Kerry McCarthy
Main Page: Kerry McCarthy (Labour - Bristol East)Department Debates - View all Kerry McCarthy's debates with the HM Treasury
Draft EU Budget 2011
Kerry McCarthy Excerpts(14 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Kerry McCarthy (Bristol East) (Lab)
The Minister certainly talks very tough talk about the current EU budget negotiations, but I have several questions about how she intends to turn that talk into action. She has given a very clear exposition of the negotiations to date—the Commission originally proposed an increase of getting on for 6% in the payment appropriations; the Council then discussed reducing those appropriations; and the UK failed, at that meeting, to persuade a significant number of member states to accept the EU’s position that there should be substantial cuts. We are now at a halfway house, which means that there will still be an increase in the budget. I understand that the EU Parliament will vote next week, on 20 October, on whether to reinstate all the budget lines. Why does the Minister think that the UK Government failed in that way at the meeting and why, when the Chancellor went to ECOFIN in May to propose a cash freeze, was he unable to win a consensus?
Chris Heaton-Harris (Daventry) (Con)
The hon. Lady talks about failure. Will she remind the House how many times in the 13 years of the previous Labour Government Ministers raised one question about the fact that the European Commission’s accounts were not being signed off by the European Court of Auditors?
Kerry McCarthy
That is completely irrelevant to the subject that we are debating. The matter has been discussed in the House on many occasions and has been raised by many of the hon. Gentleman’s colleagues. I understand that, as a new Member, he was not in the House then, but it has been discussed many times.
Kerry McCarthy
No; I want to make a little progress. I have not started saying what I intended to say.
I am slightly confused by the Minister’s stance on the motion and the amendments. The motion states that the Government support
“efforts to maintain the 2011 EU budget at cash levels equivalent to the 2010 budget”—
in other words, a freeze. The hon. Member for Stone (Mr Cash) argues that there should be no increase in the EU’s budget, which is pretty much the same position. Although the Minister implied through everything she said that she wants the budget to be smaller, that is not what the motion states. Will she clarify whether the Government are arguing for a freeze, or whether they support the 34 Back Benchers who have signed amendment (b) calling for cuts in the budget? Will she also clarify what she meant when she said that it would be illegal to support amendment (b)? I would be very happy for her to intervene on me to explain the element of illegality. If there were not that illegality, would she call for cuts? If so, why does not the Government’s motion say that there should be cuts?
Justine Greening
On the legalities, we are part of the EU—I am sure that some hon. Members wish that we were not, but we are—and we are under a treaty obligation to make payments. If we were to stop making payments, we would breach our treaty obligations, which we are not able to do under law. If we went down that route, presumably any other European country could do anything it liked against any particular treaty obligation it thought inappropriate, which would not be conducive to good diplomatic relationships or to progressing the case that we want to make for a cut in the 2011 budget. I hope that that has clarified matters for the hon. Lady. Perhaps I can press her to confirm whether Labour MEPs will support our Government’s policy stance for a cash freeze in the 2011 budget.
Kerry McCarthy
I am here to put the questions to the Minister and to find out what her stance is. She is trying to placate Conservative Back Benchers, who are clearly unhappy about the lack of progress being made by the Government. It is tough talk, but it is all talk and there is no action. When she goes to Brussels tomorrow, what will she see as success in those negotiations? What is she aiming for?
Robert Halfon (Harlow) (Con)
Does the hon. Lady’s party support a cash cut in the EU budget?
Kerry McCarthy
Again, we are not here to answer questions. We are here to put the questions and to get—[Interruption.] The Minister should accept that the Conservatives are now in government. She cannot just do what she did in opposition and talk tough—
Kerry McCarthy
I want to make progress. The Minister cannot just talk tough on European issues and pander to people who want to take us out of the EU. She is here to make progress in negotiations and to fight Britain’s corner. I have asked her what she would see as success in doing that.
On the specifics, we are here to debate whether, when EU member states and regions are all engaged in belt tightening, the EU itself should engage in a similar exercise. The Minister has said that sizeable austerity measures are being implemented across the EU. Does that not in itself prove that this economic situation is a global phenomenon that affects all EU member states and not, as the Government say every time Ministers get to their feet in the Chamber, the result of profligate public spending by the previous Government?
Mr Redwood
Will the hon. Lady tell us whether she now thinks it regrettable that the previous Government gave away our rebate and got no reform at all of the common agricultural policy, which is why this is such a big budget?
Kerry McCarthy
The CAP represented 71% of the EU budget, but it is now down to 40%, so that is significant progress, although I agree that there is more work to be done on that front. I shall come to that.
