European Union (Finance) Bill

Jacob Rees-Mogg Excerpts

Tuesday 23rd June 2015 Commons Chamber

[Barbara Keeley]

Indeed we could. Let me go on and make a few more points about the proportion that is allocated to that very important priority of competitiveness for jobs and growth. In 2014, only around €15 billion will be spent by the EU on that budget priority compared with over €41 billion for market-related spending and direct payments for agriculture. There is no sense in a system that takes that vital priority—vital for every part of the EU—of competitiveness for jobs and growth and spends so little on it. Out of the €6.3 billion of European Union funding allocated to the UK in 2013, only 23% was spending on jobs and growth compared with 63% on agriculture. It is the balance that we are calling into account.

As my hon. Friend the Member for Luton North said on Second Reading, although the proportion of the budget for agriculture has been falling, there has been a fairly significant increase in money terms over the past eight years. As long as this balance seems wrong to people, it will be very hard for many of us to explain on the doorstep why we are spending only 23% of European Union funding in the UK on jobs and growth but 63% on agriculture. Some hon. Members might find such an explanation easier in their constituencies than others, but it is a difficult argument.

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

I am very sympathetic to what the hon. Lady is saying. My one concern would be that if there are reforms, they do not disadvantage some farmers in North East Somerset and other rural constituencies to favour spending on the continent. Reform is quite right, but it needs to be fair for the United Kingdom’s farmers.

[Barbara Keeley]

The more reviews that we carry out of those priorities, the more that we develop our understanding of where the money is going. Earlier, the hon. Member for Boston and Skegness (Matt Warman) called for these matters to be discussed in a language that his constituents could understand, and I do not think that they are discussed in such a way. Having ploughed through very many debates and very many documents in relation to the Bill, I do not think that those matters are understood. The hon. Gentleman is quite right.

The Economic Secretary to the Treasury said she accepted that expenditure on the CAP is

“still too high both in absolute terms and as a proportion of the overall budget.”—[Official Report, 11 June 2015; Vol. 596, c. 1426.]

If that is what the Treasury team currently feel—that it is still too high, both in absolute terms and as a proportion of the overall budget—what are we doing to understand that better, to review it and to change it?

It is my assertion that previous reviews have not led to the level of reform that we want to achieve. It was our purpose in tabling new clause 2 to keep focus on that vital issue. When most member states are finding it necessary to make very difficult decisions—clearly, we are in that position ourselves—about their own budgets and spending, the European Union must ensure that expenditure is efficient and focused on addressing the major concerns that member states face. As my hon. Friend the Member for Nottingham East (Chris Leslie) said in the October 2012 debate:

“The next seven years of the EU budget should prioritise jobs, growth, infrastructure and practical programmes that rejuvenate fragile economies.”

As I mentioned on Second Reading, this is much needed when we still have 735,000 16 to 24-year-olds in the UK looking for work. That should be our focus—those young people.

We need a better balance of funding and we need the European Union to provide a better framework and strategy to achieve growth and jobs. Looking deeper into the detail, and the spending commitment to the EU’s smart and inclusive growth priority, only a quarter of that is spent on competitiveness for jobs and growth, and three quarters on the EU’s cohesion policies, including structural funds. It probably is not appropriate today to open up further debate about the use of structural funds. That is often discussed when we are discussing EU finance, but as my hon. Friend also said:

“Savings can be made on aspects of EU structural funds that…are too often committed in a haphazard manner and depend on outdated commitments rather than future priorities. Unless structural funds contribute to positive economic development, they cannot be justified.”—[Official Report, 31 October 2012; Vol. 552, c. 304.]

The Opposition say strongly that the proportion of the EU’s smart and inclusive growth expenditure that goes towards securing competitiveness for jobs and growth is too small. That important area of spending accounts for around a quarter of the EU budget in 2014, but that rises to only 27% across the whole six-year period.

--- Later in debate ---

[Alex Salmond]

One of the reasons we do so incredibly badly in many European programmes as regards funding is that the Treasury’s interest, when looking at additionality, as it calls it, is always to minimise EU expenditure. Although it is perfectly acceptable for the Government to defend the rebate, it is less acceptable to look at every European programme and try to minimise expenditure on it, because in doing so, we lose some of the alternative opportunities that the hon. Member for Worsley and Eccles South talked about. If the Treasury looks at every European programme and says, “How do we minimise spending?”, what follows as a natural consequence is that our share of that spending is also diminished. In the case of the common agricultural policy, it is possible to make a direct connection with the negotiating stance of the right hon. Member for North Shropshire, who was trying to abolish farm payments altogether and got the miserable, unfair and inequitable distribution of support that has been the end result of the CAP negotiations.

The Minister—I am not sure if it was a dead bat, a glorious drive through covers, or a catch at slips—rather evaded the direct question of what is the Prime Minister’s negotiating stance on the budget. The Minister said, after being passed a note, that the Prime Minister’s stance was to cut the whole budget and to protect the UK rebate. Let me point out that that has been the Government’s stance and policy since they took office in 2010; it is not a particular stance for these renegotiations. What the Minister is being asked—we really would like an answer—is whether the Prime Minister has a specific target in mind in renegotiations for changes in the EU budget or the UK contribution to it, and if so, what it is. Failure to answer that question throughout the debate adds to the no doubt unworthy, but considerable, suspicion shared across this Chamber that the Prime Minister is adopting this nebulous approach to what are his negotiating aims so that whatever he comes back with can be announced as a fundamental achievement. That does not stand scrutiny in this Committee, but even more importantly, it is a particularly poor campaigning argument in favour of the European cause.

