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Mr. David: Does the right hon. Gentleman accept that a significant financial reform of the CAP took place in 1999? According to the agreed rota, there will be a further fundamental discussion of the CAP's future in which its new financial perspective will be discussed.

Mr. Heathcoat-Amory: No, the earlier reforms may have gone some way to meeting the problem for existing member states, but they do not begin to measure up to the challenge of enlargement. The French have now made it perfectly clear that they have no interest in reopening the reform package before 2006. So Europe is simply not ready for enlargement in the crucial issues of agriculture and the budget.

We shall debate such matters at greater length tomorrow, but it is important to refer to the budget now, because everyone will concede that the present arrangements for contributions to and receipts from the EU budget are hopelessly arbitrary, unsatisfactory and unfair. The payment side of the budget is riddled with errors, misappropriation and fraud.

There is something almost comic in the fact that Europe lectures the candidate states that seek entry about budgetary discipline and that they will be required to put their own finances in order, given that the EU budget is riddled with fraud. That is not just my opinion; the European Court of Auditors has refused to verify the accounts as legal or regular for the sixth year running.

I am a chartered account, and if I had encountered such problems six years in a row in my professional life, I certainly would not invest in the company involved, and its directors would all face prosecution. The problems are like those faced by Railtrack, but they are worse because they happen every year, and the Government do nothing about them. We in the House can do nothing about them because large sums are sent to Europe, and some of them are returned, without any parliamentary authority from year to year.

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I remind the House that, on average during the past six years, this country's gross contributions have been nearly £20 million every day. Enlargement will add to that problem, because we will bring into the EU states with even weaker administrative and financial systems. If we were serious about preparing Europe for enlargement, and doing so responsibly, such issues should have been discussed and agreed at Nice, rather than simply tinkering with the voting weights for each prospective member state.

The fact is that the Bill is not primarily about enlargement; it is actually another milestone on the way to a more integrated EU. European integration is not proceeding as quickly as some people would wish. Indeed, many people in the Commission and elsewhere are disappointed at the speed of progress. However, on qualified majority voting, we are still going down that road quite quickly. The Bill contains new proposals for QMV in 31 new articles, some of which are very important.

Industrial policy has not been described so far in the debate. It worries me, however, that we are signing up to a majority voting system for an industrial policy that will reinforce all the failings of the European Union economic model. It will do that by giving other member states opportunities for interference and meddling on a industrial scale by using the EU budget.

The Prime Minister goes to the United States on many occasions, and in less troubled times he would go there to learn. He has described to the House how he believes that the European model has much to learn from the United States about job creation, innovation, enterprise and economic growth. He has tried to sell such ideas to his European Union colleagues in the Council of Ministers. Therefore, after the Lisbon summit, he said that he had seen

It was nothing of the sort; that summit was an exercise in self-delusion.

The European Union persists in using qualified majority voting as a way of forcing through damaging and unnecessary measures against the interests of this country. I am not making a partisan point, so let me give an example of where this Government opposed such a measure. The information and consultation directive will impose on member states national works councils. It will have nothing to do with multinational companies or companies that trade and operate in more than one member state; it will cover companies that are based, trade and operate entirely in this country.

The Government rightly said that the proposal was a breach of the subsidiarity principle and argued as such, but they lost the argument. More importantly, they lost the vote. They therefore had to make the best of a bad job. An unnecessary, expensive, interfering and meddling European measure will be imposed on this country against the wishes of all parties, this House, the other place and the British Government.

I cite another example, and it is one that I feel particularly strongly about. The art levy directive has been debated in the past, but the House may not know that the

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directive has now been passed against the vote of the British Government. It will impose a levy on the resale of all works of art by living artists or by artists who have been dead for less than 70 years. The practical effect of that will simply be that any valuable work of art will no longer be sold in the European Union. Sales will take place in New York, Japan or any art centre outside the EU.

