Draft European Union Budget

Debate between Graham Stringer and Mark Hoban

Thursday 12th July 2012 Commons Chamber

[Mr Hoban]

Let me make some more progress. My hon. Friend described the EU as a middleman. I suspect that the right hon. Gentleman is asking me to be a middleman between him and my hon. Friend, so I shall press on.

As Members know, the size of the annual budget is guided by the multi-annual financial framework, which is equivalent to a seven-year spending review. This was agreed by the previous Government in 2005, and set a rising trajectory for EU spending to 2013. Under the ceilings negotiated by the previous Government, the 2013 EU budget may increase by 14% in payments compared with the 2012 budget. That has encouraged the Commission to seek even more EU spending. In the current economic climate, the framework negotiated by the previous Government is out of date. We have been seeking to put right the mistakes made in the past by making every effort to rein in EU spending in recent years.

This year, however, the European Commission has again shown that it is hopelessly out of touch with the mood of Europe’s taxpayers. On 25 April, it proposed the largest recent increase in the EU budget: a 6.8% increase in 2013, taking total spending to €137.92 billion. It claims that the increase will support growth and jobs while also allowing the Commission to catch up on payments on programmes announced in previous years. We are acutely aware of the risk a budget increase of this scale poses to the UK’s contribution. At a time when we are tightening our belts in the UK, an increase in the order of 6.8% would cost the UK, taking into account the rebate, roughly €1 billion more than this year. Of course, this is not helped by the previous Government’s abatement giveaway in 2005, a decision that is costing today’s taxpayers an extra £10 billion over this Parliament. The amendment seeks to airbrush that from the record.

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

I agree that a 6.8% increase is unacceptable given the current economic situation, but why are the Government settling for a flat budget, when local government in this country is suffering cuts of 30%? Why is Europe getting a better deal than Manchester or Plymouth?

[Mr Hoban]

That is an important point, and I shall address it shortly.

Our response to the Commission’s inflation-busting proposal has been robust. At a time when Governments across Europe are making difficult decisions on public spending, a 6.8% increase in EU spending in 2013 is completely unacceptable. First, the economic circumstances have changed dramatically, and the Commission cannot ignore the facts. By 2014, the level of public debt across the 27 member states will be over 50% more than it was back in 2007, two years after the last seven-year budget was agreed. Secondly, a larger EU budget will not solve the eurozone crisis. A smaller, leaner and better-targeted budget is the best way to drive growth across the EU.

We have identified many areas of EU spending that are ripe for reform. It is time to cut the quangos, EU staff pay and programmes that offer low added value or are poorly implemented. For example, the Commission set itself the target of reducing its headcount by 1% this year. Although 286 posts have been cut—equivalent to a 0.7% reduction—that has been offset by the creation of 280 posts for Croatia’s accession. There has been no attempt to redeploy staff to meet the needs of Croatia’s accession. As ever, the Commission’s knee-jerk reaction is simply to increase the number of people employed in the EU. As a consequence, this year the Commission has cut just six posts. We estimate that if it had cut the headcount by 1%, it could have saved €45 million.

The total salary bill for the EU institutions’ staff in 2011 was over €3.5 billion, more than 2.8% of the Commission’s budget proposal for the year, and more than double the amount spent on freedom, security, justice and citizenship. Staff at EU institutions, who may have lived in Brussels for more than 30 years, continue to be paid an extra 16% “expat allowance” on top of an already generous salary, and a teacher at the European school is paid twice the average UK teacher pay.

Section 5 of the European Communities (Amendment) Act 1993

Debate between Graham Stringer and Mark Hoban

Tuesday 24th April 2012 Commons Chamber

[Mr Hoban]

It has been demonstrated time and again in a host of different economies that supply-side reforms are vital, because they reduce some of the costs on businesses and enable them to invest and improve productivity, and in that way they stimulate demand and growth.

Hon. Members are right to focus on events beyond our shores. As the Office for Budget Responsibility said in its March report,

“the situation in the Euro area remains a major risk”

to the UK’s economic forecast. More than 40% of our exports are to the euro area, and recent events in the markets remind us that euro area countries need to make painful adjustments to their public finances and external deficits. It is a difficult path that they have to walk, although new Governments in the likes of Ireland, Portugal, Spain and Italy are walking it. That is the logic of the single currency to which they are all committed, and progress is being made.

