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Mr. Flight: Is there any logic whereby reform should result in rising costs? In most organisations, reform leads to falling costs. Reform and rising costs do not go hand in hand.

Ruth Kelly: The total EU budget will decrease by the end of the planning period in 2006. That will happen

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precisely because we are reforming the operation of the EU and the Commission in combating fraud and cracking down on financial irregularities. Labour Members would like that to continue.

My hon. Friends the Members for Broxtowe (Dr. Palmer) and for Bexleyheath and Crayford (Mr. Beard) spelled out the benefits of EU membership. My hon. Friend the Member for Harlow (Mr. Rammell) spoke with knowledge and interest about the scrutiny of EU legislation. The contribution of the hon. Member for Rochford and Southend, East (Sir T. Taylor) was interesting. As has been said, he was at one extreme of the debate. He said that five wards in his constituency now benefit from objective 2 funding. He questioned whether the money should be spent there. Does that form part of the Opposition's spending cut agenda? Do they want to cut back on objective 1 and objective 2 spending in this country?

Reform of structural funds is clearly required for the long-term affordability of enlargement. We shall push hard for reform that is fair and in the British national interest and that will deliver value for money for UK taxpayers.

My hon. Friends the Members for Stroud (Mr. Drew) and for Falkirk, East (Mr. Connarty) spoke about the move from VAT resources and Customs payments towards the GNP resource. That is an important move, which is more progressive and will help in the fight against fraud.

Dr. Palmer: Does my hon. Friend agree that further progress in that direction would be welcome in future?

Ruth Kelly: The move was an important step in reforming the EU budget. It is clearly desirable to move towards a system of GNP financing. I note my hon. Friend's comments.

My hon. Friend the Member for Bassetlaw (John Mann) spoke about his negotiating skills. His strong speech displayed evidence that he is well equipped for negotiating. I do not know how he managed to argue at the age of 11 that the CAP was bleeding the country dry. However, I am grateful that he has moderated his opinions and become an ardent supporter of the EU. He pointed out the importance of building alliances and enlarging the EU.

Mr. Heath: I welcome the Economic Secretary to her new post. I want to revert to the answer that she gave my hon. Friend the Member for Kingston and Surbiton (Mr. Davey) about forgoing the windfall gain from enlargement. Is she convinced that it is not a recurrent gain? Has the Treasury carried out any analysis of whether forgoing it is more advantageous to the UK than, for example, amending or forgoing the Fontainebleau agreement?

Ruth Kelly: The new agreement puts the matter right once and for all. Any new expenditure that is incurred in the member states will qualify for the rebate.

The Bill is short but important for Britain and the EU. It will enact the own resources decisions that were made at the Berlin Council in 1999. My right hon. Friends the Prime Minister and the Chancellor of the Exchequer won a significant victory for the UK and demonstrated how

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much both sides had to gain from Britain's constructive engagement with Europe. Passing the Bill will show our continued commitment to reform in Europe.

United Kingdom gains from the Berlin Council are significant. We retained our abatement in full; we maintained the overall ceiling for Community own resources at 1.27 per cent. of European Union gross national product; we secured structural and cohesion funds that will be worth £10 billion to the UK's regions between 2000 and 2006; and we negotiated reforms to the common agricultural policy that will mean lower food prices worth an estimated £1 billion a year to UK consumers. The own resources decision that we negotiated at Berlin means that the UK will continue to make a fair contribution to the European Union budget: not a euro more, not a euro less.

The Berlin Council was an important step forward for the European Union and all its member states. The EU budget was brought under control, stabilising spending following decades of expansion. The introduction of the second pillar of the common agricultural policy will move support from production subsidies to rural development and environmental stewardship.

Of course, the decisions enacted by the Bill are only part of the process of reform in Europe. We still need to push further. Economic reforms are needed to raise the productivity of the European Union as a whole, to increase the effectiveness of the single market and to extend its benefits into new areas such as energy, telecommunications and financial services. There is also an on-going process of reform to the institutions and administration of the European Union.

Roger Casale: Before my hon. Friend concludes, will she add to the long list of important gains and benefits that come from the agreement in Berlin the fact that the reforms to the common agricultural policy, the measures introduced to tackle fraud and the ceiling put in place on the EU's resources will lead to greater public confidence in European Union institutions?

Ruth Kelly: I certainly believe that that will be the case.

The Bill also paves the way for future European Union enlargement. There is an on-going process of reform to the institutions and administration of the European Union to prepare us to meet the challenges and realise the great benefits of EU enlargement.

The Bill shows how much everyone can gain from Britain's constructive engagement with the European Union. It shows that by taking a leading role in reform and working together with other member states, we can achieve outcomes that are good for the UK and that strengthen all member states. I am proud that the UK is playing a leading role in taking this process further. The single market in financial services is a good example of the benefits that constructive engagement can bring. A dynamic single market in financial services is key to achieving fundamental economic reform and prosperity across Europe.

Mr. Gardiner: I am grateful to my hon. Friend for allowing me to intervene. She has kindly accepted a number of interventions. Does she agree that one of the most important aspects of the impact that the measures

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will have on our constituents—and on their appreciation of the value of engagement in Europe and the achievements of the Berlin summit—is that most average families will see a reduction of £70 a year in their food bill? That is the bottom line.

Ruth Kelly: I thank my hon. Friend for drawing that to the House's attention. The Bill shows the substantial gains to be made by UK consumers and by everyone else when Britain plays a constructive role and engages with the European Union. The deal achieved in Berlin reduces EU spending by 2006, improves our position on structural funds, reforms the common agricultural policy and paves the way for enlargement. It compares with substantial increases agreed under previous Governments in 1988 and 1994. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.



Queen's recommendation having been signified

Motion made, and Question put forthwith, pursuant to Standing Order No. 52 (Money resolutions and ways and means resolutions in connection with bills),

Question agreed to.



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Order read for resuming adjourned debate on Question—[28 June].

Question again proposed,

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