Jacob Rees-Mogg
Main Page: Jacob Rees-Mogg (Conservative - North East Somerset)Department Debates - View all Jacob Rees-Mogg's debates with the HM Treasury
EU general budgets for 2015 and 2016
Jacob Rees-Mogg Excerpts(8 years, 8 months ago)
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The Chair
Does a member of the European Scrutiny Committee wish to make a brief explanatory statement about the decision to refer the relevant documents to the Committee? Mr Rees-Mogg, do you wish to speak?
The Chair
No. I have on my notes “likely to be Jacob Rees-Mogg”. As we have an outbreak of good humour, I call the Minister to make the opening statement. You have no more than 10 minutes, Minister.
Mr Gauke
May I put it on record that I am grateful to see the hon. Member for Worsley and Eccles South in her place? I hope we can continue to debate this and other matters in future. I am also delighted to see the hon. Member for Scunthorpe in his place, and I hope we will continue to debate Treasury matters.
First, in terms of our position on the EU solidarity fund, the Government support the objectives and principles of the fund in providing assistance to member states affected by serious natural disasters. However, the Government also take the view that the Commission should always look first to reallocate funds from within existing agreed budgets to meet in-year pressures, rather than coming to member states to request additional money. Past examples show that the Commission is able to find reallocations—for example, when programmes are delayed or take-up is slower than expected.
In terms of the budget more widely and the need to prioritise areas relating to jobs and growth, the Government’s record is clear. As I made clear in my opening remarks, the best way to put pressure on inefficient spending is to cap the overall expenditure. The deal negotiated by the Prime Minister in February 2013 was the first real-terms reduction in the EU budget, and such budgetary restraint is very important. As the Prime Minister said at the time, EU spending reform is a long-term project, but the deal that he secured represents important progress, including on common agricultural policy expenditure. While spending on CAP was cut by 13%, spending on areas of pro-growth expenditure increased and now accounts for 13% rather than 9% of the overall budget.
It is also worth mentioning wider budgetary reform. The UK welcomes the objectives of Vice-President Georgieva’s “budget for results” initiative, which aims to develop a more performance-orientated budget that delivers tangible results for EU citizens. We are working closely with the Commission on that and see it as an important opportunity to help improve the value and efficiency of EU spending and to increase transparency about it for taxpayers. The Chancellor made our position clear at ECOFIN earlier in the year. We have held discussions with the Commission and offered technical assistance, and we are keen to drive this agenda forward.
On migration funding and our response to the crisis, the UK is of the view that a great impact can be made in conflict regions, which is why we are the second largest bilateral donor to the Syrian relief effort. We will continue with our significant efforts to ease the burden on front-line member states by providing practical, on-the-ground support. In line with the Prime Minister’s announcements, we will also take forward plans to resettle up to 20,000 Syrian refugees over the course of this Parliament.
With regard to funding of Frontex, to which we contribute not via the EU budget but through a separate bilateral contribution, we will match increased EU funding as proposed under draft amended budget 5. I hope those points are helpful to the Committee, and I will be happy to answer any further questions.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
May I say, Mr Walker, what a great pleasure it is to serve under your chairmanship for the first occasion in this Parliament? I did so many times in the previous Parliament when you were chairing, with great élan, the Procedure Committee.
To begin with, what are the Minister’s expectations for our rebate? It has gone up this year, which is good news, but last year we obviously had the problem of suddenly discovering that we owed the EU a great deal more money. Does he think that that will be a recurring problem or will the good news on the rebate be the more important part?
Mr Gauke
In terms of the rebate and the surcharge, which, as my hon. Friend rightly pointed out, emerged last year, the first point is that he is right that the rebate has increased. The effect of that is that the net additional contribution, as a consequence of revisions to our gross national income, has fallen by something in the region of €100 million. It is worth saying that the draft amending budget before us confirms this; that is an important point. On the wider question of whether we are likely to see any repeat of what happened last year, it is worth remembering the negotiation achievements that were reached last year by the Chancellor of the Exchequer, ensuring that no country is bounced into having an additional liability in the way that occurred last time.
When it comes to the revisions of GNI that have an impact on the calculation of contributions of member states, as far as the UK—or, indeed, any member state—is concerned, until all revisions have been done by all member states, it is not possible to make an assessment of precisely what additional sum is likely to be made.
Finally on this topic, let me make it perfectly clear that under this Government the UK rebate is safe. The rebate will continue to be calculated on an unchanged basis. There was no change to the formula and no change to the types of EU expenditure that we get a rebate on. The UK abatement remains fully justified due to continuing expenditure distortions in the EU budget; it is simply a matter of fairness. In terms of the surcharge issue, which is a separate but related one, we cannot yet say whether the UK will make a payment or receive a repayment from the EU later in the year until all calculations have been completed.
