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Mr. Davey: I give my hon. Friend the assurance that we in the Liberal Democrat Treasury team will work with our colleagues in the European Parliament to press for that reform agenda.

A further example is the myriad community initiatives that are spending money in individual member states but are administered from Brussels. That is clearly nonsense and contravenes the principle of subsidiarity. I say that because I know that the hon. Member for Buckingham (Mr. Bercow) has a wealth of ideas about subsidiarity and is dying to intervene on me. Just to help him, I shall give way.

Mr. Bercow: I was hoping to help the hon. Gentleman, because I am a naturally helpful soul, as you can readily testify, Madam Deputy Speaker. He laments the narrow focus on moneys to the exclusion or detriment of considering who should be responsible for what. Given that the Prime Minister came to the House as long ago as 18 June 1997 to trumpet the supposed merits of the subsidiarity and proportionality protocol of the treaty of Amsterdam, and was ably supported in the process by the hon. Member for Somerton and Frome (Mr. Heath), will the hon. Gentleman tell the House whether there has been one case of a directive or regulation of the European Union being repealed in accordance with the provisions of that protocol—just one?

Mr. Davey: I am afraid that I shall have to write to the hon. Gentleman, because I do not know whether there has been such a case. I do not claim to be an expert.

Mr. Redwood: There has not been one.

Mr. Davey: If that is true, I regret that. Clearly, we must ensure that the changes that enable such regulations to be repatriated are enforced. That would be welcome on both sides of the House, and the hon. Gentleman does the House no service by suggesting that only his party is interested in such matters.

Another area of budgetary reform involving big numbers is the common agricultural policy. The Chief Secretary to the Treasury told us that major reform of the CAP lay behind the Berlin summit. I wish that were so, because greater reform is needed in the new world. The CAP was born in the 1950s and 1960s, when there were worries about food supply and the economies of European Union countries were much more rural. The world is different now, and we have also learned of the CAP's negative effect on developing countries, which is another reason for reform. The enlargement of the European Union may lead to an explosion of the budget if it remains in its current state, as eastern European countries join. We must be far bolder in reforming the CAP.

We need to develop the painful issue of sustainable agriculture and sustainable management of our countryside. We should ensure that funding goes to

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smaller farms rather than to huge agribusinesses, and we need to reduce the bureaucracy involved in managing payments from the CAP. Huge sums are wasted on government and private sector bureaucracy. There are only four farms in Kingston and Surbiton, so I cannot claim to be an expert on agricultural issues, but farmers in other constituencies have told me that they spend an enormous amount of time applying for these funds and then showing that they have been spent in the right way. We could get rid of a significant amount of bureaucracy in the private sector if we reformed the CAP sensibly.

Mr. Drew: Does the hon. Gentleman understand the dilemma that we face? The way to open up agriculture is through increased globalisation, which comes at a cost, given the increased risk of animal diseases and the problems with the method of producing crops.

Mr. Davey: I accept the hon. Gentleman's point. It is why the reform of the CAP should be based on wider issues, such as how it could help to develop organic farming across the European Union. That would be one way to deal with the pressures implied in his remarks.

I want to refer to budget accountability. It is remarkable that in recent years the House has debated Bills relating to the European Union's budget in far greater detail than it has debated Bills on the United Kingdom Government's Budget. That goes against the whole debate on Europe. We are told that the European Union is not accountable and that this Parliament has no say, but this Parliament spends more time debating the intricacies of the European budget than it does debating the Budget of the Government who are directly accountable to it.

That is worth mentioning because the House should have a greater hold on the UK Budget, and should consider repatriating some of the good practices on budget analysis at European level. The European Parliament has a debate on the budget ex ante, before it is agreed. How many times has the House had a meaningful debate on the Budget estimates? Under the Standing Orders, we have only three days to debate the Budget estimates. That is absolute nonsense. Again, we need to strengthen the ex-ante powers of the House, and I should have liked an indication in the Bill that the Government wanted to improve accountability more widely.

