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Mr. Flight: The point that the hon. Gentleman makes has already been answered—we do not claim that we succeeded in reforming the CAP. Although spending under the CAP has fluctuated, it continues to account for nearly half of the EU's total spending, and it is projected to rise from 44 to 46 per cent. in 2006—so if what he said about the last attempt was correct, the expenditure will increase yet again.

In the debate held on 3 July, the Chief Secretary told the House that, under the current arrangements, if the EU gross national product reduced, the ceiling on EU expenditure would be automatically reduced, so EU expenditure would decrease. Although it is clear, alas, that the EU's GNP will reduce, is the Economic Secretary confident that it will be practical to reduce expenditure at the same time, as her colleague assured the House?

In essence, the deal was done at Berlin in 1999; in no way do the Government's proposals represent a negotiating triumph. Indeed, I hate to think what might have happened if the Economic Secretary ever referred to having suffered a disaster. We got the minimum deal that was acceptable. The claim that retaining the abatement was a great achievement seems wholly bogus. The abatement was negotiated by previous Conservative Administrations, and it has saved some £20 billion. Indeed, it will save about £2 billion next year.

As the House is well aware, we have a veto on that matter—unless a subtle wheeze is discovered to water it down. Our net position was not improved; nor was the unfairness in the net contributions made by different-sized economies corrected. As other hon. Members have said, no proper review of the EU budgetary process and what needs to be done to eliminate waste and excess was undertaken to ensure that money is spent as it should be. Yet the expectation is that EU administrative costs will rise from 5 to 6 per cent. in 2006, under the arrangements in hand.

Before I finish, I should like to emphasise that it is not correct to claim that there was a triumph. In particular, it is wrong not to make it clear that the Berlin arrangements failed in their intended objective, which was to accelerate movement along the road by which enlargement could occur. On that score, we are unhappy with what was achieved, but, as we made clear on 3 July, the financial deal at the centre of the issue is minimally acceptable.

Roger Casale: I am grateful to the hon. Gentleman for giving way to me a second time. It is true that previous Conservative Administrations played a part in negotiating

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previous British abatements, but does he really think that, given the Conservative party's present stance on Europe, it could negotiate any abatement on the scale that we have achieved?

Mr. Flight: The Government have merely continued with that which the Conservative Government negotiated, and a veto exists to retain that arrangement, so the Government have achieved nothing at all. What will happen when the Conservatives come to power at the next election will depend on what is going on in Europe, but I am confident that a general clear-sighted assessment of European affairs will enable us to negotiate whatever is right and proper.

3.4 pm

Ruth Kelly: With the leave of the House, I should first like to say that, once again, we have had a good-natured debate. It is interesting to hear the shadow Chief Secretary, the hon. Member for Buckingham (Mr. Bercow), speaking for the Opposition. I congratulate him on his appointment to the shadow Cabinet, and I thank him for his kind remarks. Having said that, I hope that my reputation will not take too long to recover with my colleagues.

Perhaps I should be surprised that the hon. Gentleman has discussed a European issue at his first appearance at the Dispatch Box since his elevation. In doing so, not only has he chosen to ignore the edicts of his party leader, who has asked his party to adopt a low profile on Europe, but he has gone even further than previous Conservative Front Benchers would have chosen to do, by gracing us with his presence here today. As has been said, he must realise that his own party previously voted against the programme motion for Third Reading to take place today.

However, perhaps I should not be too surprised, after all; the hon. Gentleman's views on Europe are well known. Indeed, if he had not been recalled to Parliament recently, he would have shared a platform at a Conservative party conference fringe meeting with Norman Lamont and the Bruges Group chairman, who stood up to applause when the panel was told that the party should campaign for Britain's withdrawal from Europe.

I certainly maintain that the Bill represents a triumph for Britain. Indeed, the outcome is far better than the two previous Conservative Governments ever achieved. In fact, when the last own-resources decision was considered in 1992, the agreement involved a 22 per cent. real increase in the financial perspective over seven years. In 1988, the increase was 17 per cent.

