Multiannual Financial Framework

Mark Reckless Excerpts

Wednesday 31st October 2012 Commons Chamber

[Mark Reckless (Rochester and Strood) (Con)]

We simply cannot afford to agree an inflationary increase to the EU. This country has 13% less income than it had just five years ago, and we are seeing 20% reductions to domestic spending. According to the House of Commons Library, if an inflationary increase is agreed, next year it will amount to £290 million, every penny of which we will have to borrow. Hon. Members will have spoken to constituents on different issues, and police officers have been to my surgery. They understand that their pay is frozen, although they are less happy about changes to their pay and conditions and about not getting their increments, but they do not understand why other elements of the budget, particularly the EU, should be guaranteed inflationary increases, let alone inflationary increases all the way through to 2020.

[David T. C. Davies (Monmouth) (Con)]

I have the utmost respect for my hon. Friend. Does he have the utmost respect for Opposition Members who voted time and time again to give away our powers and our money to the EU but now propose to wrap themselves in the Eurosceptic flag and walk through the Lobby with him this afternoon?

[Mark Reckless]

No, I do not. Sometimes people do the right thing for the wrong reasons, but if even the Labour party is now arguing for a real-terms cut in the EU budget, I hope that Conservatives will do likewise.

As well as my police officers, my local council, Medway council, of which I was a member, passed a motion asking Members of Parliament representing that area to vote for a cut in the EU budget. It wrote:

“The Council notes, with indignation, that whilst Medway is facing a massive…reduction in its financial settlement…the UK’s contribution to the European Union is”

getting a massive rise. It continued:

“This Council believes the EU should be treated the same as the other tiers of government and in these austere times should share responsibility…for public spending reductions.”

It argues that that would allow it to protect local services. I could not agree more.

[Dr Sarah Wollaston (Totnes) (Con)]

I am proud to represent a part of Torbay. How will I turn to residents in Brixham in my constituency, who suffered an 11% cut in formula grant last year and are suffering a 6.7% cut this year, and justify our taking the savings that they are making and handing them over to Europe?

[Mark Reckless]

Many hon. Members will be asking themselves the same question.

We heard from the Financial Secretary what these EU officials are paid. The Prime Minister went to Brussels a week or two ago and said that one in six EU officials earned more than €100,000. He might have understated his case, because we need to compare like with like. Not only do they earn more than €100,000 but they pay a special, incredibly low tax rate that applies only to people who work for the EU. They get an enormous expatriate allowance that shoves on another €15,000 to €20,000. They get a huge housing allowance. And, while a group of people in this country are about to lose child benefit of about £85 a month, EU officials get paid, tax free, another €300 per month per child. They contribute virtually nothing to their pension contributions. Under the arrangement we have in this country, any time a public official earns more than the Prime Minister—£142,500—that has to be signed off by the Chief Secretary to the Treasury. If we had to sign off every time an EU official was, in effect, getting the same take-home pay there as the Prime Minister’s salary here, that would apply to more than 5,000 European Union officials, or more than one in six. The Chief Secretary would be doing nothing but signing off those requests.

Today we have an opportunity to debate and vote on the multiannual financial framework—the long-term budget. This comes round once every seven years. It requires unanimity among member states and primary legislation in this House to implement it.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

Does the hon. Gentleman agree that, despite the agitation among Government Members, the real issue is not the objective—there is a general consensus on the need for cuts to the budget—but the weakness of the Prime Minister in being unable to negotiate and having to threaten a veto?

[Mark Reckless]

No, and that is not a sensible point at all, because we have a one-off opportunity. It is this House that ultimately votes, so if any Government Members feel uncomfortable—not because of who I will be following through the Lobby, but because of who may be following me, in support of my Conservative amendment—I say to them: if we send the Prime Minister to Brussels telling him that it is acceptable to agree an inflationary increase, he may come back to this House having agreed that inflationary increase. We will then have to vote on primary legislation, in Committee and on Report, for that inflationary increase for the EU budget, all the way to 2020. If Members do not want that, they should vote today for my amendment.

