European Budgets 2014 to 2020

John Redwood Excerpts

Tuesday 8th November 2011 Commons Chamber

[Mr Hoban]

No, let me continue.

The best way to restrain EU annual budgets is to set tough multi-annual framework ceilings. That is why, at the European Council in October 2010, member states agreed that the

“forthcoming Multiannual Financial Framework must reflect consolidation efforts being made by Member States to bring deficit and debt onto a more sustainable path”.

Rather than following that path, however, the Commission has meekly bowed to pressure from the European Parliament to increase the budget, thereby returning to the extravagance and irresponsible spending that sowed the seeds of the current global economic crisis. Just as we cannot accept the Commission’s 2012 budget, we also cannot accept the Commission’s proposal, as set out on 29 June, to increase the multi-annual framework budget for 2014 to 2020 by 11%. Such an increase is incompatible with the tough decisions being taken in the United Kingdom and in countries across Europe to cut spending.

Instead of consolidation, the Commission proposes expansion. It has ignored the calls made in December last year by the UK, France and Germany for a real-terms freeze in spending. The Commission claims to have done as we have asked, but let me make it absolutely clear to the House that it has not. On average, the spend in each year of the next framework would be about €14 billion higher than it is today.

[Mr John Redwood (Wokingham) (Con)]

Given that the Government are now studying the powers and duties that can be brought back to the House for national and local decision, surely we should be taking big lumps out of this budget? If, for example, we repatriated agriculture, industrial aid and regional aid, we could cut the budget by two thirds. I think that the members of the public to whom I answer would be very pleased with that.

[Mr Hoban]

My right hon. Friend makes an important point. In parallel to the debate about the ceilings for the budgetary framework over the course of the period between 2014 and 2020, debates are also taking place on the individual lines of expenditure within the EU budget, and we are proposing significant reductions in cost to underpin our strategy of curbing overall spending by the EU.

--- Later in debate ---

[Chris Leslie]

I understand my right hon. Friend’s frustrations, but I really do not think that the proposal on the table from the Commission would achieve the outcomes that he or I seek. We have to make concerted efforts to broker a deal where any FTT applies in any of the world’s big financial centres, all of which by the way have much to gain from a new and reliable revenue stream that supports jobs, growth and the developing world.

The Commission’s proposal falls short, especially because of its intended destination for the revenue, but I think that the difference my right hon. Friend seeks is this: we felt that there was a real window of opportunity to steer the agenda on a financial transaction tax and to persuade other countries that it was something seriously worth considering, but our Chancellor is out there at the ECOFIN meeting today, resisting under all circumstances. Indeed, he wrote a private letter to bankers the other day in which he indicated that he was not in favour of it at all—even though that contradicts some of his statements in this place. He is wrong to block wider discussion among the G20 and beyond.

The BBC’s Nick Robinson reported this lunchtime that our Chancellor asked what was the point in even having a conversation about the financial transaction tax and, apparently, whether it was

“the best way to spend our time”.

It is important that we address those issues, because the Government’s weak and defeatist attitude is an abdication of leadership and a total abandonment of the gains made for the cause at the G20 meeting in 2009. It is time that Britain stepped up to the plate and showed the leadership needed to broker a better deal by being open to the idea that it is possible to win the argument for a different approach. That is why we call on the Government to engage internationally—beyond the EU proposals alone.

The second major proposal in this multi-annual financial framework is for the Commission to change the correction mechanisms for countries that are the most significant net contributors to the EU. In other words, it proposes to end the UK’s permanent rebate. The rebate returns about two thirds of the difference between the UK’s contribution to the EU and the money we receive back. Let us be absolutely clear: the Commission’s proposals are totally unacceptable. Of all the 27 countries, only Germany is a higher net contributor to the EU budget than the UK, and we have the lowest per capita receipts from it. The common agricultural policy is a far bigger distortion of the EU budget than any correction mechanism such as the UK rebate.

This is a key test for the Prime Minister. He needs to put up a strong defence of our rebate if the language that he uses here in the House is to be matched by his deeds in those negotiations.

[Mr Redwood]

Will the hon. Gentleman give way?

[Chris Leslie]

Everybody will be watching closely, including the right hon. Gentleman, to whom I am happy to give way.

[Mr Redwood]

What promises did the previous Prime Minister but one receive when he gave away a chunk of our rebate? I thought we were promised a reduction in agricultural spending, which would be very welcome.

[Chris Leslie]

I was not a Member at the time to which the right hon. Gentleman refers, but it is true that there have been changes to the UK rebate, although not to the majority of it. My understanding is that, in terms of money returned, the total amount of rebate has actually gone up, with €5.8 billion in the previous MFF round compared with €2.8 billion before, so the rebate is still a very significant gain for the UK.

There were changes to the common agricultural policy, although—I accept—not as many as people would have liked, but until we have further proposals from the Commission on reforming the common agricultural policy I am certainly not going to get into the business of urging the Minister to change the UK rebate. It is very important that the Government put up a defence of the current position and, indeed, try harder to engage with further proposals on the CAP. That is by far the bigger distortion. We need to pursue a stronger reform agenda and to have a CAP reform that is fairer to small farmers but does not lavish as much on wealthier players in the wealthiest countries. We need to tackle that anomaly as it is an outdated relic.

I am grateful to Business for New Europe’s pamphlet entitled “Rethinking the EU Budget,” which suggests some very important changes to EU competitiveness deficiencies, such as boosting research and development. It is also important that the Minister address the deficiencies in the structural funds. Few of those are helping to boost growth, when they ought to be getting investment moving into the economy. Above all, the MFF ought to contain far greater emphasis on a strategy for jobs and growth, where we know the Government have a blind spot.

The Commission and the European Parliament also need reminding that, without growth, we cannot solve the debt crisis, the banking crisis or the jobs crisis. Energy infrastructure projects, high-speed broadband and transport link improvements could all be brought forward within the MFF envelope and prioritised to boost employment and economic activity. [Interruption.] The Minister shouts from a sedentary position that that involves more spending, but we are talking about within the limitations of the budget. We do not wish to see the increases proposed by the Commission. The Minister should be out there arguing for a proper strategy for growth, and his failure to do so betrays Ministers’ and the Treasury’s blind spot on these issues.

The motion before us tonight talks tough on some of these issues and we will not oppose it, but it is important that this time Ministers do not flunk the tests when they get into the negotiations.