Mr. Bercow: The temptation is irresistible. The hon. Lady seeks to cast aspersions on the Opposition's position. First, this is Government business, and my right hon. Friend the Leader of the Opposition would expect us vigorously to oppose it, which is what we are doing. Secondly, to avoid any doubt, my position on Europe, and that of Her Majesty's Opposition, is that we are in favour of free trade, not federalism; co-operation, not coercion; and a Europe of nation states, not a single European state.

Ruth Kelly: I thank the hon. Gentleman very much for clarifying his views on Europe, although I note that he

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does not dispel my suggestion that he thinks we may have to withdraw from the EU. As he and the hon. Member for Arundel and South Downs (Mr. Flight) said, our proposals do not represent an unreasonable deal and, as I said on Second Reading, that is high praise indeed from Opposition Members.

The hon. Member for Buckingham has indeed done his research. He gave the various figures for the gross cost of joining the EU. The gross figure that he cited was, I think, £1.2 million an hour. However, the net cost per head is £56 a year, and I believe that that is money well spent. It gives the people of Britain a right to be part of the largest European single market, comprising 370 million people, which is estimated to increase output by 1.5 per cent., and other benefits and jobs depend on our membership of the EU and the single market.

The hon. Gentleman dwelt at length on the CAP. Of course, we recognise that further reforms need to be made to the CAP. A mid-term review of CAP financing, involving the cereals and the dairy regimes, is due in 2002. We must use that opportunity for further CAP reform. I totally agree with him that more needs to be done, but Agenda 2000 represents the most radical reform of the CAP since its inception. In fact, if we had not managed to make alliances with Sweden, Denmark and Italy, any reform of the CAP would have been extremely unlikely. We are in the vanguard of those negotiations; the Government's ability to form alliances enables us to push the agenda forward.

Mr. Bercow: The hon. Lady teased me, so she will not mind if I tease her. Does she endorse the verdict of the hon. Member for South Derbyshire (Mr. Todd) that the outcome of the Berlin Council was "modest"? Does she share his shock at the failure to achieve progress on free markets in sugar and milk quotas?

Ruth Kelly: The hon. Gentleman surely realises that I have enormous respect for my hon. Friend the Member for South Derbyshire (Mr. Todd), whose interest and knowledge of such matters is recognised by Government and Opposition Members. He must agree that my hon. Friend did not question what I have told the House today—that the United Kingdom is in the vanguard of reform and we are pushing for further reform. Of course, we recognise that more is needed and we intend to pursue such action. I merely point out to the hon. Gentleman, who described the Berlin Council as modest, that in the 1980s spending on the CAP represented more than 60 per cent. of the EC budget; this year, it will be 45 per cent. I am sure that he agrees that that is a great step forward. He questioned the nature of our contributions, which have come down in line with those of France and Italy, and asked whether it is right to incorporate six new member states in our assessment. I suggest to the House that it would have been misleading for us not to incorporate the most likely participants in an enlarged EU.

We have had an interesting debate, with both Opposition parties discussing the windfall gains that the UK has forgone in line with previous practice, which was agreed when the Conservatives were in government. As the hon. Member for Buckingham noted, I have written to the hon. Member for Kingston and Surbiton (Mr. Davey) and placed a copy of that correspondence in the Library for Members to read and study. The figure for the windfall gain that the hon. Member for Kingston and

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Surbiton quoted was an estimate from the European Commission itself. The amount of windfall gain to be forgone, he will realise, will vary from year to year as a result of the duties and levies collected, the effect of consumer expenditure on the VAT base, the level of the VAT base and other factors, but I will not bore the House by going through them. However, the amount is purely an estimate and not a definitive figure for the windfall gain from year to year.

We had an interesting and entertaining discussion about the own resources decision and article 9. The matter was first raised in the House by the right hon. Member for Wokingham (Mr. Redwood), and I was disappointed that he was not present to hear my response. Article 9 does not represent in any way a potting of precedent, which the Conservative Government agreed. Indeed, as the hon. Member for Buckingham well knows, and as the hon. Member for Kingston and Surbiton pointed out, that is not a critical aspect of a hidden regime in tax policy. We are absolutely determined to maintain our stance that there should be no new tax-raising powers for the EU. As the hon. Member for Buckingham will know, at ECOFIN in July we had the enthusiastic support of many other member states in that position. He will also know that there could be no new EU tax without the unanimous support of EU Finance Ministers.

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