Draft EU Budget 2011

Baroness Stuart of Edgbaston Excerpts

Wednesday 13th October 2010 Commons Chamber

[The Economic Secretary to the Treasury (Justine Greening)]

I beg to move,

That this House takes note of European Union Document No. SEC(2010) 473, Statement of Estimates of the European Commission for the financial year 2011; and supports the Government’s efforts to maintain the 2011 EU budget at the cash levels equivalent to the 2010 budget, while ensuring better value for money in EU expenditure.

I very much welcome the fact that this debate is taking place in this Chamber for the first time in several years. The debate demonstrates the importance that the House attaches to scrutiny of the EU budget, to the UK’s contribution to it, and to the value for money of EU expenditure.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

I am grateful to the Minister for giving way. She says that this debate demonstrates the importance that the Government attach to giving the House a say. Can she tell us whether a vote on the matter, either way, would make the slightest bit of difference?

[Justine Greening]

The hon. Lady is assuming that those Members who have tabled amendments will press them to a vote. Perhaps she is prejudging the outcome of the debate. We welcome the debate because, tomorrow, I shall be in Brussels pressing our case in respect of the European Union budget, and it is vital that we are able to say that we have scrutinised the document thoroughly in our European Parliament.

In regard to the European Union, matters such as the single market, enlargement and environmental standards have seen real progress, but the EU budget does not have pride of place among the EU’s achievements. I will not hide from the House the Government’s frustration that some of our partners—and those in EU institutions—do not seem to understand how bizarre it is, when national budgets are under such extraordinary pressure, that the EU should be immune from that. So here in the UK, the week before a very tough spending review, it is only right that we should subject the EU’s budget for 2011 to the same level of scrutiny as our own national accounts.

As I said to the hon. Member for Birmingham, Edgbaston (Ms Stuart), I will be in Brussels tomorrow, holding discussions with Commissioner Semeta, the Belgian presidency and MEPs on this very subject, pressing them to take the close, objective, pragmatic and responsible look at the EU budget that is long overdue, just as we are doing in the House today. I will, of course, come later to the previous Government’s giveaway of the rebate, which is one of the main reasons why we will see our contributions rising over coming years, but let me begin by summarising this Government’s approach to the Commission’s EU budget proposals.

At the beginning of the debate, let me also clarify our response to the amendments: I absolutely agree with the sentiments of both. Amendment (a) was tabled by my hon. Friend the Member for Stone (Mr Cash) and I would like to take this opportunity to pay tribute to the time, effort and work he has put into scrutinising not just the EU budget but a whole range of areas in which the EU has become involved. His persistence has certainly paid dividends in ensuring that this matter has maintained the prominence in the UK Parliament that it absolutely deserves.

--- Later in debate ---

[Justine Greening]

I assure my hon. Friend that we are looking across the piece to challenge rises in all areas of the EU budget, including the EEAS. As he points out, only months ago we were given an assurance that there would be fiscal neutrality and that has already been broken. We are challenging that and I believe we are doing so successfully. I assure him that we are making our case very strongly within the EU to challenge those sorts of spends when they are bad value for money and when the money is spent in an unplanned way that has not been agreed and was not passed in the original proposal that was signed up to. As he points out, that proposal was signed up to by the Labour party when it was in government.

So, let me wrap up. Although the annual budget negotiations are not the usual forum to achieve major budget reform, we have still set out our stance. We will be looking for a cash freeze in 2011 and, in this time of austerity, Europe needs to be looking to make the same efficiency savings that we are making in the UK.

I know that the House is interested in this topic, so I shall touch on it briefly. The European Parliament’s Budgets Committee has voted on this budget and the European Parliament in plenary will be voting next week on the European Parliament’s position on the 2011 budget. We have done our best to ensure that our Government’s position on the 2011 budget has well and truly got through to MEPs. We sent a lobbying note to the UK MEPs in September clearly setting out our position.

[Ms Gisela Stuart]

Would the Minister care to comment on press reports that the European Parliament said that it would make concessions on its budgetary demands only in exchange for concessions by member states on direct resources financing?

[Justine Greening]

I cannot confirm those reports, but I can tell the hon. Lady that the European Parliament is now considering in detail its response to the European Union 2011 budget. It might well decide to take a position that has a broader perspective than purely the size of the European budget and the split of that budget across the headings. As she will be aware, if there is no agreement, the conciliation process will take place, and of course I cannot prejudge how the European Parliament will approach that and whether it will seek a broader negotiation process than just that on the budget. She is right to flag up the fact that the Parliament might choose to do that, which is why it is all the more important that Ministers and the Chancellor are out making our case with the European Parliament and MEPs as to why we believe that saying no to the totally unacceptable 6% rise is absolutely vital for all MEPs. I hope that the Opposition will play their role with their MEPs in ensuring that the European Parliament takes the right position on the European Union budget. I have spoken with James Elles, an MEP who is on the Budgets Committee. As I have said, I will be in Brussels tomorrow to reiterate our position.

