European Union (Finance) Bill

Debate between William Cash and Baroness Keeley

Tuesday 23rd June 2015 Commons Chamber

[Barbara Keeley]

I think the hon. Gentleman will see when we come to the vote that we do have support.

Our new clause 3 would also improve accountability and transparency by inviting EU budget representatives to appear before the European Scrutiny Committees in this House and the other place each year before the EU budgets are negotiated. I appreciate the points made by Conservative Members that of course there should be no interference with the work of the European Scrutiny Committee in this House, but what we have tried to do in these new clauses is send the strongest statement we can send and give the strongest possible support to all those in this House who want to see these important aspects of value for money and budgetary control put in place.

[Sir William Cash]

I am sure the hon. Lady would appreciate the fact that the European Scrutiny Committee functions by virtue of the Standing Orders of the House of Commons. Leaving aside the merits of this proposal, if there were to be a stream of requirements imposed by Parliament on the manner in which the European Scrutiny Committee, an all-party Committee containing many Labour Members, were to conduct its business, the life of the Committee would be made pretty intolerable and its purpose would probably be undermined.

[Barbara Keeley]

I very much take that point on board.

New clause 1 requests a review by the European Commission of the basis of appropriations for the European Union budget and a study of whether alternative arrangements might offer improved value and enhanced budgetary control. On Second Reading, I highlighted a concern about the growing gap between the ceiling on spending commitments and the ceiling on payments. That gap, as agreed in the settlement of February 2013, is between €960 billion on commitments and €908 billion on payments. As I pointed out in the earlier debate, that gap has crept up from an average of 2.6% to the current 5.4%, and it is projected to rise to 5.7% in the period from 2014 to 2020. We must now seriously question whether that gap is manageable.

The Commission describes the system as follows:

“Commitments are tomorrow’s payments, and payments are yesterday’s commitments. Commitments are planned future payments whereas payments are legal obligations from the past…if every year the increase in commitments is much higher than that in payments you end up promising many partners to pay their future bills but find yourself unable to pay those bills when they arrive years later.

This is what has been happening over the last years: as many commitments were made years ago for projects that are being completed now”.

That is a key issue with the drive to smaller EU budgets, yet, as the Commission says,

“many bills related to projects remain unpaid and have to be rolled over to the following year. This leaves no choice to the Commission but to call for increases in payments.”

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[Barbara Keeley]

The more reviews that we carry out of those priorities, the more that we develop our understanding of where the money is going. Earlier, the hon. Member for Boston and Skegness (Matt Warman) called for these matters to be discussed in a language that his constituents could understand, and I do not think that they are discussed in such a way. Having ploughed through very many debates and very many documents in relation to the Bill, I do not think that those matters are understood. The hon. Gentleman is quite right.

The Economic Secretary to the Treasury said she accepted that expenditure on the CAP is

“still too high both in absolute terms and as a proportion of the overall budget.”—[Official Report, 11 June 2015; Vol. 596, c. 1426.]

If that is what the Treasury team currently feel—that it is still too high, both in absolute terms and as a proportion of the overall budget—what are we doing to understand that better, to review it and to change it?

It is my assertion that previous reviews have not led to the level of reform that we want to achieve. It was our purpose in tabling new clause 2 to keep focus on that vital issue. When most member states are finding it necessary to make very difficult decisions—clearly, we are in that position ourselves—about their own budgets and spending, the European Union must ensure that expenditure is efficient and focused on addressing the major concerns that member states face. As my hon. Friend the Member for Nottingham East (Chris Leslie) said in the October 2012 debate:

“The next seven years of the EU budget should prioritise jobs, growth, infrastructure and practical programmes that rejuvenate fragile economies.”

As I mentioned on Second Reading, this is much needed when we still have 735,000 16 to 24-year-olds in the UK looking for work. That should be our focus—those young people.

