I am sure the whole House will join me in sending our best wishes to Pope Benedict following his announcement today. He has worked tirelessly to strengthen Britain’s relations with the Holy See and his visit to Britain in 2010 is remembered with great respect and affection. Pope Benedict’s message on that visit—of working for the common good—is something that spoke to our whole country, and I am sure his successor will continue to provide a voice of inspiration for millions around the world.
Last week’s European Council agreed the overall limit on EU spending for the next seven years, starting in 2014. When these multi-year deals have been agreed in the past, spending has gone up, but last week we agreed that spending should come down. By working with like-minded allies, we delivered a real-terms cut in what Brussels can spend for the first time in history. As the House knows, the EU budget is negotiated annually, so what we were negotiating—initially at the Council last November and again last week—was not the individual annual budgets, but rather the overall framework for the next seven years. This includes the overall ceilings on what can be spent—effectively, the limit on the European Union’s credit card for the next seven years.
During the last negotiation, which covered the period 2007 to 2013, the last Government agreed to an 8% increase in the payments ceiling, to €943 billion. Put simply, this gave the EU a credit card with a higher limit, and today we are still living with the results of allowing the EU’s big spenders to push for more and more spending each year.
In fact, only last year, while member states were having to make tough decisions to tighten their belts at home, the big spenders succeeded in increasing the 2012 European budget by another 5% compared with the previous year. If no deal had been reached, the existing ceilings would have been rolled over and annual budgets could have continued to soar for the next seven years. Because annual budgets are negotiated by qualified majority voting, it can be difficult to constrain spending in these annual negotiations. By contrast, the seven-year limits are agreed by unanimity, so this was our chance to get the ceilings down in line with what could be afforded.
The European Commission produced an initial proposal for increasing the payments ceiling still further to €988 billion. This was strongly supported by a number of member states. The first negotiation took place at the Council in November, and although the President did then reduce this during the Council itself, it was still some way short of the real-terms cut we were looking for. So together with like-minded allies from a number of countries, including Germany, Sweden, the Netherlands and Denmark, we rejected the deal on the table and told them to think again.
At this Council, we made further progress. Together with allies, many of whom like Britain write the cheques, we achieved a proper look across all the areas where spending in the Commission proposal could be cut. While there are areas where we could and should go further, not least on reforming the common agricultural policy and reducing the bureaucratic costs of the European Commission, we agreed a real-terms cut in the payment limit to €908 billion. That is €80 billion lower than the original proposal; €35 billion lower than the deal agreed by the last Government, which is still in operation today; and €60 billion lower than the emergency arrangements that would have come into place if there were no seven-year deal. My aim was not simply to cut the credit-card limit; I wanted to set the limit at a level that would deliver at worst a freeze and at best a cut in actual spending over the next seven years. That is what this deal delivers—a real-terms cut.
If we take the latest complete budget—the one for 2012—and freeze spending at that level for the next seven years, we would have spending limits of €932 billion. Our new payments limit means spending cannot rise above €908 billion, so we have slashed €24 billion off a real freeze on the last completed budget. Of course, the budget set in 2012, which Britain voted against, was unacceptably large, but even against the average of the last two completed years—2011 and 2012—this deal still delivers a real-terms cut.
This deal must now, of course, be voted on by the European Parliament, and the European Council has said it is prepared to accept some flexibilities about how spending is divided between different budget years and different areas of spending, but we are absolutely clear that this must be within the framework that the member states have now agreed. The EU’s seven-year budget will now cost less than 1% of Europe’s gross national income for the first time in its history.
Let me say a word about how this deal is likely to affect the UK’s contribution; a word about how it is likely to affect what the UK receives from the EU for research, for our regions and for our farmers; and a word about what this means for growth and competitiveness across the European Union as a whole.
On the UK’s contribution, the House will remember how the last Government gave away almost half of our rebate. This has had a long-term and continuing effect on the UK’s net contributions. It is worth remembering why. It is because when the European Union spends money on structural funds and cohesion payments in eastern European countries, for example, the UK no longer gets a rebate on this money. As a result, almost whatever budget deal was done, our net contributions were always likely to go up. As a result of this deal, however, they will be going up by less. The only two sensible things we could do to protect the British taxpayer in these negotiations were to get the overall budget down and to protect what is left of our rebate.
The right hon. Gentleman keeps on saying “Hear, hear”, but he was the one who gave away our rebate in the first place. Even he is welcome on a happy day like today. That is exactly what we have done.
While the actual amount that the UK contributes will depend on technical factors, such as the size of the annual budgets, economic performance and exchange rates, as a result of this deal we now expect the UK’s contribution to the EU to fall as a share of our gross national income. As for the rebate that this Government inherited, it is now completely untouched. As ever, throughout the negotiations the rebate was attacked repeatedly, but I successfully rejected all the calls for change, and under this Government the British rebate is safe.
In terms of what the UK receives, I wanted to make sure that our universities were well placed to receive research work, that our less well-off regions were treated fairly compared with others, and that our farmers continued to receive support for the environment schemes that they put in place. Let me deal with each of those points.
The section of the budget that includes spending on research, innovation and university funding is up by over a third. The money is handed out on the basis of quality, so Britain’s universities are particularly well placed to benefit. We have ensured that structural funds will continue to flow to our less well-off regions, and Britain’s share will remain broadly the same, at around €11 billion. While we have cut spending on the common agricultural policy overall, we have protected the flexibility that will allow us to direct funds to support both the environment and the livelihoods of our farming communities.
Overall, this is a better-framed budget in terms of growth, jobs and competitiveness. It is disappointing that administrative costs are still around 6% of the total, but overall spending on the CAP will fall by 13% compared with the last seven-year budget. Research and development, and other pro-growth investment, will now account for 13% rather than 9% of the total budget.
Reform of EU spending is a long-term project, but this deal delivers important progress. Working with allies, we took real steps towards reform in the European Union. This is a good deal for Britain, a good deal for Europe, and above all a good deal for all our taxpayers. That is what we have delivered, and I commend my statement to the House.
