European Union Committee: Multiannual Financial Framework

Lord Liddle Excerpts

Tuesday 19th June 2012 Grand Committee

[Lord Liddle]

My Lords, I declare an interest as chair of the think tank Policy Network, which has received some funding from the European Parliament budget.

This has been an excellent debate, typical of the quality of the work of the European Union Committee of this House. On behalf of the Opposition, I welcome the noble Lord, Lord Boswell, to his new role as chair, which I am sure he will carry out with distinction as his predecessor, the noble Lord, Lord Roper, did. He must have had a very satisfied feeling, as this debate proceeded, about the group of heavy-hitting Members he has on his committee. They and the noble Lords who chair the various sub-committees have shown today a wide range of knowledge and experience of the EU’s business. It is a balanced and objective analysis, with recommendations, and I am sure that the report of this debate will be widely read in the European institutions and by those concerned with Europe’s work.

Having said that, I regret that the committee did not issue a bolder clarion call for radical reform of the EU budget. I make no secret of the fact that I am a very passionate pro-European, but I do not think that pro-Europeans should pull their punches in any way about the need for radical budget reform. If ever there was a case for it, surely the crisis that the eurozone has now entered is a justification.

I remember at the last budget settlement in 2005 that one of the things solemnly agreed by the European Council was that there would be a thorough mid-term review of the common agricultural policy in the period of that financial framework. It never happened. I was in the Commission at the time and remember the arguments that were put forward: “Oh, we don’t want to do a review now, what we’ll do is have a really thorough intellectual examination of what needs to be done”—this was in 2008—“and will come up with radical proposals for the next seven-year period”. However, when we get to the radical proposals published by the Commission in June 2011, I am afraid they can only be described as a damp squib. It is not just the Commission’s fault but it is to an extent, because it has a duty under the treaties to speak for the European interest. The Commission should never have allowed itself to get into the mood of complacency that the member states were only too happy to be in. The Commission should have challenged them, but on the budget, it has not. As a result, it makes the task of making the case for Europe more difficult.

I agree with the noble Lord, Lord Teverson, that the European Union has very strict procedures for audit, in many ways better than many of its member states. However, the fact is that there is a widespread perception of waste and bureaucracy in that 6% administration budget. The United Kingdom should be pressing for an independent review, not just of the Commission but of the Parliament and Council budgets. The Council tends to hang on to its own budget and say that no one can look at it. We need an independent review of all the institutions and their budgets and whether they could be more efficiently spent.

The other problem with the budget is that it is such a collection of vested interests. It is the problem of an acquis of vested interests, which is extremely difficult to change. As reformers within the European Union, we have to think how, either through time-limiting certain programmes or pieces of legislation, we can make it easier to get things changed. What is the Government’s policy for making that kind of change possible? Change in the EU’s policy programmes is much needed.

The noble Lord, Lord Williamson, is right that the common agricultural policy is radically different from the policy that was launched in the 1960s, but it still needs an awful lot of reform. The payments that are made to rich farmers in northern France and parts of Britain and that often go to commercial companies are an abuse, and we ought to be capping them. I ask the Minister: is it his policy that payments to rich farmers should be capped or is it not?

Secondly, some of the Mediterranean subsidies that are given to tobacco famers in Greece, for instance, are an absolute disgrace. If we want to help Greece, the last thing that we should be doing is helping its tobacco farmers. We should help Greece to train the unskilled workforce that means that it has a real problem in competitiveness.

On the structural funds, I am a passionate supporter of regional policy. However, an independent review by Barker set out very clearly what needed to change in the structural policies. We need to get away from the doctrine of the juste retour. We need to focus on growth priorities and be clear about what they are. We need more conditionality. These things are happening to an extent, but not nearly enough.

My position, which is certainly the Labour position as well, is that it is impossible to argue for any increase in the EU budget until much more radical reform takes place. I accept the intellectual argument that a successful monetary union may require a bigger budget to make it work, but it will be impossible to argue that unless the existing budget is reformed. There is a case for some of the programmes being expanded. If there were reform, that is what should happen. We know that there are proposals to increase the research budget and expenditure on infrastructure and to extend ERASMUS. These are all very worthy objectives, which will help Europe’s competitiveness. However, I seek an assurance from the Minister. If additional money is made available under the growth plan that will come to the Council next week, will Britain be a participant in the extra money that will be available? Will we benefit from some of it as well the eurozone, or are we abstaining once again from full participation in the Union’s development?

Therefore, some areas could be expanded if only there was reform, but the reform nettle has yet to be grasped. The growth agenda to which President Hollande is so attached is an opportunity to grasp the reform agenda, but I wonder what strategy the UK Government have for being bolder in this respect. It is very difficult to get reform. I welcome the alliances that the Government have built so far, but in the past, they have tended to crack under pressure. As I have mentioned, there are vested interests everywhere in the EU budget. The European Parliament rightly has co-decision powers in the budgetary area. What is the strategy?

I read an interesting analysis from the Centre for European Reform by John Peet, the eminent Economist correspondent, and Stephen Tindale. They argued for a tripartite initiative by Britain, France and Germany, in which each member state was prepared to put their red lines on the table and try to work out a radical plan for change. Are the Government prepared to think in those terms, or are we essentially stuck with the status quo?

As my noble friend Lord Giddens said, a Europe 2 is emerging. We are in the middle of a crisis. We cannot just let the opportunity of the European budget pass us by. If Europe is to gain legitimacy, there must be radical reform of its budget.