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Mr. Bercow: I note what the hon. Gentleman says about the small size of the centrally employed EU bureaucracy, but I am sure that he will acknowledge the large number of British civil servants and civil servants in other member states whose principal responsibility is to give effect to EU decisions, so he should not develop his point too far. Is he arguing for a reorganisation of EU finance, with fewer small pots and more money put into the larger ones, or is he making the bold and ground-breaking assertion for a Liberal Democrat that the EU budget should be cut?

Mr. Davey: I am arguing for rationalisation. If that leads to cuts and frees up resources, member states might take the political decision to remit the money to member states or use it for other purposes. I would not prejudge those decisions, but I object to money being wasted on a structure that is clearly inefficient. We should be arguing that, the Government should have argued that and we should be calling for greater reforms of the EU budget.

I have another example. Much EU spending takes place in member states, but is administered by officials in Brussels—a ludicrous process. It has to be inefficient and cannot be as transparent as a system whereby money that is spent in, for example, the UK is administered by British civil servants answerable to British Ministers. The process needs significant reform and is one reason why I agree with the hon. Gentleman that the Bill is modest.

There was not a great deal of argument about the Bill's details when we considered them in Committee and on Report. After all my research, I found only one cause for concern, to which the Minister responded in her letter to me on 10 October. The reform of own resources means that the UK Government will give up windfall gains from budget reforms due to the expansion of Europe and so on to keep the abatement originally agreed by Baroness Thatcher at Fontainebleau.

I asked the Minister whether the cumulative effect of giving up windfall gains—they are related not solely to the Bill and the decisions that preceded it, but to discussions undertaken by the previous Conservative Government—was larger than the benefit of the abatement. She was not able to answer that factual question in Committee or on Report. I pushed her on it because I wanted to persuade her to ask her officials to consider the question and do the number crunching,

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although she was hesitant to do that at first. I am delighted that she did so because the figure that she set out in her letter to me on 10 October, which is now in the Library, provides Members with the information necessary to allow the Bill its Third Reading.

The calculation could have shown that the cumulative effect of the windfall gain was larger than the abatement. That would have been a major new piece of information on which Members could have decided whether to allow the Bill to proceed. As I and my colleagues voted to give the Bill a Second Reading, I am delighted that the calculation turned out as it did, and the abatement is indeed larger.

I want to keep my remarks brief, as we do not need to discuss the matter in any more detail. The key substantive point that emerged under previous scrutiny has been answered by the Minister. Unlike the hon. Member for Buckingham, I thought that the letter was clear and that it answered my points. I should stress that it was the Liberal Democrats who made those points at all stages and forced the Government to provide the information that was key to the Bill's scrutiny. If there is a Division, I and my colleagues will vote in favour of Third Reading. We hope that, when the Government engage in discussions on future reform of the EU budget, they will be rather more bold and seek rather more radical change.

2.51 pm

Mr. Howard Flight (Arundel and South Downs): I would not try to copy the sophisticated rhetoric of my hon. Friend the Member for Buckingham (Mr. Bercow), but I was delighted that the Opposition were able to include in this debate the droit de suite. I can comment only that when I last spoke on the subject, I made the great mistake of saying "seigneur" instead of "suite".

This debate has been rather unsatisfactory; we know that we are going through the motions. It is about what was agreed at Berlin two years ago, and the nature of the Bill does not permit any sensible amendment. We are faced with a "take it or leave it" approval of the deal that was done.

Our basic point is that the essence of the deal on changes to VAT and gross national product funding is reasonable. The VAT-based contribution is to be amended by reducing the maximum call-up rate to 0.75 per cent. in 2002-03 and to 0.5 per cent. thereafter, and member states' GNP-based contributions are to be increased.

The hon. Member for Kingston and Surbiton (Mr. Davey) sought to claim huge credit for inducing the Minister rightly to make it clear that the cost of giving up our windfall gain would be cumulative. I think that most Members were aware of that. That of course means that we are not dealing with the one-off figure that was quoted. However, I am grateful to the Minister for clarifying that for the record. The major dishonesty of Berlin, however, was that it was supposed to be about enlargement. In a sense, it was the antithesis of that because the failure adequately to reform the common agricultural policy blocks enlargement.

I believe that anyone who is European must want enlargement of the European Union. From visiting people in Hungary, the Czech Republic and Poland, I know that they feel that they have been treated appallingly. The iron curtain has been down for 12 years and they have been told by the EU to do this, that and the other, but they are

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still left dangling on a string waiting for the prospect of becoming EU members. Some states have even reconsidered the desirability of becoming members. However, all those who want an open, liberal and flexible EU, rather than an inward-looking one, must want a widened membership.

Angus Robertson (Moray): Can the hon. Gentleman reconcile those opinions—I fully endorse them; Ithink that all Members would like the rapid enlargement of the EU as soon as possible—with his party's voting record last night? The Conservatives voted against the European Communities (Amendment) Bill, which will effect EU enlargement.

Mr. Flight: I fear that the hon. Gentleman is wasting the House's time; there are different issues involved. The treaty of Nice is about going a step too far in political unification, while enlargement is the very opposite of that. A Europe of very different economies and countries cannot be a rigid and inflexible EU, but Nice would take us down that path.

Roger Casale (Wimbledon): Perhaps the hon. Gentleman could answer the question that I put to the shadow Foreign Secretary yesterday, to which he was unable to reply. Were ratification of the treaty of Nice to fail, when would be the earliest possible date that EU enlargement could occur?

Mr. Flight: With respect, the question is nothing to do with the matter before us. I am simply trying to make the point that something that was supposed to be about enlargement occurring as early as possible was actually about postponing enlargement for an unlimited period. Until there is adequate reform of the CAP, enlargement is not possible. That is well realised by countries in Europe that want to join the EU.

I turn to article 9, about which my hon. Friend the Member for Buckingham elucidated and—dare I say—entertained the House. It is important that the French equivalent of "autonomous" has crept in. The Minister argued on Second Reading that article 9 merely repeated what had gone before, that we should not take any notice of it, and so forth. The wording has been tightened marginally.

There is of course no point in having article 9 unless it is meant to mean something. It reserves the right to consider pan-European taxation and, indeed, to reconsider the British abatement. What is the point of Mr. Bache and his army of staff considering the subject if no one has any intent of making progress towards it? As my right hon. Friend the Member for Wokingham (Mr. Redwood) and I pointed out on Second Reading, and as my hon. Friend the Member for Buckingham pointed out today, the fact that the issue is included in what we are being asked to approve should not be overlooked. The Bill puts down a marker with which we do not agree and with which I do not think people generally agree.

There is no free lunch. The issue really was about Germany, Holland, Austria and Sweden wanting to pay less. That meant that someone must pay more or, to the extent that it might be possible to reduce the total budget, our contributions—allegedly—will not rise. However, we will not enjoy any reduction in contributions either.

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That fails to address the central issue that France, which has an economy roughly comparable to ours, pays £760 million net, whereas the UK pays £3.5 billion. We all know why; it is because of the CAP. We also all know why the CAP has been so difficult to reform. Yet again, failure to reform the CAP has hindered the debate on fair contributions and the problems for a more outward- looking Europe, and nothing has been done about such failure.

Mr. Wayne David (Caerphilly): Will the hon. Gentleman acknowledge that the last time that the common agricultural policy was reformed was at the 1992 Edinburgh summit, where, under the Tory Government, agriculture spending was increased by 9 per cent?

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