The European Central Bank’s monetary loosening has helped to stabilise the banking system, and the trillion dollars pumped in through the long-term refinancing operation has been helpful. There has been progress in stabilising Greece, and—as I have said—a number of countries have announced important economic reforms.

As well as these measures, important longer-term reforms have been made since we last debated the convergence programme. Those reforms include a stronger, more effective stability and growth pact following agreement of the “six pack” in December 2011. A new macroeconomic imbalances procedure will provide an assessment of potential economic risks across Europe, with sanctions for euro area countries that fail to take action. Importantly, the Commission has put forward proposals to improve co-ordination of budgetary processes between euro area countries.

The treaty on stability, co-ordination and governance—the fiscal compact—was signed in March by 25 member states and it also has the potential to embed stronger rules on fiscal discipline. Together, these reforms represent a stronger, reinforced system of economic governance for the EU and the euro area in particular. While many of these stronger measures may not be right for the UK, they can support stability in the single currency area.

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

Will the Minister give way?

[Mr Hoban]

If I may, I will finish my paragraph as it may clear up any misapprehensions that the hon. Gentleman has.

I would like to reassure the House that following these reforms the UK is still not subject to sanctions under the strengthened stability and growth pact—the EU treaty is clear that they apply only to EU area countries. Unlike other countries, the UK will only present its convergence programme to the Commission after the Budget is presented to Parliament—the procedure that we are following today.

[Graham Stringer]

Does the Minister read the newspapers? Has he not noticed that Europe is getting less and less politically stable and that many of the European economies are shrinking? Whatever titles are put on the policies, that is what is really happening. Would it not make sense for the Government and this country to support an as stable as possible break-up of the euro, which would provide growth in Europe and in the United Kingdom?

[Mr Hoban]

It would be inappropriate for the UK Government to dictate the economic policies to be followed by those in the eurozone. Members of the eurozone have made it very clear that they wish to remain part of it, and there are even member states queuing up to join it. Indeed, if we have an independent Scotland, it might consider joining the eurozone. There are challenges, but there is a strong political commitment in the eurozone for the euro to remain in place.

Connecting Europe Facility

Debate between Graham Stringer and Mark Hoban

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.

Eurozone Crisis

Debate between Graham Stringer and Mark Hoban

Tuesday 15th November 2011 Westminster Hall

[Graham Stringer]

(Blackley and Broughton) (Lab) rose—

[Mr Hoban]

I would like to make some progress. Let me address UK commitments through the IMF, which is the centrepiece of this debate. In a carefully worded statement, the hon. Member for Nottingham East (Chris Leslie) covered Labour’s retreat on its IMF policy. He was bravely leading his troops through the No Lobby in July without the support of the architects of the G20 London deal. The former Prime Minister and the former Chancellor were not there. What has happened? Last week, his boss, the shadow Chancellor, cut his legs from under him by saying that

“the Labour party supports an increase in the UK’s International Monetary Fund subscription”.

I do not think the hon. Gentleman is in a position to lecture anyone about consistency and principle.

As a founding and permanent member of the IMF, and as one of its largest shareholders, we continue to be a strong supporter of its role as a global backstop to the world economy. Currently, 53 countries are being supported by the IMF, of which only three—Greece, Ireland and Portugal—are in the euro area.

Eurozone (Contingency Plans)

Debate between Graham Stringer and Mark Hoban

Monday 20th June 2011 Commons Chamber

[Mr Hoban]

My hon. Friend is absolutely right that we have seen during this crisis the strains within the eurozone mechanism. The actions that needed to be taken to resolve the consequences of those strains include the bail-outs of the Greek, Irish and Portuguese economies. It is absolutely right that we secured that opt-out to the Maastricht treaty, to ensure that this country did not have to be a member of the euro, a position that the previous Government seemed not to support.

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

The Minister, the Government and the House want stability, but quite frankly, Greece is bankrupt, and cannot restore its economy while it remains in the euro. Is not the answer to introducing stability an orderly return to the drachma? Should not that be the burden of the Government’s policy?

[Mr Hoban]

The hon. Gentleman is absolutely right that we need stability in the eurozone, but I do not think that speculation here will help to deliver that stability to the Greek economy or the wider eurozone.