Some Conservative Members have referred to the European Court of Auditors, which they are always praying in aid for their anti-Europe propaganda. That is partly because the Court of Auditors is such a strong body that it is actually able to root out some of the waste and corruption. We should argue for the strengthening of the auditors who report to the House, and suggest giving them some of the stronger powers conferred on the European Court of Auditors.

The Bill is very modest. It does not do huge amounts for either the European Union or the British taxpayer, and to that extent it represents a missed opportunity. Even so, the Liberal Democrats will not obstruct modest measures, however lacking in courage they may be. We will support the Government tonight, but we hope that, in debating these issues in both the House and the European Union, they will be far more courageous than they have been up to now.

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4.46 pm

Dr. Nick Palmer (Broxtowe): The Bill gives effect to an excellent negotiating result, as has been emphasised by a number of speakers. Such things tend to be discounted in advance and forgotten afterwards. We should pause for a moment to recognise the success of the ministerial team that negotiated, and also that of Britain's overall approach in a positive and co-operative agenda.

When I have travelled in Europe, I have always been struck by the fact that there is little schadenfreude in regard to the problems that have sometimes arisen in Britain over European policy. There is a genuine wish to co-operate and to work with us, and a substantial community of interest. When the British Government reach out to work with European partners and achieve a sensible conclusion, they have an excellent chance of success, as we have seen in this instance.

The main substantive change in the Bill is a shift away from dependence on value-added tax and Customs revenues as the primary source of Community revenue towards a greater reliance on a fair reflection of each state's gross national product. That is welcome for several reasons. First, it is fairer to countries like Britain that have less agricultural, more balanced economies with a strong industrial base. Secondly, it is fairer right down to the individual level: VAT is not predominantly known as a progressive tax, and it is reasonable for each country to contribute according to GNP.

Thirdly—this has not been mentioned so far; it was particularly striking that the hon. Member for Hertsmere (Mr. Clappison) did not mention it—the shift will reduce the opportunity for fraud. Whereas in every EU country it is not unknown for people to try to evade VAT, I know of no attempt to change the figure for GNP. There is therefore a reasonable chance of a positive side effect, namely a reduction in fraud. I hope that in the long term the Government will aim to eliminate the historical and artificial basis of funding as a side effect of VAT and the tariff budget, and substitute a straightforward levy on the basis of GNP, so that each country is fairly treated.

The commentary of the hon. Member for Hertsmere on the Bill reminded me of the old claim that Britain is a nation of shopkeepers. He focused to an extraordinary degree on very small sums of money, to the total neglect of the overall picture. I will give a couple of examples. The entire net contribution of the United Kingdom comes to less than 1 per cent. of Government expenditure.

The hon. Gentleman is particularly exercised by administration, describing it as one of the fastest growing areas of expenditure. The growth rate for administration in the proposals is 1 per cent. The total extra cost to UK taxpayers of the entire increase that he described is 1p per taxpayer per year. That is the area on which the Conservative spokesman focused.

If we are to spend our debating time challenging the figure of 1p, it is reasonable to ask whether the scrutiny that the budget is getting is appropriate—whether it is the sort of scrutiny that the Conservative party has repeatedly claimed is missing from the European scene.

I also noted the hon. Gentleman's general attack on European spending in Britain. He refused to answer the Chief Secretary's question about which European projects in Britain he would cut. He still owes us that explanation. If he does not give it, I hope that the Conservative party

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will give us further details, later in this debate or in the more general debate tomorrow, about where it wants the axe to fall.

We have all shared in the pleasure of Britain's successful defence of the rebates. It is also fair to note that the House of Lords Select Committee on the European Union observed that the objective of which we need to keep track is not the rebate but ensuring that Britain's share of contributions is fair. Until now, the rebate has served us well. In the long term, as the Committee argued, we should be prepared to consider any approach that secures a long-term basis for Britain's fair share—possibly one without some of the artificial side effects that result in us turning away European spending because of the impact that it would have on the rebate. For the time being, however, the outcome is entirely welcome.

Before considering the detail of the debate it is worth looking at the fundamental question of why we are members of the European Union. Is it—as the hon. Member for Hertsmere seemed to suggest from time to time—to try to make a small profit and reduce our net contribution—[Interruption.]

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