Draft European Union Budget

Chris Leslie Excerpts

Thursday 12th July 2012 Commons Chamber

[Mr Hoban]

Indeed, I think that the achievement of the rebate at Fontainebleau was a signal achievement of her time in office, but of course that was done in the context of a multi-annual financial framework debate, and we are going through that process at the moment with our European partners. We have made it clear that the rebate is one of our red lines, and we will continue to stick to that, in the same way that we have been very clear about our outright opposition to the financial transaction tax. We will show backbone in these debates, but let us identify those opportunities where our power and leverage is at its highest, to maximise the price that we want in return.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

While the Minister is in such a fine and confident mood, can he give a commitment that the UK Government will settle for nothing less than a real-terms reduction in the budget for the multi-annual financial framework—that spending review seven-year period?

[Mr Hoban]

I have to say that talk is very cheap on the Opposition Benches, as the amendment demonstrates. They may talk things up, but what was the previous Government’s record? It was to give away our rebate in the hope of some vague common agricultural policy reform. So let the negotiations continue and we will come to the House when they are concluded; we have been very clear about what we are seeking to achieve.

[Chris Leslie]

Ah!

[Mr Hoban]

The hon. Gentleman may say “Ah”, but the reality is that when his party was in office it gave away the rebate and allowed a spending increase that permitted the EU budget to rise by another 11% this year. I do not think the Labour party’s record in government is anything that the Opposition should be proud of or crowing about.

--- Later in debate ---

[Chris Leslie (Nottingham East) (Lab/Co-op)]

I beg to move amendment (a), at line 15, leave out from “States” to the end and add

“notes that the UK’s ability to negotiate a satisfactory European Union budget deal has been weakened by the Prime Minister’s failure to secure allies for a more prudent settlement in this qualified majority decision; and so calls on the Government to strengthen its stance so that the 2013 Budget and the forthcoming Multi-Annual Financial Framework are reduced in real terms.”

It is always interesting to follow the Financial Secretary to the Treasury. His motion, parts of which we agree with, states that the multi-annual financial framework—a rather clumsy phrase, but essentially a seven-year spending review for EU budgets from 2014 to 2020—needs to be on a sustainable path. Of course that is true. It is also absolutely true, as the motion states, that these are times of ongoing economic fragility in Europe. However, the motion does not mention the fact that, sadly, that is more the case in the UK under this Government.

The motion mentions difficult decisions having to be taken, but falls short when it comes to the actual matters at hand. The Minister spent almost half an hour trying to throw mud and allegations at the previous Government about what happened several years ago, but said hardly a word about what he was doing about the budget settlement for 2013 and even less about the big decision on the seven-year spending review period—a decision, incidentally, on which the Government have a veto. We are coming to that critical period of time when he and the Prime Minister in particular are potentially at their most influential, with leverage over what happens with that budget, but when we tried to get a simple answer from the Minister on whether he agreed that the 2013 budget and the multi-annual financial framework should be reduced in real terms, answer came there none. He said, “Well, we’ll try our best to do the right thing.” The motion states that the proposed 6.8% increase is “unacceptable”, but that is simply too weak. Not going for the 6.8% increase is a no-brainer. Where is the Government’s backbone?

The motion was tabled only yesterday, so it is no surprise that many hon. Members may not have seen that this crucial debate is taking place.

[Mr Nuttall]

rose—

--- Later in debate ---

[Chris Leslie]

I am glad that the hon. Gentleman is, as ever, in his place.

If people realised how weak the Government were being in their negotiating stance, they would be totally appalled.

[Jacob Rees-Mogg]

The hon. Gentleman is very reasonable in all these matters and of course he wants answers from the Government, but in that spirit of frankness, does he personally regret the loss of £10 billion to the UK Government by giving away the rebate? I know he was not personally responsible for that.

[Chris Leslie]

The hon. Gentleman has to realise that the European Union was going through a totally different era of accession countries and enlargement. Now, we are in a post-financial crisis era, in which it is absolutely clear that, as my hon. Friend the Member for Blackley and Broughton (Graham Stringer) said, serious spending cuts are taking place in our domestic economy and budget. Many of our constituents want pro-job, pro-growth and pro-stimulus measures to be priorities here in the UK, and they feel aggrieved that some administrative budgets in the EU will continue to roll forward without the UK Government showing the restraint that they ought to show while they are at the height of their potential negotiating powers—hence the amendment that we have tabled.

Despite the Financial Secretary to the Treasury’s sudden animation when I asked him what exactly the Government are doing, the motion does not set out clearly the view, which ought to be and would be shared by all hon. Members, that the budget and the multi-annual financial framework should be reduced in real terms. It is a simple statement that would help the Government in their negotiations, and that is why the House should support the amendment.

[Mr Nuttall]

Some of us will oppose the amendment on the basis that it, too, does not go far enough, because it talks about reducing the budget merely in real terms. The question I therefore pose is: would the hon. Gentleman be satisfied if the budget increased in cash terms?

[Chris Leslie]

The hon. Gentleman was perfectly free to table his own amendment, and he pitches a perfectly respectable position. I thought that it was important to draw the Government into adopting a stronger stance, and a reduction in real terms is, at the very least, the place where we need to see the Government, but we could not get them even to that point. He has seen the motion; it falls short in so many ways.

