“in contrast to national judges, the EU judges are not specialized in specific fields.”

Is it any surprise that they make such a mess of things?

Jacob Rees-Mogg: It is a rather terrifying thought that we have a court that its own friends say does not have judges with the expertise to rule on issues, but that instead of saying, “Well, let’s decide it in our own courts, where we have judges of proper expertise and standing,” we should be just appointing more second-rate judges to Europe, to get them to sort it out. That cannot possibly be the right approach to take.

We in the United Kingdom have a very high view of judges. We have been fortunate in this nation to have judges who have been rigorous figures of the law. They have not been political participants. However, the European Court is not of that category or standing. It is part of the operation of the European Union; and, along with the Commission and the European Parliament, it is in a constant battle and struggle to take powers from the nation states. Anything that we do to reform the European Court should mean bringing powers back to our own courts, where they will be judged on their merits and not on a scheme to push forward the programme of ever-closer union.

It is worth remembering, if anyone questions whether that is true, what happened in the United States in the 19th century, when the Supreme Court was avowedly federal in its approach and the 10th amendment was increasingly ignored to empower the central authorities. The European Court of Justice is doing exactly the same thing. Therefore, I go back to the intervention that I made on the Minister: the more the system is

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gummed up, the better. The fewer opportunities there will be to interfere in the nation state, the more opportunity we will have to repatriate powers to our own systems and our own judges. Therefore, although the matter before us is minor and essentially trivial, let it go through, but let us watch like hawks any further changes that the European Court may seek to make, to ensure that this drift of power to the continent ceases.

2.53 pm

Mr Lidington: I thank the hon. Member for Wolverhampton North East (Emma Reynolds) and my hon. Friends the Members for Stone (Mr Cash) and for North East Somerset (Jacob Rees-Mogg) for their contributions. Let me seek to respond briefly to the various points and questions that have been raised. I will try to divide my response into four parts.

Let me deal first with costs, which my hon. Friend the Member for Stone spoke of. The measures in the two draft regulations will be accommodated within the European Court of Justice’s existing budget. The additional costs will be no more than de minimis. As I said earlier, the two vice-presidents will be existing judges; no additional individuals will be appointed to those posts. The extra judges who will be available to provide sickness cover in the civil service tribunal will be paid only for the days when they are required to be on duty and sitting.

My next point relates to powers. It is obviously tempting to go beyond the terms of the motion and the draft regulations and have a more general debate about the powers of the European Court of Justice. My hon. Friends the Members for Stone and for North East Somerset spoke with passion about their concerns over the way in which the powers of the ECJ and the scope of the Court’s jurisdiction had been enlarged over recent decades. The trouble is that such a debate would take us on to broader questions about the development of the European Union that do not fall within the scope of the motion.

I suggest to my hon. Friend the Member for North East Somerset that there are certain remedies that he might propose. For example, other hon. Friends advocate changes to the treaties of the European Union, and such changes could seek to impose the kind of constraints that he has in mind. I do not mind saying clearly that, as far as I am concerned, we would all benefit, nationally and in every part of the European Union, from less legislation. We would benefit if there were no culture in institutions, either national or European, to seek a remedy for any ill or injustice through additional laws and regulations, rather than seeking an effective non-legislative remedy.

I say to my hon. Friend that it would not be right to question the quality of the individuals who serve in the European Court of Justice. As he will know, the treaty and the rules of appointment require that they should be men or women who have served, or who are capable of serving, in senior judicial roles in their member states. Certainly, the men or women who might be nominated as the United Kingdom’s judges at the European Court of Justice are required to have achieved a very high reputation indeed in the judicial and legal professions in this country even to be considered, let alone nominated. Whether we agree or disagree—as individuals or as Governments—with particular judgments of the ECJ, the judges are people of high professional standing.

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Jacob Rees-Mogg: I would question the judges’ probity on one thing in particular: their ruling that their own pay should be increased, which was fundamentally improper.

Mr Lidington: My hon. Friend has made his point clearly for the record.

My hon. Friend the Member for Stone asked about the risk of further efforts to enhance the powers and the jurisdiction of the European Court of Justice. He referred in particular to the possibility of the introduction of a right to petition the Court and take cases there. I can assure him that, notwithstanding what learned professors might say, no such proposal is on the table at the moment. No such proposal forms part of the regulations before us. The subject has not crossed my desk and it is not a matter of live discussion among Governments at present.

My hon. Friend also asked about the timing of the debate and expressed concern at what he believed to be an absence of time for the European Scrutiny Committee to consider this matter. I would challenge him on that. Looking back at the record, I see that we provided explanatory memorandums to that Committee at various times during the course of the negotiations: first, on 28 April 2011, then on 24 June 2011, 30 September 2011 and 20 April this year. I wrote to him last week to advise him of the latest developments and to request that the Committee clear these measures from scrutiny.

As for the most recent developments, we are working against the decision by the Cypriot presidency to table these measures for discussion and decision at a Council meeting in the very near future. My concern in writing to my hon. Friend as I did was to ensure that his Committee was aware of the need for urgency if the Committee and Parliament were to have the opportunity to express their views and, in the case of Parliament, to take a decision about the UK’s approach to these regulations ahead of that Council meeting.

The final point on which I was questioned—

Mr Cash: Will the Minister give way?

Mr Lidington: All right, I will, but then I will move on.

Mr Cash: My hon. Friend should not show his impatience; that is not a wise thing to show to the Chairman of the European Scrutiny Committee. I think that his demeanour should be a little more relaxed.

Let me say simply that I have put a number of questions to the Minister and I can see that he is not going to answer them, so I should be grateful if he wrote to me when he has had a chance to look at the transcript of the debate. As it happens—I do not say this with any stricture—he was talking to the Whip on duty when I

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asked him the questions that had been formulated carefully by our advisers. I should be grateful if he replied to me in writing, as he is clearly not going to respond at the moment.

Mr Lidington: I can assure my hon. Friend that, when it comes to dealing with him, my patience is infinite. I will certainly check the record and I will write to him if there are any points on which we have not given him an adequate answer. I ask him to look at what I have said about the nugatory costs of the measures, because questions on that matter formed a considerable part of the series of questions that he put to me during his speech.

The hon. Member for Wolverhampton North East asked about the Government’s attitude towards the proposal to appoint additional judges to the General Court. My answer is that we do not rule this out. We can see why this is being advocated as a means of reducing the significant backlog of cases at the General Court, but before we agree to an increase in the number of judges, with the additional costs that that would undoubtedly entail, we certainly want to be absolutely clear that every possible efficiency measure had been taken to reduce the General Court’s spending and to improve its productivity. We view this question—and the possible costs arising out of an increased number of judges—as one that needs to be addressed in the broader framework of the financial pressures on the EU and its member states and in the context of the negotiations over annual EU budgets and the multi-annual financial framework.

Another point in reply to the hon. Lady is that, in addition to our concern about costs, we would want to be satisfied with the judges concerned if additional judges were indeed appointed. The United Kingdom—England and Wales in particular, where a common law system applies—will be concerned as a country to make sure that judges with a knowledge of common law systems are properly represented when cases are considered by the European Court of Justice.

I have tried to respond to the points raised in the debate, and I hope that the House will now agree to the motion.

Question put and agreed to.

Resolved,

That this House takes note of the draft Regulation 2011/0901A(COD) of the European Parliament and of the Council (amending the Protocol on the Statute of the Court of Justice of the European Union and Annex 1 thereto) and draft Regulation 2011/0902(COD) (relating to temporary Judges of the European Union Civil Service Tribunal) and, in accordance with section 10 of the European Union Act 2011, approves Her Majesty’s Government’s intention to support the adoption of draft Regulations 2011/0901A(COD) and 2011/0902(COD) of the European Parliament and of the Council.

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Draft European Union Budget

3.4 pm

The Financial Secretary to the Treasury (Mr Mark Hoban): I beg to move,

That this House takes note of an unnumbered Explanatory Memorandum dated 5 June 2012 from HM Treasury on the Statement of Estimates of the Commission for 2013 (Preparation of the 2013 Draft Budget); recalls the agreement at the October 2010 European Council and the Prime Minister’s letter of 18 December 2010 to European Commission President Manuel Barroso, which both note that it is essential that the European Union budget and the forthcoming Multi-Annual Financial Framework reflect the consolidation efforts of Member States to bring deficit and debt onto a more sustainable path; notes that this is a time of ongoing economic fragility in Europe, with countries across Europe taking difficult decisions to reduce public spending; agrees that the Commission’s proposed 6.8 per cent increase in European Union spending in 2013 is unacceptable; agrees that the Commission’s proposal for a larger European Union budget is not the way to fix Europe’s problems, and that large savings are feasible without compromising economic growth; notes that the proposed increase would impose unaffordable costs on taxpayers in the UK and other Member States; notes that UK contributions to the European Union budget have also risen in recent years due to the 2005 decision to give away parts of the UK rebate; and so supports the Government in seeking significant savings to the Commission’s proposals across all budget headings and in its strenuous efforts to limit the size of the 2013 European Union budget.

