Multiannual Financial Framework

George Kerevan Excerpts

Wednesday 7th December 2016 General Committees

[Mr Gauke]

On the mid-term review, as I have explained, the current proposal ensures that the payment ceilings that we signed up to over this seven-year deal are preserved. Therefore, we would not be looking to oppose the proposed mid-term review. The proposals are essentially neutral, with respect to what we would expect to pay over the MFF period, but we recognise that some commitments and functioning are likely to outlast our membership. On that basis, we took the view that the most appropriate approach for us to take is to abstain. We think that is the most constructive approach in the circumstances.

The hon. Lady asked what our approach to the future MFF will be. She may be familiar with the answer. This will play into our negotiations for Brexit. In those circumstances, the point at which the negotiations will start for the next MFF will be in 2018. We can assume that we will be in the middle of Brexit negotiations at that point, and our role in the next MFF will also be discussed in those negotiations; I think that the two are linked.

On the hon. Lady’s point about why the mid-term review was expedited, the presidency was keen to make progress and show that the budget proposals could be delivered quickly. That is something we welcome. Sometimes these matters can drag on for some time, but where it is possible to make quicker progress, we should do so. I hope that that is helpful.

[George Kerevan (East Lothian) (SNP)]

I am pleased to serve under your direction, Mr Hanson. The hon. Member for Salford and Eccles (Rebecca Long Bailey) has covered a lot of ground that I would have reservations on, but I agree with the specific issues relating to the 2017 budget.

First, can the Minister confirm that the UK abstained on the reconciliation discussions between the Council and Parliament, and can he justify that? It seems that has a direct relationship to spending next year. Secondly, in the reallocation of funds that led to the increase in spending for next year on immigration and immigration security, how did that impact on previous plans to spend on development and development aid within the budget? Thirdly, given the significant funds that are allocated and the increase in funds that will be allocated for pensions and remunerations to former commissioners, is the Minister satisfied with the rules of conduct governing former commissioners in taking paid remuneration after they leave the Commission?

[Mr Gauke]

First, on why we abstained on the annual budget, it is fair to say that the budget deal has a healthy payments margin of €9.8 billion—over €7 billion more than last year—and we welcomed that. We still believe that the EU could go further to cut lower priority spending from the budget. However, progress has been made, and the UK recognises that by not voting against the budget. We very often voted against the budget in the past because we felt that not enough had been done to deal with wasteful spending and that better value for money could be obtained for the European taxpayer. However, given that the payment margins were healthy this year, we decided not to vote against. More could have been done, but, in the circumstances, we decided to abstain.

On the reallocation of immigration expenditure, I can reassure the hon. Gentleman that the spending on aid was not impacted by increases in internal security. In fact, both have been enhanced.

Pensions remuneration is not a matter for budget discussions; it is a matter for the rules that the Commission applies to itself, so there were no particular discussions on that point. The UK and other member states have pointed out that the European Commission’s administration costs are higher than we would like. Indeed, there has been an increase in recent years, particularly in administration costs, although that has largely been put down to increased security costs, given recent events. The specific point that the hon. Gentleman raised was not part of our discussions.

--- Later in debate ---

[George Kerevan]

I will be reasonably brief. I want to put on the record my growing concern about the abstentionism that the Government are pursuing at an EU level when it comes to making decisions. I understand the logic that if we are proposing to leave an institution, it is slightly invidious to remain part of the decision-making process. On the other hand, it is highly unclear at what point we will exit the European Union, if indeed we do exit. It is more than likely that there will be significant legacy payments and that they will be influenced heavily over the next two of three years, particularly if the global economic situation worsens. If there is a rise in interest rates, that will trigger all sorts of shifts in budget allocations. It just seems premature, even from the Government’s point of view, to abstain on a lot of the budgetary negotiations.

I feel slightly conflicted in saying that, because the UK Government’s abstention from the reconciliation process between the Council and the European Parliament over the last few weeks has actually led to the Parliament being able to increase commitments quite significantly and in a positive direction, particularly when it comes to investment in growth and jobs. Given that the EU budget is 2% of European GDP, it is a significant lever when it comes to improving economic growth, and I think the 2017 budget will actually be quite beneficial in improving the economic picture in the EU. As the Government and the Brexiteers always remind us, the EU remains our most significant market. We therefore have a role to play in boosting economic growth across the entire Union. Again, I ask the Government to think carefully about which budget discussions it decides to abstain from, because abstention from such discussions does not mean that the UK will not at some point have to pick up the tab.

I remain slightly worried about some aspects of the 2017 budget, as I intimated in my question. It seems to me—I say this as a convinced European—that there is a sad track record of well-paid senior Commissioners leaving the institution and quickly taking up jobs in the banking sector, pocketing large pensions to boot. Questions need to be asked about some of the budget lines. The Minister is perfectly correct to point out that we should scrutinise the budget carefully for value for money, but there are still some aspects of the way money is spent that we could worry about.

In conclusion, I will not oppose the motion, but I suggest that the Government should think carefully. There is a long way to go before the Brexit negotiations are finished. We remain a member of the European Union, and we should play our part in discussions about budgets.