I thank the Prime Minister for his statement. Let me first join him in paying tribute to Pope Benedict XVI. He is a spiritual leader for 2 billion people in the world, and a theologian of great distinction. His visit to the United Kingdom will be long remembered as a proud moment for millions of Catholics in this country, many people of other faiths, and, indeed, many Members of the House. His decision to stand down will not have been reached lightly, and it is right for Members in all parts of the House to acknowledge his service.
I also join the Prime Minister in welcoming the agreement that has been reached on a cut in the seven-year payment ceilings for the European Union budget. At a time when so many budgets were being cut at home, the House voted for a real-terms cut last October, and it was right to do so. No doubt it was just an oversight that in his statement he forgot to express his thanks to Members on his own Benches and on those of the Opposition for giving him such a strong negotiating mandate. Even he must see the irony of his having sought to vote down a proposal that turned out to be the outcome of the negotiations. He was against it before he was for it: that is the reality.
As well as restraint in the budget, however, we needed reform. We needed to prioritise growth within a smaller budget by cutting back even further on spending that was not a priority.
Let me deal first with agriculture. The common agricultural policy fell as a proportion of the budget from 46% in 1997 to 33% in 2010. We welcome the modest continued decline in agriculture spending as a share of the European budget from 31% in 2013 to 27% by 2020, but does the Prime Minister agree that with agriculture making up just 1.5% per cent of the total output of the European Union and still accounting for nearly 30% of the budget, there is still much more to do?
Secondly, we welcome the increase in funds targeted towards growth, infrastructure, research and development and innovation, but can the Prime Minister confirm that the achievement of a declining budget compared to November’s proposal came not at the expense of agricultural spending but, in part, at the expense of that funding for growth?
Thirdly, the Prime Minister and I agree on the need for the EU to play its part in effective development, diplomatic and governance support in north Africa. Can he say what discussions took place about how the EU could play that enhanced role in the context of the decision in this budget round to effectively freeze the European development fund, which provides assistance for the region? Given the new emerging challenges across the Sahel, what information can he give us about how funding for that region will be affected? In that context, can he take this opportunity to say something about the transition road map for Mali, which formed part of the Council’s conclusions, or at least part of its discussions?
Fourthly, given the very significant and unprecedented difference between the ceiling on payments—to which the Prime Minister referred in his statement—and the ceiling on commitments agreed on Friday, can he tell the House what discussions took place about how this would be dealt with in the years ahead?
While this budget brings restraint, Europe still needs a plan for recovery and growth. The Council’s conclusions talk about the importance of trade agreements. Will the Prime Minister update the House on developments on the possible EU-US trade agreement and on how he sees that being developed this year, including at the G8 summit? Does he recognise, however, that the long-term changes to the budget and the possible EU-US trade agreement are no substitute for a growth strategy for Europe? There are 26 million people looking for work in the European Union, and nearly 6 million unemployed young people looking for work—shamefully, 1 million of them here in the UK. The European economy is struggling and the British economy is flatlining. What Europe now needs, and what Britain now needs, is a plan for jobs and growth. That is the way Europe must change, that is the change that we need for Britain, and that must be the priority for the months and years ahead.
I suppose we should take the welcome. We should take it from someone who never got a freeze, let alone a cut, who never protected our rebate but who gave it away, and who told us that we were going to be marginalised, isolated and picking fights in an empty room. But I welcome the right hon. Gentleman’s welcome. Thank you. I did not quite get a thank you, but I will give him a thank you for the non-thank you.
The right hon. Gentleman asked a lot of questions. Let me go through them. On agriculture, he asked whether there was more to do on reducing the budget, given that it represented only 1% of European industry. Yes, there is, although we have taken some steps forward. The common agricultural policy budget pillar one goes from €320 billion to €277 billion, which is a significant change. In terms of what grew in the budget that can help to deliver growth and jobs, we have the Connecting Europe Facility, which is about energy, transport and broadband networks. That goes from €8 billion in the last seven-year period to €19 billion in this period, so I do not think it is entirely fair to say that the right things were not increased or that the right things were not cut. I said in my statement that I was disappointed that we did not go further on the central bureaucracy.
We did have a discussion on north Africa and Mali. The right hon. Gentleman is wrong to say that the European development fund will go down; it will go up by €1 billion. On Mali, there was very little time left at the end of the marathon Council to discuss those issues, but I took the opportunity to praise the French President for the brave action that the French have taken, to offer our strong support, and to say that we would contribute by training troops from west African nations. I have spoken to the Nigerian President, who is in London today, about that issue. Most of all, however, a political strategy is needed alongside the military efforts.
On the gap between ceilings and payments, the gap is between €960 billion on commitments and €908.4 billion on payments. That is just over 5%, which is not untypical, given the experience of recent years. The European Commission thought that that gap was deliverable, so I think that answers that question. On EU-US trade, I spoke to President Obama about half an hour ago, and I think we are making progress. I will continue strongly to push and support that measure. On the issue of how we use the European Union to encourage growth, one of the greatest things we can do is to complete the single market in digital, in energy and in services, and it is this Government, working with allies, who are delivering precisely that.
On the overall deal, there is a real need to ensure that the European Parliament supports it. We are often challenged about the friends we have in Europe, but I would challenge the right hon. Gentleman about his friends there. What is he going to say to his friends in the Party of European Socialists who are condemning this deal, condemning the British action and saying that we should not be constraining European spending? Will he confirm today that Labour MEPs will be voting for this budget? Answer? The head moved a little bit. While he is at it, is it not time to confirm whether his party will back an in/out referendum? Labour’s claim is that the greatest problem is uncertainty, but what could be more uncertain than not knowing whether you are for it or against it? Any progress? It is not a day for answers, but it is a day for celebrating the fact that we have cut the budget for the first time in history.
Fontainebleau in 1984. Does my right hon. Friend agree that his achievement, and the success last week of a most acceptable reform of the common fisheries policy, demonstrates how many of the United Kingdom’s objectives can be achieved by serious and professional negotiation with our allies? Does he accept also that our objectives—for example, the working time directive—can be achieved, as he did with the EU budget and as the United Kingdom did with the CFP, by working with the close allies we have on so many of these subjects?
I agree with my right hon. and learned Friend, and it is worth paying tribute to Baroness Thatcher, because what makes the British rebate different from the other rebates is that it does not have to be renewed in each seven-year term: it is there as part of the architecture of the budget, and unless you are foolish enough to give some of it away, which the last Government did, it is there and can only be amended by unanimity.
