European Budgets 2014 to 2020

Part of Internet Regulation (Material Inciting Gang Violence) – in the House of Commons at 4:16 pm on 8 November 2011.

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Photo of John Baron John Baron Conservative, Basildon and Billericay 4:16, 8 November 2011

No, because I do not have time and I want to push on. I do apologise.

The situation is made even worse by the fact that the European Court of Auditors has still not signed off the accounts after 16 years. It is unbelievable. Such a situation would simply not exist in the private sector. We would not be more than doubling our contribution to an organisation that has not signed off its accounts. We have no precise idea of how the money is spent. We need to take cognisance of the fact that it is a dire situation when auditors have not been able to sign off the accounts. It proves the lack of transparency that exists when it comes to EU spend.

I suggest to my hon. Friend the Minister that we have to be careful about the position that the Government take. Although our first position is that there should be no net increase at all in absolute terms, our fall-back position seems to be that we do not want any increase in real terms—in other words, that we will match inflation. At the moment, inflation is a touch over 3% across the eurozone. However, there is a risk that inflation could rise, and we should be careful what we wish for when talking about pegging our contribution to inflation.

This recession is unusual in that it is a de-levering recession caused by too much debt. The options available to Governments are to reduce spending, which is difficult in the present environment, to create growth—again, difficult, because people are paying down their debts—or to create an element of inflation in order to inflate the debt away. I suggest that the European Union, or certainly the eurozone, will explore that possibility and is currently exploring the option of quantitative easing on a massive scale. Despite the economic outlook, higher inflation is not an impossibility, particularly looking 12 months out. I ask the Minister to be careful what he wishes for when he talks about pegging our contribution to inflation, because inflation could very well rise shortly.