EU general budgets for 2015 and 2016

Baroness Keeley Excerpts

Monday 14th September 2015 General Committees

[The Chair]

We now have until 5.30 pm for questions to the Minister. May I remind Members that these should be brief? It is open to a Member, subject to my discretion, to ask related, supplementary questions.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

Thank you, Mr Walker. It is a pleasure to speak in this Committee, the first time that I have done so with you in the Chair. May I thank you for chairing our proceedings today? I hope it is helpful if I group my questions.

First, on the draft decision about the use of the EU solidarity fund in 2016 for financial assistance to eligible states affected by major national disasters or extraordinary regional disasters, the terrible floods experienced by Romania, Bulgaria and Italy in 2014 caused extensive damage to the economic and productive sectors in many towns and cities in those countries. The UK was a beneficiary of the solidarity fund after the 2007 floods; I am sure Members remember those floods and the difficulties they caused for many constituents. We received £127 million to help with their aftermath.

I agree and have constantly said in debates on these matters that there is a need for budgetary restraint and reform in the EU budget. I spoke strongly about that in the debate on the European Union (Finance) Bill. Will the Minister make his position on the solidarity fund clearer? Will he accept the need to help countries that have experienced significant problems owing to flooding? Will he agree to such mechanisms being used in a similar way in the future, or does he think that, for us to achieve budgetary restraint, we have to reform the way those instruments work?

Secondly, what plans do the Government have to ensure that this annual budget and future EU budgets are controlled and that funding is prioritised on interventions to encourage jobs and growth throughout the EU and in the UK? Today’s documents raise again some of the issues that I raised in the European Union (Finance) Bill. Funding for the common agricultural policy is still high and not being diverted to more useful programmes such as the European fund for strategic investments. Other budget amendments have pushed the budgets further into the margins, which again raises my question of whether the gap between commitment and payment appropriations is manageable and whether it is the most efficient way to ensure budgetary restraint. We had quite a debate on that when discussing the Bill. What plans does the Minister have to ensure wider reform of the EU budget?

Finally, I would like to ask the Minister about the UK’s response to migratory pressures in Italy and Greece. In document 11, his follow-up letter to the Chair of the European Scrutiny Committee, the hon. Member for Stone (Sir William Cash), on draft amending budget 5, responding to those migratory pressures, he outlined more details and he has said more on that today. In the letter, he said that the funding provided for in this DAB supported a range of measures to support the management of migration flows, none of which directly funded the Commission’s proposed schemes for relocation to other member states of 40,000 migrants arriving in Italy and Greece or the resettlement of 20,000 refugees from those countries. Will he confirm whether, in line with the European announcement, the project will include resettlement to other European member states? Does he agree that, contrary to the comments he made in the letter, that does appear to constitute direct funding for the relocation of some of the migrants arriving in Italy and Greece?

Labour Members in the UK Parliament and European Parliament have called for a joint approach to help cope with the increasing number of refugees. The Government have stated that they will not participate in a proposed mandatory EU programme to resettle migrants rescued when trying to cross the Mediterranean to Europe. Now that European leaders have voted against a quota system for relocation, something with which the Government did not agree, are there plans to engage further in the European effort to solve the migrant crisis? What future financial support are the Government willing to mobilise to help the UK and other EU countries deal with those migratory pressures, which are the consequence of unrest in the middle east?

[Mr Gauke]

May I put it on record that I am grateful to see the hon. Member for Worsley and Eccles South in her place? I hope we can continue to debate this and other matters in future. I am also delighted to see the hon. Member for Scunthorpe in his place, and I hope we will continue to debate Treasury matters.

First, in terms of our position on the EU solidarity fund, the Government support the objectives and principles of the fund in providing assistance to member states affected by serious natural disasters. However, the Government also take the view that the Commission should always look first to reallocate funds from within existing agreed budgets to meet in-year pressures, rather than coming to member states to request additional money. Past examples show that the Commission is able to find reallocations—for example, when programmes are delayed or take-up is slower than expected.

In terms of the budget more widely and the need to prioritise areas relating to jobs and growth, the Government’s record is clear. As I made clear in my opening remarks, the best way to put pressure on inefficient spending is to cap the overall expenditure. The deal negotiated by the Prime Minister in February 2013 was the first real-terms reduction in the EU budget, and such budgetary restraint is very important. As the Prime Minister said at the time, EU spending reform is a long-term project, but the deal that he secured represents important progress, including on common agricultural policy expenditure. While spending on CAP was cut by 13%, spending on areas of pro-growth expenditure increased and now accounts for 13% rather than 9% of the overall budget.

It is also worth mentioning wider budgetary reform. The UK welcomes the objectives of Vice-President Georgieva’s “budget for results” initiative, which aims to develop a more performance-orientated budget that delivers tangible results for EU citizens. We are working closely with the Commission on that and see it as an important opportunity to help improve the value and efficiency of EU spending and to increase transparency about it for taxpayers. The Chancellor made our position clear at ECOFIN earlier in the year. We have held discussions with the Commission and offered technical assistance, and we are keen to drive this agenda forward.

On migration funding and our response to the crisis, the UK is of the view that a great impact can be made in conflict regions, which is why we are the second largest bilateral donor to the Syrian relief effort. We will continue with our significant efforts to ease the burden on front-line member states by providing practical, on-the-ground support. In line with the Prime Minister’s announcements, we will also take forward plans to resettle up to 20,000 Syrian refugees over the course of this Parliament.