I agree with what my right hon. and learned Friend says about working with allies, but I would also say this, which is relevant to what Margaret Thatcher achieved at Fontainebleau: everyone in the European Union has got to understand that you are prepared to say no if you do not get what you want.
In welcoming the progress that was made, may I ask the Prime Minister about further efforts to cut the administrative costs of the European Union? He will be aware that, even in Germany, the high cost of salaries and the benefits that officials enjoy is now a matter of great public controversy. What progress does he think could be made on this budget to ensure that those who work for the European Commission are paid a reasonable salary and not one that offends European taxpayers?
The right hon. Gentleman is right to raise this. The Commission proposal—heading 5, on EU bureaucracy—was €63 billion over the seven-year-period. That was cut back to €61.6 billion, but it is disappointing. Looking at levels of pay, levels of benefit and some of the special payments that people receive, there is a range of reforms that could be made. We must go on arguing for them in the annual budget process and go on working with allies. I think it is now understood across Europe that there are generosities that simply are not defendable.
I congratulate the Prime Minister heartily on a very professional outcome to the negotiations. Will he take this opportunity to ask all party political leaders in this country to urge their MEPs to uphold this deal and to vote for it in the European Parliament? I am sure Conservatives will, but the public would not take kindly to being let down by MEPs after he has done so well.
My right hon. Friend makes an important point. All the UK MEPs account for a decent percentage of the European Parliament, so it makes a real difference if socialist MEPs and Liberal MEPs from Britain vote for this budget, and they should do so in an open, transparent manner. The idea of having a secret ballot in a Parliament seems to me completely wrong. The fact is that you send MEPs to Brussels—and, regrettably, to Strasbourg—so you can see what they do on your behalf.
But will the Prime Minister confirm that the entire EU budget accounts for just 1% of the gross national income of all 27 European member states? Should not his real priority be to end the disastrous policy of austerity that he and his fellow leaders are imposing right across Europe, and instead kick-start growth and investment to bring hope and prosperity instead of despair and stagnation?
I am afraid it is this attitude—a little bit of billions here and a little bit of billions there does not really matter very much—that has got us into so much trouble. Yes, it is 1%, for the first time, of Europe’s GNI, but the fact is that it is many billions of pounds that we pay into the European Union, and it is very important that we keep the budget under control.
May I congratulate the Prime Minister on the outcome of the deal and tell him that my colleagues here and our MEPs are supportive of the deal agreed in terms of the size of the budget? Given that the deal achieved with like-minded partners protected niche areas such as police co-operation, will he join me in saying to people such as the leader of the UK Independence party that they cannot, on the one hand, make arguments that we should not have Bulgarians, Romanians and others flooding our shores, and on the other hand not have the European arrest warrant and arrangements like it, which provide European police co-operation?
I very much welcome the commitment by the Liberal Democrats in the European Parliament to support this budget. That is two down—the Conservatives are up for it and the Liberals are up for it—so what about Labour? What are you going to do when all those other socialists in Europe tell you that this is a terrible deal and that we should not be cutting spending? When are we going to see some leadership from the Labour party?
On the issue of Bulgaria, the right hon. Gentleman makes an important point about the European arrest warrant. I would also make the point that it is important that we do have structural and cohesion funds that help countries recovering from decades of communism to raise their living standards. We should be proud of the fact that we do support a European Union in that way.
What discussions took place about the justice and home affairs agenda? As the Prime Minister knows, last year 100,000 people crossed illegally from Turkey into Greece. Does he not think that support for Frontex and its ability to deploy the RABITs—Rapid Border Intervention Teams—is essential to protecting the border? Is that going to be preserved?
There was not a specific discussion about Frontex, but under the so-called heading 3 the home affairs heading, spending is going up from €12.4 billion to €15.7 billion. That is an area where there are new responsibilities, not least because of the new member states, which is why the spending under that heading is going up.
May I congratulate my right hon. Friend on demonstrating that when a British leader takes a resolute, reasoned and constructive approach on what is good for Britain and good for Europe, we can succeed in carrying other people with us, and on disproving the craven prediction of the Leader of the Opposition that by articulating Britain’s distinctive vision for the future of Europe we would undermine our influence?
I am very grateful to my right hon. Friend for that. What is required is not only building these alliances and making those arguments, but, as I said, making it clear that if you cannot get a reasonable deal, you are prepared to go on negotiating right through the night, as we did, or, as we did in November, saying, “This deal isn’t acceptable. You have to go back and think again.”
May I, on behalf of my constituents, congratulate the Prime Minister on getting this overall reduction in the budget for the United Kingdom, which will be very welcome indeed? Does he agree that it would be very helpful if all MEPs voted for it? Will he outline to the House exactly what will happen should they not do so?
Obviously, if we cannot agree a budget, the situation would be very serious. That point was made at the Council repeatedly because, although of course there are emergency arrangements for just continuing with the existing ceilings and rolling them forward, it would be impossible for countries to plan their cohesion spending, their structural fund spending, what roads to build and what networks to put in place. That would be a very unsatisfactory outcome. I hope that the Parliament will look seriously at that, recognise that having no deal would be very bad for all countries that want to see proper planning and proper budgeting, and recognise that this is a good deal and it should accept it.
May I congratulate my right hon. Friend on this significant success? He carried it through in line with the most important of his five Bloomberg principles, namely that the root of our democracy and accountability lies in this Parliament, which recently voted for such a reduction. Does that not prove that the UK national interest is best served when the Government and Parliament are at one?
I absolutely agree with my hon. Friend. A number of leaders of different European countries kept referring to what they thought the European Parliament would do if we agreed this figure or that figure, so the point had to be made fairly frequently in the Council that we should also, and more importantly, be listening to the individual national Parliaments, because of course it is our Parliaments that have to vote the money. The European Parliament does not have any responsibility for voting the money, and it is to our Parliaments that we should account.
