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6.21 pm

Mr. Mark Todd (South Derbyshire): It is a pleasure to follow the hon. Member for Tatton (Mr. Osborne). His maiden speech was elegant, and deserves compliment. He dealt graciously with his predecessor, who, obviously, had proved a substantial embarrassment to his party in many ways, and drew out many of the strong aspects of that Member's participation in the House's affairs. He also made several points drawn from his family's experience, notably that there is something to be learned from this country's willingness to accept people from troubled states, support them and look on them with tolerance rather than suspicion. That is certainly a message that I take from his story, and I am sure that he takes it as well.

I also welcomed the speech of the hon. Member for Leominster (Mr. Wiggin), partly because, like him, I was preceded here by another member of my family.

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My grandfather was a Member of Parliament, and I appreciate some of the difficulties of following in political footsteps within the family. I am sure that the hon. Gentleman will face the same task.

Before turning to the debate, I should mention two items of personal history. First, shortly after I was elected, a hit list of newly elected Labour Members, along with their supposed weaknesses, appeared in The Observer. I was described as being, among other things, a maverick Euro-sceptic. I do not know with what substance the description had been given—I certainly had not communicated any of my views to anyone who might have been the author of the piece—but my speech may provide at least some basis for an understanding of why it might have appeared.

Secondly, I have some direct experience of dealing with a tiny part of the budget of the European Commission, which forms the basis of this debate. For about three and a half years, on behalf of the company for which I then worked, I ran a small business in Scotland as part of my activities. Its main marketplace was the European Commission. It sold services comparing databases for the Commission's research and development budget, and also made bids for a variety of research and development projects of its own.

That experience showed me a number of things. First, although this was the core activity of my business and I therefore pursued it with vigour, as a taxpayer I found it hard to defend the projects in which we were invited to engage. I could not see any obvious value in them; and the careful way in which they were audited by the European Union, which indicated some of the user bases, rather bore out my impression that very few people engaged with the databases that we produced or learned anything from them. That concerned me.

Secondly, there was the process by which decisions on the budget were made. The individuals involved occasionally let slip their national preferences regarding the way in which decisions ought to be made, and the partners who should be chosen in the putting together of successful projects for bids. That disappointed me. The process was not always objective; certainly, it was important to listen carefully to the language of the person with whom one was dealing, and to messages that might have been communicated about how best to seek a successful bid from the European Commission. I never encountered corruption, but I did encounter practices that I considered to stray from true objectivity, and projects that I found difficult to defend as a taxpayer, while defending them vigorously as chairman and managing director of a company that thrived on winning.

I have some direct experience, then, that confirms some of what was said by the hon. Member for Kingston and Surbiton (Mr. Davey). He made a surprisingly forceful speech, on behalf of his party, about the need for reform in the European Union and a tighter focus on its processes and objects. I share that view 100 per cent. There are some aspects of what the EU does that it will inevitably do ill—activities that, as far as I can tell from my experience, are largely carried out to foster the aspirations of individual members of the Commission and some of their supporters in individual member states. I do not believe that those activities were part of the core purposes

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of the European Union, to which I certainly subscribed when I voted in favour of joining the Common Market in the 1975 referendum.

I have described my experience of the research and development budget, but I am sure that there are other cases in which what appeared to me to be peripheral expenditure could have been tightened and sharpened, in a downward direction, towards clearer objectives that had more to do with the propagation of free trade and common-market principles within a single trading area.

As for the Bill and its mechanisms, the first element is that we are being invited, rightly, to applaud the Government's performance and their success in controlling the European Union's budget. It contrasts sharply with the supposed successes of the Conservatives when, in government, they had the opportunity to act rather than talk. We often observe a striking contrast between the Conservatives' rhetoric on European matters and the delivery of what they promised when they had that opportunity.

In 1988, when there was negotiation for the setting of the EU budget, a real-terms 17 per cent. increase was agreed by, presumably, the Government led by Lady Thatcher. The handbag wielded in anger apparently did not deliver a defensible outcome, given some of the Conservative speeches that we have heard this afternoon.

In 1994, under the perhaps less robust leadership of John Major, there was a 22 per cent. increase in the budget agreed in real terms. The contrast is marked, therefore. The success of the recent budget negotiation was to hold the budget in real terms over the period of the agreement, which is to be applauded.