Real-terms cuts are required now to the EU administrative budget, because in the UK we are in a double-dip recession, thanks in part to the Government’s failure on economic growth. The economy shrank in the last quarter of 2011 by 0.4%, and in the first quarter of this calendar year by 0.3%. Borrowing hit £18 billion in May, up £3 billion on the same month last year, and pressures on the UK’s finances are increasing: domestic tax revenues have fallen and income tax receipts are 7.3% down on the year to May. Today the Office for Budget Responsibility, in its fiscal sustainability report, cites projections suggesting that the public finances are likely to come under pressure in the longer term, and states:

“In the absence of offsetting tax increases or spending cuts this would widen budget deficits over time and eventually put public sector net debt on an unsustainable upward trajectory.”

There is much more evidence than ever before of the need for us to strengthen the Government’s negotiating stance. That is why it is just not good enough for the Government to say, “There’s not much we can do about it. It’s a qualified majority vote this year. We’re in a terribly difficult position,” and why in our amendment we have, sadly, had to point out that the Government have failed to win alliances for a tougher position on the budget. That is where we are today.

There was the phantom veto in December last year, when nothing was actually vetoed—everything went through with the agreement of the other EU countries, and the Prime Minister succeeded simply in alienating the UK’s negotiating position. Now, when we need to make strong arguments about reducing budgets, few are listening and open to ideas because of the stance taken by the Prime Minister in those negotiations.

[Kate Hoey (Vauxhall) (Lab)]

I want whoever is in power in this country to negotiate over our budget in a much tougher way. Does my hon. Friend agree that perhaps the only way for us to get the European Union to take us seriously is to say that we will not pay any more than what we think is a fair contribution and increase? Indeed, given all the waste, there should be not an increase, but a decrease.

[Chris Leslie]

That is why we need to change the approach of Ministers in negotiations. We have to come to a settlement. This year, we are on the cusp of Ministers having a veto power over the seven-year spending review period. This is the moment when we need them to be particularly firm.

[Mr Davidson]

Does my hon. Friend feel so strongly about making sure that the agreement we strike with Europe has the support of the people of Britain that he thinks the budget settlement should be the subject of a referendum? That would be an ideal way to determine the long-term budget—the people themselves voting in a referendum on whether they are prepared to accept it.

[Chris Leslie]

I see the tempting avenue down which my hon. Friend wants to go. I am not sure that it is necessarily good to budget by referendum. It would be simple for the Chancellor, the Prime Minister and the Minister to firm up their position and set out things much more clearly than they have in the motion. I urge hon. Members to look at the airy-fairy fudging language of the motion today—and going forwards, which the Minister does not like to talk about.

The Minister was right to draw on the Financial Times analysis, including in pointing out the reduction of just six administrative staff from the 41,000 EU posts. Some increases for pensions, for schooling allowances for EU officials and even for some of those extra accession activities in relation to Croatia, are still pencilled in by the Commission. I do not think that the administrative budget proposals on the table are justified. Instead, we should be reprioritising the resources paid to the EU budget so that they are sweated more effectively for a pro-growth, pro-jobs position—looking at energy markets, high-speed broadband and the infrastructure and structural fund changes that need to be made. I do not think that the Government have appreciated the strength of feeling on this matter.

[Mr Cash]

I am glad that the hon. Gentleman used the phrase “strength of feeling”. What is his strength of feeling about the fact that every justification for proposing an increase of 6.8%, in all the papers that I have read as Chair of the European Scrutiny Committee—everything in the European Parliament and the multi-annual financial framework discussions in which I took part a few months ago—is, “We need to do it because of the Lisbon treaty”? Will the hon. Gentleman, on behalf of the Opposition, now accept that the Lisbon treaty was a great mistake?

[Chris Leslie]

No. Some commitment appropriations are certainly being pencilled in—“We can’t undo the budget because of previous commitments”—but almost an equal number of appropriations are new programmes that the European Commission could vary and change. I am all for expenditure at European level and doing our part collectively to boost and stimulate economic growth, but there is not sufficient justification for some of the continued administrative back-office areas of expenditure that simply do not help at this time, especially when we have so many economic difficulties in the UK.

My question to the Minister is very simple: what exactly is the Government’s position? Are they in favour of a real-terms reduction in the budget or not? The Minister would not say. I urge his hon. Friends to try to pin down the Government on that, because we are at a crucial juncture. From reading the reports this week in The Guardian about a deal being done whereby we will not touch reform of the common agricultural policy, for example, I get the sense the Prime Minister likes an easy life with business as usual and wants to continue in that vein.

[Kelvin Hopkins]

I entirely agree that the Prime Minister wants an easy life as regards the CAP. On behalf of the European Scrutiny Committee, I recently attended a meeting in Brussels about CAP reform where I think I was the only voice calling for restraint; most of the others were calling for more spending on the CAP. What are we doing about it?

[Chris Leslie]

Although changes to that 40% chunk of the budget have been made, fundamental reforms must still be on the table. The Prime Minister should not wave the issue away so readily.

The Prime Minister and the Government must build some radical alliances, because the 2013 budget is decided by qualified majority voting. They must also strengthen their backbone on the seven-year spending review. This will be a key test for the Government. We know that they just want to look backwards, but it is important that the Minister takes some responsibility, because he is in the driving seat now. The Government must focus not only on the rebate but on ensuring that budgets are set at the right and prudent level. We believe that real-terms reductions can be achieved now and for the future, but the motion falls short of that. That is why we tabled our amendment, which I commend as the best way to strengthen the Government’s backbone.