I am sure that the Prime Minister is right to say that no deal would be very damaging, both for Europe and for Britain. Could he say something about the part of his statement that referred to a new power for the European Parliament to negotiate flexibilities over years, and I think also over budget heads? On one reading, that is a sensible bit of flexibility; on another, it is a chance for the modicum of reform that has been achieved to be rolled back. That would obviously be very damaging indeed. Could he say a bit more about that?
I would be delighted to. First, we have to remember that the answer to the question, “Why is it that the European Parliament has any say over this budget at all?” is the Lisbon treaty, which the right hon. Gentleman’s party, in government, passed. Having said that, and given that we have to try to ensure that there is a deal, and it is better to have a deal than no deal, it is right to say to the Parliament, “It is important you can look at flexibilities between different years—between different budget headings—to try to ensure that spending is planned properly,” but I was very specific, and it was very specifically said at the Council, that this flexibility cannot result in the €908.4 billion ceiling being increased. That cannot go up. Money can be moved around to plan spending more effectively, although, of course, all that has to come back to the Council to be agreed, but the €908.4 billion, in my view, is inviolable.
At a time when the democratic link between the EU and the people of the EU is wafer thin, does the Prime Minister agree that any attempt by the European Parliament to ratify the agreement by secret ballot should and would be treated with contempt?
My hon. Friend is right. A secret ballot in a Parliament is an extraordinary concept. MPs and MEPs should vote transparently so that their constituents can hold them to account. They have to account not only to their electorates but to their countries, which will suffer if a deal is not passed through.
Will the Prime Minister confirm that his Government are still in favour of future enlargement of the EU beyond Croatia to countries in the western Balkans and, potentially, elsewhere? Given that this budget lasts until 2020, what provision is there in it for any further accessions of new states after Croatia?
We are in favour of further expansion of the EU to the countries of the western Balkans and others, as the hon. Gentleman says. Obviously, there is room in the budget for cohesion and other payments, but the fixed amount of payment ceiling— €908.4 billion—cannot change.
May I add my congratulations to my right hon. Friend on returning from Europe with a very good deal for the United Kingdom? [Interruption.] I see him wincing. The ongoing, long-term reductions in staff of the European institutions has been close to his heart. Does he now expect to see a reduction in staff, as well as a return to perhaps less generous remuneration and retirement packages than EU officials currently enjoy?
That’s for me to know and you to find out.
I absolutely agree with my right hon. Friend that we need to make more progress. It is disappointing how far we have come but I think there is a sense in Brussels that, somehow, its officials are higher beings, and they even referred to civil servants elsewhere as burger flippers, compared with their lofty role. That really needs to be beaten down and we need to recognise that its civil servants have to live within proper budgets, just as ours have to.
I hate to tell the Prime Minister that my predecessor apparently left that piece of paper behind in Munich, so whatever piece of paper he had I hope he brought with him.
Were there any discussions on the proposed bail-out for Cyprus, in particular the suggestion that uninsured deposits in Cypriot banks be written down as losses, which would have considerable effect for people here?
There was a brief discussion about Cyprus, not least because President Christofias was attending his last European Council. Herman Van Rompuy gave a moving eulogy and described him as everyone’s favourite communist, which received widespread assent. ECOFIN is meeting and will properly discuss those things. There was not an in-depth discussion about the Cypriot financial situation.
I welcome and support the Prime Minister’s statement. I am sure that no horsemeat was on the menu in Brussels, but can he reassure us that Europol’s budget will be protected in the multi-annual framework, given its recent success in identifying 103 people-smuggling suspects and 425 people implicated in football match-fixing, and its emerging role in tackling the cross-border crime involved in the horsemeat scandal?
If my hon. Friend looks at heading 3, which is the money spent on home affairs, justice and Europol issues, he will see that that budget is going from €12.4 billion to €15.7 billion. I join him in saying that the horsemeat issue is extremely serious. As my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs said, this is predominantly an issue of food safety, food labelling and truth telling to consumers, but we need to do everything we can to get on top of it.
The Prime Minister wants to repatriate regional policy. As a sign of his good intentions, will he guarantee to make up in full any shortfall in cohesion funding for west Wales and the valleys?
Overall, the amount of structural funds that will be coming to the United Kingdom at around €11 billion is a small reduction, but broadly the same—maybe 2% less. We then have to decide how that money is fairly divided up between the different regions. Of course, west Wales is one of the less developed regions so should benefit from that. We will be making final determinations about how the money is divided up when we know more about the overall figures and the proposal has been passed by the European Parliament.
May I warmly congratulate the Prime Minister on being more sceptical than the sceptics and delivering an even better deal than the cash freeze that some of us voted for in public last autumn? On the day that Pope Benedict has announced his resignation, surely some people in Europe will come to realise that the ideal of Europe lies in western civilisation, not in a bunch of MEPs voting in secret to preserve their perks and pay.
My hon. Friend is entirely right. A secret ballot would be wrong. We need an open ballot, but I would encourage every MEP from right across the United Kingdom, whatever their party, to support the budget, because it is better to have a deal than to have no deal, and this deal is right for Europe’s taxpayers.
During the summit the Prime Minister clearly had talks with President Hollande about the situation in Mali, but strangely he has made no statement to the House of Commons on this. Can he tell us how long the French troops intend to be there, how many more British troops are going, the cost of them, and above all, the military objective of the British participation in this enterprise?
There was a brief discussion about Mali, which President Hollande led, and I did have a discussion with him. I strongly support what the French have done. I do not believe it is their intention to keep their troops there a moment longer than they have to. The intention is to train up African forces from the west African states. Britain is prepared to contribute some 200 troops to that purpose. I spoke this morning to President Goodluck Jonathan of Nigeria to offer our support to train Nigerian troops. It is our intention and that of the French that those west African troops will replace the French troops. Then two things need to happen—a political agreement in Mali that helps to bring that country together, and the rapid training of Malian forces so that they can take responsibility for their own security. No one wants foreign troops to stay in Mali a second longer than is necessary, and that is certainly not our intention.
The Prime Minister has achieved two incredible firsts recently—not just the rolling back of the multi-annual financial framework, but the double majority lock for European banking union voting. Does he believe that this means that austerity has led to a new realism in the European Union? Does he think the support that he has gained for his reforms recently will lead to a greater acceptance of the need for reform and repatriation in achieving a new settlement for Britain as a member of the EU?
