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Mr. Edward Davey (Kingston and Surbiton): I thank the Economic Secretary for her letter of 10 October,

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which clarified an issue that was of serious concern to me. I also thank her, on behalf of the House, for asking her officials to spend some of their summer recess making the necessary calculations. I assure her that the figures that she has given today and in her letter answer my question in a substantive way.

Ruth Kelly: I thank the hon. Gentleman. It was an enlightening experience for all involved.

Another point raised during our earlier debates concerned the Berlin reforms of the common agricultural policy. The Berlin summit saw the most radical reform of the CAP since its creation. There were significant cuts in the prices of cereals, beef and milk, which brought cereal prices close to world levels for the first time. As a result of those reforms, consumers in the United Kingdom will be about £70 a year better off. Although we will continue to push for further reform, the Agenda 2000 reforms constitute a significant victory for the UK. Berlin also introduced the CAP second pillar, which focuses on rural development and the environment. That was a significant step in the move from market-distorting production- based subsidies.

The Bill ratifies part of the Berlin agreement which secured no increase in UK contributions and safeguarded the abatement. That was a good outcome for the UK, and I commend the Bill.

1.52 pm

Mr. John Bercow (Buckingham): It is a pleasure to joust for the first time—I hope that it will not be the last—with the Economic Secretary.

This is an important measure. Although, as was said on Second Reading and in Committee, the Bill is short, its implications are substantial. It is therefore necessary and desirable for us to engage in not a leisurely but a proper and comprehensive debate on Third Reading.

That is also true when we put the debate, and the proposed Act, in the context of the size of the European Union budget. When we talk about what this country contributes to the European Union, it seems extraordinarily difficult to arrive at an agreed figure. Estimates vary greatly, and it is important to distinguish between the gross contribution that the United Kingdom makes to the EU budget and the net contribution. My hon. Friend the Member for Rochford and Southend, East (Sir T. Taylor)—who, sadly, is not present, but who contributed to our proceedings with distinction earlier—has calculated that this country sends approximately £1.2 million every hour. From that, the Economic Secretary will readily deduce that the sum sent each day is some £29 million, and that therefore more than £200 million per week goes from the United Kingdom taxpayer to the European Union.

I stress the words "from the United Kingdom taxpayer to the European Union" because Governments do not, of course, have any money. There is no question of the personal largesse of the hon. Member for Bolton, West (Ruth Kelly) going to the European Union; we are talking about hard-pressed British taxpayers, and the net contribution appears to be more than £4 billion a year.

It is worth noting how the European Union budget is spent. There has, for example, been a marked change in the last decade or so in the proportion of EU funds

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allocated to structural assistance. I think that the figure in 1988 was around a sixth of the EU budget, whereas it is now nearer a third.

The Economic Secretary, who is never knowingly understated in trumpeting the Government's alleged achievements, was bold on Second Reading and in Committee. Regrettably, today she has already repeated a phrase that she used at an earlier stage. She talked about how the Government accomplished a negotiating triumph. Allowing for the almost inevitable and instinctive tendency to indulge in spin over substance, that was a bit rich and I hope that she does not repeat the claim.

Quite properly for consideration of this important matter, we have a packed House and hon. Members will be aware of the four bases of own resources: agricultural and sugar levies, customs duties, VAT-based contributions and gross national product-based contributions. The Economic Secretary made an entirely factual point about the shift from traditional own resources, as greater emphasis is now placed on GNP-based contributions. That is a simple statement of fact. However, her claim that the outcome of the Berlin European Council and the decisions subsequently taken in September 2000 constitute a negotiating triumph is more controversial.

I shall argue my own case, as will my hon. Friend the Member for Arundel and South Downs (Mr. Flight) in his winding-up speech for the Opposition, but it is legitimate to pray in aid, if I can attract the Economic Secretary's attention from the alternative delights of talking to the Paymaster General, the verdict of a Foreign Affairs Committee report. The Economic Secretary will be intimately familiar with "European Union Enlargement and Nice Follow-up", which was published on 10 April. It is not the product of Opposition thinking, but at paragraph 18 it states:

Ruth Kelly indicated assent.

Mr. Bercow: I am grateful for the Economic Secretary's sedentary assent to that proposition. She thinks that it makes sense. Therefore, she will immediately share my concern that the issue has not been raised since Berlin, despite no fewer than four opportunities to do so, and that CAP reform has not featured on the agenda. Four countries have held the EU presidency in the intervening period, but none chose to highlight the subject. If she agrees with the Opposition and the Liberal Democrats that further reform is needed, it is not unreasonable to ask when she thinks that it might feature on the presidency agenda.

Mr. Edward Davey: I agree that the Bill, like the summit that debated CAP reform, does not go far enough and the hon. Gentleman is right to suggest that the Liberal Democrats want further, much greater CAP reform, but how far did the Conservative Government go on CAP reform during 18 years in office? Their many failures in negotiations with the EU have left us with today's appalling CAP inheritance.