We need a better balance of funding and we need the European Union to provide a better framework and strategy to achieve growth and jobs. Looking deeper into the detail, and the spending commitment to the EU’s smart and inclusive growth priority, only a quarter of that is spent on competitiveness for jobs and growth, and three quarters on the EU’s cohesion policies, including structural funds. It probably is not appropriate today to open up further debate about the use of structural funds. That is often discussed when we are discussing EU finance, but as my hon. Friend also said:

“Savings can be made on aspects of EU structural funds that…are too often committed in a haphazard manner and depend on outdated commitments rather than future priorities. Unless structural funds contribute to positive economic development, they cannot be justified.”—[Official Report, 31 October 2012; Vol. 552, c. 304.]

The Opposition say strongly that the proportion of the EU’s smart and inclusive growth expenditure that goes towards securing competitiveness for jobs and growth is too small. That important area of spending accounts for around a quarter of the EU budget in 2014, but that rises to only 27% across the whole six-year period.

[Sir William Cash]

Does the hon. Lady appreciate that much of what she says in terms of generalities is understandable, and is reflected very much in European Commission documents, which I have been looking at for the last 30 years, one way and another, on the European Scrutiny Committee, but that the inherent problem is the fact that every time there is a need to argue for jobs and growth, the answer from the European Commission is to give more subsidies, more bail-outs, and more cohesion and structural funds, when actually what is needed is deregulation and to provide people with a means of increasing productivity and jobs and to deal with youth unemployment?

[Barbara Keeley]

I hesitate to say that I think we agree on this point, but I think we do. [Interruption.] All right, then: we enthusiastically agree on this point. It is very clear indeed that, particularly with youth unemployment, we have a serious problem. It is a problem throughout the EU. We must spend more on that and we must find a way of doing so. Although the Minister spoke at great length, he did not tell us at any point what the difference would be between the ongoing review in the EU and the existing commitments. We want to send a very strong message. Until the Bill is passed, it is our last chance for a considerable period to make these points strongly to the EU, and we believe that we should do so.

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[Barbara Keeley]

That is strange, but I cannot answer for the Minister. He may want to intervene for himself now or at some later point.

I have emphasised jobs and growth, but this EU budget priority also includes policies and programmes to promote vital areas of research and innovation—infrastructure, education, training and enterprise development. My hon. Friend the Member for Sheffield Central (Paul Blomfield) has been a staunch advocate of the importance of EU funding for research and development in the UK. In 2012 he said:

“The more the EU invests in research and innovation, the more the UK benefits, because the quality, breadth and depth of UK research puts us in a position whereby we gain disproportionately from European research programmes.”—[Official Report, 31 October 2012; Vol. 552, c. 292.]

It is self-evident that competitiveness for jobs and growth should be more of a priority, but also that we would benefit more if the priorities were switched to increase funding for research and innovation.

Serious consideration of reform of the EU’s spending priorities is needed if we are to use the EU budget, as the Opposition believe we should, as a mechanism to promote future jobs and growth in the UK and other member states. We can only get that change of spending priorities if we keep a focus on the balance between competing priorities and continue to drive down wasteful and inefficient spending.

Much was said on Second Reading, as I am sure the Minister recalls, about what hon. Members consider to be wasteful and inefficient spending. Some Members might cover that again today, but we have already talked about staffing costs and administration costs, and the costs of the move between Brussels and Strasbourg. Other items of waste and inefficiency can also be drawn to the Minister’s attention.

We have already discussed new clause 3, and I do not need to keep on emphasising this, but in tabling it we did not in any way want to disturb the balance between the Government and the scrutiny Committees. I hope that hon. Members accept that. However, points have been raised in previous debates on why we need that relentless scrutiny. My hon. Friend the Member for Nottingham East said in the debate on the multi-annual financial framework that we need

“a relentless focus on the justification behind detailed expenditure.”—[Official Report, 31 October 2012; Vol. 552, c. 304.]