I thank my hon. Friend for what she says. Two things are happening. First, there is a growing sense right across Europe, not just in the UK, that we must have proper control of EU spending, and that if we are tightening our belt at home, we should not be spending more through the EU. That had strong support.
Secondly, countries are seeing that as the euro requires a further tightening of parts of the European Union, proper arrangements need to be put in place for non-euro countries. The banking union agreement was a really good example of that, and I hope that it is the precursor to more such arrangements, which would be helpful for non-euro countries like Britain.
I thank everyone who had this incredible foresight. I would like to argue today that it was all part of a careful plan. Perhaps on a day like this I will just leave it at that.
May I congratulate the Prime Minister on a hugely impressive achievement that saves every household £150? Will he confirm that as well as the new ceilings being well below the old ceilings, even more impressively they are below the 2011-12 actual payments, and that as well as gross contributions being lower under this deal, it is conceivable that, despite the Labour rebate giveaway, even net contributions will come down?
I am very grateful to my hon. Friend for what he says. It is difficult to foresee net contributions coming down because it would not be right to keep trying to spend more on agriculture, where we do get a rebate, than to spend more on cohesion for the poorest countries in Europe, where we do not get a rebate. As I said, the best way to protect our net position which makes sense is to keep the rebate and keep the overall level of spending down. I absolutely agree with my hon. Friend that the key is to set the ceilings at a level where they are not just coming down but constrain the budget, and that is what we have managed to do.
Will the Prime Minister welcome the budget agreement to introduce transition regions, which should give a useful boost to economic growth and investment and should be worth an extra £300 million to us in South Yorkshire? Will he pay tribute to the local authorities, led by all political parties, that argued so strongly for this support? Will he explain why the Government remained opposed to transition regions right until the very end?
I can confirm that Britain will benefit in terms of transition regions. We always go into these negotiations arguing that we need to look at all levels of spending and all economies, because it is rather hypocritical to argue, “You’ve got to cut the overall spending but you’ve got to protect every single bit of what Britain receives.” The good news is that 11 regions are likely to benefit: Tees Valley and Durham, Lincolnshire, Merseyside, Shropshire and Staffordshire, Highlands and Islands, South Yorkshire, Lancashire, Cumbria, East Yorkshire, North Lincolnshire, Northern Ireland and Devon. Those will all, we hope, be transition regions under the new plans.
May I congratulate the Prime Minister on winning for Britain in Brussels and put on record my thanks and recognition for his clearly formidable negotiating skills? Does not this show that any British Prime Minister is strengthened when there is a Commons vote behind him, whether it be for an EU referendum or an EU budget cut?
I am very grateful to my hon. Friend for his support. It is absolutely right to say that the British Parliament speaks clearly about these issues and is listened to carefully in the corridors of Brussels. That is true. We should always respect the fact that it is to this Parliament that Prime Ministers have to answer.
What did other leaders say to the Prime Minister in the margins about a British referendum? Does he believe that this budget deal makes the case for Britain staying in Europe stronger?
I would say that the reaction that I have had to the speech I made a few weeks ago has been, on the whole, fairly positive, because people can see that it is not some simplistic argument about an immediate referendum—it is a well-argued case, I would say, for how Europe should reform and how we should secure Britain’s place within it. These discussions show that Britain can get good deals done with partners in Europe having made a speech on that subject. I think that actually it strengthens Britain’s place in Europe.
I thank my hon. Friend for her support. This is just one of many steps that we need to take to reform the European Union, all of which should be good for other countries in Europe, as well as for Britain.
I congratulate the Prime Minister. [Hon. Members: “Hear, hear!”] Is it still his understanding that the €36.8 billion described as outside the multiannual financial framework will lead to additional British payments, as he has previously warned, and what estimate has he made of the cost to the UK of those additional payments?
There has always been off-EU budget spending and it is important that we control that as well. The Germans have been particularly focused on this agenda and have made some very good proposals for savings there, too.
I congratulate the Prime Minister on his statement. Does my right hon. Friend agree that the fact that the United Kingdom gets to have a veto on EU spending limits only once every seven years, and that 4,365 eurocrats are paid more than either my right hon. Friend or the German Chancellor, might just be a couple of the reasons why millions of British people have come to the conclusion that this country would be better off outside the EU?
My hon. Friend is entirely right that it is only once every seven years that we have the unanimity lock that enables us to achieve a deal such as this one. I do not share his view that Britain would be better off outside the European Union, but I accept what he says: we need to convince people that Europe and the bureaucracy live on a tight budget. We have taken some steps forward, but I am not satisfied with where we have got to with regard to the costs of the Commission or the other central costs. Six per cent. is still too high and, just as Government Departments here have made and are planning huge savings between 2010 and 2015, the same should apply in Brussels, too.
The future of the euro remains extremely uncertain. Indeed, a wobble in the markets only last week shows how brittle it is. Are there still European politicians who believe that the euro was a good idea and that it is now safe?
The answer is yes. As I have said—we have had this exchange before—I have never supported Britain’s membership of the euro and never will. We are better off outside it, but we have to understand the fact that, for some European leaders and politicians, the euro is an article of faith and they will do everything they can to save their currency. That is why I think we should be planning on the basis of change in Europe; the eurozone requires changes to make sense of its currency, and we should use that opportunity to win changes that are good for countries outside the euro, too.
This is a superb deal and the Prime Minister deserves many plaudits. However, one area that we surely need to look at again is the EU External Action Service. Does the Prime Minister agree that the European EAS should not be competing with large European countries such as Britain, France and Germany, but complementing us and, therefore, opening missions in those countries where the big countries in Europe are under-represented or not represented?
My hon. Friend is entirely right. There is a danger that the European External Action Service, which was, of course, part of the Lisbon treaty that he and I opposed, will start duplicating what is done by individual countries. We need to work very hard to make sure that it is adding value rather than just displacing it.
Given the significant difference between the payment ceilings and the commitment ceilings, what does the Prime Minister think is the likelihood of the EU having to increase the annual budgets beyond the level set out in the multiannual financial framework on a year-by-year basis?