Mr Deputy Speaker (Mr Lindsay Hoyle): I must inform the House that Mr Speaker has selected the amendment in the name of the hon. Member for Nottingham East (Chris Leslie).

Mr Hoban: I am pleased to have this opportunity to discuss the 2013 EU budget.

As Members will know, the economic climate in the EU has changed dramatically in recent years, and the situation remains fragile. The uncertainty in the euro area is the biggest challenge facing the EU economy, and there is a risk that it will affect growth and jobs in Britain. That is why we have pressed the euro area to address both the immediate challenges and the long-term systemic issues that it faces. In the midst of one of the biggest debt crises to hit Europe, this Government and Governments across the EU have made difficult decisions in order to consolidate their public finances and implement structural reforms.

The EU budget, funded by EU taxpayers, cannot be immune from the changes that are sweeping across Europe. An ever-increasing EU budget is not the way in which to fix Europe’s problems, and it is time for the EU to live within its means. That requires a strict reprioritisation and the targeting of areas that support growth and reduce the waste and inefficiency that has become characteristic of EU spending.

John Healey (Wentworth and Dearne) (Lab): The Financial Secretary mentioned supporting growth. As he will know, as part of the preparation for the EU’s next budget period there are proposals for “transition regions” status, which could benefit at least 11 regions in this country. We in south Yorkshire are aware of the benefits that it could bring by supporting local jobs, businesses and growth. Are the Government in favour of the concept of transition regions?

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Mr Hoban: I am surprised that the right hon. Gentleman has raised that point, given that the amendment tabled by a member of his own Front Bench calls for a more restrained budget and given that one of the consequences of a cut in the budget would be a further constraint on spending. Our main priority is to deliver a freeze in the multi-annual financial framework, and we need to establish which measures in the budget are consistent with that. However, we do need to focus on jobs and growth, and the biggest challenges in that regard are often presented by the newer accession states when the gap between their economies and those of countries such as the UK, France and Germany is at its widest. We need to focus on spending in the areas where there is the greatest potential for those countries to yield real fruits in terms of economic growth and jobs.

John Healey: I am not entirely sure whether that was a yes, a no, a maybe, or an “I don’t like to say.” The Financial Secretary will know that the qualification for transition regions status is a GDP that is between 75% and 90% of the EU average. Some parts of our country require that extra help; they need more balanced growth, and support for jobs and businesses. Does the Financial Secretary support the concept—I am not asking about the quantum—of transition regions in the next EU budget period?

Mr Hoban: The negotiations on regional funding are a matter for my colleagues in the Department for Business, Innovation and Skills, and I am sure that they will respond to the points that the right hon. Gentleman has made. Our overarching priority is to ensure that our spending in the EU gives us value for money, and the overall settlement for the next seven years and the multi-annual financial framework must reflect that. He may wish to participate in the debate on the preparations for the framework which will take place in European Standing Committee B when the House returns in September. That is one of the many opportunities for debate provided by my hon. Friend the Member for Stone (Mr Cash) in his role as Chairman of the European Scrutiny Committee.

Chris Heaton-Harris (Daventry) (Con): Will my hon. Friend give way?

Mr Hoban: I will, but then I must make more progress.

Chris Heaton-Harris: According to a paper produced recently by the Fresh Start group, of which I am co-chairman, if we repatriated structural funds among countries whose GDP is more than 90% of the EU average, we would be able to spend £4 billion more—money that would come directly from the Government—on growth in the United Kingdom without having to go through the middleman of the European Union.

Mr Hoban: My hon. Friend makes a powerful point. We need to view expenditure issues in the context of the impact of our contribution and how it is linked with the rebate, but I do not want this to turn into a debate entirely about structural funds. There will be many other opportunities to discuss those.

John Healey rose—

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Mr Hoban: Let me make some more progress. My hon. Friend described the EU as a middleman. I suspect that the right hon. Gentleman is asking me to be a middleman between him and my hon. Friend, so I shall press on.

As Members know, the size of the annual budget is guided by the multi-annual financial framework, which is equivalent to a seven-year spending review. This was agreed by the previous Government in 2005, and set a rising trajectory for EU spending to 2013. Under the ceilings negotiated by the previous Government, the 2013 EU budget may increase by 14% in payments compared with the 2012 budget. That has encouraged the Commission to seek even more EU spending. In the current economic climate, the framework negotiated by the previous Government is out of date. We have been seeking to put right the mistakes made in the past by making every effort to rein in EU spending in recent years.

This year, however, the European Commission has again shown that it is hopelessly out of touch with the mood of Europe’s taxpayers. On 25 April, it proposed the largest recent increase in the EU budget: a 6.8% increase in 2013, taking total spending to €137.92 billion. It claims that the increase will support growth and jobs while also allowing the Commission to catch up on payments on programmes announced in previous years. We are acutely aware of the risk a budget increase of this scale poses to the UK’s contribution. At a time when we are tightening our belts in the UK, an increase in the order of 6.8% would cost the UK, taking into account the rebate, roughly €1 billion more than this year. Of course, this is not helped by the previous Government’s abatement giveaway in 2005, a decision that is costing today’s taxpayers an extra £10 billion over this Parliament. The amendment seeks to airbrush that from the record.

Graham Stringer (Blackley and Broughton) (Lab): I agree that a 6.8% increase is unacceptable given the current economic situation, but why are the Government settling for a flat budget, when local government in this country is suffering cuts of 30%? Why is Europe getting a better deal than Manchester or Plymouth?

Mr Hoban: That is an important point, and I shall address it shortly.

Our response to the Commission’s inflation-busting proposal has been robust. At a time when Governments across Europe are making difficult decisions on public spending, a 6.8% increase in EU spending in 2013 is completely unacceptable. First, the economic circumstances have changed dramatically, and the Commission cannot ignore the facts. By 2014, the level of public debt across the 27 member states will be over 50% more than it was back in 2007, two years after the last seven-year budget was agreed. Secondly, a larger EU budget will not solve the eurozone crisis. A smaller, leaner and better-targeted budget is the best way to drive growth across the EU.

We have identified many areas of EU spending that are ripe for reform. It is time to cut the quangos, EU staff pay and programmes that offer low added value or are poorly implemented. For example, the Commission set itself the target of reducing its headcount by 1% this year. Although 286 posts have been cut—equivalent to a 0.7% reduction—that has been offset by the creation of 280 posts for Croatia’s accession. There has been no

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attempt to redeploy staff to meet the needs of Croatia’s accession. As ever, the Commission’s knee-jerk reaction is simply to increase the number of people employed in the EU. As a consequence, this year the Commission has cut just six posts. We estimate that if it had cut the headcount by 1%, it could have saved €45 million.

The total salary bill for the EU institutions’ staff in 2011 was over €3.5 billion, more than 2.8% of the Commission’s budget proposal for the year, and more than double the amount spent on freedom, security, justice and citizenship. Staff at EU institutions, who may have lived in Brussels for more than 30 years, continue to be paid an extra 16% “expat allowance” on top of an already generous salary, and a teacher at the European school is paid twice the average UK teacher pay.

Mr William Cash (Stone) (Con): My hon. Friend is making a powerful case and I take it seriously. I do not in any way suggest cynically that the Government are merely trying and not succeeding, but when I see the words

“seeking significant savings…across all budget headings and in…strenuous efforts to limit the size”,

I feel that there is another answer. In the light of his powerful argument, which has not yet even finished, there is a strong case for our saying that we insist, rather than merely seek, and for saying, “We will not pay any more. We will refuse to do so if you are not prepared to do something about it.” This really is getting out of control, as is the work load of law that we discussed in the previous debate.

Mr Hoban: I will come on to deal with the process of negotiation that we are going through, but my hon. Friend will, of course, be aware that the EU budget is determined by qualified majority voting, whereas the framework is determined by unanimity. As he said, he has practised law for some time, so I am sure that he would not be encouraging us to break the law—

Mr Cash rose

Mr Hoban: Or perhaps he is.

Mr Cash: I am grateful to my hon. Friend for walking straight into that one. He knows the formula that I have adopted in the past, notwithstanding the European Communities Act 1972. I have put it to the Prime Minister, and the European Scrutiny Committee report endorsed it as a potential weapon. I simply say to my hon. Friend that there comes a point when we simply have to draw a line and we may have to override European law. The EU breached the law with the stability and growth pact and the fiscal compact. I think it is about time we started showing a bit more mettle.

