Connecting Europe Facility

Graham Stringer Excerpts

Thursday 19th January 2012 Commons Chamber

[Mr Hoban]

The hon. Gentleman makes an important point. There is a debate to be had on where such decisions should be taken and what our priorities should be. That is why it is important for us to impose discipline on the EU budget and try to influence debate on it to ensure that when money is spent, it is spent well and wisely in pursuit of our objectives.

Let me remind the House of three key aspects of the Commission’s proposal for the next financial framework: first, an increase in the budget of more than €14 billion a year compared with a freeze on current levels; secondly, a new financial transactions tax to fund the EU budget; and thirdly, an end to the UK’s permanent rebate. That financial framework proposal and the proposals to increase spending through the connecting Europe facility are unacceptable.

In November, the House agreed that the Commission’s financial framework was

“unacceptable, unrealistic, too large and incompatible with the tough decisions being taken in the UK and in countries across Europe to bring deficits under control and stimulate economic growth”.

[Graham Stringer (Blackley and Broughton) (Lab)]

I am following the Minister’s logic carefully and agree with him, but would it not be more sensible to set an objective of reducing the European budget by around a third, which is the cut that has been imposed on local government?

[Mr Hoban]

I will set out the Government’s position on the financial framework in my own sweet time.

Continuing financial instability in the eurozone owing to unsustainable levels of public debt makes the case for restraint stronger: the EU budget must be part of fiscal consolidation, not immune to it. As the Prime Minister has stated, alongside leaders from France, Germany, the Netherlands and Finland, the maximum acceptable increase in EU budget size until 2020 is a freeze in current payment terms.

Since November’s debate on the financial framework, we have made significant steps towards achieving that goal. In the face of a Commission proposal to increase the 2012 budget by 4.9%, the UK led the European Council in demanding, and achieving, a restriction of the 2012 budget to a real freeze to 2011 payments. In pursuit of a real freeze in payments, the UK’s position must, and will, be consistent and clear in annual budget negotiations, financial framework negotiations and negotiations on the individual spending programmes that make up the framework, of which the connecting Europe facility is one.

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[Chris Leslie]

We are all waiting to see what proposals come forward. The Chancellor has said that he will come to Parliament and let us have a say on many of these things. Indeed, perhaps the Minister can help us out with the timing of those proposals—[Interruption.] If he would care to listen to my questions, perhaps he could also tell us when we will get the Bill to enact the European financial stabilisation mechanism permanent bail-out fund. We are all waiting for that. The eurozone countries are supposed to be rolling together the European financial stability facility and the EFSM into that permanent arrangement, but as I understand it we will have to legislate for that. Will he tell us when that will happen, because it is related to this question about potential IMF funding? We need clarity from the Government—and from the IMF as well.

[Graham Stringer]

I completely follow my hon. Friend’s logic, but surely this is not the largest issue facing the future of the European economy. The largest issue is that the people running Europe are determined to keep a political project going by competitive deflation in the countries of Europe. The best solution for the whole European economy is for an orderly break-up of the euro, particularly for those economies, such as Greece and probably Italy and Portugal, that are, in effect, bankrupt.

[Chris Leslie]

I do not agree with my hon. Friend that the break-up of the euro would be in the UK’s interests, but there are dangers with a permanent deflationary lock in the fiscal policies of the eurozone countries. That is why, both in the UK and across the eurozone, far more must be done to get growth into those economies. They have to grow in order to build their way out of the hole that they are in. In that sense, the ambitions, which many people share, of improving infrastructure across the EU, while laudable, need to be seen in the context of the affordability criteria that must be applied to them. We have to act to unblock the clogged arteries of Europe, connecting the major cities of the continent, making it easier for business and opening new opportunities for growth in the single market. Capital investment in infrastructure is extremely important as a driver for growth.

What progress are Ministers making in shaping the European spending review? That is absolutely at the heart of today’s debate. After December’s phantom veto—the first veto in history that stopped precisely nothing—the UK has to pick up the pieces and try to influence the important EU budget process. The Minister was throwing around history lessons about the common agricultural policy and various other things. However, we need to know what exactly this Government are going to do about the common agricultural policy. What is he going to do about the spending proposals? Rather than walking away before the negotiations even begin and leaving another empty chair, the Minister has to raise his voice, build some alliances and secure a more appropriate level of expenditure that also shifts priorities.