The hon. Gentleman asks an extremely important question. Over the last MFF, there was something like a 7% gap, on average, between commitments and payments, so I would argue that a 5% gap is perfectly safe. I think that what we will see is lots of efforts by the institutions of the European Union, now that they are on a tighter budget, to try to spend their money more effectively and to try to use the headroom available. That is perfectly understandable and it might lead to better financial planning, but we can be confident that the ceilings are fixed and that, as a result, the spending will be less.
I thank my hon. Friend for his support. I am glad to know that the good people of Somerset are in a hearty mood. This deal shows that those who build alliances, make strong arguments and stand up for what they want can get a good deal in Europe.
We have just heard, unbelievably, the Leader of the Opposition claiming credit for the Prime Minister’s achievement. I know that the Prime Minister is a charitable fellow so, given the vocal support of the shadow Chancellor, perhaps we could give them a little credit if they manage to get their socialist MEPs to support the deal.
I am afraid that that is the key test. It is one thing saying something in this Parliament. The real test of leadership is whether the Leader of the Opposition can get not only his own socialist MEPs, but all socialist MEPs to support the deal. If he thinks that it is such a good idea and if he is such a leading player in the socialist group, surely he will be able to convince his MEPs, but we have heard not a word about that.
I congratulate the Prime Minister on rejecting the calls for a further review of our rebate. Does he agree that it is high time for the Labour party to apologise for giving away nearly half the rebate when it was in power, which is costing the country billions of pounds?
My hon. Friend makes a good point. I am sorry to disappoint him, but I am afraid that the Labour party has not learned the lesson. Its group in the European Parliament, the Group of the Progressive Alliance of Socialists and Democrats, has called for an end to all rebates, including ours. Its EU budget reform submission stated that the socialist and democratic group
“calls on the Commission to propose to put an end to all form of rebates”.
Far from learning from its mistakes, the Labour party would like to do it all over again.
A number of newspapers in this country have been “banging on” about Europe for many years and have often been cynical about our influence. Does the Prime Minister share my disappointment that on Saturday morning, a number of newspapers, including The Daily Telegraph, relegated his victory to a small article on page 8, while the Financial Times heralded it as a “significant victory” and even Le Figaro described it as a “masterstroke”?
I am very grateful to my hon. Friend. I will have to spend a bit more time studying the European press. I hope that the people can see that this is a good deal for Britain and for taxpayers across Europe.
Does the Prime Minister agree that this excellent budget, which is good for both Britain and Europe, paves the way for Britain to continue to develop alliances and to set sensible targets to reform Europe in a way that creates a more competitive business environment?
I agree with my hon. Friend. It is important that we continue the work of shrinking the agriculture part of the budget and growing the part of the budget that goes towards research and development and investment, because we want a modern European economy that can win in the global race.
In 2011, the Prime Minister vetoed the EU treaty. Earlier this year, he made the Bloomberg declaration, promising an in/out referendum. Last Friday, he forced the EU to cut the budget. Is he not proving that he is a traditional Tory? Surely this statesman is not the heir to Blair, but the heir to Thatcher.
I am very grateful to my hon. Friend for that—for those remarks. I am glad that I have made him and, I hope, Mrs Bone happy on this occasion.
I congratulate the Prime Minister on a double first last week: the first real-terms cut to the budget and the first time that the overall budget has been less than 1% of GDP. That gives the lie, does it not, to the accusations of the Labour party that Britain has been isolated in Europe ever since he used the veto just over a year ago? Is it not a combination of the red lines that he has drawn, the negotiating strategy and the building of alliances that has led to this successful outcome?
I thank my hon. Friend for her remarks. As with the fiscal treaty, it is important that if we cannot accept something and do not want to accept something, we are prepared to say no. It is also vital to build alliances. Britain worked closely with the Swedes, the Danes, the Dutch and the Germans to build a strong alliance for a good deal for Europe’s taxpayers.
I congratulate the Prime Minister on his exploits last Thursday and Friday and on the build-up work to the summit. He will recall that many people told him that what he achieved in Brussels could not be done. Indeed, one said that there was “absolutely no prospect” of Britain securing a cut in the EU budget. What conversations has my right hon. Friend had with the Deputy Prime Minister since his return from Brussels?
May I join the many voices of congratulation for my right hon. Friend and say how much I am enjoying this statement? Not only has he brought back a good deal for the British taxpayer, but it was a good day for the British Parliament—this House voted for a cut, and he delivered it.
My hon. Friend is absolutely right. It is important that other European leaders recognise that when we sit round that table, we listen not to the European Parliament, which has its legitimate views, but to our own Parliaments. That goes for the British Parliament and also for the German, Swedish, Dutch and Danish Parliaments. All Parliaments of the net contributors must be listened to.
May I join the congratulations to the Prime Minister on his personal achievement in bringing back a great deal for Britain? For years, the European Union has talked about its growth agenda, but is not the fact of the matter that EU regulation and the EU political project are holding back, rather than promoting, growth in Europe?
My hon. Friend makes an important point. Although there are things in the EU budget that can help growth—clearly, if we invest in the brilliance of British universities, that is welcome—we also need to drive the agenda of completing the single market and knocking out unnecessary regulation, as my right hon. Friends in the Cabinet are doing.
May I also add my congratulations to those coming from both sides of the House on this significant result in Brussels? I note that the shadow Chancellor is doing his best to cheer himself up. Does my right hon. Friend agree that while we have a Conservative Prime Minister negotiating on behalf of this country, the rebate is safe?
Absolutely; I can confirm that I would never agree to changes in the rebate and I think that is very important—[Interruption.] No, never. I would not agree to changes in the rebate; I think that would be completely wrong. Margaret Thatcher got a fantastic deal, and the fact about the rebate is that it lasts through all MFF periods, rather than having to be renewed on every occasion.
“David Cameron…has failed to build the alliances needed to deliver it.”
That was his view, but as he cheers away—I am expecting one of his lasagnes before too long.
The people of this country waited nearly four decades for a British leader strong enough to promise them a say on the European juggernaut and to stop the budget from growing, so may I congratulate the Prime Minister on delivering both in nearly three weeks? I particularly welcome the shift of resources to research and development, which will do the economy and Britain a world of good. Le Figaro has described the Prime Minister as a tenacious negotiator, fuelled, no doubt, by Haribo and other great British exports. Does he agree that that suggests that the clarity of his Bloomberg speech reinforces rather than weakens his negotiating position?