Mr Hoban: I have to say that I always thought it was appropriate to obey the law, even in circumstances where we would perhaps rather not do so. We need to take our obligations seriously, but that does not in any way weaken our resolve to get the best possible deal for British taxpayers.

Jacob Rees-Mogg (North East Somerset) (Con): I am sure that the Minister has as much backbone as Margaret Thatcher had. She went along to European Councils and said, “Give us back our money.” I think that is the line he should take.

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Mr Hoban: Indeed, I think that the achievement of the rebate at Fontainebleau was a signal achievement of her time in office, but of course that was done in the context of a multi-annual financial framework debate, and we are going through that process at the moment with our European partners. We have made it clear that the rebate is one of our red lines, and we will continue to stick to that, in the same way that we have been very clear about our outright opposition to the financial transaction tax. We will show backbone in these debates, but let us identify those opportunities where our power and leverage is at its highest, to maximise the price that we want in return.

Chris Leslie (Nottingham East) (Lab/Co-op): While the Minister is in such a fine and confident mood, can he give a commitment that the UK Government will settle for nothing less than a real-terms reduction in the budget for the multi-annual financial framework—that spending review seven-year period?

Mr Hoban: I have to say that talk is very cheap on the Opposition Benches, as the amendment demonstrates. They may talk things up, but what was the previous Government’s record? It was to give away our rebate in the hope of some vague common agricultural policy reform. So let the negotiations continue and we will come to the House when they are concluded; we have been very clear about what we are seeking to achieve.

Chris Leslie: Ah!

Mr Hoban: The hon. Gentleman may say “Ah”, but the reality is that when his party was in office it gave away the rebate and allowed a spending increase that permitted the EU budget to rise by another 11% this year. I do not think the Labour party’s record in government is anything that the Opposition should be proud of or crowing about.

Mr David Nuttall (Bury North) (Con): Perhaps I can help the Minister. In 2010, I asked about the cost to the UK taxpayer of the reduction in rebate negotiated by the previous Government and was told that the full cost, now that the rebate is fully phased in, is £2 billion a year. Will he confirm that?

Mr Hoban: Absolutely. My hon. Friend is spot on and it will cost this country £10 billion over the lifetime of this Parliament. That is the disgraceful way in which our rebate was given away for some review of the CAP that never materialised.

Mr Ian Davidson (Glasgow South West) (Lab/Co-op): As the Minister will be aware, I am no great defender of the previous Government’s position on these matters. However, simply pointing to the previous Government’s position is not answering the question. Will this Government make it clear that they will not agree to an increase in the money going to the EU? Yes or no?

Mr Hoban: We are going through the process and we have been very clear about our red lines for own resources and the rebate. We have tried to reach a common position with our allies on the size of the budget and of the multi-annual financial framework. We have been very clear that, at a time when member states across the

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EU are being asked to curb their spending, the EU should play its role in doing that, too. That is what we are seeking to do, not just in the budget but in the financial framework. Just as we have delivered spending restraint at home, we are urging the case for delivering spending restraint in the EU. We have argued forcefully that we need to tackle the chronic over-budgeting and strictly prioritise EU spending. We need significant cuts in the Commission’s spending and I think that they are possible without impeding efforts to boost growth.

Kelvin Hopkins (Luton North) (Lab): I, like many Members, have criticised the decision in 2005 to give away part of our rebate in return for a non-existent reform of the CAP. The Government make much of that, but as I have said more recently, if they really are concerned, why not say to the European Union that we want the £2 billion a year back? We might not be able to recoup all the money that has been lost already, but at least let us get the rebate back to where it should have been had that 2005 agreement not occurred.

Mr Hoban: The hon. Gentleman makes a proposal. We are in the early stages of the discussion on the next multi-annual financial framework. Clearly, maintaining our rebate is a key priority in that debate and we will continue to work to protect the rebate, using our veto if necessary.

There are things that we can do to support growth without massive increases in spending. We can deepen the single market, sign free trade agreements with third countries and reduce regulatory burdens. The Commission claims that bills must be paid, but its proposals simply create new bills for future generations to pay by announcing new programmes this year. It cannot complain on the one hand about needing more money to pay bills due this year when it is also making fresh promises that will have to be paid for in future years. We expect the Commission to look for savings in programmes that either are not under way or represent poor value for money, rather than simply asking member states and their taxpayers to pay more.

It is time that Brussels woke up to the economic reality that member states face and started helping us to tackle our debts at home. Following the Commission’s proposal in April, we have been working with other member states to drive down the Council’s opening position on the EU budget but, as Members will be aware and as I mentioned in response to the intervention from my hon. Friend the Member for Stone (Mr Cash), the Council’s position on the annual budget negotiation is agreed by QMV, not unanimity. Following lengthy negotiations, the position in Council limits growth in spending to 2.79% on 2012 levels. We voted against that in Council because it is simply too high, but we must recognise that it is an unhappy compromise. A higher increase would have been blocked by net contributors such as ourselves and a lower increase would have been blocked by net recipients. Each, in different circumstances, have a qualified majority.

The outcome reached in Council cuts €5.2 billion off the Commission’s proposals and saves the UK taxpayer about £500 million. It is larger than the spending cut that saved us €3.6 billion last year and is €11.3 billion lower than the ceiling of EU spending agreed by the last Labour Government, saving the UK around

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£1.1 billion. Within the overall budget we have slashed the Commission’s proposed increase for the CAP by €490 million.

The debate on the budget will continue. We now have a period when we have to discuss the budget with the Council and Parliament and when we will come under pressure from both the Commission and Parliament to increase spending and move away from the 2.79% increase agreed in Council. That is why we have worked with France, Germany, the Netherlands, Sweden, Austria, Finland and Denmark, not only outlining our disappointment with the 2.79%, but making it clear in a statement made at a meeting earlier this week that further increases to EU spending should not be agreed later this year. That sends a clear signal to the Commission and the Parliament that they should not expect the Council to compromise in budget discussions later this year, and it is a reminder that we will continue to take a tough line on the multi-annual financial framework and on any spending increases proposed for the 2012 budget.

It takes a bit of barefaced cheek for the hon. Member for Nottingham East (Chris Leslie) to table an amendment that deletes reference to the fact that Labour gave away our rebate in 2005. It is an attempt to hide Labour’s record in office. It gave away that rebate in return for a review of CAP that did not take place, at a cost, as I said earlier, of £10 billion to British taxpayers. It would have been better if the hon. Gentleman had recognised the serious mistake that had been made by Tony Blair and the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) in giving away our money.

In his amendment the hon. Gentleman talks about trying to make friends and secure allies, but he was the campaign manager for the right hon. Gentleman—something that is not often quoted in the right hon. Gentleman’s biographies—who attempted not to go to ECOFIN to build alliances with other Finance Ministers to help to get a satisfactory outcome for our budget rebate; the man who did not even turn up for the public signing of the Lisbon treaty, and who wanted to do it in the dark, which shows an inability to create alliances. We will take no lessons from the Labour party on the need to create alliances with other member states. As we have clearly demonstrated with the agreement that we have reached on how the future negotiations on this year’s budget will proceed, we can and do build alliances and successfully impact the course of policy development in the European Union.

Kelvin Hopkins: I do not really agree with the amendment, because it seems to suggest that the Prime Minister is some sort of militant Eurosceptic, which is far from the truth. I would like him to take a stronger line.

Chris Heaton-Harris rose—

Mr Hoban: I do not think that comment needs much response, so I will give way to my hon. Friend.

Chris Heaton-Harris: My hon. Friend is being a bit soft on the Opposition, because their amendment is absolutely pathetic. It is like student politics, trying to re-write a bit of history and deny the past. It is quite pathetic, because they signed up to the rules by which this Government have to negotiate.

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Mr Hoban: My hon. Friend is spot on. It is absurd to try to re-write history and deny that it is because of the actions taken by the previous Government that we have a real challenge in curbing EU spending. It is because they were soft in their negotiations on the rebate and on the level of EU spending across the financial framework that we are spending more than we ought to be spending. It is not just the £10 billion that we have lost as a consequence of the rebate. They negotiated a spending ceiling for this year that is £11 billion higher than the Commissions proposals, so we could face an even bigger bill as a consequence of the weakness of the previous Government. To try to use this amendment to airbrush history lets the Opposition down and shows how unfit they are for office.

Kelvin Hopkins: The hon. Member for Daventry (Chris Heaton-Harris) suggests that this is tit-for-tat student politics, but the Government constantly refer to the 2005 budget settlement—which I agree was wrong—and then propose to do nothing about it.

