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European Union (Finances)

Oral Answers to Questions — Foreign and Commonwealth Affairs – in the House of Commons at 2:30 pm on 21st June 2005.

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Photo of Stephen Hammond Stephen Hammond Conservative, Wimbledon 2:30 pm, 21st June 2005

If he will make a statement on the future finances of the European Union.

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

Yesterday, the Prime Minister set out to the House the UK position during the European Council discussion on future financing last week. The UK has long argued that the negotiation to set the EU budget from 2007–13 is an opportunity to reform EU expenditure to provide an appropriate future financial framework. The proposal on the table last week manifestly failed to do that. The failure last week to reach agreement provides an opportunity to look again at the structure of EU spending in the light of the contemporary challenges facing the Union.

Photo of Stephen Hammond Stephen Hammond Conservative, Wimbledon

Reading through the Prime Minister's statement yesterday, the House will have noticed that, in the decade to 2003, the UK paid a net contribution of €23.6 billion more than France, and without our rebate it would have been €30 billion more than that. In the House last week, the Prime Minister said that he was prepared to negotiate the rebate but not to negotiate it away. Can the Minister give some clarity about how much that rebate would have fallen by in the past decade had we been negotiating it away?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

I assure the House that those discussions took place in the context of the statements that we made prior to the Council, when we said first, that we believe the rebate to be fully justified, and secondly, that we were willing to use the veto if necessary and as appropriate to defend Britain's national interest. As it transpired, it was not necessary to exercise the veto as we were joined by a number of other countries in rejecting the proposal that was tabled by the EU presidency. However, we were clear in the negotiations on Thursday and Friday in Brussels about the need for there to be a clear and categorical link between the British rebate and the fundamental reform of expenditure across the European Union, which would, of course, include the issue of the common agricultural policy, which largely accounts for the very significant receipts received by France, to which the hon. Gentleman referred.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I thought that the Prime Minister's statement yesterday was a breath of fresh air in the long ongoing debate about European finances. If we can succeed in replacing the common agricultural policy, that will be beneficial not only to Europe but, more important, to poorer countries, particularly those that export agricultural products. Would they not also benefit if we replaced the European aid regime and repatriated aid? For a long time, the Department for International Development has felt that if aid were distributed through its own budget, it would be more efficient and well directed than it is through the EU budget.

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

Before I heard his questions, I thought that my hon. Friend was going to offer his good wishes to the Prime Minister and inquire whether there were any positions for Parliamentary Private Secretaries in the Foreign Affairs team, but in light of his specific question I fear that I will have to disappoint him. The Council of International Development Ministers that took place just a couple of weeks ago in Brussels makes a powerful case for how the European Union can act as a catalyst and as a force for good in the world. We saw an increase in commitments from the EU from $40 billion to $80 billion by 2010. That shows the scale of commitment not just of the British Government—we have an honourable record in increasing the money spent on international aid—but of member states throughout the European Union. It also sets a very challenging and a rich opportunity that the G8 can develop at the meeting in Gleneagles on 6 to 8 July, and it shows powerfully that if we work together at EU level we can increase our influence and do good in the world.

Photo of Ian Paisley Ian Paisley Leader of the Democratic Unionist Party

In the House yesterday, the Prime Minister told me that there was no reason why individual Governments could not subsidise agriculture. Given that such subsidising is impossible under current European rules, do his Government now intend to change the rules? Will he consider making the rebate once again the Government's responsibility, so that farmers get direct payments from the Government?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

The question rather anticipates further conversations that are needed at an EU level. In Brussels on Thursday and Friday, we were looking for a clear commitment to reform, not least given the fact that 40 per cent. of the EU budget—as many in the House are now aware—is spent on agriculture, which accounts for only 5 per cent. of the EU's population and about 2 per cent. of its output. We believe that there is a case for fundamental reform, but in the first instance we need to take forward discussions with our EU partners on how to achieve that, rather than offering particular solutions at this stage to particular member states' problems.

Photo of Phyllis Starkey Phyllis Starkey Labour, Milton Keynes South West

Notwithstanding the intransigent view on the common agricultural policy adopted by the French President, is the Minister aware that French public opinion is not monolithic on this matter and that there is substantial support in France for reform of the CAP, not least from the Parti Socialiste? What steps are this Government taking to get their message across to European public opinion, in order to build support for financial reform across the EU?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

I am certainly aware that on this issue, as on so many others, neither the people of France nor people across the EU have a unified view or speak with a single voice. Public opinion clearly varies, depending on the individual circumstances of the country in question. I am also aware of the comments of the Parti Socialiste in France, following the European Council meeting. They clearly diverged from the position taken by the Elysée Palace and by others of different political persuasions in France.

On advancing this debate, as Minister for Europe I have already sought to communicate our view on the future financial perspective, and I have written a number of articles for European newspapers in recent days. We of course rely on the excellent work being done by British diplomats in our posts across the EU, and I can assure my hon. Friend that that work will continue in the weeks and months ahead.

Photo of Graham Brady Graham Brady Shadow Minister (Europe)

The Government are rightly keen to cut back on aspects of EU expenditure that are not fit for purpose in the 21st century and to direct funds to the new member states instead. Does the Minister agree that perhaps the most obvious example of waste and extravagance in the EU is the maintenance of a duplicate Parliament in Strasbourg, which costs £120 million a year to run?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

The hon. Gentleman will be aware that there are areas in which we would like the EU to secure greater efficiency. However, the tenor of his question reflects the fact that the best way to advance that case is not by allowing oneself to be discounted from the argument because of one's Euroscepticism, but by giving a clear and genuine commitment to the EU and to reform.