I am very grateful to my hon. Friend for his remarks. It is because that speech is a proper agenda for reform in Europe, and about all of Europe not just Britain’s relationship with Europe, that it gives us a good platform to take forward talks with our partners.
I commend the Prime Minister on this positive development that gives expression to the will of this Parliament. Given that Opposition concerns about isolation prove unfounded, will the Prime Minister say a little more about the longer term ramifications when it comes to negotiations ahead of the EU referendum?
As I have said, this shows that we should have a very clear bottom line and set of objectives that we want to achieve, and that we must work very closely with partners and allies to try to build up our arguments and alliances. That is what we have done over the single market, where a huge number of countries are backing our view. That is what we are doing over the EU trade deals—I hope we can make further progress on those—and that is also what we must do with our EU reform package.
May I thank my right hon. Friend for having listened to the House on this issue, and congratulate him on his good judgment in not taking the Deputy Prime Minister with him to negotiate? May I ask him to build on his success by organising an independent audit of the costs and benefits of our membership of the European Union?
I am very grateful to my hon. Friend for his support on this issue. As for the costs and benefits of membership, I think the balance of competences review that will be carried out by the Foreign Office will give everyone the opportunity to make their points about which areas of European endeavour are in our interest and which are not. We should allow that debate to take place.
This remarkable negotiating triumph follows hard on the heels of the Prime Minister’s referendum promise which has done so much to improve his negotiating hand to further advance British and European interests in Europe. Will he undertake not to take advice from the Opposition, who told him that he was too isolated in Europe to achieve these objectives and whose MEPs are about to vote in secret against the synthetic posturing of the Leader of the Opposition—one of the things that brings the European Union into such disrepute?
“David Cameron has failed to persuade other European leaders to deliver the reform of and real terms cut in the Budget”; and we were accused by the shadow Foreign Secretary of being “isolated and marginalised”; but importantly, the Europe spokesperson said that
“If he does get a good deal for British taxpayers then we will commend him for that”.
I heartily congratulate my right hon. Friend who has shown that he is an adept negotiator and demonstrated resilience without the need to wield a handbag. Can he suggest any ways to improve
EU negotiations so that they do not involve all-night sittings that are designed to wear down Heads of Government?
For the record, may I say that I do not have a handbag, which will reassure my hon. Friends, some of whom I know I have upset recently. I promise that I do not have a handbag and I have no plans to get one—[Interruption.] No, neither a manbag nor a handbag.
On the issue of how the EU does business, I agree that these all-night sittings are not a sensible way to discuss rationally things such as budgets. We need to try to find a way to start our work in the morning and try to complete it, rather than starting in the evening and going all the way through the night.
In congratulating my right hon. Friend on this triumph, may I suggest to him that the bold bottom line on his long-term renegotiation of our role in Europe seems to have focused some minds wonderfully among other net contributors to the budget?
I thank my hon. Friend for his support. There is support in Europe for reform and for the agenda that we have set out, but we will have to work extremely hard to build alliances and win friends in order to deliver what I think would be good for Europe, but also good for Britain in Europe.
May I congratulate the Prime Minister on his historic success? Does he agree that not only has he delivered a budget cut, but this is an important moment for growth in the European Union, with important emphasis on research and development, and competitiveness?
My hon. Friend is entirely right. That is why, within a budget that needs to be properly constrained, we need changes to the common agricultural policy in order to deliver more money for research and development and things that can help growth in Europe. We have achieved that: I wish we had gone further in that regard, but we can still make that argument in individual budget negotiations.
May I echo the support for my right hon. Friend and the work that he and his ministerial team have done, not only in the last week but in the months preceding these negotiations—engaging with countries such as Germany, building alliances, showing that Britain has real influence in Europe and being positive?
My hon. Friend is absolutely right. There is strong support for the different agenda items that we want to pursue—whether that is constraining properly the European budget, completing the single market or making sure that we are having the impact that we want in terms of terrorism—and we should build those alliances and work accordingly.
I congratulate my right hon. Friend on the great job that he has done, not only for the British taxpayer but for the European taxpayer. One of the problems with the European Union is that it is often far too inward looking. Can he say what progress was made at the European Council on free trade agreements in a global sense?
The conclusions agreed at the Council are that we will open discussions with Japan on its free trade agreement, we are enthusiastic about the potential for an EU-US trade deal, and that we are close to completion on the Canada free trade agreement. The paper submitted to the Council was one of the most pro-trade, pro-reform papers I have seen, and that is thoroughly to the good.
I, too, congratulate the Prime Minister on the significant success he achieved at the European negotiations. Does he share my confusion regarding the Opposition’s position? The Leader of the Opposition and the shadow Chancellor are seeking to claim to credit, yet the most senior Labour politician in government, the First Minister of Wales, is critical and is calling for a higher EU budget settlement. Does the Prime Minister share my confusion?
I have to admit that it is confusing, because of course Labour MEPs voted against a freeze in the EU budget when they were given the opportunity. What we need to hear from the Opposition is that they will show some leadership and tell their MEPs that this is a good deal for Britain and that they will back it. Let me give the Leader of the Opposition another chance. Will his MEPs be backing this budget: yes or no? [Interruption.] That was a no. [Interruption.]
Mr Balls, you are barking in the most bellicose fashion at the Government Benches. I know that whenever you do anything you do not it quietly, but a degree of restraint would be appreciated.
I am sure my constituents in Kettering would want me to congratulate the Prime Minister warmly on negotiating a real-terms cut in the EU budget. Will he take this opportunity to name and shame those of our European partners who most vociferously resisted attempts to cut the administrative budget?
I am afraid to say that the people who most oppose a cut to the administrative part of the EU budget were in the European Commission itself. They made a series of arguments about the extra roles and duties they had to take on, but I do not believe that they have looked properly at what member states have done in terms of pay freezes and pension and allowance reforms. They simply have not looked at what countries are having to do and what they should be doing in Brussels.