Mr Hoban: Unlike the Opposition, who were prepared to sacrifice our rebate for some sort of illusory review of spending, we stand firm. It is one of our red lines. In the same way, we stand firm on the financial transaction tax. That is why we vetoed it. We have cut €500 million off the CAP budget this year, which is much more concrete than some review that cost us £10 billion.

Mr John Redwood (Wokingham) (Con) rose

Mr Hoban: I give way to my right hon. Friend, but then I must make some progress and allow others to speak in this short debate.

Mr Redwood: What would the member states that want a high budget say if the UK Government pointed out that public sector wages and benefits in Greece and Spain are having to be cut in cash terms because the EU will not cut its own budget? When there is so much waste and programmes that are not very important, one would think it was much easier and preferable to cut those.

Mr Hoban: My right hon. Friend needs to reflect on the fact that there are, crudely, two groups of member states: those that are net contributors to the EU budget, such as the UK, Germany, the Netherlands and France; and those that have no incentive to curb the size of the budget because they are net recipients. That is one of the reasons there was a tension in the Council debate on this year’s budget and, effectively, two blocking minorities: one if the budget settlement were too low and the other if it were too high. We are making the case across Europe that we need to curb spending and that the money is spent much better at home than through Brussels. We have a group of like-minded allies on that, although not all member states see it in the same way. I think that we need continually to send the message that there are better ways to boost growth in Europe than simply by spending more taxpayers’ money, whether it comes from Belgian, Greek or British taxpayers.

Mr Redwood: But they need to be educated, because in order to get money out we also have to put money in, so higher EU spending affects all member states adversely, not just those that make a net contribution.

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Mr Hoban: In the dynamics of budget debates, the net recipients see that they have a net benefit from increased EU spending, rather than a net cost, which we have. That is one of the driving forces behind their negotiating position. We are taking the argument to them, engaging with them, explaining some of the problems with EU spending and trying to get the EU back on track. Let us wean people off the idea that simply spending more is the answer to our economic problems and find concrete ways in which Europe can contribute to growth without spending more of our taxpayers’ money.

The Government have taken a tough stand in negotiating this year’s budget and are working with like-minded member states to curb increases in EU spending. We are hampered by the fact that the rebate was given away by the previous Government, which cost the taxpayer dear, but we are trying to recover that money. I urge hon. Friends to vote against Labour’s amendment if it is put to a vote and to support our motion.

3.32 pm

Chris Leslie (Nottingham East) (Lab/Co-op): I beg to move amendment (a), at line 15, leave out from “States” to the end and add

“notes that the UK’s ability to negotiate a satisfactory European Union budget deal has been weakened by the Prime Minister’s failure to secure allies for a more prudent settlement in this qualified majority decision; and so calls on the Government to strengthen its stance so that the 2013 Budget and the forthcoming Multi-Annual Financial Framework are reduced in real terms.”

It is always interesting to follow the Financial Secretary to the Treasury. His motion, parts of which we agree with, states that the multi-annual financial framework—a rather clumsy phrase, but essentially a seven-year spending review for EU budgets from 2014 to 2020—needs to be on a sustainable path. Of course that is true. It is also absolutely true, as the motion states, that these are times of ongoing economic fragility in Europe. However, the motion does not mention the fact that, sadly, that is more the case in the UK under this Government.

The motion mentions difficult decisions having to be taken, but falls short when it comes to the actual matters at hand. The Minister spent almost half an hour trying to throw mud and allegations at the previous Government about what happened several years ago, but said hardly a word about what he was doing about the budget settlement for 2013 and even less about the big decision on the seven-year spending review period—a decision, incidentally, on which the Government have a veto. We are coming to that critical period of time when he and the Prime Minister in particular are potentially at their most influential, with leverage over what happens with that budget, but when we tried to get a simple answer from the Minister on whether he agreed that the 2013 budget and the multi-annual financial framework should be reduced in real terms, answer came there none. He said, “Well, we’ll try our best to do the right thing.” The motion states that the proposed 6.8% increase is “unacceptable”, but that is simply too weak. Not going for the 6.8% increase is a no-brainer. Where is the Government’s backbone?

The motion was tabled only yesterday, so it is no surprise that many hon. Members may not have seen that this crucial debate is taking place.

Mr Nuttall rose

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Chris Leslie: I am glad that the hon. Gentleman is, as ever, in his place.

If people realised how weak the Government were being in their negotiating stance, they would be totally appalled.

Jacob Rees-Mogg: The hon. Gentleman is very reasonable in all these matters and of course he wants answers from the Government, but in that spirit of frankness, does he personally regret the loss of £10 billion to the UK Government by giving away the rebate? I know he was not personally responsible for that.

Chris Leslie: The hon. Gentleman has to realise that the European Union was going through a totally different era of accession countries and enlargement. Now, we are in a post-financial crisis era, in which it is absolutely clear that, as my hon. Friend the Member for Blackley and Broughton (Graham Stringer) said, serious spending cuts are taking place in our domestic economy and budget. Many of our constituents want pro-job, pro-growth and pro-stimulus measures to be priorities here in the UK, and they feel aggrieved that some administrative budgets in the EU will continue to roll forward without the UK Government showing the restraint that they ought to show while they are at the height of their potential negotiating powers—hence the amendment that we have tabled.

Despite the Financial Secretary to the Treasury’s sudden animation when I asked him what exactly the Government are doing, the motion does not set out clearly the view, which ought to be and would be shared by all hon. Members, that the budget and the multi-annual financial framework should be reduced in real terms. It is a simple statement that would help the Government in their negotiations, and that is why the House should support the amendment.

Mr Nuttall: Some of us will oppose the amendment on the basis that it, too, does not go far enough, because it talks about reducing the budget merely in real terms. The question I therefore pose is: would the hon. Gentleman be satisfied if the budget increased in cash terms?

Chris Leslie: The hon. Gentleman was perfectly free to table his own amendment, and he pitches a perfectly respectable position. I thought that it was important to draw the Government into adopting a stronger stance, and a reduction in real terms is, at the very least, the place where we need to see the Government, but we could not get them even to that point. He has seen the motion; it falls short in so many ways.

Real-terms cuts are required now to the EU administrative budget, because in the UK we are in a double-dip recession, thanks in part to the Government’s failure on economic growth. The economy shrank in the last quarter of 2011 by 0.4%, and in the first quarter of this calendar year by 0.3%. Borrowing hit £18 billion in May, up £3 billion on the same month last year, and pressures on the UK’s finances are increasing: domestic tax revenues have fallen and income tax receipts are 7.3% down on the year to May. Today the Office for Budget Responsibility, in its fiscal sustainability report, cites projections suggesting that the public finances are likely to come under pressure in the longer term, and states:

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“In the absence of offsetting tax increases or spending cuts this would widen budget deficits over time and eventually put public sector net debt on an unsustainable upward trajectory.”

There is much more evidence than ever before of the need for us to strengthen the Government’s negotiating stance. That is why it is just not good enough for the Government to say, “There’s not much we can do about it. It’s a qualified majority vote this year. We’re in a terribly difficult position,” and why in our amendment we have, sadly, had to point out that the Government have failed to win alliances for a tougher position on the budget. That is where we are today.

There was the phantom veto in December last year, when nothing was actually vetoed—everything went through with the agreement of the other EU countries, and the Prime Minister succeeded simply in alienating the UK’s negotiating position. Now, when we need to make strong arguments about reducing budgets, few are listening and open to ideas because of the stance taken by the Prime Minister in those negotiations.

Kate Hoey (Vauxhall) (Lab): I want whoever is in power in this country to negotiate over our budget in a much tougher way. Does my hon. Friend agree that perhaps the only way for us to get the European Union to take us seriously is to say that we will not pay any more than what we think is a fair contribution and increase? Indeed, given all the waste, there should be not an increase, but a decrease.

Chris Leslie: That is why we need to change the approach of Ministers in negotiations. We have to come to a settlement. This year, we are on the cusp of Ministers having a veto power over the seven-year spending review period. This is the moment when we need them to be particularly firm.

Mr Davidson: Does my hon. Friend feel so strongly about making sure that the agreement we strike with Europe has the support of the people of Britain that he thinks the budget settlement should be the subject of a referendum? That would be an ideal way to determine the long-term budget—the people themselves voting in a referendum on whether they are prepared to accept it.

Chris Leslie: I see the tempting avenue down which my hon. Friend wants to go. I am not sure that it is necessarily good to budget by referendum. It would be simple for the Chancellor, the Prime Minister and the Minister to firm up their position and set out things much more clearly than they have in the motion. I urge hon. Members to look at the airy-fairy fudging language of the motion today—and going forwards, which the Minister does not like to talk about.