I hope that the Minister—the last man in—will rise to the occasion by confirming that he is in favour of more equitable distribution of land ownership in Scotland and by giving us an insight into the Prime Minister’s true negotiating hand in the coming arguments and discussions in the European Union.

[Mr Rees-Mogg]

The speech by the right hon. Member for Gordon (Alex Salmond) is tremendously important and gets to the heart of one of the issues we have with the common agricultural policy, although, not surprisingly, I look at it in a different way from the question of socialism and land holdings that the SNP is going for.

The issue, as has been discussed in the European Scrutiny Committee, is that over the years our farmers have increasingly become so efficient and large that there has been a good deal of consolidation. That applies very much in my constituency among dairy farmers. The number of dairy farms has reduced significantly and they are bigger farms proportionately, but European subsidies tend to go to smaller farms disproportionately. Therefore, we find that British farmers are disadvantaged. I entirely agree with the right hon. Gentleman that if, under a system of farming subsidies and a competitive framework, that means that people are getting handouts from the European Union, British farmers—farmers in the United Kingdom—do not get the equivalent subsidies to farmers on the continent, they are disadvantaged because their cost base is automatically higher and their profitability is reduced. Therefore, when we are arguing for careful consideration, overview and oversight of expenditure in the European Union, and reductions in the common agricultural policy, we have to ensure that the cuts are made in a way that is fair to the UK farmer. Even if our end objective is the entire elimination of agricultural subsidies, it must be done in a way—

[Jim Shannon]

As I am sure the hon. Gentleman is well aware, the farms in Northern Ireland are smaller. They are greater today than they were, say, 20 years ago, but they are still not big in comparison with those on the UK mainland. Does he agree that there needs to be consideration for the farms in Northern Ireland, particularly in my constituency of Strangford? He seems to be referring to farms that are very large. In Northern Ireland, we have farms with an average of 150 acres.

[Mr Rees-Mogg]

I am very sympathetic to farmers and I ought to declare an interest as I have a little land in Somerset, although sadly not a great deal and I do not farm directly. If I did, I would certainly count as a very, very small farmer. In the past a slice has been taken from the biggest receivers of European subsidies, so the farms that have been the most consolidated and efficient lose subsidies at a faster rate than other farms. I think that protection is already in place—

[Alex Salmond]

That is why the protection built into the agricultural settlement of €196 per hectare is so important, and why it is so disadvantageous that it is almost half that figure in Scotland. That is why the minimum per hectare is so important.

[Mr Rees-Mogg]

Being more traditional, I prefer a minimum per acre, but otherwise I am broadly in agreement with the right hon. Gentleman. I agree that it is not right to look at the issue purely in terms of the landowner, because that discourages consolidation. As Conservatives, we are in favour of efficiency in all industries, but the subsidy system across Europe not only disadvantages our farmers, but discourages consolidation and efficiency. That cannot be the right approach.

[Peter Grant]

Is the hon. Gentleman telling us that consolidation and enlargement always equal efficiency? Does he not recognise that, especially in agriculture, there are significant community and social benefits to allowing small, family owned farms to continue in existence?

[Mr Rees-Mogg]

There are great advantages to having small, family owned farms, but we need an efficient agricultural system that provides the food and produce the country needs. I do not think one should be unduly sentimental for agriculture against other industries. As a lover of the countryside and of our rural traditions, I am tempted to fall in line with the hon. Member for Glenrothes (Peter Grant). The constituency was called Central Fife when I stood there—unsuccessfully, just for the record. However, although I am sympathetic to his point, I think it is important to have efficient agriculture first when spending other hard-pressed taxpayers’ money. It ought not to be entirely about sentimentality.

[Kelvin Hopkins]

It is a great pleasure to follow the hon. Member for North East Somerset (Mr Rees-Mogg). Before I turn to the main part of the my speech, I would like to comment on what he has just said. Some 34 years ago, my then 11-year-old son had a discussion at his primary school about what was then called the Common Market. He was asked about the common agricultural policy, which he knew a lot about because he listened to me at home. His teacher asked him, “What is the CAP?” He said, “It’s the common agricultural policy.” His teacher asked, “What is that about, then, Daniel?” He said, “It’s a way of subsidising inefficient small farms,” and 34 years on, the hon. Gentleman has raised exactly the same point. Some things do not change very much. I think my son is the same age as the hon. Gentleman.

It is also a great pleasure to follow my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley), who sits on the Front Bench, and support two of her new clauses and her amendment. On new clause 3, I am pleased that she has acceded to the sensible point made by the hon. Member for Stone (Sir William Cash), the Chair of the European Scrutiny Committee, of which I am also a member. I will, however, support my hon. Friend in the Lobby later on her other new clauses.

I have spoken probably 100 times in European debates in this Chamber over the past 18 years. I have said some of what I am going to say today a number of times before, but in order to make an effect in politics I think we must sometimes repeat messages over and over again, hoping that, in time, one’s colleagues, particularly those on the Front Bench, will listen, agree, take note and act accordingly.

I was also much taken by the hon. Gentleman’s comment that when he rebelled he was trying to help his Front-Bench colleagues. That is a splendid idea. If ever I am moved to rebel in future, I shall tell my Whip that I am trying to help our Front-Bench colleagues and I hope she will accept it in that spirit.

The most interesting new clause is new clause 2, which is about expenditure. I have said many times that I believe that the common agricultural policy ought to be repatriated to member states for them to decide how to subsidise their own agriculture, and that the CAP’s structures should be dismantled. We would certainly benefit from that financially in more than one way, including by not paying in so much. We could subsidise at exactly the same level and possibly in exactly the same way, but still be better off because we would not be paying into something where we are net losers.