Henry Smith (Crawley) (Con)
If this truly is a global circumstance, how come, apart from the Republic of Ireland, this country has the largest deficit of any in the EU and the largest of any in the G20?
Kerry McCarthy
That is obviously partly related to the fact that the UK has probably the largest financial centre globally—it is certainly far and away the largest financial services sector in the EU. There is a more significant impact on the UK economy, London being as it is, as opposed to other countries.
To return to my speech, I shall not take any more interventions for a while. Labour Members believe, as we have always done, that the EU should always scrutinise its expenditure carefully and closely in cutting waste. We want to ensure that the budget is spent wisely and well, and that there is demonstrable added value for the member states and regions as a result of such expenditure.
We welcome the fact that the EU Parliament has chosen, for the first time, not to go above the ceiling set out in the budget at a time when member states face economic hardship. That demonstrates that the Parliament has at least gone some way to appreciating the challenges, but the issue today is whether we should go further. The Government, despite all their talk and bluster, seem to be singularly failing in their aim of putting a lid on what the EU Parliament wants to spend.
Labour Members fully support the principle that the EU budget needs to play its part in an era of fiscal consolidation, and we do not think it right that there should be significant real increases next year, but we should avoid throwing the baby out with the bathwater. The EU has key roles to play, and it was noticeable in the Minister’s speech that she made only passing reference to the good things that come out of working with our European partners. In particular, it is important that the EU continues to foster growth and recovery, which is the priority for us here in Britain. As Europe is our largest export partner, growth in Europe is an essential precondition for our recovery.
We welcome the stated key objectives for the draft 2011 budget, which are to support the EU economy and recovery from the economic and financial crisis, and to help EU citizens by reinforcing economic growth and employment opportunities. It is somewhat ironic that as the European Parliament debates and votes on the draft budget on Wednesday 20 October, when it will focus on the admirable and important objectives of supporting recovery and growth, we in the UK Parliament will hear a statement on the comprehensive spending review from the Chancellor, who clearly rejects an active role for the Government in securing such objectives and believes that cuts, cuts and cuts alone are the way forward.
Ms Gisela Stuart
Will my hon. Friend take on board two observations? On an earlier intervention about the Commission’s budget not having been signed off for the past 10 years, is she aware that neither has that of the Department for Work and Pensions? On a much more practical point, if the great ambition is to make us economically successful, will my hon. Friend reflect on the Lisbon agenda, which was supposed to make us the most competitive and technologically advanced economy in 2010 and has singularly failed to do so? Why does she have so much faith in the 2011 aspirations?
Kerry McCarthy
There was also the 2010 strategy. In the flagship initiatives set out in the documents before us today, there are some good programmes that we should support, to the extent that they have demonstrable outcomes and that they make a difference, rather than being fine words that do not achieve what they set out to do.
Let me go briefly through the headings in the budget. The Minister was unspecific. She spoke generally in favour of a cash freeze, but did not specify in which areas. [Interruption.] Perhaps the hon. Member for Devizes (Claire Perry) will refrain from heckling me quite so much. She is a near neighbour of mine, and we get to talk rather a lot on the television cameras outside the Chamber. It is extremely distracting, and she will get a chance to contribute later if she wishes. That is fair.
Under sub-heading 1a in the budget, on competitiveness for growth and employment, we support funding that encourages the effective operation of the single market, including addressing transport challenges, such as the greening of transport systems, and promoting sustainable, low-carbon economic recovery and growth. It is important to continue to support innovation and research and development on, for example, the environment, clean energy, energy efficiency and promoting a knowledge-based economy. Europe has a key role to play in that.
On structural and cohesion funding, which is included under sub-heading 1b, much of that spending is key to EU enlargement. Sensible steps to ensure that that money is well spent, which we agree should be taken, should not be allowed to slip into undermining the important principle that enlargement is in the UK’s long-term interest.
Andrew Percy
I hope that the shadow Minister will be gentle with me—I am a new Member, after all. We keep going back to the same point, which is that for all the good that she says the European Union does—she has highlighted several areas of spending—we still do not know whether that money has been spent, because the accounts are never signed off.
Kerry McCarthy
I will not repeat the point about the hon. Gentleman not being in the Chamber on many occasions when we have had similar debates. As with any public spending, it is important that there is some measure of outcomes, so that we can be sure that there are demonstrable changes and that objectives will be achieved as a result of the spending programmes. We are committed to that. To use the argument about the accounts not being signed off to dismiss everything good that the EU has done and all the initiatives on which we are working with our European partners is tantamount to throwing the baby out with the bathwater, as I said earlier. The argument is used as a red herring by those who are against the entire European project.
