European Communities (Finance) Bill

I see the Economic Secretary to the Treasury shaking her head; I presume that she is still one of the true believers, as befits somebody who used to be the chief economist for Britain in Europe—hardly an impartial organisation on such matters. It would be right for us to reject the proposals and for the Government to stand up for British interests. The budget negotiations were meant to rely on real reform as a quid pro quo for additional payments from the United Kingdom, but it is absolutely clear that there has been no real reform in the EU budget as a result of our conceding a substantial chunk of our rebate. The Prime Minister and I completely agree on the need to repatriate to the United Kingdom expenditure on structural funds. As has been said, no value whatever is added by the process of passing money to Brussels, handling fees being taken off, and some of the money coming back to us for projects in this country. All that involves is a transfer of political power to Brussels, which allows politicians there to make decisions about which projects should be supported and which should not, and under which rules. Such issues would be far better handled in this country. It would be much better to dispense with the system whereby Brussels handles the structural funding throughout the European Union, and I shall come in a moment to how I think that ought to be done. I have similar thoughts about the common agricultural policy in the UK. As far as I can see, for a long time there have been very few reforms in the CAP. As has been said, the policy basically operates as a wealth transfer system, whereby poor consumers pay more for their food so that wealthy farmers can benefit. It is an obscenity that, as has been mentioned, people such as the Duke of Westminster receive enormous sums from the CAP, and will continue to do so under this scheme. Under the proposals, the undeserving rich will continue to get richer from the CAP and that financial system. It is completely false to suggest that I, or many of my hon. Friends who intend to vote against this budget, oppose aid for eastern Europe. I have been in favour of widening the EU for a long time, so that is a calumny that we should in no way be prepared to accept. However, it is not helpful to handle the money that we wish to give to eastern Europe as it is currently being handled. In our relationship with eastern Europe, we should adopt two models from the Department for International Development. First, where we have little confidence in the internal systems of the country involved, we should be prepared to say, ““Yes, we're willing to support this project, but we'll handle it. We'll seek your help and assistance, but we will not hand the money over to the local equivalent of the Mafia, so that they can take away a huge proportion of it instead of making sure that those who deserve it receive it.”” The second method is direct budget support. Where we have confidence in the Governments of the recipient countries, it is far better to give them aid in their budgets, as we do with many African countries that have met various good governance standards, so that they, rather than some bureaucrat in Brussels, can determine how that money should be spent. It has always seemed absurd to assume that the European Union and its bureaucrats sitting in Brussels know better what is needed in Latvia, Lithuania and other parts of eastern Europe than the people in those countries do. If we support devolution in this country, we should support devolution in the form of direct budget support across the whole of Europe. Let me turn to some concerns about the detail of the system that the Government have not yet touched on. Does the Minister accept that the Government have, as they confirmed in a written answer, agreed to a last-minute £1 billion increase in the administration budget merely to ease the passage of the proposals in Brussels? Why did we concede an extra £1 billion in sweeteners? That is log-rolling, and I can see no reason why we did it, or why we expect the British public to pay our share of it. Following the agreement in December 2005, we were told, ““That's it—enough is enough. This is the agreement and this is what we are going to stick to.”” Yet two months later the Government agreed to an increase in the European budget of £2.7 billion. Why was that? It seems to display a certain inability to strike even a bad deal and then stick to it. Saying, ““We surrender, but if you're not happy with that, we'll surrender again later on,”” is not the best way of dealing with these matters. We have been told that the Government are very keen on transferring money to eastern Europe. However, we should be absolutely clear that it remains the position that Ireland and Belgium will be net recipients from the budget, as are Luxembourg and several other wealthy countries, whereas a country such as Cyprus, with a gross domestic product half that size, will end up as a net contributor. That is absurd. Per head, the top three recipients of EU funds will be old member states—Luxembourg, Belgium and Greece. That does not display a transfer of wealth from the EU's old western members to its new eastern members. France will be the largest single recipient of money from the EU under the negotiated settlement, which is meant to be about transferring money to the east. I fail to understand how the Government can possibly defend this as a good deal. If this is good deal, I dread to think what a bad deal would have been. It is noticeable that the Government have refused to produce statistics indicating their estimates of how much every other country in the EU will pay in and receive—except for France. If they are prepared to do it for France, I cannot see why they are unwilling to do it for other countries, unless they feel that there is something to be ashamed of. I mentioned that Luxembourg will get the most in EU spending per person, followed by Belgium and Greece, and I would be grateful if the Minister would justify that to me. This does not strike me as being a reform budget. Spain was previously the largest recipient of funds, but it has been replaced by France, and that transformation does not seem to be a brilliant piece of negotiating. Ireland is the second richest country in the EU, with an income per head 30 per cent. above average, yet it will get more money out of the budget than it puts in. I do not understand the logic of that position. In fact, the CAP currently transfers money from the poorest states to richer countries such as France and Spain. I am happy to give way on this point if the Minister wants to intervene, but in 2004 the 10 new member states paid nearly €1 billion more into the CAP than they got out of it. Perhaps that situation will change over time, but how did we get into that position? Why are we prepared to accept that the EU's administration costs alone will rise by 28 per cent. in real terms? At a time when we are trying to squeeze budgetary expenditure and administrative costs, why are we prepared to accept that EU administration costs will go up by 28 per cent.? Is that another brilliant example of hard negotiation?