European Community Budget

Part of the debate – in the House of Commons at 4:04 pm on 21st February 1983.

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Photo of Mr Peter Shore Mr Peter Shore , Tower Hamlets Stepney and Poplar 4:04 pm, 21st February 1983

I beg to move to leave out from semi-colon to end and add 'deplores the continuing failure of Her Majesty's Government to end the scandal of Britain's inequitable contributions to the EEC; recalls the unanimous Resolutions of the House of Commons on 16th July and 22nd November 1979 urging a fundamental reform of the Budgetary arrangements so that Britain's contribution to the Budget is at least not greater than its receipts; declines to approve the Preliminary Draft Supplementary Budget under which the Government has agreed that Britain is to make a further £616 million payment to the EEC in 1982–83; and demands that the Government resist any new EEC proposals that would increase the tax burden on the British people.' The House has listened to a speech that I can best describe as something of a sandwich. There was frivolity at the beginning and at the end. In the middle there was a large slab of platitudes and wishful thinking. Frankly, the Financial Secretary's capacity to mislead the House is far below his ability to deceive himself. That is a judgment that I have formed, having listened to his attempts to explain and to see a way out of the present impasse, in which we have been for so long, in our budgetary arrangements with the EC.

The Financial Secretary opened his remarks with some reference to trade. As it is the totality of our relationships that gives so sharp and cutting an edge to the budget imbalance, it is right for me to inform the House and the Financial Secretary, as he does not seem to know anything about it at all, what has happened to our balance of trade since we joined the EC.

I shall quote the incontestable figures in terms of our manufacturing and semi-manufacturing trades. In 1972, which was the year before we joined, the United Kingdom had a balance of £82 million in its manufacturing trade. In the first half of 1982—this is appalling—our deficit was about £4,800 million. The reason why this has not yet turned into an unmanageable balance of payments crisis is that in 1972 we had a virtually nil balance of trade in oil products with the members of the EC, but in the first half of 1982 we were exporting an annual £4,000 million of North sea oil which helped, but did not overcome, the defict that had accumulated in our manufacturing trade.

It is against that background—and it is only one of the major issues that we seek to raise on the totality of issues involved in our membership of the EC—that we turn to the special levy, the special tax and the special exaction that is imposed upon the British people through the budgetary arrangements.

This is the sixth debate in this Parliament on Britain's inequitable contribution to the European Community budget. In the first of these debates, on 16 July 1979, the House unanimously approved the motion, substantially reiterated in the Opposition amendment today, that in view of the United Kingdom's massive and ever increasing net contribution to the Community Budget"— the Goverment should— press for a fundamental reform of the Budgetary arrangements so that Britain's contribution to the Budget is at least not greater than the receipts. That same resolution was reiterated in the second debate on 22 November 1979 when the Chancellor of the Exchequer outlined the Government's two main policy objectives: first, that there should be a broad balance in the United Kingdom's accounts with the Community", and, secondly, that arrangements embodying a broad balance must operate in respect of 1980 and subsequent years. As the Chancellor then put it: This time the agreed solution must be one which, so far as can possibly be foreseen, will last as long as the problem … Neither I nor any succeeding Chancellor will wish to make speeches in the House in a year or two about yet another debate within Europe on this same subject."—[Official Report, 22 November 1979; Vol. 974, c. 593–97.] That was the Government's position, and hon. Members know that at the Dublin summit, which followed in late 1979, in spite of the vehement statements by the Prime Minister that she would no longer play Sister Bountiful to the Community—it was, after all, our own money—the Government were driven to a shoddy, shameful and continuing unsatisfactory compromise.

Since the stamp of the Chancellor of the Exchequer was put upon the two major objectives of the Government's policy in relation to the Economic Community in those debates in 1979, and again in his attempts to explain why he did not get it in 1980, I greatly regret that the right hon. and learned Gentleman is not defending this further failure from the Government Front Bench today. I have been in touch with him, and he knows very well that I expected a senior member of the Government to be speaking from the Dispatch Box today. I hoped that we would at least have had an opportunity of substantial answers not only to the questions that I shall put—I shall put quite a few—but to the pertinent quesion of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) about the Government's attitude towards the latest proposals to remove from the House further powers on financial and taxation arrangements, as is suggested in the documents before us.

As a junior Minister, the Financial Secretary is not entitled, and has no right, to speak for the Government on this matter. That is all the more reason why the Chancellor, who is not exactly on the eve of his own Budget, should have been present today. He is not attending any international conference; he is sitting in Great George street thinking of how he can dress up his package on 15 March in a way that is most acceptable to the electorate.

I have outlined the Government's position in 1979 before the Dublin conference. By the time we reached our third debate on 2 July 1980, the Government had settled for an arrangement under which we had to be content with a substantial refund. That arrangement fell far short of broad balance. Moreover, it would last initially for two years and, at most, for three. Meanwhile, the Community agreed to make what the Chancellor described as a fundamental review of the scope, balance and operation of the Community budget, the stated purpose of which would be 'to prevent the re-occurrence of unacceptable situations' for any of the member states."—[Official Report, 2 July 1980; Vol. 987, c. 1556.] At the centre of today's debate, amid all the documents before us, is the outcome of the third and final year of the 30 May 1980 agreement. Amid those papers is the crucial one containing the Government's weak-kneed agreement to pay no less than £616 million to the Brussels authorities for the fiscal year 1982–83. However £616 million may be described, it is clearly not a broad balance. It is better described as a good example of the so-called resolute approach.

The fundamental review of the Community budget—the so-called mandate of 30 May 1980—has run predictably into the sands. As I warned at the time, the so-called mandate gave the Commission and the Council anything but a free hand. They were hedged in from the start by their terms of reference. Those included the Council's specific agreement not to call into question the common financial responsibility for Community policies that are financed from the Community's own resources; nor to call into question the basic principles of the CAP.