We anticipate that the long-overdue budget review paper from the Commission will be published in the next 10 days. We then expect the Commission to present proposals for the next seven-year framework for the EU budget in the first half of next year. I can assure hon. Members that the Government will strongly defend the UK’s national interests in the forthcoming EU budget negotiations. We are clear about what matters to the UK. We will defend the UK’s abatement, which is fully justified owing to distortions in EU spending, and we want the EU budget to be smaller, so that our domestic efforts to cut the deficit are not undermined by growth in EU commitments.

--- Later in debate ---

[Kerry McCarthy]

That is obviously partly related to the fact that the UK has probably the largest financial centre globally—it is certainly far and away the largest financial services sector in the EU. There is a more significant impact on the UK economy, London being as it is, as opposed to other countries.

To return to my speech, I shall not take any more interventions for a while. Labour Members believe, as we have always done, that the EU should always scrutinise its expenditure carefully and closely in cutting waste. We want to ensure that the budget is spent wisely and well, and that there is demonstrable added value for the member states and regions as a result of such expenditure.

We welcome the fact that the EU Parliament has chosen, for the first time, not to go above the ceiling set out in the budget at a time when member states face economic hardship. That demonstrates that the Parliament has at least gone some way to appreciating the challenges, but the issue today is whether we should go further. The Government, despite all their talk and bluster, seem to be singularly failing in their aim of putting a lid on what the EU Parliament wants to spend.

Labour Members fully support the principle that the EU budget needs to play its part in an era of fiscal consolidation, and we do not think it right that there should be significant real increases next year, but we should avoid throwing the baby out with the bathwater. The EU has key roles to play, and it was noticeable in the Minister’s speech that she made only passing reference to the good things that come out of working with our European partners. In particular, it is important that the EU continues to foster growth and recovery, which is the priority for us here in Britain. As Europe is our largest export partner, growth in Europe is an essential precondition for our recovery.

We welcome the stated key objectives for the draft 2011 budget, which are to support the EU economy and recovery from the economic and financial crisis, and to help EU citizens by reinforcing economic growth and employment opportunities. It is somewhat ironic that as the European Parliament debates and votes on the draft budget on Wednesday 20 October, when it will focus on the admirable and important objectives of supporting recovery and growth, we in the UK Parliament will hear a statement on the comprehensive spending review from the Chancellor, who clearly rejects an active role for the Government in securing such objectives and believes that cuts, cuts and cuts alone are the way forward.

[Ms Gisela Stuart]

Will my hon. Friend take on board two observations? On an earlier intervention about the Commission’s budget not having been signed off for the past 10 years, is she aware that neither has that of the Department for Work and Pensions? On a much more practical point, if the great ambition is to make us economically successful, will my hon. Friend reflect on the Lisbon agenda, which was supposed to make us the most competitive and technologically advanced economy in 2010 and has singularly failed to do so? Why does she have so much faith in the 2011 aspirations?

[Kerry McCarthy]

There was also the 2010 strategy. In the flagship initiatives set out in the documents before us today, there are some good programmes that we should support, to the extent that they have demonstrable outcomes and that they make a difference, rather than being fine words that do not achieve what they set out to do.

Let me go briefly through the headings in the budget. The Minister was unspecific. She spoke generally in favour of a cash freeze, but did not specify in which areas. [Interruption.] Perhaps the hon. Member for Devizes (Claire Perry) will refrain from heckling me quite so much. She is a near neighbour of mine, and we get to talk rather a lot on the television cameras outside the Chamber. It is extremely distracting, and she will get a chance to contribute later if she wishes. That is fair.

Under sub-heading 1a in the budget, on competitiveness for growth and employment, we support funding that encourages the effective operation of the single market, including addressing transport challenges, such as the greening of transport systems, and promoting sustainable, low-carbon economic recovery and growth. It is important to continue to support innovation and research and development on, for example, the environment, clean energy, energy efficiency and promoting a knowledge-based economy. Europe has a key role to play in that.

On structural and cohesion funding, which is included under sub-heading 1b, much of that spending is key to EU enlargement. Sensible steps to ensure that that money is well spent, which we agree should be taken, should not be allowed to slip into undermining the important principle that enlargement is in the UK’s long-term interest.