Guy Opperman (Hexham) (Con)
The hon. Lady has referred to many good things about the European budget. Is she, in her shadow ministerial role, able to identify anything that she would cut?
Kerry McCarthy
I shall come on to that point, if the hon. Gentleman will bear with me.
We support some of the structural and cohesion funding, but we agree with the Government that budget levels should be realistic and reflect absorption capacity. In certain areas throughout the EU budget, planned spending levels are indefensible, and, in response to the question that was just asked, we believe that spending under heading 2 on the preservation and management of natural resources should not be a priority in the current economic climate. We do not support that scale of spending on agricultural intervention, and we will support the Government’s close scrutiny of it.
We very much welcome, however, the Government’s statement that there should be an increased emphasis on development objectives, including on reaching the millennium development goals in poorer countries, and we believe that adequate funding is necessary to achieve those aims.
Finally, we also support the Government in pushing for reductions in the administration budget.
Kerry McCarthy
No. I am coming to a conclusion, and the hon. Gentleman will have his chance to speak in a moment. Where efficiency savings can be found, they should be found, and there are significant savings to be made in that area. I can see that many Members want to speak, so I do not intend to delay the House any longer. I look forward to hearing the rest of the debate.
Justine Greening
I must make some progress, because we have very little time left.
In the wake of the worst financial crisis in living memory, and with the events that subsequently unfolded, we have said today in this House that we believe—rightly—that there is no justification for an increase in the EU’s annual budget of nearly 6%. In fact, as we have heard, countries across Europe are taking steps to ensure fiscal consolidation, and there is a strong case for the EU to follow suit—I know that the House can tell that I am taking that case to Europe directly and making it to those countries. My right hon. Friend the Member for Wokingham (Mr Redwood) pointed out how they are taking difficult decisions, and I made that exact point in French to the French Finance Minister.
At a time when all our European neighbours are looking to rein in public expenditure, the EU should not be looking to carry on with business as usual. It cannot be a case of carrying on regardless. That is why we voted against the Council’s first reading, which went in the right direction but did not go far enough—a view seemingly shared by everybody in this House apart from those on the Opposition Front Bench. They let us down by losing part of the rebate in 2005 and now in 2010 they are letting us down again by failing to support our efforts as a Government and as a coalition of parties on behalf of the British taxpayer to get value for money.
My hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson) asked how many MEPs will vote against this provision. I can reassure him that we are already talking to our partners in Europe and in our group—the European Conservatives and Reformists. I have spoken to my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill), my good friend, and he assures me that he spoke yesterday to the Whip in charge of that group and all that group will be voting against a rise in the European Parliament when it comes before them. I urge those on the Opposition Front Bench to join us in that and to confirm that their Socialist group will do that. If they want to help the British taxpayer, they can start lobbying their own group in the European Parliament in the way that we have already successfully done.
Finally, we have spoken a lot tonight about concerns over the effectiveness of the EU spend and how well it is accounted for. I share those concerns. In fact, the last Government never used their vote when they took a look at the European audit accounts. We plan to be ready to use our vote if we see accounts that fail to meet the standards that we think they should. If we see accounts that contain points made by the European auditors that we believe the Parliament is not taking on board, we will be ready to use our vote in future to challenge the Commission in a way that the last Government never were.
I want to thank Members again for their valuable contributions. It has been incredibly useful for me to have this debate, particularly on the day before I travel to Brussels to defend our national interests and to get the best possible deal for the taxpayer.
Justine Greening
Not unless the hon. Lady is about to say that Labour MEPs and their Socialist group will support us.
Justine Greening
Sorry.
This year, member states have been taking unprecedented action to restore sustainability to their national finances, making tough choices today to deliver a better future tomorrow. That is the case that I shall be making to my colleagues across Europe in the days and weeks ahead. In these times of austerity, there is no justification for ineffective, wasteful expenditure and there is a real need to scrutinise every euro of spending to ensure that it delivers what is promised. The Opposition might not want to play a role in challenging the unacceptable Commission budget rise, but the Government and we on the Government Benches will. I commend the motion to the House.
Amendment proposed: (b), leave out from ‘the financial year 2011’ to end and add
‘is concerned at the above-inflation increase being made to Britain’s EU budget contribution; believes that, at a time when the Government is poised to make reductions in public spending elsewhere, it is wrong to increase that contribution; and calls on the Government to reduce Britain’s EU budget contribution’. —(Mr. Carswell.)
Question put, That the amendment be made.