Lord Ashton of Hyde
Main Page: Lord Ashton of Hyde (Conservative - Excepted Hereditary)European Union (Finance) Bill
Lord Ashton of Hyde Excerpts
Lord Ashton of Hyde (Con)
My Lords, this is a short Bill but an important one. Its purpose is to enable the United Kingdom to implement the new Own Resources Decision—ORD for short—the legislation that governs the system by which the EU budget is financed. Clause 1 adds the new ORD to the list of previous Own Resources Decisions recognised under the European Communities Act 1972, thus giving it effect under the UK law. When passed, the Bill will become the European Union (Finance) Act 2015, superseding the European Communities (Finance) Act 2008, which approved the previous ORD. I am glad to see the noble Lord, Lord Davies of Oldham, in his place since it was he who, seven years and five months ago, took through the previous finance Act in 2008. Clause 2 simply cites this Act as the European Union (Finance) Act 2015 and repeals the European Communities (Finance) Act 2008.
The new ORD was agreed unanimously by the Council of Ministers in May 2014. This came as a result of the historic seven-year EU budget deal secured by the Prime Minister in 2013. In 2005, the last time a seven-year EU budget was agreed, the then UK Government agreed to an 8% increase in the spending ceiling and gave away part of the UK rebate. In 2013, by contrast, the EU budget was cut in real terms for the first time, with our rebate protected.
On the expenditure side, we ensured that within a smaller budget, expenditure was reoriented towards areas of expenditure that can provide real growth—areas such as high-value research and development, and tertiary education. Spending on research and development and other pro-growth investment will now account for 13% of the total budget, a 4% increase on the previous budget. At the same time, overall spending on the common agricultural policy will fall by 13% compared to the 2007 to 2013 period.
However, the Bill relates only to the agreement reached on the revenue side of the EU budget. In 2013 there was strong pressure from some member states, the Commission and the European Parliament to reform the way the EU budget is financed, including proposals to introduce a financial transaction tax and do away with the UK rebate, or at least change the way it works. It was a specific objective for the UK that the new financing system would require no new own resources or EU-wide taxes to finance EU spending, and no change to the UK rebate.
This is precisely what was achieved in the political agreement reached in February 2013, and was accurately reflected in the new ORD. Under that agreement, which the Bill will implement, the Prime Minister protected what is left of the UK rebate, and this is maintained without any change throughout the life of this agreement. The agreement also ensures that there will be no new types of member state contributions and no new taxes to finance EU spending over this period.
The new ORD does not make any changes to the way that the EU budget is financed. There are, however, some changes in the detail of the ORD compared to the previous one. For example, it reintroduces reductions in the GNI-based contributions of the Netherlands and Sweden, while also introducing small reductions in these contributions for Denmark and Austria. The UK will contribute to these small corrections, which would mean an additional £16 million contribution from the UK per year compared to the last ORD. To put this in context, this is around 0.1% of our total gross contribution in 2014. Moreover, this will be largely offset by changes in other corrections.
Noble Lords will recall that the UK has always supported the principle of budgetary corrections set out at the 1984 Fontainebleau European Council, which gave us our rebate. In the absence of any meaningful reform on the expenditure side of the budget, we believe that member states who make disproportionately large net contributions to the budget in relation to their prosperity, such as the UK, should receive corrections.
This new ORD now requires the approval of each member state, in accordance with its own constitutional requirements, before it can come into force. The Bill before us will therefore give UK approval to that Council decision. The passing of the Bill will be the final action necessary in delivering the deal secured by the Prime Minister in 2013. As a result of that deal: EU spending was cut in real terms; UK contributions are forecast to be lower in every year compared to the final year of the Government’s seven-year deal, by on average around £1.3 billion; and our rebate, which is worth around £5 billion per year, is protected. This agreement represents a good deal for the taxpayer now and over the coming years, and I commend it to the House. I beg to move.
Lord Ashton of Hyde
My Lords, I am grateful to the noble Lord, Lord Davies, who has responded to this brief debate for Her Majesty’s Opposition. The Bill reminds us that, by working with partners, a better European settlement is possible. The revenue side of the budget is an area that receives much less interest, but is no less important, nor any less of a success for the UK, than the cut to the EU budget.
This Bill is the culmination of a two-year process. In 2013, the Prime Minister negotiated a deal for the multiannual financial framework which involved no new categories of own resources and no new taxes, and kept our rebate intact. For the first time, he achieved a cut in the multiannual financial framework.
Since then, there has been scrutiny—this pertains to what the noble Lord, Lord Davies, talked about—by the European Parliament and by the scrutiny committees of both Houses of this Parliament, not to mention Statements and Questions in both Houses. The Council of Ministers agreed this ORD unanimously in May last year. On 23 June, the House of Commons passed this Bill and it finally falls to this House to give the Bill a Second Reading.
The noble Lord mentioned the constructive role that he hopes the Government will play in the EU. I can assure him that we will do so. He welcomed the cut in the overall budget and in particular the reallocation of money from the common agricultural policy to the structural funds. It is not as much as we wanted—13%—but the money went to the growth funds, which I think we all agree are a good thing. Within the common agricultural policy as well, we reallocated some money from Pillar 1 to Pillar 2, from subsidies to rural growth funds.
The noble Lord, Lord Davies, could not resist referring to the Budget and how we should manage the finances better, which is somewhat strange considering that, in the context of this Bill, the annual contribution doubled under the last MFF. His party gave away the rebate, which has cost this country €9 billion and a further €2 billion per annum.
The noble Lord asked whether we were driving the agenda in Europe. We are certainly able, and would like, to take an active part in Europe. We will pay attention to the five presidents’ group report and to the high-level group. I agree with him that we should move to growth and I think that the new Commission is pursuing much more of a growth agenda. We will certainly support that and we agree with it.
On research and development, I again agree with the noble Lord. It is worth noting that the Horizon 2020 project received a 38% increase in this MFF and British universities are particularly suited to take advantage of that fund. We also support Vice-President Georgieva’s better spending agenda, but I am afraid that I cannot tell the noble Lord when that report will be published. If I find out, I will certainly write to him and let him know.
On the noble Lord’s comments about being uninformed on the budget, I think we can all agree that it deserves closer scrutiny. There is a huge concern across Europe that we should spend a lot of time trying to identify the structural weaknesses, and we should definitely increase scrutiny. He mentioned that EU officials should be summoned to the scrutiny committee of your Lordships’ House. Sir William Cash explicitly mentioned in the House of Commons that the Commons committee already can summon EU officials. I agree that the EU Scrutiny Committee should also be able to.
The overall message we are giving with this ORD is that if we are tightening our belt at home, we should not spend more through the EU; and we are not, thanks to the Prime Minister’s historic deal. Within the smaller overall MFF, expenditure has been reoriented toward areas that provide higher value for money to the UK taxpayer—high-value research and development, universities and other pro-growth investment. The Government’s task, on which I know this House will hold us to account, is to deliver on that deal.
We strongly welcome Vice-President Georgieva’s budget—and I have just had some information. The first working-level meeting will take place in September. The initiative aims to develop a more performance-oriented budget which delivers tangible results. We have held a discussion with the Commission and offered technical assistance. The precise timing and scope of the review is not yet known, but rest assured that we will push for maximum value for money in the context of this review.
In 2013, we achieved real, historic change. We got a good deal for the United Kingdom. We proved that we can achieve reform in Europe and we protected our interests. This historic agreement will be formalised with the passing of the Bill, which I commend to the House. I ask that the House give the Bill a Second Reading.
Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.