The other strong argument for the amendment is this. Some people say, “We’re not going to get a real-terms cut,” but we will certainly not get one if we do not even try. If we use the veto, that is not a bad place to be; in many ways, it is better than where we would be with an agreed inflationary increase. There are two strong reasons for that. First, either we operate within a multiannual financial framework under the old, frozen ceilings carried forward, or we agree new ceilings going up by inflation, allowing higher budgets in future. Each of those budgets is always negotiated under qualified majority voting annually; the question is, where we have unanimity and where we need legislation, do we allow inflationary higher limits to 2020 or not?

[Mr Brooks Newmark (Braintree) (Con)]

Will my hon. Friend give way?

[Mark Reckless]

If my hon. Friend does not mind, I shall continue, as others may like to come in

The second point is that if there is no agreement on a new MFF, the process of money being transferred from the budget towards the new member states will not continue. What happened, in that disgraceful decision in 2005 when Labour gave away the rebate, is that a process was put in place whereby the new member states do not pay towards our rebate in the way that the old member states do. If the Prime Minister vetoes an MFF package, that process of money shifting to new member states will be suspended; therefore, the process by which the rebate is given away will, at least for that period, be stopped, which is a significant gain for Britain. If there is an inflationary increase, as the Government propose, we will be looking at a net contribution going from £9.2 billion last year to £13.6 billion at the end of the process. We simply cannot afford that.

The European Commission put out its own press release, which asked the question: “What will happen if a new MFF is not agreed?” The press release states that failure to agree a new MFF

“would considerably complicate the adoption of new programmes. And in the absence of new legal bases, including their indicative financial envelopes, no commitments could be made…those multiannual spending programmes…the 2014 budget would probably only cover the agricultural payments and the payments on outstanding commitments,”

and that organisations

“benefiting from EU-funds…would face severe drawbacks.”

If hon. Members are prepared to vote through primary legislation—later, when we get that chance—and if they are happy with an inflationary increase in the EU budget, plus everything else that will happen because of the continued loss of the rebate if that is agreed, they should vote for the Government motion. If hon. Members think that the European Union has too much money and that its budget is too large and needs to be cut, they should support my amendment.

--- Later in debate ---

[Mr Cash]

The hon. Gentleman is right. I do not think this is just a cynical move, even though there is an element of that. As I find when I go to meetings with those in the presidency, there is a recognition: they know they cannot go on spending money that is not there. That is the truth. That is all this argument is really about. It is about the big landscape of whether, like Mr Micawber, we can just hope something will turn up. It will not; it has to be built through real growth policies.

Unfortunately, the report the European Commission produced only a few months ago shows it has not got a clue how to generate that growth. I was also deeply disturbed to see that the amazing report by the European Parliament calling for all these increases was welcomed by the vice-president of the European Commission, Maroš Šefcovic. He said the MFF was “an investment budget” for delivering growth in “the entire EU.” He condemns himself outright simply by endorsing the 150 pages of unadulterated rubbish that came out of the European Parliament in its interim report.

[Mark Reckless]

Even for those in the House who are genuine Keynesians, if our goal is to stimulate the economy is it possible to think of a worse way to spend money than the way the MFF sets out for the EU?

[Mr Cash]

I absolutely agree. The real problem is that their answer is to give more money to the public sector and to ventures and projects that, as the Court of Auditors report shows, increasingly fail. The trouble is that the European project is a failing project.

They will not recognise that, so what are they doing? They are saying, “We are going to go off and have a federal Europe.” Well, let them have it. They can have their federal Europe if they want, but we, in this country, cannot possibly be part of it—that is unthinkable. The Prime Minister knows it is unthinkable, and my genuine belief is that he will come to discover that it would be better to veto this and to ensure it does not go through, because he has already been presented with the crossroads. The crossroads was presented by Mr Barroso, and the crossroads is being presented by the other member states. There is no turning back. We therefore have to say no. We say no to this, we say no to the illegal banking regulations that we have just been looking at and we will be saying no to the proposals for any new treaty. If we are prepared to put our money where our mouth is and actually say that we will not accept this, we will be serving the national interest.