I will certainly do that. Paragraph 7 of the conclusions talks about support for a comprehensive trade agreement with the US, looks forward to the launch of negotiations with Japan, and expects the negotiations with Canada to be concluded very shortly. Britain will continue to lead on this issue.
I also congratulate the Prime Minister. He has shown clearly the difference between what happens when a Conservative Prime Minister negotiates for this country and when a Labour Prime Minister negotiates for this country. He has done far better, I might add, than any of the unlikely leadership bidders we have seen on the Conservative Benches in recent weeks, too. Will he set out to the House clearly what he expects the UK’s gross contribution and net contribution to be in each of the next seven years?
I am very grateful to my hon. Friend for his steadfast support. The difficulty in answering his question directly is that until we have the exact breakdowns of spending on agriculture, structural funds and cohesion in each year, it is difficult to work out exactly how much the rebate will deliver. The rebate does not operate on the cohesion spending in eastern Europe, but it does operate on agriculture spending. It is only when we know those parameters that we can work out the position. I have been straightforward and said that the British contribution is likely to go up because of the changes to the rebate agreed by the previous Government. However, they will go up by less than they would have done, because we have constrained the budget and because we have kept the rest of the rebate intact.
I congratulate the Prime Minister. Will he note that the shadow Chancellor has now cheered the Prime Minister more this afternoon than he has cheered his own leader in the past year? What does the Prime Minister make of the shadow Chancellor’s claim in the Yorkshire Post this weekend that Labour has
“absolutely not ruled out a referendum”?
I say to Michael Ellis that the Prime Minister is responsible for many things, but he is not responsible for the policy positions of the shadow Chancellor and he is certainly not responsible for what quotes are given or attributed to the shadow Chancellor in the Yorkshire Post. However, we will hear a sentence from the Prime Minister.
I also congratulate the Prime Minister on achieving an outstanding deal—we can tell it is outstanding because the French and the Labour party are agreed and are congratulating him on his negotiating stance.
I want to ask the Prime Minister about structural funds, which are very important to many regions of the country, including east Kent. Will he ensure that if the map for the UK is to be changed, Members of Parliament for the relevant areas will be consulted and will have a chance to say where they stand?
I am grateful to my hon. Friend for what he says. Under the new arrangements, there will be three different types of support for the regions. There will be the less-developed regions whose GDP per capita is less than three quarters of the EU average. In the UK, Cornwall and the Scilly Isles, west Wales and the valleys will qualify for that support. Then there are the transition regions whose GDP per capita is between 75% and 90% of the EU average—that is the list I read out earlier. However, all regions can of course receive some structural funds for competitiveness and employment goals. We will be able to make more details available as the full figures become available.
I congratulate the Prime Minister on another successful victory for the UK in Europe—hot on the heels of Yorkshire’s audacious bid for the Tour de France, which we will now be hosting next July. On the EU budget, does he agree that there is a lot of overlap and duplication in foreign affairs and defence, making them potentially big areas for budget savings?
First, I join my hon. Friend in welcoming the fact that the Tour de France will start in Yorkshire. I heard a very good presentation in Leeds. It is an extremely exciting course, and I am sure that it will bring many spectators and enormous support for west Yorkshire.
In response to my hon. Friend’s question about the budget, I think that further works needs to be done on some of the smaller headings—administration and others—where there is room for further savings.
Given Labour’s record of giving away the UK rebate, given that Hansard is littered with its Members wittering on about us being isolated in Europe, given that the Prime Minister has pledged to give the British people a say on our future in Europe, which Labour denied them, and given that he has now achieved a historic budget negotiation success, what would he now say to Labour?
I hope that Labour will turn to its friends in the European Parliament and say to the socialist MEPs, “This is a good deal for Europe and you should vote for it.” Let me give the leader of the Labour party another chance, because this is important. [Interruption.] Oh, he cannot intervene on his own MEPs. What is the point of a Leader of the Opposition, if they cannot lead on occasion?
First, I congratulate the Prime Minister. Despite the success of the wave of change in north Africa and the middle east, some of those countries, such as Egypt, Libya and Tunisia, are more susceptible to extremism and radicalisation. Were these countries discussed and was any action proposed?
I thank my hon. Friend for his support. As I said earlier, there was a discussion specifically about Mali, but there is more to be done to support democracy and the building blocks of democracy in countries such as Egypt and Libya. The EU, with its partnership and neighbourhood funds, has a role to play there.
As a business owner, when negotiating with suppliers I was always able to drive down costs when there was a clear alternative. On the same principle, was my right hon. Friend’s hand strengthened by the UK’s Eurosceptic stance ahead of the 2017 referendum?
There was an understanding, particularly among the net contributor countries, that it was time for proper budget discipline and that previously countries had gone to these MFF negotiations and not focused on the fact that if we were controlling our budgets at home, there was a case for doing it properly in Europe. I am delighted we were able to achieve that.
Today is indeed a triumph for my right hon. Friend the Prime Minister and I congratulate him—also, I might say that his wife designs very nice handbags, albeit out of my price range. Does he agree with the shadow Chancellor, who told the Yorkshire Post:
“If we allow ourselves…to be the ‘status quo party’ on Europe, or the ‘anti-referendum party’…we’ve got a problem,” and that
“we would be pretty stupid to allow ourselves to get into either of those positions”?
My hon. Friend makes a very good point: we have a clear plan in place for sorting out reform in Europe and putting that reform to the British people. The accusation against us is that this could cause uncertainty, but the argument I would make is this. What could be greater uncertainty than Labour’s position? One minute the Opposition are in favour of a referendum and the next minute they are against it. They really have to sort out their position, come to the House and tell us what it is.
I am delighted to be the last hon. Member to offer my congratulations to the Prime Minister on securing such an historic victory in Europe. After an hour and a quarter of delivering his statement and answering questions in the Chamber, and given Labour’s woeful negotiating skills in Europe, can my right hon. Friend tell me whether we are any closer to knowing whether the Leader of the Opposition will be able to convince his MEPs to vote for this deal?
I do not think we are any closer to getting an answer. What we have heard though is good news. The Liberal Democrats will be voting for this budget in the European Parliament and the Conservatives will be voting for it in the European Parliament too. We now need to hear from the Labour party, not only about its own MEPs, but about socialists right across Europe. Labour should be convincing them.