Mr. Bercow: I am grateful to the hon. Gentleman, who can always be relied on to prove himself a steadfast

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supporter of the Labour Government when they are on the rack. If he continues in that vein, the entitlement to Short money that the Liberal Democrats enjoy on account of their status as part of the Opposition will quickly be called into question. However, I shall happily answer his point.

The hon. Gentleman thinks that we are playing a game of table tennis and that my natural response will be to say what a splendid job the Major Government did on the matter, but I am about to disappoint and perhaps even surprise him. We did something on CAP reform, but nothing like enough. Progress has been modest, but the difference is that I am not claiming dramatic, wholesale reform during 18 years of Conservative government. The Economic Secretary, on the basis of a fairly modest achievement, of which more anon, made a far bigger claim. Although the hon. Gentleman likes to be a helpful contributor, I hope that he will not do the Government's work for them, especially when they are doing their best to advance a rather poor case.

I try to be fair-minded about these matters, but I know that Labour Members may not necessarily take it from me that the outcome of the European Council was modest rather than distinguished. I hope, however, that the Economic Secretary is interested in and inclined to show her respect for the verdict of the hon. Member for South Derbyshire (Mr. Todd). It pains me that he is not here today. It is in order in his absence to pay sincere and fulsome tribute to him for his contribution to our earlier debates. He speaks with some authority on agriculture, and, on Second Reading, in relation to the CAP, he said:

He went on helpfully to point out:

I will not dilate further on the subject because I do not want unduly to embarrass the hon. Gentleman when he reads my remarks later. Suffice it to say, he said that he was shocked that there had been no progress on the liberalisation of the sugar regime or on the need to reform what he described as the "ludicrous" milk quota system.

In the circumstances, it seems that the hon. Gentleman's verdict is more closely related to the facts than the Economic Secretary's claim for the Government's achievements. Put another way, my hon. Friend the Member for Arundel and South Downs was being fair when he said that what the Government secured was not outstanding, but

Can the Economic Secretary do something about the prevailing tendency in Government for spin to triumph over substance, optimism over reality and fiction over fact? She will recall that on Second Reading, my hon. Friend the Member for Hertsmere (Mr. Clappison) reminded the House of the commitment made in the Labour manifesto, which boldly asserted:

Yet, the net contributions show no sign of falling. I refer the hon. Lady to the 1999 Court of Auditors annual report, which showed that France was contributing annually

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£766 million net to Community coffers, Italy £1.153 billion and the United Kingdom £3.482 billion. When she responded to my hon. Friend on that point she said that she stood by the claim that our contributions were falling to levels comparable with those of France and Italy on the assumption of the admission of six new members by 2006. It is a trifle cheeky for her to stand by the Labour manifesto, which made a direct and explicit claim about what is happening to UK contributions, when what the authors of the manifesto meant was that if certain events transpired and if the projected outcome of those events was as it is currently expected to be, there would be a comparable level of contribution. The expression ifs and buts, apples and nuts readily springs to mind.

The hon. Member for Kingston and Surbiton (Mr. Davey) may be satisfied with the answers that he has had on windfall gains, in which he takes a special, detailed and intelligent interest, but I am not so readily reassured. On Second Reading, the Economic Secretary, with an air of some impatience because the subject had been regularly raised, said that she wanted to set

the position in respect of windfall gains relinquished or forgone.

In answer to my colleagues, the Economic Secretary said that the estimated loss to this country as a result of forgoing the windfall effect was approximately 220 million euros, which, if my arithmetic serves me correctly, roughly equates to £150 million. The difficulty with that answer was not that it was untrue but that, as with so much of what the Government lob in our direction, it was only half true. What she did not say, but, I believe, has recently confirmed in correspondence, was that the figure of 220 million euros was not a one-off figure, one-off loss or one-off disadvantage to the United Kingdom but a recurring sum that would arise every year. If I am mistaken and she can put another complexion on the matter, I shall be very happy to hear her do so.

I am, however, privileged to have sight of the Economic Secretary's letter, dated 10 October, to the hon. Member for Kingston and Surbiton. She talks, in that context, about how average annual windfall gains would represent

Those averages can of course be ghoulish things, often disguising all sorts of variations that could redound to our disadvantage.

Nevertheless, I am grateful to the Economic Secretary for confirming in writing, although she did not repeat the point in her speech today, that on her best estimate she expects that the total level of windfalls to be forgone after enlargement is a little higher—not of the order of 5 per cent. of the average abatement, but rather nearer to 7 per cent. I do not say that that is a point of dramatic significance, but it should not be dismissed. It is important to know when we are talking about a one-off figure of 220 million euros and when we are talking about a figure that will recur for a number of years to come.

I follow with the greatest interest what the Economic Secretary says in these debates, just as I always follow what the Paymaster General says—although she is displaying a particular lack of interest in following what

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I am saying today. However, that does not in any way undermine or diminish the significance of the issues that we are raising.

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