The Financial Secretary to the Treasury said on Second Reading:

“Many in Europe agree with us that the EU is too uncompetitive, too democratically unaccountable and too inflexible to the concerns of citizens in its member states.”—[Official Report, 11 June 2015; Vol. 596, c. 1389.]

That is a very poor situation that we find ourselves in.

[Sir William Cash]

The hon. Lady referred to the need for relentless scrutiny. I have a thought in my mind that maybe some people think that the European Scrutiny Committee, at least over the last five years, has indeed been relentless in its scrutiny, and that goes for all members of the Committee, which has produced many unanimous reports. Is she effectively prepared not to press her amendment because of the problem I gave about the constant stream of legislative requirements that might interfere with our status as a European Committee?

[Barbara Keeley]

Indeed, we could do that. We would definitely want to press the other new clauses, but there was no intention to upset that balance. It has been suggested that the Minister could solve these matters by giving some kind of undertaking on the matters raised in our new clauses. We do not resile from the position that we want to send out the strongest possible message from this House that we are serious about scrutiny. The European Scrutiny Committee is of course relentless in its focus on those matters, and so too must the House be relentless. Doubtless we will have many more reports and reviews.

When in opposition, the Minister was part of the team that tabled an amendment to get a report, as I mentioned earlier. It was not agreed to at the time, but the Commission review went ahead anyway. The results of that report, which was published in 2010, were interesting. Its main finding—it was a very substantial finding—was that the current rules for the EU budget make it slow to react to unforeseen events, while too many complexities hinder its efficiency and transparency.

This is a week of tumultuous events for the European Union. The situation we find ourselves in with the EU budget, with its complexity, its slowness to react, the difficulty in balancing priorities and the fact that it does not represent the priorities that we think are important, means that it is clear to all—there is often broad agreement on this in the House, and I am sure that there will be today—that it is past the time when it needs to change.

Our remaining amendments would assist in ensuring that reports are made to the House on value for money, budgetary control and, importantly, budget priorities and waste and inefficiency. I commend them to the Committee.

[Sir William Cash]

I have already said much of what I need to say on new clause 3, which is my main concern today, so I will make only a few points. Basically, new clause 3 is inappropriate. The European Scrutiny Committee does its job relentlessly, as the shadow Minister has just indicated, so there is no need for the new clause. We can invite officials to it if we wish to, and we do on occasion, but we are perpetually scrutinising the budget and recommending matters for consideration on the Floor of the House.

Imposing on the European Scrutiny Committee legislative functions that would be monitored by other Government Departments could cause enormous difficulty by interfering with its Standing Orders functions. Under the Standing Orders, the Committee has to form a judgment on what is of political and legal importance. We can invite European Commission budget representatives to see us, and indeed we can also recommend to the Treasury Committee, for example, that it might wish to do the same, so we already have various means at our disposal.

It is not necessary for me to repeat the points that I have already made in interventions. I am grateful to the shadow Minister for agreeing not to press new clause 3 and putting that on the record, so that in future nobody else is tempted to impose on the European Scrutiny Committee, or indeed on any Select Committee, legislative requirements that might in one way or another interfere with their discretionary judgments under the Standing Orders.

[Barbara Keeley]

I hope that the hon. Gentleman will accept my assurance that we have no intention of doing that, but I also hope that he will agree that it is important to send out the strongest possible message that we are focusing on these matters relentlessly throughout the House, and that the European Scrutiny Committee will continue its excellent work.

[Sir William Cash]

I am extremely grateful to the hon. Lady. I hope that she will not mind my mentioning the fact that she is sitting in glorious isolation on the Opposition Front Bench, and with nobody behind her, other than my friend the hon. Member for Luton North (Kelvin Hopkins), who is not known to be enthusiastic about all matters European. Perhaps the relentless scrutiny to which she refers could be improved by having a few more Labour Members here to support her.