The second element touches on the foundations of the agreement—common agricultural policy reform. There, it is possible to overstate what was achieved. Some modest and welcome steps were taken, but modest is the word. The gentle progress towards free-market prices was incomplete. Most commodities traded within the CAP area are substantially more expensive than those in world markets. One can argue whether those market prices are entirely relevant, but there is a significant imbalance. One of my hon. Friends mentioned the substantial burden that consumers in this country and the rest of the EU bear to maintain that subsidy for agriculture throughout the EU.

The agreement will not be a rational basis for defending agricultural policy in the forthcoming World Trade Organisation round. Whenever that gets going, we will find ourselves under immense pressure to make further progress towards liberalisation. Among the more shocking omissions was the failure to progress at all with liberalisation of the sugar regime, which guarantees higher prices in this country, albeit not at a direct cost to the taxpayer. Furthermore, the ludicrous milk quota system acts as a means of controlling production and impeding free markets. No progress was made with those initiatives, which could have been taken, and that is unwelcome.

Nevertheless, some progress has been made. There was a welcome delivery of some savings to consumers, some steps towards a truer free market position and greater transparency in agricultural support. Those should all be applauded, but perhaps with one hand and not as vigorously as they might have been.

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The third element is the reform process, which brings me back to my original argument. From my experience—perhaps the position has profoundly changed—there needs to be a thorough reform of the way in which spending decisions are taken, of spending priorities in the EU and of the management of that process. I found it to be inefficient in many respects.

I welcome the fact that Commissioner Kinnock has been given that brief, which is demanding—I would love to have it myself. It is a challenging task and I am sure that he is relishing it. He is certainly making some progress, which is to be commended. I would be most uncomfortable about agreeing a long-term funding basis without some clear understanding that a reform agenda is being followed through by those who are sent by this country to serve on the European Commission.

The concern about reform provides a platform for certain doubts, but this is not a debate about the euro and I would not want to make it one. At issue in the decision about whether we should take that further step in European integration are the concern about EU institutions and the way in which they work and whether we have a sufficiently flexible and transparent arrangement for managing European policy. I hope at some other stage to expand on some of the arguments that are outside the scope of this debate. One issue that is certainly relevant, however, is whether the institutions and the reform agenda that has been agreed are sufficiently robust for us to feel comfortable about taking that further step of integration.

Dr. Julian Lewis (New Forest, East): Without going beyond the bounds of the debate, will the hon. Gentleman give us his reaction to the recent statement of Chancellor Schroder that he would like the European Commission effectively to become the Government of Europe?

Mr. Deputy Speaker (Sir Michael Lord): Order. I know from the hon. Gentleman's earlier remarks that he is aware of what I was about to say. Perhaps, I need not say it.

Mr. Todd: Thank you, Mr. Deputy Speaker. You need not.

First, we need a sharper definition of the purpose of the European Union. We need to decide what it is most efficient for the European Commission to deliver, and much tighter administration of the Commission's tasks for which we are deciding the funding today.

Secondly, we need far better scrutiny in this country and this House of the matters that we are voting on today and the financial implications. I read with interest—I only read it this afternoon because of this debate—some key aspects of the House of Lords Select Committee report on the funding of the European Union in which a Commissioner had been quoted as saying that the subject of today's debate was a very small matter. Indeed, one of my hon. Friends said that the budget under discussion was small in relation to the UK public spending budget and that one could exaggerate the significance that it should be given. That neglects the argument that, in total public spending terms, the UK contribution is probably worth between 2p and 4p on income tax in net terms—our net contribution to the EU. That is of some weight and significance and we should take careful measure of it.

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We debate some matters of much less weight at considerable length in this House, so the matter deserves tighter scrutiny.

The systems that are in place clearly do not work well enough. Many hon. Members do not engage properly in scrutinising EU legislation. Constituents tell me that such legislation is nodded through and I can hardly dissent. Many provisions that are adopted on our behalf are not properly scrutinised. We should make a better hand of that.

I welcome the opportunity to contribute to this debate. It gives us the chance to applaud what the Government have done; I genuinely do so, as we have taken important steps. I am a committed European and strongly endorse the European Union, but I want Europe to be run more sharply, with a clearer focus on objectives that we can all share, rather than on aims that seem to engage minor interests throughout the continent of Europe. This is also an opportunity to set some more challenging tasks for future negotiations, which I hope that this Government will lead.

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