The Minister was right to draw on the Financial Times analysis, including in pointing out the reduction of just six administrative staff from the 41,000 EU posts. Some increases for pensions, for schooling allowances for EU officials and even for some of those extra accession activities in relation to Croatia, are still pencilled in by the Commission. I do not think that the administrative budget proposals on the table are justified. Instead, we should be reprioritising the resources paid to the EU budget so that they are sweated more effectively for a pro-growth, pro-jobs position—looking at energy markets, high-speed broadband and the infrastructure and structural

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fund changes that need to be made. I do not think that the Government have appreciated the strength of feeling on this matter.

Mr Cash: I am glad that the hon. Gentleman used the phrase “strength of feeling”. What is his strength of feeling about the fact that every justification for proposing an increase of 6.8%, in all the papers that I have read as Chair of the European Scrutiny Committee—everything in the European Parliament and the multi-annual financial framework discussions in which I took part a few months ago—is, “We need to do it because of the Lisbon treaty”? Will the hon. Gentleman, on behalf of the Opposition, now accept that the Lisbon treaty was a great mistake?

Chris Leslie: No. Some commitment appropriations are certainly being pencilled in—“We can’t undo the budget because of previous commitments”—but almost an equal number of appropriations are new programmes that the European Commission could vary and change. I am all for expenditure at European level and doing our part collectively to boost and stimulate economic growth, but there is not sufficient justification for some of the continued administrative back-office areas of expenditure that simply do not help at this time, especially when we have so many economic difficulties in the UK.

My question to the Minister is very simple: what exactly is the Government’s position? Are they in favour of a real-terms reduction in the budget or not? The Minister would not say. I urge his hon. Friends to try to pin down the Government on that, because we are at a crucial juncture. From reading the reports this week in The Guardian about a deal being done whereby we will not touch reform of the common agricultural policy, for example, I get the sense the Prime Minister likes an easy life with business as usual and wants to continue in that vein.

Kelvin Hopkins: I entirely agree that the Prime Minister wants an easy life as regards the CAP. On behalf of the European Scrutiny Committee, I recently attended a meeting in Brussels about CAP reform where I think I was the only voice calling for restraint; most of the others were calling for more spending on the CAP. What are we doing about it?

Chris Leslie: Although changes to that 40% chunk of the budget have been made, fundamental reforms must still be on the table. The Prime Minister should not wave the issue away so readily.

The Prime Minister and the Government must build some radical alliances, because the 2013 budget is decided by qualified majority voting. They must also strengthen their backbone on the seven-year spending review. This will be a key test for the Government. We know that they just want to look backwards, but it is important that the Minister takes some responsibility, because he is in the driving seat now. The Government must focus not only on the rebate but on ensuring that budgets are set at the right and prudent level. We believe that real-terms reductions can be achieved now and for the future, but the motion falls short of that. That is why we tabled our amendment, which I commend as the best way to strengthen the Government’s backbone.

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3.46 pm

Chris Heaton-Harris (Daventry) (Con): This subject has been omnipresent throughout my political career. For 10 years, I served on the European Parliament’s Budgets Committee and Budgetary Control Committee.

Andrew Percy (Brigg and Goole) (Con): You get less for murder.

Chris Heaton-Harris: Yes, indeed.

I am very keen that the Government get their principles in line and their priorities straight. I want to explain why the amendment tabled by the Opposition is complete rubbish and to give the Minister a feel for why many Conservative Members think that we need to be doing slightly more, in a slightly stronger way, to achieve the aims that I think we all agree on, given that the European budget is way too high.

This year is important in budgetary terms because 2013 is the last year of the current multi-annual financial framework. The work that is done now on the 2013 budget will hold firm for next multi-annual financial framework, within which the Commission is bidding for a lot more money. That is significant for the United Kingdom.

The Commission raises this money in a number of ways: direct payments from national Governments based on each country’s gross national income, a levy on each national Government that takes a slice of their VAT income, customs duties on various imports from outside the EU, and levies on sugar production. That accounts for about 99% of the budgeted income of the European Commission. To put that into scale, in 2010 the UK’s gross contribution to the EU budget was €14.66 billion and we received back €6.75 billion, equating to a net contribution of €7.91 billion.

Jacob Rees-Mogg: My hon. Friend mentioned the repatriation of funds to the UK. The net figure that he cites assumes that the European Union spends money in the UK in a way that we would like, but that is not a fair assumption.

Chris Heaton-Harris: That is a correct assumption. A number of those projects would not have been financed by this Government or by previous Governments, so the money is being diverted into different things. That is why the last Prime Minister, when he was Chancellor of the Exchequer, mooted the idea of repatriating those moneys.

Andrew Percy: I agree that the Labour amendment is total nonsense. Is it not true that a lot of money is being spent on infrastructure projects in parts of the European Union that are wealthier than the area that I represent, where a great deal of Government funding is being cut? That is completely unacceptable to my constituents.

Chris Heaton-Harris: I agree with my hon. Friend that it is a difficult ask for us to explain to our constituents why no money is forthcoming for reasonable projects in our areas, when we are giving money to richer areas across the European Union through the regional structural funds. That is an aberration that we should look at seriously.

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We were the second largest net contributor to the European Union in 2010. Germany was ahead of us with €11.95 billion. Behind us were France with €6.48 billion and Italy with €5.84 billion. Obviously, Italy is not the richest country in the world at the moment, so it, too, is trying to do something about its net contribution. The largest net recipients in 2010 were Poland with €8.17 billion, Greece with €3.44 billion and Spain with €3.1 billion. So there are lots of fiscal transfers across the 27 member states.

Many other costs are hidden in the European Union budget.

Mr Nuttall: The figures that my hon. Friend quotes show that, in essence, we are transferring the entirety of our net contribution to Greece and Spain.

Chris Heaton-Harris: If it was done as a simple transaction, that would be the case.

The Commission’s budgetary expenditure is divided into five headings. “Sustainable Growth”, which mainly involves the EU structural funds, and “Preservation and Management of Natural Resources”, which relates to agriculture and the environment, are the biggest items and accounted for 87% of EU spending in 2012. “Citizenship, freedom, security and justice”, which relates to social policy, crime and policing, and “The EU as a global player”, which involves foreign policy issues, were the smaller items of the budget. The heading, “Administration”, relates to the finances of the staff of the European Commission and other institutional expenditure, such as that of the European Parliament, the Committee of the Regions, the Economic and Social Committee and various other EU agencies and quangos.

Kate Hoey: I hope that the hon. Gentleman’s attention has been drawn to the wonderful little DVD that has been sent to a number of Members by Marta Andreasen, who has done a terrific job of showing all the waste that has gone on and how massive amounts of taxpayers’ money are being wasted. If we stopped that waste, we would not have to increase the budget, but could cut it. Would he like to ensure that every Member of Parliament can see the DVD?

Chris Heaton-Harris: It is not often that I would commend anything to do with a politician from the UK Independence party. However, if we look at the front page of the Financial Times from 1 August 2002, we see sitting beside Marta Andreasen at the press conference one of the MEPs for the East Midlands, who is now the MP for Daventry. She was the first person to hold the role of chief accountant of the European Commission who had an accountancy qualification. I am very keen that her expertise is shared. I have seen the DVD and it is well worth looking at.

The Minister set out some obstacles to the reform of the budget, and they are great. When there are big vested interests, with big countries getting way more money out than they will ever put in, there is no chance of reducing the budget under qualified majority voting. As I have tried to explain, we are one of the biggest net contributors, and we will continue to be so way into the future. However, we will always be outvoted on budgetary matters under qualified majority voting, because more countries gain from our expenditure than pay themselves.

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Blocs exist to protect certain things. There is the bloc of net gainers, but France, which is a net contributor, exists in another bloc to protect one of the big areas of spending: the common agricultural policy. It does not want any major changes to the CAP, because that is how it diminishes its net payments to the EU. With such vested interests built in, reform of the European budget is much easier said that done, as the Opposition prove in their amendment.

Another problem with the EU budget is that its own auditors do not sign it off. This is the 17th consecutive year in which the European Court of Auditors, having checked the legality of EU spending, has refused to give it what is called a positive statement of assurance. Essentially, it has refused to sign off the accounts. As the Financial Secretary said, we must consider that alongside the fact that the European Commission constantly asks for much more money to spend but then cannot spend it properly. Until recently, it was running up massive surpluses in its own accounts.

There are also aberrations that people do not like. The latest is that we are told that EU chiefs are splashing out on a new £350 million headquarters, at a time when everybody else is having to cut their budgets. That new headquarters, by the way, is in Luxembourg, where MEPs no longer go because they are based in Brussels and Strasbourg. There is obviously too much money in the system. The case for reform is therefore greater now than it has ever been.

