European Budgets 2014 to 2020

Stephen Williams Excerpts

Tuesday 8th November 2011 Commons Chamber

[Geraint Davies (Swansea West) (Lab/Co-op)]

I will keep my comments brief. I believe we all agree that we do not want to see an increase in the European budget. We all understand that a €1 trillion fund is being established to bail out the euro currency, and if push comes to shove we all understand that we are being asked for more money for the International Monetary Fund. We all understand that we in Britain are facing massive constraints on public spending. However, we should get our facts clear.

As I said in my intervention, I understand that what is being proposed is that the 2013 budget will be higher, and will become the fixed 5% cash increase ceiling between 2014 and 2020. However, it is said the total amount of the budget as a share of EU gross income will fall from 1.12% to 1.05%. I support what the Government are saying, but let us be fair about what is happening. There will be a cash increase ceiling, and the budget will fall in real terms as a share of overall EU income.

[Stephen Williams (Bristol West) (LD)]

Will the hon. Gentleman recognise that one reason for that fall as a proportion of total European income is that some elements that are currently within the budget are being taken out of it and accounted for in a different way?

[Geraint Davies]

No, I do not accept that, but I do accept that there need to be structural changes in the budget, such as a reduction in common agricultural policy funding and more focus on growth, investment and tooling up Europe to compete with emerging markets. All those factors are important. Government Members who think this is all a complete waste of money and that we would be better off spending it at home on chip shops miss the point of having a commonality in research and innovation, and of making Europe more successful for the future. The Government seem to be completely ignorant of any strategic undertakings or documentation that come out of Europe on how to push smart, sustainable and inclusive growth. That is missing from the Government’s armoury—they focus always on cuts and never on growth, and they are missing the wood for the trees.

On the Tobin tax, I clearly do not support a tax when 80% of it would fall on Britain and when it would undermine Europe’s competitiveness. I share the view of the shadow Minister, my hon. Friend the Member for Nottingham East (Chris Leslie), that we should look for an international basis for such a measure. That said, we need to understand that an international Tobin tax would fall primarily on the US and the UK.

My understanding is that the rebate has been frozen at £3.2 billion a year for the next seven years, but we need to realise that if the gross contribution is increasing, our rebate is going down proportionately. The Prime Minister should argue harder for the rebate to increase at least at the same rate as the increase in our gross contribution. Without further ado, I shall come to a conclusion, because I know that many hon. Members wish to speak.

--- Later in debate ---

[Stephen Williams (Bristol West) (LD)]

I am glad to have the opportunity to speak, especially after that generous build-up. We are having a curious discussion. We have had many European Union discussions in the past few months, and I cannot recall my hon. Friend the Financial Secretary being received with such warm accolade on every occasion as he has been on this one. I am sure that must have cheered him. We saw the curious alliance of Conservative Eurosceptics and Labour Eurosceptics when there was discussion of the possible demise of the eurozone. However, on this issue we might actually have tri-party agreement. May I assure my hon. Friend the Member for Wellingborough (Mr Bone), even though I am a Europhile within the Liberal Democrats—that phrase must make him shudder—that my party has usually been at the forefront of calling for reform from within the European Union? We do that because we want the European Union to work. We want it to be a success and we are certainly not blind to its shortcomings.

[Chris Leslie]

Will the hon. Gentleman therefore confirm that Fiona Hall, the leader of the UK Lib Dems in the European Parliament, posted an article on 15 July that said:

“It’s time to consign the UK rebate to history, along with the rest of Thatcherism”?

[Stephen Williams]

That is not a position of this coalition Government at Westminster. As a good democrat, the hon. Gentleman will recognise that decisions that we make in local councils or in the European Parliament, where people have their own electoral mandates, do not bind parliamentarians in this House. That is the way in which our democracy works and we take a different stance on the matter here.

The European Commission has asked for a 5% budget increase, from €966 billion to just over €1 trillion, for the second half of this decade. Most of our constituents would find it extraordinary that a request is being made for the EU budget to wax while people in every member state are having to endure the waning of their budgets. It was right that last December five large net contributors to the EU budget—the UK, Germany, France, the Netherlands and Finland—called for a freeze in the EU budget for the second half of this decade. I would like the Minister to tell us whether the Government are seeking a cash freeze or a real-terms freeze.

Whatever the level of the budget, it certainly is a budget in drastic need of reform. The common agricultural policy still accounts for more than 45% of the European Union’s spending, whereas research and development accounts for only 6.7%. The Commission is actually proposing a switch between those budgets, but that switch is made possible only by the Commission’s call for a larger budget. It is simply ludicrous for the European Union to continue to have agriculture as its largest area of expenditure, rather than the industries of the future—industries where the UK is well placed. We are currently the largest recipient of EU funds for research and development, and that is the budget that should be expanded. The priority for the United Kingdom coalition Government should be to negotiate a major shift within the EU budget and certainly within the existing level of resources. To clarify the issue for the hon. Member for Nottingham East (Chris Leslie), I say that our budget rebate should remain while the EU budget remains in its current unreformed and out-of-date state.

On sources of revenue for the European Union, I share the sentiments expressed by the Opposition Front-Bench team that it would not be right for the EU to take on the personality of a federal state and have taxes paid directly to it, whether that be VAT or the proposed financial transactions tax. There is a very good case for a financial transactions tax being levied once we can have international agreement among the global financial centres, many of which lie outside the European Union, but there is no case at all for the European Union itself to pinch that money, which the people who have campaigned for the Robin Hood tax have earmarked for other purposes. May I reassure my colleagues that the Government are right to call for a freeze in existing EU budgets? However, they should also vigorously press the case for reform.

[Several hon. Members]

rose—