Orders of the Day — European Community (Budget)

Part of the debate – in the House of Commons at 12:00 am on 4th July 1975.

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Photo of Mr David Howell Mr David Howell , Guildford 12:00 am, 4th July 1975

We have a form of switching. We also have the bizarre process, as a result of not carrying forward, of having to hurry to spend everything we can before the year is out. That leads to some of the major nonsenses of our present budgetary process.

That is the theory of what happens in this country, but when we apply that kind of thinking to the Community situation it is different. It is rather unfamiliar, because there is the Commission, which has the duty and the right inclination and motivation to produce proposals for spending more. There is the Council of Ministers, which in relation to the budget for 1975–76 is wielding something approaching a Geddes axe over some of the proposals in the preliminary draft budget. In between the two there is the Parliament, pursuing a diplomatically wise middle way concerning the 1975–76 budget. At first glance the line-up is a very different one in the Community institutions as compared with Parliament and the executive in this country.

I shall deal with the way in which the Council, the Commission and the Parliament take up their positions when they deal with the 1975–76 budget, which is relevant to the future, and to the contribution we have to make. It is in a sense very strange that the Council of Ministers —the "Government" was so concerned with economy in relation to the 1975–76 budget. This is only because we are not used to our own Government or any Government being particularly obsessed by economy. One understands the Council's motives in seeking to economise and cut down the preliminary draft budget which it receives both from the Commission and from the Parliament.

A very interesting document was circulated by the Chief Secretary to the Treasury on 29th October 1974 explaining the Council of Ministers' point of view and that of the Government on the budget and the need for economy. I am unable to resist the temptation to read out one sentence from a document, signed by a Minister in the present Government, explaining why the Council has cut down the budget and what were the guiding principles: Economies have been sought in the Community Budget comparable to those imposed by member states in their national budgets". What economies, one wonders, were going on in the national budget of the United Kingdom at that time. I cannot remember any. I can remember a very rapid increase in the national budget of the United Kingdom and in the borrowing requirements. There were no economies here. Maybe there are now, but there were not then. But whether there were or not, at least in the Council of Ministers there was the spirit of economy to inform its deliberations, and that led it to some fairly radical and controversial proposals for cutting expenditure.

If that were to be the case in the future, we should have an odd situation in which the executive, in the sense of the Council of Ministers, was on the side of economy and the Commission and to some extent the Parliament were on the side of expenditure, and one would adjust one's views accordingly. But it may not always be like that. It might be like that for 1975–76, because member countries were all worried about the worldwide recession and the way in which their budgets got out of line following the oil crisis. As the hon. Member for Knutsford said, however, things will change. There will certainly come a time when the pattern becomes more comparable with the one we know here, in which the executive and the Commission plus the Council of Ministers will be the big spenders, and it will fall to the European Parliament and, to the extent that they can do it, the national Parliaments, to resume the rôle on which we have fallen down so badly nationally of restraining and controlling expenditure.

That, above all, is the reason why, when looking at the balance of arguments for and against more powers of the European Parliament, and more opportunity for it to exercise control over expenditure, we ought to look less at what has happened over this last year, in which to some extent the rôles were slightly changed, and more at the almost certain developments in the future, when it will be very necessary indeed for the European Parliament to have stronger powers to operate over areas of the budget and to control and restrain. That is why all the proposals that are now in the air and coming forward for stronger auditing procedures, and for a body like our Public Accounts Committee at the European level, are wholly to be welcomed. The European Parliament would be most unwise to take the advice of anyone from this House who urged it to concentrate solely on developing Vote procedures of the kind that we have here.

We have found in the last few years that the one area in which we have made progress in controllng expenditure is through the updating of the methods and techniques and the Public Accounts Committee and its readiness to abandon the old "candle ends" approach and to begin to look at programmes and analyse them seriously while they are continuing, so that it can make comments before money has been spent rather than when it has long since been spent and no one can remember which Minister or civil servant was in charge of the programme at the time.