Although the European Council will not formally adopt its position on the European Commission’s proposed EU budget for 2013 until 26 July, member states’ ambassadors to the EU reached a deal on it yesterday, as the Financial Secretary mentioned. The Commission has proposed an overall 6.8% increase in payment appropriations compared with 2012, which amounts to about £7.2 billion—a decent sum. As he said, the member states’ position agreed yesterday means a £2.9 billion increase in payments. That is an increase of 2.79%, which can be compared with the EU inflation rate of 1.9%.

The Financial Secretary and I know that the UK, the Netherlands and Sweden all oppose the deal and will vote against it at the Council on 26 July. However, if we are the only three states to do so, the budget will be adopted by a qualified majority of countries in the blocs that I outlined, which want to receive more than they put in. If the estimated UK gross contribution of 11.3% to the 2012 EU budget were replicated, under yesterday’s deal the UK would pay about £12.2 billion gross into the budget next year.

Essentially, we are just about to increase the EU budget, and our part of that increase is £330 million. That would pay a year’s basic salary to 18,500 Army privates, the average basic salary to 10,500 NHS-qualified nurses, or a year’s basic salary to 12,500 police constables.

Graham Stringer: The hon. Gentleman is providing some extraordinarily insightful and useful information about the absurdities of the EU. When the Financial Secretary was asked to be a bit tougher, he made great play of always having to obey the law. We are law makers, so of course we agree, but can the hon. Gentleman think of any organisation in the UK that would hand over £100, let alone £12 billion, to an organisation that cannot get its accounts audited?

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Chris Heaton-Harris: No, I cannot. One point that I am trying to make is that, if we want to be stronger and to cause a bit of upset among our European partners, we could dig our heels in. The Government are doing what they can, while abiding by the letter and spirit of the law, but we could change the face of public services in the UK with just the increase in our contribution to next year’s budget. It is therefore perhaps worth digging our heels in that bit harder and threatening to do something that might be against the letter of the law. There would be a relatively large amount of public approval for such actions in respect of an organisation that has not had its accounts signed off for 17 years, as the hon. Gentleman says.

There would be more public approval for such actions if people knew what the money is spent on. I shall speak for just one more minute, because I know other hon. Members wish to speak, and outline a handful of things that the European budget goes on. Total EU spending in 2012 on quangos and agencies, which the Minister mentioned, was about €2.48 billion. Some agencies and quangos completely duplicate other bodies that serve the EU and member states, such as the Economic and Social Committee and the Committee of the Regions, which the European Commission is meant to consult but which no one has ever heard of, apart from those illustrious members of our communities that enjoy going on the monthly trips to serve on them. We could cut those and save €215 million straight away, but British Governments of either political complexion have never suggested it.

There are two human rights agencies. We could cut at least one of them, saving €15 million. Four agencies are involved in workplace and environment issues. We could cut a number of those and save €50 million. If we dig and delve deeply enough, we find that each EU Commission budget line funds all sorts of things that it probably should not. Hundreds if not thousands of non-governmental and other organisations get money from the EU budget. The have become slightly too close to the EU and should question whether that helps them to get their point across, even if it helps them in budgetary terms. Greenpeace is not one such organisation—it refuses to take any money from any governmental institution.

Mr Davidson: Is the hon. Gentleman aware of how the system operates? The EU gives money to organisations that it has established, so that they can lobby the EU to spend money on their aims.

Chris Heaton-Harris: To illustrate exactly that point, I shall quote the reasons Greenpeace gives for not taking money from governmental institutions:

“Greenpeace does not solicit or accept funding from governments, corporations or political parties. Greenpeace neither seeks nor accepts donations that could compromise its independence, aims, objectives or integrity… Greenpeace relies on the voluntary donations of individual supporters, and on grant support from foundations.”

I take EU lobbying by Greenpeace way more seriously, because it comes from the heart and not from an EU budget line.

My next example is the LIFE+ programme budget line, which funds, among other groups, Avalon, which co-ordinates activities and lobbies on behalf of sustainable rural development in central and eastern European

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regions; BirdLife Europe; CEE Bankwatch; Climate Action Network Europe; Coalition Clean Baltic; Danube Environmental Forum; EUCC Coastal and Marine Union; Eurogroup for Wildlife and Laboratory Animals; EUROPARC; the European Environmental Bureau; European Environmental Citizens Organisation for Standardisation; European Federation for Transport and Environment; European Landowners Association; European Water Association; Federation of Associations for Hunting and Conservation of the EU; FERN; Friends of the Earth Europe, which constantly lobbies hon. Members on all sorts of things; Health and Environment Alliance; International Federation of Organic Agriculture Movements EU group; International Friends of Nature; International Network for Sustainable Energy; Justice and Environment; and the Mediterranean Information Office for Environment, Culture and Sustainable Development. The list goes on. Just one budget line funds all those organisations.

Mr Cash: On a broader question, will my hon. Friend consider that if we were to consider a Swiss-style relationship with Europe and negotiate a proportionate drop in our net contributions, we could reduce the amount we pay to no more than £1.3 billion, saving nearly £7 billion? Does he find that an attractive idea?

Chris Heaton-Harris: Anything that saves UK taxpayers significant sums of money I deem worthy of further investigation.

There are lots of areas in which the Government, working with others on the Council and Members of the European Parliament, who have an opportunity to amend the budget, can do a lot more, but only if there is a tiny threat that we might not want to increase our contribution at all. We have the reason to do it—the accounts not being signed off—but I urge the Minister to consider the opportunities that present themselves in the coming years. I support the Government in trying to reduce our budgetary contribution. I know that it is unbelievably hard work—I have sat in on these trilogue meetings in Brussels—but it is worth the effort, because we could save the UK taxpayer billions of pounds.

4.6 pm

Keith Vaz (Leicester East) (Lab): I want to start with a small Euro whinge about the time available to discuss these important matters. When we discuss European affairs, it is important that we have more than one and a half hours. I have great respect for the Front-Bench spokesmen, but they took more than 45 minutes to put their cases, leaving very little time for those knowledgeable Back Benchers—I do not include myself; I would never want to praise myself—who want to make a contribution on these important matters.

It is a pleasure to follow the hon. Member for Daventry (Chris Heaton-Harris), who is obviously extremely knowledgeable about these issues, having sat on the budget committee of the European Parliament for many years before claiming asylum here in Westminster. I am sure that we should listen carefully to what he says about how the process operates. I would also be keen to see a copy of the DVD showing what goes on inside the EU that my hon. Friend the Member for Vauxhall

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(Kate Hoey) offered to Members. I have not received a copy—perhaps the UK Independence party MEP decided to send it only to some Members.

I want to say three quick things, because I know that other Members want to contribute. The first, concerning migration issues, is directly relevant to the EU home affairs agenda. I would like to know from the Minister, if not today then certainly in writing, what part of the budget will be ring-fenced to help countries such as Greece to deal with the serious migration problems at their borders. I see that the hon. Member for Rochester and Strood (Mark Reckless) is here. The Home Affairs Committee visited Fylakio, on the border of Greece and Turkey, where we saw the detention centres in which many of these refugees and asylum seekers live. The conditions were appalling, and we were told that more than 100,000 people crossed the border between Greece and Turkey every year.

Obviously we would like an improvement in the living conditions of those who arrive in Greece, but more than that we would like to prevent these illegal migrants from coming into Greece in the first place. As Members will know, the destination of choice for those 100,000 people who cross the border into the EU is not Greece. They are only kept in detention for six months, and they then travel to Athens and end up in northern and western Europe, particularly the United Kingdom and Scandinavian countries.

We know that Greece is having huge problems, but I would like an assurance that some of the money in the budget will be ring-fenced for issues of concern to this country. If we are to deal with illegal migration, it is much better to do so at the far borders of the EU, rather than allowing it to be a problem for us here, with all the issues and political controversies that it raises when we debate it. Is any of that budget to be ring-fenced?

Mark Reckless (Rochester and Strood) (Con): I wonder whether the Chairman of the Select Committee on Home Affairs recalls that when we went to Greece we came across a young lady from Latin America who had almost accidentally got caught up in the Greek illegal immigration system. She was desperate to go back, but the EU funds could not be used for that purpose, however much we made the case to the European Commission representative there. In the end, we had to get assistance from the Norwegian Government, whose funds did not require domestic Greek matching funds. Should we therefore not also deal with that issue?

Keith Vaz: That is absolutely right. I do remember that young lady. She made a beeline for the hon. Gentleman—he was single at the time, I think, and—

Mark Reckless: I must clarify the position: I believe it was my hon. Friend the Member for Hertsmere (Mr Clappison) for whom she made a beeline.

Keith Vaz: We did not give notice of that allegation, so we had better not pursue it. However, the hon. Gentleman is right: the issue he raises is another area that can be looked at as a possible means of dealing with this important subject.

