European Union (Amendment) Bill

That is not the allegation that I was referring to. If noble Lords look at Hansard, it will be very obvious what the noble Lord, Lord Pearson, actually said. I do not think that we should do that in your Lordships’ House; we must be clear that the word ““crooked”” is inappropriate. I would argue that it is never appropriate, but I do not think we should use it in these debates. The noble Lord is making a separate point about the role of the Commission. The point I was making is that a lot of expenditure is through member states and that the European Court of Auditors made the point that when there is joint expenditure, some issues arise. Noble Lords who have dealt with getting accounts in public bodies will know that quite often, qualified accounts are not about irregularities that are fraudulent or cause concern; the irregularities have simply occurred in administrative measures. It does not mean that we are complacent or happy about it, but I am concerned that we are clear about what we are describing . Members of the Committee talked about the Common Agricultural Policy and its proportion of expenditure. Agricultural expenditure has already fallen from around two-thirds of the budget in the 1980s to 44 per cent in 2007. In the course of the 2007-13 financial prospective spending, it will fall in real terms by 7 per cent. I would like to describe the procedure as it will be, so that noble Lords who are not familiar with how it will work, as I was not, can understand it. I hope that that will be helpful, not least as noble Lords look back on this and think about other stages of the debate. I apologise to noble Lords who know this extremely well, but what is called the financial perspective is agreed by member states by unanimity. That is the overall expenditure for general areas for a seven-year period. The treaty will put that on a secure basis for the first time. There are six areas involved: sustainable growth, which is 44 per cent; natural resources, including agriculture, which is 42 per cent—I am rounding these figures up; justice, home affairs and citizenship, which is 1 per cent; external relations, which is 5 per cent; administration, which is 5 per cent; and compensation to new states, which is 0.2 per cent. The own resources decision that is then made by unanimity sets the size of the contributions to the EU budget for the period of the financial perspective—in other words, for the seven years—including member states’ contributions and rebates. That is unchanged from the current arrangements and is implemented in the UK by primary legislation, with which noble Lords will be very familiar. The annual budget procedure, which sets the levels of detailed expenditure for each year within the ceilings that have been determined by the financial perspective by unanimity by the Council, is jointly decided by the Council and the European Parliament. I hope that puts it in perspective: the overarching figures are agreed by unanimity, there are decisions about the percentage breakdown within that, and then what happens within those budgets is jointly decided. After that, the Commission proposes a budget. Both the Council, by QMV, and the Parliament, by simple majority, can propose amendments if they wish. If they cannot agree on the amendments, the Council and the Parliament meet in what is now described as a Conciliation Committee, which is new. The Council, again, acts by QMV. The committee’s proposals are sent back to the Council and back to the Parliament. If the Council rejects them but the European Parliament agrees them by a three-fifths majority, they are adopted. If the committee cannot agree, the Commission must submit a new budget. The critical part of that process is that when the Conciliation Committee comes together, it consists of the Parliament and the Council. Whether the Council representatives are Ministers or officials—the treaty is silent on that; that is to be worked through—they will be mandated, whoever they are, probably by ECOFIN but certainly by the Council, to speak on behalf of the Council. They will go to that committee and try to reach agreement. If the committee cannot agree, the Commission has to start again. If the committee agrees—in other words, we have mandated representatives as if we were the European Council and our representatives on our behalf are no doubt reporting back and keeping us informed of each conclusion with which the Parliament agrees—and for some reason, having done that, the Council rejects it when it goes back, the European Parliament then has a say. That addresses the point of the noble Lord, Lord Hunt of Wirral. I was searching my mind because when I went through this process I was looking for where the Council keeps and grows its strength, in a sense. Its strength is that if its mandated representatives cannot reach agreement in that committee with the Parliament, the whole thing is off. It is only if they have reached agreement and then the Council decides to ignore its mandated representatives that the European Parliament can step in. That is an important way in which the Council retains and, indeed, develops its role and responsibility. Having said all that, I take nothing away from the importance and value of the role of the European Parliament. I hope that on that basis the noble Lord can withdraw his amendment.