EU Budget (UK Rebate)

Oral Answers to Questions — Treasury – in the House of Commons at 10:30 am on 10th November 2005.

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Photo of Philip Davies Philip Davies Conservative, Shipley 10:30 am, 10th November 2005

What recent discussions he has had with other European Union member states regarding the future of the UK rebate within the EU budget.

Photo of John Healey John Healey The Financial Secretary to the Treasury

The UK presidency has been consulting all member states about the next EU budget. We are committed to working for a deal at the December European Council. Our position on the abatement remains as set out by my right hon. Friend the Prime Minister in the House on 20 June.

Photo of Philip Davies Philip Davies Conservative, Shipley

I thank the Minister for that reply.

According to The Times, this summer the Chancellor threatened to veto the entire EU budget if our partners attempted to end the UK rebate. Why has the Treasury retreated from that position, such that last week the Economic Secretary told the European Scrutiny Committee that if our European partners made concessions

"everything would be on the table for negotiation"?—[Official Report, European Standing Committee C, 1 November 2005; c. 9.]

Photo of John Healey John Healey The Financial Secretary to the Treasury

Our position has been consistent throughout. Our aim is an affordable budget that meets Europe's aims and the challenges it must face in the future. The June plan, on which the Chancellor was commenting, means that even at the end of 2013 Europe would still be spending 40 per cent. of its budget on agriculture, when the challenges for the future lie in innovation, science, research and development, training and education to try to meet competitiveness in the world economy. The difference between the hon. Gentleman's party and mine is that we want to reach a deal in December, as I said, and we are currently working hard to secure that, while he and many others in his party do not want a deal and really want withdrawal from Europe. As he told a fringe meeting at the Tory party conference, the only party—

Photo of Brian H Donohoe Brian H Donohoe Labour, Central Ayrshire

Will the Minister give us an indication of the potential threat to the European regional fund?

Photo of John Healey John Healey The Financial Secretary to the Treasury

I understand my hon. Friend's concern about regional funding and policy. It will obviously be an important part of the new financial perspective, but it waits on overall agreement of the budget. He will be aware that we have made proposals for changes not only in the overall budget, but in the structural funds and regional policies to which he referred. He will be aware that three quarters of the funding for UK regions and nations is from domestic Government rather than from Europe. The guarantee that we have given—that if our proposals are adopted, there will be no fall-off in the funding for UK regions and nations, because we put such a premium on regional policy—is one that he and many of my hon. Friends will welcome.

Photo of Christopher Huhne Christopher Huhne Shadow Minister, Treasury

I should be grateful for a little clarification from the Minister, as I for one am still confused about exactly what the Government's position is on the UK rebate. Does the Minister intend to agree with the Prime Minister on 8 June, when he clearly said:

"The UK rebate will remain and we will not negotiate it away"?—[Hansard, 8 June 2005; Vol. 434, c. 1234.]

Or does he agree with the Prime Minister on 21 June, when he said, following talks with the Swedish Prime Minister:

"We have made it clear . . . that we are prepared not just to discuss and negotiate . . . but to recognise that the rebate is an anomaly that has to go, but it has to go in the context of the other anomaly being changed away"?

What is the Government's position on the rebate, and can the Minister assure the House that they will defend the rebate, which is a necessary part of dealing with the anomaly?

Photo of John Healey John Healey The Financial Secretary to the Treasury

The hon. Gentleman perhaps has more experience of how the real business in Europe is done, given his experience before his election to the House. The position is as the Prime Minister set out to the House on 20 June, when he said:

"I made it clear that we should deal with both anomalies: the rebate and the CAP. I proposed that we have a fundamental review . . . to alter fundamentally the structure of the budget, dealing both with the rebate and the CAP."—[Hansard, 20 June 2005; Vol. 435, c. 524.]

It should be clear to the hon. Gentleman, because he knows the system, that the review is an important step towards the reform that is needed to correct those imbalances, which mean that the abatement is currently fully justified.

Photo of Gisela Stuart Gisela Stuart Labour, Birmingham, Edgbaston

As there are two rebates—one is the UK rebate and the other is the French rebate, known as the common agricultural policy—can my hon. Friend assure the House he will not make any concessions on the one without having firm concessions on the other, not the mere promise of them?

Photo of John Healey John Healey The Financial Secretary to the Treasury

Indeed, as my hon. Friend knows extremely well, given her experience in Europe, the rationale for the British rebate is the imbalances and distortions in the European budget, principally around the common agricultural policy. Those imbalances mean that Britain has paid almost twice as much as France into the European budget since 1984, and that we are paying seven times more on agriculture than on the other parts of the European budget that will help Britain and other European countries to adjust for the future. That is why the Prime Minister and the Foreign Secretary have been leading negotiations to try to secure a review as part of an overall budget settlement. They remain committed to that and are working hard to do the deal that will allow the budget to be approved at the December Council.

Photo of Mark Francois Mark Francois Shadow Paymaster General

We welcome the Damascene conversion on the Liberal Democrat Benches. It is an open secret that, in the fag end of the EU presidency, the Government are now offering up the UK rebate to try to clinch a deal on the budget for 2007–13. How do Ministers square their eagerness to negotiate away our rebate with the Prime Minister's categorical pledge to the House on 8 June? He said:

"The UK rebate will remain and we will not negotiate it away. Period."—[Hansard, 8 June 2005; Vol. 434, c. 1234.]

What kind of Prime Minister changes his mind so fundamentally on such an issue in just three weeks?

Photo of John Healey John Healey The Financial Secretary to the Treasury

I am not sure whether the hon. Gentleman fully appreciates the UK's position as President of the European Union at the moment. It is our responsibility, as well as our aim, to introduce proposals that can be accepted by all. That means the right deal for the UK, but it also means the right deal for Europe. The Foreign Secretary is working hard to try to secure and put in place the preparations for that agreement in December, but it must deal with the main imbalance of the common agricultural policy alongside any question of the UK rebate.