The second issue—[Interruption.] My hon. Friend the Member for Glasgow South West (Mr Davidson) keeps reminding me that I said I would speak for three

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minutes, and my time is now almost up. Let me therefore ask the Minister to look at the cost of enlargement. I am a great supporter of enlargement. When I was Minister for Europe, my job was to go to the European Union, as Tony Blair told me to, and ensure that we became best friends with all the countries in eastern Europe that sought to come into the European Union, and that is what I sought to do. I am therefore very much in favour of enlargement, but I am a bit worried by some of the figures for the cost of it. Croatia has been promised €150 million, while Turkey, which is not even a member, has been given €3 billion. We all support Turkish membership, but I am worried about all the money that is going to candidate countries and the possibility that we do not know precisely what is happening to it.

Mr Hoban: The right hon. Gentleman makes an important point. Last week the Commission proposed a €10 billion increase in the financial framework to cover the cost of Croatia’s admission. However, it should find that money from the existing budget, rather than loading additional costs on to taxpayers across all 28 member states, as they will become.

Keith Vaz: I am pleased to hear that the Minister is seized of the issue, and presumably he resisted that attempt to increase the budget. However, we seem to be giving a lot of money to some of the other potential candidate countries—Iceland, Serbia and Montenegro, as well as Turkey, of course—without knowing precisely what the benchmarks are. We should therefore look at that issue in the budget.

My final point relates to the Europe 2020 strategy and the benchmarks set when it was created, starting with the Lisbon agenda, which was agreed in 2000. Are we sure that enough of that money is going on growth and jobs in the European Union? There are other issues that need to be dealt with, but ensuring more jobs and growth is the key to getting Europe out of its current mess.

4.13 pm

Jacob Rees-Mogg (North East Somerset) (Con): It is a great pleasure to follow the right hon. Member for Leicester East (Keith Vaz), although I note that we are all glad that he is Chairman of the Home Affairs Committee rather than the Select Committee on the Treasury, because 13 minus six is certainly not three. None the less, it was a great pleasure to listen to what he had to say.

I want first to deal with the hypocrisy of the European Union. It seems to me outrageous that the European Union is saying to the peripheral nations—the nations in trouble—that they must cut, be austere and have reduced budgets forced on them while it builds up its own empire and takes more money for itself, so that it can enjoy the fleshpots of Brussels while the people in Greece can hardly afford to eat. This is deeply shameful and another reason for being suspicious of the European Union and the way it operates.

On the other hand, I support the Government because they have been valiant, in extremely difficult circumstances, in trying to keep the budget under control. As my hon. Friend the Member for Daventry (Chris Heaton-Harris) pointed out, it is almost impossible to get a qualified majority to keep the budget down when so many people

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benefit from an increased budget. However, the Government have done incredibly well in getting allies and in working with other member states whose interests are aligned to ours to keep the increase down to just a little above inflation. Of course I would like to see more; I would like a cash decrease in the budget and a remarkably small EU budget in general, but, given the difficult circumstances that the Government face, they have done extraordinarily well.

The Government have a bigger challenge ahead of them, however, because this arrangement is just for 2013 and they will have to negotiate the multi-annual financial framework. They hold one crucial card in that respect, which is unanimity—the veto. I would be interested to hear from the Minister whether the starting point for the multi-annual financial framework will be the budget for 2013 as agreed or the limit for the 2013 budget as agreed under the last multi-annual financial framework, because I believe that there is a difference of €11 billion between the two. If we are starting from the much higher level, we might find ourselves being told that the reduction has been a great success when in fact there has been an overall increase. That technical point is important.

I also want to issue a warning to the Government, and here I am going to sound like a Treasury stooge—a position that I hope to achieve at some point—who supports the Treasury line on everything. I support it in this regard, however, because I believe in austerity, and in cutting public spending and getting it under control. I am very worried about the partial general approach that is being taken to the multi-annual financial framework. I am worried that other Ministries are agreeing to programmes that will require funding, and that they will subsequently present the Treasury with a fait accompli.

Mr Hoban: I can assure my hon. Friend that that is certainly not going to be the case.

Jacob Rees-Mogg: I am reassured by that, but I note that some of the documents that we have seen in the European Scrutiny Committee make it seem as though it would be difficult to un-agree some of the things that have been agreed. I am reassured, however, that the Minister is going to watch the situation carefully.

I should like to finish by thanking the Opposition for their marvellous amendment. It has without doubt achieved one thing, which is to unify the Conservative party in ridiculing an amendment that could hardly be sillier, more foolish, more erroneous, more wrong-headed or more potty—I hope that that word counts as parliamentary. Let us look at it. It states that

“the UK’s ability to negotiate a satisfactory European Union budget deal has been weakened by the Prime Minister’s failure to secure allies”,

yet the Prime Minister has secured allies right, left and centre. He did it for this year’s budget, and he has done it again for next year’s. It was one of his great European negotiating triumphs over the mendicant nations that get more money out of the European Union than they pay into it.

The Opposition also have the brass neck to state in their amendment that they want a real-terms reduction in the multi-annual financial framework, and that the Government will not answer their questions. I asked the hon. Member for Nottingham East (Chris Leslie) a

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simple question about the £10 billion that we lost, whether he regretted it in any way. I phrased my question as gently as I could, acknowledging that he had not been in Parliament at the time—a sad loss to the nation—but did he answer me? Did he say that it had been a great humiliation and a great shame that the last socialist Government had lost £10 billion of hard-earned British taxpayers’ money? Not a bit of it. He wandered on, and he meandered around, but he said nothing helpful of that kind. He therefore unites the Tory party in chortling at the effrontery of the socialists in coming here, when they spent money as if it was going out of fashion, and expecting us to do a job that even Hercules would probably have found beyond him.

I urge the Government—I beseech them—to cut the spending of the European Union. I am with my hon. Friend the Member for Daventry in saying that we should say to the EU: “For those 17 years of not having your accounts written off, we are deducting £1.7 billion from our contribution.” That has a nice symmetry. Let the EU take us to the Court—the Court that, as we discovered earlier, is gummed up with cases—and let it see whether it could bring a case against us to show that the law was on its side. I doubt that it would be.

4.19 pm

Mr Ian Davidson (Glasgow South West) (Lab/Co-op): It is noticeable that, so far as I am aware, not a single Member has risen to defend the European Commission’s case for an expansion of its budget. Not even my right hon. Friend the Member for Leicester East (Keith Vaz)—representing Leicester and Brussels East—who is just departing, dared to suggest that the budget should be increased. I note that not a single Liberal Democrat has bothered to turn up to defend the EU’s budget proposals either. When I indicated my intention to speak in this debate, the Whips Office very generously offered me the chance to have the day off, on three occasions, despite the three-line Whip. Nevertheless, I felt it appropriate to share my views with the House.

This is the one area where, in respect of the UK Budget, virtually everybody is agreed that substantial cuts can be made. At a time of austerity, it is clearly indefensible to spend copious amounts of money on the European budget in the way we do. If I remember correctly, the Minister mentioned European schools, so will he tell us how much money is spent per teacher and per pupil in European schools in comparison with schools in the UK, either for the individual nations or across the UK as a whole? That would enable people to see the disparity. Will the Minister provide for the information of Members an account of the salaries and other rewards, and the tax and other deductions, of the top 100 most highly paid people in the European Commission and of those of the top people employed by the British Government? I believe such a comparison would reveal the level of extravagance of the European Commission in supporting itself in the style to which it has become accustomed to be outrageous and indefensible.

The Minister did not mention to any great extent the case for making cuts in the common agricultural policy, which is the wildest example of a benefits system for the least deserving that I have ever come across in my life. We have attacked the poor by changing their benefits

12 July 2012 : Column 536

system, yet we are not prepared to take any steps to try to amend the benefits system that works for this country’s wealthiest landowners. The waste and extravagance of the EU fails to be audited successfully year after year—to the great complaint of the Public Accounts Committee on which I served for many years.

It seems obvious that the Minister and Conservative Members must have something in their notes, saying: “weak case; kick Opposition”. I accept that the Opposition’s case is weak. I did not support the budget changes when we gave away the rebate: we got virtually nothing for it; we got no change to the common agricultural policy, and those responsible for it did not even get the presidency of the European Union. In those circumstances, it was a patently disastrous deal, but simply reflecting on that is not sufficient. The Minister needs to be more explicit about how exactly he proposes to deal with the situation in which we are perpetually outvoted in qualified majority voting by those who receive money from those who pay. There is an in-built majority of recipients, so it is inevitable in those circumstances that we will always lose.