With regard to funding of Frontex, to which we contribute not via the EU budget but through a separate bilateral contribution, we will match increased EU funding as proposed under draft amended budget 5. I hope those points are helpful to the Committee, and I will be happy to answer any further questions.

--- Later in debate ---

[Barbara Keeley]

I thank the Minister for his answers. It was interesting that the hon. Member for North East Somerset made an appropriate point about the vagueness of definitions in an 88-page document and the various other attachments. What we are debating is probably as clear as the proverbial mud to many people outside the room, so perhaps we can add a little clarity.

I have made this point before: the Opposition believe—we must keep insisting on this—that the European Commission should try to make decisions surrounding the budget much more accessible to citizens. The material is dense and, even for a short debate such as this, it is hard to understand what is being said. The Commission should start to understand how to give more and better information about the budget and the budget process, and I am sure that the Minister, who has to plough through all these things, agrees. Transparency is a key factor, so I was glad that the hon. Member for North East Somerset talked about that.

I want to cover several more points, just for emphasis. A lot of this is uncontentious, albeit not all. As I have said, we welcome the fact that the draft budget states that its primary objective is to

“provide a new boost for jobs, growth and investment”.

We welcome the overall increase in the fund for competitiveness for growth and jobs of 11.4% for 2016 compared with 2015. However, there have been decreases in funding for large infrastructure projects and, at a much greater rate, for energy projects to aid economic recovery. We should encourage a focus on green energy and investment.

Funding for economic, social and territorial cohesion has received a small overall increase, although both the cohesion fund and the European territorial co-operation fund have decreased. That heading has been the subject of an extensive reprogramming exercise and the margin left beneath the ceiling is now very tight, with only £11 million of difference. We will continue to press the Government to ensure that significant changes to and reallocations of funding are made on the basis that they are likely to increase value for money for the UK taxpayer.

We welcome the continued decline in agriculture spending as a share of the European budget—as I have said, it will drop from 41% of EU commitments in 2014 to 35% in 2020—but the wider reform of the common agricultural policy that is needed has still not taken place. The UK Government should push for such reform in future negotiations. Deductions are being made to sustainable growth and natural resource funding, but they involve funds for which reform is less of a priority. For example, the European agricultural fund has decreased by 24.9%, whereas market-related expenditure and direct payments have decreased by only 1.4%.

We welcome the increased focus on dealing with the refugee crisis. Draft amending budget No. 5 was intended to support the EU relocation and resettlement schemes. As the Minister mentioned, the money has been used to reinforce Frontex, to provide emergency assistance after the first arrival and screening of migrants, to reinforce the regional development and protection programmes for north Africa and the horn of Africa, and to cover emergency assistance for the surveillance activities carried out in the context of Frontex operations.

In addition, €25 million was used to implement a voluntary pilot project on resettlement. To refer back to my question, a European announcement on 13 May suggest that that project would include resettlement in European member states. Labour welcomes the use of the flexibility instrument to help to alleviate the migrant crisis, but we encourage the UK Government to engage with the rest of Europe and other affected countries to find a sustainable way of funding a response to this increasingly serious situation. Frankly, we must have something more sustainable than what is in place today. It was disappointing that many Conservative and UKIP MEPs voted on 9 September against legislation calling for a unified response to the relocation of 40,000 asylum seekers from Italy and Greece. Labour Members and MEPs have called for a joint approach to help to cope with the increasing numbers of refugees. My colleague, Claude Moraes MEP, chair of the European Parliament’s civil liberties, justice and home affairs committee, said:

“We need a long-term solution, with Britain opting into a comprehensive EU plan to tackle a crisis which is likely to go on for some time and will require solidarity on refugees and measures to halt people-smuggling and the root causes.”

I believe that this is a Treasury issue as well as a Home Office one, and I hope that the UK Government engage with the EU to provide an adequate response to the crisis.

Along with our European counterparts, Labour Members fully support the letter of draft amending budget No. 1, which helps to create the budget structure necessary for the provision and creation of the European fund for strategic investments. We believe that such funding should be a priority for the EU. It will help to target areas for growth, including infrastructure in the transport, energy, digital, environment, urban and social sectors. Other areas of focus will be education and training, health, research and development, and support for small and medium-sized enterprises. It is unfortunate that the money redirected to that fund is from funding already set aside to increase competitiveness for growth and employment. We should not be in that either/or situation. Money is being shifted from the Connecting Europe Facility to fund the European fund for strategic development. That means that money to improve cross-border rail and operability, sustainable and efficient transport, and the connectivity of transport modes has been more than halved. However, there is a new budget allowance for encouraging private investment for transport infrastructure projects. The Minister mentioned the redeployment of funds from Horizon 2020.

I want to leave the Minister with a question, although I do not know whether he will have time to answer it today. Have the Government made any assessment of whether the shifting of the funds will provide better value for the UK taxpayer? I understand that the measure uses unallocated margins, but that goes to the question of the manageability of the gap between authorised commitments and authorised payments. I spoke about that a great deal in our debates on the European Union (Finance) Act 2015, so I will not rehearse the arguments again today.