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3.45 pm

As the hon. Gentleman so rightly pointed out, at the negotiations at least three approaches to reform were set out: co-financing, degressivity and modulation. The UK endorsed progressive price cuts, and we look forward to reconsidering that in the mid-term review of the CAP. Modulation would provide significant flexibility and, for the first time, countries would be able to transfer resources to rural development. The UK intends to take advantage of that facility and transfer up to 4.5 per cent. of CAP spending to rural development by 2006-07.

I was pleased that the hon. Member for Kingston and Surbiton (Mr. Davey) welcomed the switch to the GNP resource, which is of course a more progressive system. He welcomed also the ceiling of 1.27 per cent. on own resources, which, as he rightly pointed out, imposes the necessary financial discipline on EU countries. He asked detailed questions about the windfall gain and the UK rebate. Those are interesting questions, and I will attempt to answer at least some of them.

As the hon. Gentleman knows, there are three elements to the windfall gains: that relating to successive shifts from VAT to GNP financing; a new element relating to

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the switch to GNP as a result of an increase in the amount that member states can retain against collecting the traditional own resources; and a third element that will come into effect only after the next enlargement.

The first element is eliminated by article 4(d) of the own resources decision. That has the effect of setting our contribution at a level equal to what it would have been if the switch to GNP had not taken place. The second element will be eliminated from 2001 by article 4(e) of the own resources decision. That subtracts from the abatement the UK's net gains resulting from the increase in the percentage of traditional own resources to be retained to cover collection and related costs.

The calculation needed to eliminate the enlargement windfall gain will not, of course, arise until the year after the next enlargement. It will involve establishing the amount of pre-accession expenditure in the acceding countries in the year immediately before enlargement takes place, and excluding that amount from the expenditure on which the abatement is calculated. In subsequent years, that amount will be indexed using the euro-GNP deflator, and excluded from the expenditure on which the abatement is calculated. That ensures that, in real terms, what was unabated before enlargement will remain unabated afterwards.

The hon. Gentleman asked whether it would be possible for the Treasury to calculate the cumulative effect of windfall gains forgone. As he rightly pointed out, that is a rather complex calculation of amounts that can vary from year to year. Indeed, it is not at all clear at the moment what will be the value of the windfall gains that will be forgone on enlargement, as that will depend precisely on which countries are eligible for enlargement and on the amount of pre-accession aid that is spent in the year preceding enlargement.

The EU has come up with its own estimate, although I believe that others may come up with different estimates. It would be even more difficult to go back and calculate a cumulative total, and I can tell the hon. Gentleman that we are not even considering doing so. I assure him, as I have been assured, that the total of the windfall gains forgone is not significant compared with the size of the total UK abatement. I hope that I have reassured him and that he does not spend the recess trying to make his own calculations.

Mr. Edward Davey: I am grateful for the Minister's assurance, but it would still be useful for Members to see the figures. Even if I do not spend my summer recess calculating them, I hope that someone from Her Majesty's Treasury will. Perhaps she can confirm that they will. We clearly have historical data on the windfall gains that were forgone after the 1988 and 1992 decisions by the Conservative Government, so it would be fairly easy for the intelligent people in the Treasury to calculate the figures. If the brains exist in the Treasury to produce the formula in the first place, surely its officials can make a prediction, or a range of predictions, for the windfall gains forgone because of the 2000 decision.

Ruth Kelly: I am sure that the Treasury team is extremely flattered by the hon. Gentleman's words, and I shall consider his request. However, it is not a simple calculation and it is not clear whether it would make sense, but I shall heed his words.

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The hon. Gentleman also mentioned the effect of the Fontainebleau agreement on the green pound. He rightly explained that the Conservatives introduced the system when they were in government. Their Governments did not pay out a penny of the optional money that was available for agrimonetary compensation, whereas this Government have taken advantage of it to support our farmers.

In conclusion, the deal is good for Britain and Europe. It maintains financial discipline, shifts financing to GNP and retains the UK's abatement. I hope that the arguments made on Second Reading and those that we have pursued extensively today make the clause acceptable to the Committee.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Bill reported, without amendment.

To be read the Third time tomorrow.

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Northern Ireland

3.54 pm

The Minister of State, Northern Ireland Office (Jane Kennedy): I beg to move,

I was tempted to move the order formally, but I see that some hon. Members are here to debate it.

The order, which was made in Privy Council yesterday under the procedure in section 85 of the Northern Ireland Act 1998, makes three essentially technical amendments to policing legislation and comes into effect on 30 July. Before going into those in detail, I want to ensure that hon. Members are in no doubt: the order does not arise from the Weston Park talks. It addresses two issues that have arisen on new police recruits—referred to as police trainees—and takes the opportunity to make a technical amendment on parliamentary procedure, which I hope will be welcome.

I also want to set out for those not familiar with section 85 of the 1998 Act how it works. In brief, Her Majesty the Queen at Privy Council makes the order. It must then be approved by resolution of both Houses of Parliament within 40 sitting days. If it is not, then it ceases to have effect.

The order makes two amendments to the Police (Northern Ireland) Act 2000 and a further amendment to the Firearms (Northern Ireland) Order 1981. The main change concerns the appointment and training of the first new recruits to the Police Service of Northern Ireland. The first amendment relates to section 39 of the 2000 Act, which provides for the appointment of police trainees. As recommended by the Patten report and therefore as provided for in the Act, police trainees do not acquire the status and powers of police officers and are not subject to police terms and conditions until they have successfully completed their recruit training. As a consequence, section 41 of the Act provides for the Secretary of State to make regulations setting out the terms and conditions of trainees. It also requires that the Policing Board, among others, be consulted before the regulations are made.

In spite of the Government's considerable efforts to bring about the necessary agreement on outstanding policing issues to enable the Policing Board to be established, it is not yet in place; nor is it likely to be in time to be consulted before the regulations for the trainees are needed. It is planned that the trainees will be appointed in September. The order accordingly substitutes the Police Authority for Northern Ireland for the board for the purposes of consultation, and to undertake any of the board's functions under the regulations until the board is in place. Although that is not what we would have wanted to do, it is a sensible remedy. Put simply, it enables us to go ahead to set terms and conditions for the trainees.

On the second issue that affects recruits, the proposed amendment to the Firearms (Northern Ireland) Order 1981 exempts trainees from the requirement to hold firearms certificates. That will avoid the necessity for the Chief Constable to issue individual firearms certificates to trainees for the purposes of firearms training. Again, I hope that that makes sense. Police officers United Kingdom-wide are already exempt.

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Finally, the order will amend section 76 of the 2000 Act. As it stands, section 76 requires that a draft order to renew the 50:50 recruitment provisions, under section 47(3), and draft regulations on flags and emblems for the new policing service, under section 54, must be laid in Parliament for 40 days before they come into effect, but section 76 does not require that they be debated. The amendment applies the affirmative resolution procedure, which guarantees debates in both Houses, and allows the legislation to come into effect immediately thereafter.

To be frank, we thought that we had done that in an amendment to the Police (Northern Ireland) Bill in the other place in response to the report by its Delegated Powers and Deregulation Committee which called for the affirmative procedure to be applied to the powers in those clauses. That is what we meant to do at the time and are now doing through the order. With those brief comments, I commend the order to the House.

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