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8.17 pm

Roger Casale (Wimbledon): I join my hon. Friend the Member for Stroud (Mr. Drew) in welcoming the Economic Secretary to the Front Bench. I wish her every success in her new position, and I am convinced that she will be off to a good start today and continue in that fashion.

I challenge the view advanced by Opposition Members, particularly the hon. Member for Rochford and Southend, East (Sir T. Taylor), that although it is acceptable for Britain to be a member of the European Union, it is not acceptable for Britain to make a net financial contribution to the European Community. In other words, I challenge the view that the price of Britain's membership of the EU is not a price worth paying.

I do not argue that Britain should be a member at any price, or that we should not continue to fight for the best possible deal for Britain and for further reform of the EU. However, we should place any assessment of Britain's financial contribution to the EU in the context of the overall economic benefits that accrue to Britain from our continued membership. In debating EU finances, it is as well to remember what those economic gains to Britain and the people of Britain are. They are important to investment and jobs in the UK and provide a substantial boost to Britain's external trade.

More than 3 million jobs depend on Britain's participation in, and continued active membership of, the EU and the single market. More than 750,000 companies in the UK are involved in the single market and more than £132 billion—more than half the UK's total external trade—is linked to our membership of it. It is important

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to remind the Opposition Members who seem to be implacably opposed to Britain's continued membership of the EU that we must put our membership in that context. They continually speak about the price of membership without seeing its overall economic value. They do not seem to want to acknowledge the huge economic benefits of being part of the European market.

I say to Opposition Members who hold such views that their vision of Britain and its future is narrow and timid. At its heart is the fear that Britain can no longer stand up for its interests or pay its way in the world. It is not a vision of Britain that I recognise or that could inspire anyone with confidence in the future, and I believe that it leads to the conclusion that we should withdraw from the EU. If some Opposition Members are not arguing that we should consider withdrawal, they should think about whether it is right to flirt with views that lead to such a conclusion. That narrow, sceptical and even hostile view of the European Union and of Britain's relationship with it was put forward at the general election but soundly rejected by the British electorate. I ask hon. Members to imagine how it would have gone down with our European partners and other European peoples if such a vision had had the opportunity to prevail.

I want Britain, like other European nations and our partners in the EU, to be confident and engaged in European affairs. I want it not only to advance a positive vision for the future of Europe, but to make the case for changing the way in which the EU operates and build the necessary alliances to deliver that change. It should also be putting forward the case for reform. I say to Opposition Members that to accept and value Britain's membership of the European Union is not to accept the EU as it is or to deny that it is in need of reform. It is exactly those reforms that the British Government have been working to negotiate. Indeed, they negotiated them successfully in the talks and summits that led to the Berlin conclusions that we are debating.

Reform is needed first and foremost in how the common agricultural policy operates. Despite Opposition Members' sceptical comments, major reform in the operation of the CAP is occurring and was achieved at the Berlin summit. That includes substantial agreement on price cuts for cereals, beef and milk. Spending on the CAP will decline from 2002, which should bring a cost reduction of £70 a year to the average household in Britain.

Mr. Wiggin: How was the common agricultural policy reformed? I did not think that it had been reformed at all.

Roger Casale: I am tempted to give a long exposition about how the CAP has developed over the years. The hon. Gentleman must not think that if the CAP did not exist, other EU countries would not have their own mechanisms and instruments for protecting their agricultural sectors. Not only in the agricultural sector, but in other sectors, including industry, we want trade barriers to be removed through negotiation.

That is exactly what the EU and international co-operation are about. It is no good merely wishing that it was not there. We must deal with the world in which we live and face up to the reality of the historical development of the EU and the CAP, and work with other European nations for a negotiated settlement to bring

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those barriers down. One of the common features of the CAP is the price support mechanism. It is by reducing the level at which prices will be supported for beef, cereals and milk, bringing them closer to world prices, that we are delivering benefits to consumers in this country as a result of reform.

Mr. Mark Hendrick (Preston): Does my hon. Friend agree that the common agricultural policy has now been cut from about two thirds of the EU budget to less than half? The dalliances of the Opposition put this country at great risk. If they had been elected, decades of treaties and agreements would have been ripped up, which would have done no good whatever for the British people. Does he agree that it is outrageous for them to threaten our relationship with the other 14 member states so irresponsibly?

Roger Casale: I listened closely to my hon. Friend's comments. It is all very well for Opposition Members to shake their heads and say that they would not have torn up the treaties or jeopardised many of Britain's important international relations, not least with our partner countries, but they put forward exactly such views and policies in the election campaign. They went down very badly and would have made a miserable impression on any partner countries that we were seeking positively to influence.

In today's world, we must recognise that many of the problems that we face as a country and many of the concerns of the people whom we represent can be resolved only by working together in the European arena or in an international context. That involves building alliances for the sort of changes that we want to deliver. We must have majority agreement to deliver many changes in the EU, because of the way in which it operates. We must do the groundwork of building alliances with our European partners and engaging positively and constructively with the EU if we are to succeed.

It is all very well for Opposition Members to shake their heads, but we have heard nothing from them about an alternative strategy that could succeed without recognising the need to build up those alliances and build confidence in Britain's contribution to the European debate, so that we can lead in Europe on the reforms that we all want, including CAP reforms. One can sit in the corner and say, "What a big, bad world we live in", or go out into the world and try to change it. The way to make those changes is to work together with other European countries to deliver them.

Reform will not be completed overnight. We are engaged in an historical process and this country has a tremendous contribution to make. We cannot make that contribution if we are always seen as negative and as carping from the sidelines. Unfortunately, for many years when the Conservative party was in government, that is how Britain was seen.

The Berlin Council did several other things apart from introducing important reforms to the CAP. It put paid to the notion that the European Union's finances were spiralling out of control. Let us consider for example the amount that the EU spends on administration. No one can say that the 5.1 per cent. of the budget that is spent on the Commission and the institutions means that the EU is a superstate spiralling out of control. A European Union

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that cannot raise taxes directly, except from its employees, or borrow to finance investment, is hardly a fiscal system that is out of control.

Opposition Members raise the spectre of the EU as a Frankenstein's monster that is all powerful and outside our control. That is nonsense. The EU budget has a fixed ceiling of 1.27 per cent. If we consider EU spending for the next five years—the set of consecutive financial budgets that are agreed for a five to six-year period and described as the financial perspective—total expenditure is projected to be less than our expenditure when we entered that period last year.

Our debate this evening should reassure those who support, as we do, a ceiling on EU resources. At Berlin, it was decided to bring spending within tightly defined limits. European Union spending has been stabilised for the first time in its history. That was our Government's objective when we entered the negotiations. We also managed to maintain the United Kingdom abatement in full. Those two achievements would not have been possible if we had started out from the negative, tactically and psychologically flawed, politically misguided position of many Conservative Members. That position would not have delivered any benefits for Britain, let alone reforms of the EU.

Whatever the politics of our debate on the future of Europe and the EU, the technical and financial measures agreed at the Berlin Council are significant. I hope that hon. Members from all parties can perceive some good in them for Britain. They set a good course for the future of the EU, based on sustainable financial foundations as we prepare for enlargement.

Hon. Members in all parts of the House should consider that the Berlin settlement will benefit Britain and set the EU on a sound course for the future. I urge them to support the Bill.

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