European Union (Finance) Bill

Debate between Peter Bone and Kelvin Hopkins

Thursday 11th June 2015 Commons Chamber

[Kelvin Hopkins (Luton North) (Lab)]

I congratulate the hon. Members for East Lothian (George Kerevan) and for Tonbridge and Malling (Tom Tugendhat) on their maiden speeches. They are very impressive new colleagues. I welcome them warmly to the House and look forward to working with them in the coming years.

I agree with the view of my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) on the Front Bench that matters pertaining to the European Union budget should be made more clear. EU finances are controversial and we ought to be clear what we are arguing about and make sure that our constituents understand as well.

The problem is that numeracy is not given to everyone, especially when it comes to very large numbers. I used to teach economics, and the first question I used to ask my students was, “What is the difference between a million and a billion?” Many of them did not know, except that a billion was probably a bit bigger than a million. When I put the question in terms of the number of houses that they could buy for £1 million and £1 billion —perhaps four for £1 million and 4,000 for £1 billion—the students started to get the message that £1 billion is a substantial amount of money, and many billions are even more substantial.

Our net contribution, be it £10 billion or £12 billion—there might be some debate about the precise figure—is a large sum. Rather than talking billions, I tried to work it out in a way that my constituents would understand. For example, it is the equivalent of about 3p on the standard rate of income tax. People understand that. It is getting on for £200 per person per year. People understand that. For a family of four, £700 or £800 a year is a significant sum, and that is what they are contributing net to the European Union. Our net contribution has trebled in the past six years since 2008. That trebling—people understand an amount multiplied by three—is a very large increase in those years. We do not know how much that is influenced by the poor deal done in 2005. Nevertheless, that is where we are today.

Much has been made of the UK rebate, which was reduced, as we know, but even since 2008 it has gone down as a proportion of our gross contribution. In 2008 our rebate was 38% of our gross contribution; in 2014 it was 25% of our gross contribution. In that sense we have lost out even further. The 2005 deal was described by The Economist at the time as such a bad deal that no deal would have been better than that deal. I have said a number of times in this House, to the previous Government as well, that if they are so worried about it, why do we not at least try to restore the position pre-2005? That has not been taken up. Personally, I would go further than that.

Our net contribution over 40 years has been on a substantially rising trend. It started quite small but it is now much, much larger. The cumulative effect on our economy, on growth and living standards, has been substantial. My good friend John Mills, who runs the Labour euro-safeguards group, has done calculations to estimate the impact on growth during that period and it is substantial. We could have been a richer country by some way, had we not had to pay a substantial sum net into the European Union budget every year.

[Mr Bone]

The hon. Gentleman is making a powerful speech on this subject, as usual. Does he remember the only year when we had a net contribution from the EU? Was it not the year we had the Wilson referendum?

[Kelvin Hopkins]

Indeed. The hon. Gentleman is right. I have the Library note. The only time we had a net receipt from the European Union, or Common Market as it was then, was in 1975.

The major problem for us has been the common agricultural policy, which has been the major drain on the EU budget and to Britain’s enormous disadvantage over that time. Mrs Thatcher’s negotiation of a rebate was based on the fact that our agriculture was very different from that of most of the rest of the European Union and we were substantial net contributors, which was seen to be unfair so we secured a rebate. That rebate is no longer as large as it should be. Nevertheless, we did secure a rebate, which arose because of the CAP.

The Prime Minister would do well to seek Britain’s withdrawal from the CAP in his negotiations. That is certainly one of my red lines in the negotiations. The common agricultural policy is not a good thing for anyone, and certainly not for Britain. Last year I went with the European Scrutiny Committee to Lithuania. Lithuania used to be self-sufficient in food. Now it is being paid not to grow things. Large swathes of the land of Lithuania are being left fallow because the farmers are being paid not to grow things under the CAP, which is nonsense.

If we were outside the CAP we could continue to subsidise our own agriculture at the same level as occurs now, saving vast sums of money for the Exchequer while subsidising our farmers at the same level; or, more sensibly, we could decide how and where we subsidise more precisely, according to our own needs and what is better for Britain. We might want to preserve Welsh hill farms which may not be so efficient but are part of our culture and our environment and it is nice to keep them going, but we would not necessarily want to give such large subsidies to very large grain farmers in East Anglia, and so on. We could target the subsidies more sensibly, according to what we in this Chamber think, rather than what is decided in Brussels.

We should also be free to buy agricultural products on world markets and not have to pay EU duties on such imports. The EU still subsidises the dumping of sugar surpluses on world markets, a nonsense which discriminates against developing and poorer countries that produce sugar. There are many nonsenses in the EU budget and, as was pointed out earlier, it has failed to be signed off by the EU auditors for more than a decade and a half—a scandal. No business could operate having been refused audit approval for 15 or 20 years. It would be illegal to do so, I suspect. I want to see the EU budget substantially reformed.