Draft EU Budget 2011

Lord Tyrie Excerpts

Wednesday 13th October 2010 Commons Chamber

[Justine Greening]

In fact, we are doing just that. I will come on to more detail about what we are doing now and what we plan to do, clarifying the arguments that we are putting to the European Commission.

Let me be clear that the Government will support the amendment tabled by my hon. Friend the Member for Stone. We very much welcome the pressure applied to the European Parliament to reject the proposed rise. We will do our bit as Ministers and as a Government to put pressure on that Parliament, and particularly on our MEPs, to reject any proposed rise. When the shadow Minister, the hon. Member for Bristol East (Kerry McCarthy) makes her speech following mine, I very much hope that she will confirm that the Opposition will press their MEPs to oppose any rises in the EU budget. Perhaps my hon. Friend the Member for Stone will want to press her further on that.

Amendment (b) was tabled by my hon. Friend the Member for Clacton (Mr Carswell) who, despite spending less time in this House than my hon. Friend the Member for Stone, has also clearly established his role as one of those MPs who scrutinises all EU matters carefully in a way that adds quality to our debates. I want to make it clear to him that we absolutely agree with the sentiments behind his amendment. We want to see the 2011 budget cut. The problem with the amendment is that if we withdrew our money from the EU, under its terms that would be illegal. We cannot support an amendment that would make our action illegal, so we will have to reject it, but I can tell my hon. Friend that if he had worded the provision slightly differently, we might well have been able to support both amendments. It is with regret that we have to reject his amendment, despite agreeing with its sentiments.

Let us talk about our concerns over the EU budget. It is not just the size of the draft EU budget but its effectiveness that is an important matter of concern.

[Mr Andrew Tyrie (Chichester) (Con)]

Many aspects of the EU budget are, of course, deeply pernicious. Does the Minister agree that a particular shocker is the fact that the original budget had written into its baseline a 4.4% increase in administration costs alone? It would be utterly appalling if we found increases in administration budgets taking place at a time when economies are having to be found right across Europe. What proposals do the Government have to get that increase down substantially? Will we be able to make a saving and secure a reduction in administration budgets as a result of the negotiations?

[Justine Greening]

My hon. Friend is absolutely right that it is shocking and untenable for the EU to propose a 4.4% rise in heading 5 administration at a time when countries across the EU are struggling with extremely difficult and challenging fiscal deficit reduction plans. We have already voted against that rise and we will continue to take the opportunity to vote against it. More than that, I will explain what we are doing to ensure that the next time we have the chance to vote against it in Council, rather than have a minority of countries with us that is just short of a blocking minority, we can actually achieve a majority and make a difference.

If we look at the size of the EU budget, we see that there is a marked disparity between the Commission’s proposed budget increase and the substantial reductions in public spending that countries across the EU are having to make. The Governments of, among others, France, Germany, Greece, Spain and Romania, as well as our own, have all announced sizeable austerity measures¸ and the EU as a whole has taken unprecedented action to secure economic stability. Yet the Commission has proposed that the EU budget should increase by nearly 6% in 2011. The Commission’s draft budget explains that the proposed increase is driven primarily by pre-planned rises in the financial framework, and by large spending programmes such as the research framework programme. As we have heard, however, it is impossible to ignore other elements, such as the startling 4.4% increase in the cost of running the EU institutions themselves.

I think all Members are aware that, arguably, the level of the EU annual budget is to some extent already determined by the overall financial framework, but the Government firmly believe that 2011 cannot be a “business as usual” year for the EU budget. That is simply no longer tenable. As a result of the global financial crisis, Governments across the EU have had to reassess their spending plans, and the EU budget should not be immune to the same pressures. My right hon. Friend the Chancellor of the Exchequer has been very clear about that. We are committed to securing a cut in the 2011 budget. Indeed, at a meeting of EU Finance Ministers on 18 May, my right hon. Friend the Chancellor proposed a freeze in the budget at 2010 levels. He said:

“I put to Ecofin that there should be a cash freeze in the budget. It is not acceptable to have an increase in the budget.”

That was in marked contrast to the previous Government’s approach, which saw year-on-year rises effectively unchallenged, and, most damagingly, saw Britain lose part of our valuable rebate—a rebate that had been won by a Conservative Government. This is not strictly within the scope of today’s debate, but as we turn our attention later to the next financial framework, we will do so with our UK contribution rising purely as a result of the previous Government’s catastrophic decision to give away part of our rebate. That amounts to a £2 billion a year hit for taxpayers—£10 billion over the course of a Parliament—and for what? A reform of the common agricultural policy that has simply never taken place.