The directive will therefore destroy the London art market, which is the largest in the world and by far the largest in the EU. The Government understood that and, to be fair to them, they argued the case well and persistently, but they were finally outvoted. Art dealers in the United States cannot believe what has happened. A European directive will enrich not the London, United Kingdom and EU art markets but one on the other side of the Atlantic. They cannot believe how that can happen. I have no way of describing the matter to them other than in the terms that I just have.

The directive was passed under existing qualified majority voting, but the Bill will extend such voting into new areas. What I have described will happen in areas that we have not yet thought of. That is not just bad for the economy. This country will catch the EU disease of over-regulation and over-government; more seriously, such a proposal is bad for democracy.

Angus Robertson (Moray): How does the right hon. Gentleman square that argument with the view of politicians on the continent who are much in favour of a federal Europe? In their reaction to that part of the Nice agreement that deals with the qualified majority threshold and the number of votes for a blocking minority, they viewed the treaty as one of the greatest brakes on a federal Europe. In fact, we are in a confederal Europe.

Mr. Heathcoat-Amory: As I said earlier, some people would like to go further and faster. The hon. Gentleman did not dispute the example that I gave, and it is inescapably the case that qualified majority voting—which has done acknowledged damage to the House and to the country in the way that I have described—will be extended into new areas. That is my point.

Such an approach is bad for democracy and the public have sensed that. The point has already been made that they do not worry all the time about the minutiae of EU decision making. They do not understand it for a start, but they perceive that something is wrong. It is striking that, when the electors in any member state are allowed near a decision about a specific European matter, they come up with unpredictable results.

A year ago, the Danes surprised everyone by voting against the proposal that they should join the euro. They did that by overcoming the Danish establishment—almost all the political parties, the trade unions, employer organisations and most of the press—and all their European neighbours. The people smelled a rat and voted no. In March this year, the Swiss—not a member state, but a highly democratic country—voted no to the proposition that their politicians should apply for membership of the EU, and in June, the Irish unexpectedly voted no to the treaty of Nice.

There are other manifestations of that malaise. One is the shamefully low turnout in elections to the European Parliament. That problem will not be solved by giving the

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EU more powers. People will not rush out and vote in European elections because of a great advance in co-decision making. Nor will it help that, under the Bill and the Nice treaty, the EU will be given powers to regulate and fund political parties on a pan-European basis. It will simply increase public cynicism about the whole enterprise when politicians dole out money to other politicians and their own political parties. That is also combined with the strong suspicion that political parties that do not sign up to, or endorse, the aims of the EU will not receive the money. There is a deep-seated malaise that the treaty does not begin to address.

The distribution of power within the United Kingdom also needs addressing. We need to find ways of shifting power downwards; I would like to revive local authorities and, in this Parliament, I hope to persuade my colleagues to re-examine the issue of local government finance. I know that other Members share that aim. However, if one has that aspiration, it is crazy to start to transfer more powers upwards to the most remote Government in the world—the EU. That will happen under the treaty by the extension of the competence and power of the EU, reinforced by the extension of qualified majority voting into new areas. That represents a transfer of decision making from people who have been voted for and can be removed—Members of the House, for example—to people who are unelected and cannot be removed. The process is irreversible and irrevocable.

It is sometimes claimed that all the little glitches and problems and things that we do not like are worth while because we gain so much influence. Why is it necessary to try to achieve some small influence over decisions in other countries by giving up all influence over decisions in our country? Is that not the negation of democracy and of the reasons why we have been sent here? In the current international crisis, can people seriously argue that our influence in the world or on the United States or middle east is diminished in any way by our opposition to some aspects of European integration, or that it would be extended if we signed up to a further ratchet of European integration?

I believe that the reverse is true. The seeds of the destruction of our influence are in the Nice treaty. The proposals for a separate European Union military structure outside NATO, which is what we are signing up to, will undermine what influence we have in the wider world.

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