The European Parliament is wholly right—as are its members, if I may say so, as someone outside this process—to concentrate on building up the Court of Audit and the Public Accounts Committeee method. I urge it, when it does so, to make it a committee which is determined to look at on-going progress and which does not get bogged down, as our Public Accounts Committee was at one time—it is now much improved—in looking at detailed questions of how many paper clips were used in some programme, all fixed and wrapped up two or three years before, and producing long and turgid reports which Members are then understandably reluctant to debate because they all relate to things that no one can remember.

I hope that the European Parliament will develop the kind of Public Accounts Committee approach that we are now developing in this House and that it will not get bogged down in the kind of procedures we had in the past, and which were so hopelessly inadequate for controlling, scrutinising and restraining the growth of public expenditure.

Finally I come to the question of claw-back and "additionality". This a very worrying situation and, quite frankly, I suggest that the Treasury has got it wrong. The concept of additionality is one that, I have always opposed. I agree with the comment of the hon. Member for Inverness that his starting point is that it is a nasty word anyway. I do not know whether the word "additionality" is in the dictionary, but one should always be suspicious of curious words and phrases like this and realise that nasty and complicated words usually disguise nasty and complicated thoughts and programmes. [An HON. MEMBER: "Devious"] The hon. Member regards the use of the word "additionality" as devious. That may be carrying the criticism a little far, but it is certainly complicated to the point of obscurity.

There are two aspects to it, one of which was touched upon by the hon. Member for Farnworth (Mr. Roper). The first is whether this is the correct approach. Clearly in the Commission it is thought not to be the correct approach. I can see the argument from the point of guardians of public spending, of which the Chief Secretary is the chief Minister responsible, that this is a very good way indeed of taking the heat off some of the grants handed out from the Treasury, or taking the heat off the burden on the Exchequer of the subscription to the European Economic Community.

Here is a marvellous opportunity for the Treasury to recoup large sums, either to continue paying out existing grants and support subsidies to bodies and organisations in this country, to forgo support from Brussels and use it to offset the subscription to the Community, or to use the grants and subsidies being paid out to bodies in this country and make up the difference with money direct from Brussels. Whichever way it does it, it must be an almost irresistible temptation, to those concerned with keeping down public expenditure by all means, to use this method.

I think, however, that the Treasury will be on very dangerous ground indeed if it pursues this method. I regard it as dangerous ground for the reason that it undermines the contact between voluntary bodies, regional programmes, regional developments, the activities of ordinary people in public life, working hard in various activities in the regions of this country, and the living idea of Europe, Brussels and the European institutions. That is a very serious and dangerous thing.

This is a time when the major parties in the House and the House as a whole are committed to working to build up and strengthen Europe and the European idea. I know that there are hon. Members who think otherwise. The business of pocketing the difference by collecting the cash from Brussels and not passing it on, or collecting the cash, passing it on and refusing the grant from the Treasury correspondingly, undermines that important linkage. It is an anti-European practice and a bad one.

There have been reports in the Press which describe the way in which the EEC Social Fund is generating support which ought to go to various organisations and which describe the way in which those organisations have sought to apply to Brussels for what they believe to be their due and how, when they applied, they were told that the money had already been drawn for them and was already in the Treasury and had gone to swell Treasury funds. I imagine that the Chief Secretary will say whether those reports are accurate. If they are true, this is a very clumsy and secretive way of operating.

When the Treasury wishes to make known its need to control public spending, will it pursue practices openly and in a way that does not break the link between voluntary agencies and organisations in the regions of the European Community? Should it not be done in such a way that people understand the costs and benefits of this country being a member of the EEC, and in a way which maximises the impact of Britain and the organisations in this country in seeking and applying for our due from the various funds of the Community, especially the social fund? It would be absurd if as a result of this claw-back technique we were getting less than our due from the EEC simply to satisfy the Treasury's need to find some extra pocket money to help it with the subscription to the European Community or to offset the grants and loans to local bodies.

The Treasury needs to look again at the additionality philosophy. It needs to be aware that the way in which it appears to be practising at present is hostile to the development of the EEC and to the development of this nation as a vigorous and effective member of the Community.

Those are just a few comments from someone who is neither in the executive nor part of the delegation to the European Parliament. Despite the timing of this debate, it has given us an opportunity —our first—to have a go at the Community budget. The House will want to have several more goes if we are to have effective control.