Mr Rees-Mogg
The Minister said that the external aid budget will go up by 22%. Do our contributions to it that go through the European Union but are not co-funding operations with the European Union count towards our 0.7% target for overseas aid?
Mr Rees-Mogg
Very often in these European debates on the budget, we look at the smaller issues, but subheadings 1 and 2—economic, social and territorial cohesion, and sustainable growth and natural resources—cover about €111 billion of expenditure. Those terms seem to be vague and woolly. Will the Minister give us some more guidance as to where the money really goes? What is economic, social and territorial cohesion, other than building a fence in Hungary? What is sustainable growth and natural resources? I do not think that we are not doing a lot of mining in the European Union.
Mr Gauke
On my hon. Friend’s previous question, I can confirm that the contribution to the EU budget that is spent on overseas aid is included in our 0.7% official development assistance target. I am pleased to be able to provide that clarification.
My hon. Friend makes a wider point about the vagueness of the definitions, but that is perhaps not unique to the European Union. Whether descriptions relate to UK expenditure or various UN conventions and expenditure, they are not always as clear as they might be. There have been issues in trying to explain to the general public how we spend money within the UK, and such terms can be a little vague. I support my hon. Friend’s enthusiasm for greater transparency in this area. The Government introduced UK taxpayers to tax summaries setting out where expenditure goes so that they can be better informed about how public money is spent.
On the EU budget headings, my hon. Friend referred to sustainable growth. This includes common agricultural policy pillar two spending, which focuses on rural development that is environmentally sustainable. That is part of heading 2 spend. The EU budget spend contributes to financing through various programmes. For example, Horizon 2020, which I touched on earlier, is perhaps one of the less controversial areas of EU expenditure, as are cohesion funds for sustainable development within the EU.
I hope that I have provided some information for my hon. Friend about the relevant headings, but if he would like more, I am happy to set that out.
Mr Rees-Mogg
My initial point is that we should always remember that when the EU budget talks about “own resources”, it means our money, which was the point that Margaret Thatcher made so forcefully all those years ago to get our money back. The EU does not, in fact, have any of its own resources. It has money that it squeezes out of the British taxpayer, and it gives us a little bit back in return, but it does not have its own resources.
I am concerned about the size of the budget that is spent on things about which we know very little, except the common agricultural policy, which I fear is used to subsidise inefficient continental farmers and damages the interests of our farmers, because it is biased in favour of small, inefficient farming units whereas so many of our farmers have consolidated. That is a particular problem when dairy prices are so low because our farms, have become much more efficient, in many cases quite painfully.
My neighbour, my hon. Friend the Member for Somerton and Frome, and I have large rural constituencies with a lot of dairy farmers who suffer because the CAP is focused away from British farmers to less efficient farmers—and we pay for it. That seems to be the worst of all possible worlds. It will, as the hon. Member for Worsley and Eccles South said, go down to representing 35% of the EU budget, but that is still an enormous amount to be paying in agricultural subsidies. If we look at the experience of New Zealand and how competitive it has become after weaning itself off subsidies, the lesson is quite clear. We want efficient, larger farming units that are able to compete globally, not to have the principles of the 1960s applying to farming.
It is also difficult to know where the money is going, which was why I asked the Minister about the €110-odd billion in the main parts of the budget. We often argue about the rise in administrative expenses. They are important, but they are 6% of the budget, and that 6% of the budget ought to be reduced. An administrative cost of 6% is pretty high in the context of other Administrations but if we save money there, we are talking about hundreds of millions, whereas if we save money in the major part of what the EU is doing, we can talk about saving billions. It really is a question of going through this line by line and seeing whether the money is being spent reasonably.
Perhaps Parliament does not take the whole issue of European spending seriously enough because we hand the money over and that is it, whereas we spend four days debating the UK Budget, as well as the autumn statement and so on. However, we are having a two-hour debate with not many participants on a quiet Monday afternoon in which we are discussing the very large European budget, the inefficiencies that go with that, and the aspects of the spending that may not be in the British national interest.
I am fully supportive of what the Government have done on the MFF—it was an absolute triumph. I did not think that it would be possible to get the European budget cut. It worries me that outside the MFF, the process is subject to qualified majority voting, so our ability to limit things is seriously curtailed and, as the Minister suggested, we have to find allies in like-minded countries that do not want spending to go up. The question is whether the use of this money is wasteful and in the British national interest. The reminder is, as always, that this is our money—our taxpayers’ money.