The question arises of what we do about the next overall budget for the longer period. I am not clear whether the Government are saying unequivocally that they intend to veto that budget if it is unsatisfactory. I am not clear how they will judge whether or not the proposed budget will count as unsatisfactory. An hon. Member asked earlier whether the Government would view a cash increase as acceptable in any terms. I would have thought that a cash freeze should be the very least that the Government would expect from the budget going forward. I would have hoped that we wanted to see, at the minimum, substantial cuts in a whole host of areas of the EU budget—and that otherwise we would reject it. If that brings about a confrontation with our European allies—those with whom we wish to work on many fronts—it might bring about the sort of issue on which we want a referendum.

I have not previously favoured an in/out referendum because I regard neither of those options as particularly attractive: a yes to stay in would be seen as a green light to ever-closer union, while a no to get out would be seen by isolationists as a green light to their position. I believe in co-operation with our European allies, but on different terms from those that we have at present. The Government have a responsibility to be fair to our European allies so that they do not feel that they have been ambushed by our producing—like a rabbit out of a hat—a whole set of red lines at the last minute. We should be spelling out now what it is that we are not prepared to accept in any drastic redrawing of the budget.

I hope, of course, that the budget cuts will be so drastic that my hon. Friends support them as well. It is noticeable that Opposition Members have been unanimous in criticising the European budget, and I think that if a vote were taken now among the Opposition Back Benchers who are currently present, the budget would be subjected to stringent cuts.

The Government must recognise that the country is far more Eurosceptic and suspicious of EU budget spending than the élites of Europe who are disproportionately spoken for in the House. It is true that the Liberal Democrats are not here, but they are not the only guilty parties. There are those who have become hypnotised

12 July 2012 : Column 537

by the lure of Brussels and the concept of flying back and forth throughout Europe. They have been sucked in by a very seductive embrace: the idea of becoming a European statesmen, and world statesmen, and so on and so forth. That leads people to forget what life is like at home, and the feelings and ambitions of ordinary people, let alone the price of milk.

I hope that the Financial Secretary will not only agree to provide the information for which I asked about schools and the salaries and taxation of the top 100, but spell out more clearly the rules that the Government intend to apply for the forthcoming budget period.

4.26 pm

Mr William Cash (Stone) (Con): The debate is extremely important, particularly in the light of what we heard from the Foreign Secretary this morning, because it is about our relationship with the European Union. As I said in my response to the Foreign Secretary’s statement, it is fundamental that we concentrate not merely on powers, but on democratic power. The debate is about sovereignty and tax and spend, it is about how much we should contribute, and—as I said to the hon. Member for Nottingham East (Chris Leslie)—it is about the increase in functions that has led to the increase in the budget. The hon. Gentleman knows that, and we know it. The fact is that the Lisbon treaty should never have been allowed to go through. The budget question is at the heart of this, and I say no, no, no.

Neil Parish (Tiverton and Honiton) (Con): My hon. Friend is absolutely right. If we want to curb the powers of the European Union we should pay it far less money, which it should spend more efficiently, and, given that Europe is facing austerity, it is entirely wrong to ask for a 6% increase.

Mr Cash: It is indeed. In fact, the Commission is asking for 6.8%.

I agree with the Minister that the Government have fought hard, but they have not fought well enough. Although an amendment that I tabled last year proposing no increase was accepted by Members on both sides of the House, we ended up with a 2.5% increase. I think I am right about that, although the Minister appears to disagree. As for the year that we are discussing now, we need to ensure that, if necessary, we take firmer steps in the light of the changed relationship that has resulted from these times of austerity.

I think that we should say no and ensure that the amount in question is at worst a flat increase. Furthermore, I think that we should say no to the final results. QMV does not impress me: other member states have been breaking the law all over the place, particularly Germany and France over the stability and growth pact. The whole of the fiscal compact was unlawful. It is time that we took a firmer line. We are a major net contributor to the EU budget, of which, last year, 45% was spent on policies for sustainable growth, 41% on the preservation and management of natural resources, and the rest on, for instance, “the EU as a global player” and administration. We are the second largest net contributor after Germany. The current annual budgets under the multi-annual financial framework are going in the wrong direction. We should restrain all further expenditure to the EU. We must take action on the gross payments. The gross

12 July 2012 : Column 538

payments, less abatement, were £12.915 billion in 2010, up from £8 billion in 2005. There is an ever-growing increase in real terms. That is unacceptable in a time of austerity.

I shall conclude by referring to a point I have already made. We must change our relationship with the EU in the way anticipated by those of us who would make the most of what the Foreign Secretary said earlier today, and we must do so sooner rather than later, and certainly before 2014. If we were to adopt a Swiss-style relationship and negotiate a proportionate drop in our net contributions, we would be able to save at least £7 billion for the British taxpayer. That is the direction we should go in. It is time that we said no, not maybe.

4.30 pm

Mr David Nuttall (Bury North) (Con): As ever, it is a great honour to follow my hon. Friend the Member for Stone (Mr Cash).

The facts are simple. The net out-turn figures are £9.2 billion for 2010-11, £8.7 billion for 2011-12, £6.9 billion for 2012-13 and £8.3 billion for 2013-14. At a time when we are cutting our budgets here in the UK, the fact is that, whatever happens in the negotiations, those in Europe and Brussels want the European budgets to be increased. Meanwhile, my constituents are seeing their budgets being cut. This serves to highlight the fact that we would be better off out of the EU.

Question put, That the amendment be made.

The House divided:

Ayes 141, Noes 234.

Division No. 52]

[4.32 pm

AYES

Abrahams, Debbie

Alexander, rh Mr Douglas

Alexander, Heidi

Ali, Rushanara

Bailey, Mr Adrian

Bain, Mr William

Banks, Gordon

Barron, rh Mr Kevin

Bell, Sir Stuart

Benn, rh Hilary

Betts, Mr Clive

Blears, rh Hazel

Blenkinsop, Tom

Bradshaw, rh Mr Ben

Brown, rh Mr Nicholas

Brown, Mr Russell

Buck, Ms Karen

Campbell, Mr Alan

Caton, Martin

Clark, Katy

Clarke, rh Mr Tom

Coaker, Vernon

Coffey, Ann

Connarty, Michael

Cooper, Rosie

Cooper, rh Yvette

Corbyn, Jeremy

Creasy, Stella

Cruddas, Jon

Cunningham, Alex

Cunningham, Mr Jim

Cunningham, Sir Tony

Dakin, Nic

David, Wayne

Davidson, Mr Ian

Denham, rh Mr John

Dobbin, Jim

Docherty, Thomas

Donohoe, Mr Brian H.

Dorries, Nadine

Doyle, Gemma

Eagle, Ms Angela

Efford, Clive

Engel, Natascha

Evans, Chris

Farrelly, Paul

Fitzpatrick, Jim

Flello, Robert

Flint, rh Caroline

Fovargue, Yvonne

Gapes, Mike

Gilmore, Sheila

Glindon, Mrs Mary

Goggins, rh Paul

Greatrex, Tom

Green, Kate

Griffith, Nia

Gwynne, Andrew

Hamilton, Mr David

Hanson, rh Mr David

Harman, rh Ms Harriet

Havard, Mr Dai

Hodge, rh Margaret

Hunt, Tristram

Irranca-Davies, Huw

Jackson, Glenda

Jamieson, Cathy

Johnson, rh Alan

Johnson, Diana

Jones, Susan Elan

Kaufman, rh Sir Gerald

Kendall, Liz

Khan, rh Sadiq

Lammy, rh Mr David

Lazarowicz, Mark

Leslie, Chris

Lewis, Mr Ivan

Lloyd, Tony

Love, Mr Andrew

Lucas, Caroline

Lucas, Ian

Mactaggart, Fiona

Mahmood, Shabana

Malhotra, Seema

Marsden, Mr Gordon

McCarthy, Kerry

McDonnell, John

McGovern, Alison

McGovern, Jim

McGuire, rh Mrs Anne

McKechin, Ann

McKenzie, Mr Iain

Mearns, Ian

Michael, rh Alun

Miller, Andrew

Moon, Mrs Madeleine

Morden, Jessica

Morrice, Graeme

(Livingston)

Morris, Grahame M.

(Easington)

Murphy, rh Mr Jim

Murray, Ian

Nandy, Lisa

Nash, Pamela

O'Donnell, Fiona

Offord, Dr Matthew

Onwurah, Chi

Owen, Albert

Pearce, Teresa

Perkins, Toby

Qureshi, Yasmin

Raynsford, rh Mr Nick

Reed, Mr Jamie

Reeves, Rachel

Reynolds, Emma

Reynolds, Jonathan

Riordan, Mrs Linda

Rotheram, Steve

Ruane, Chris

Ruddock, rh Dame Joan

Sharma, Mr Virendra

Skinner, Mr Dennis

Smith, Angela

Smith, Nick

Straw, rh Mr Jack

Stringer, Graham

Sutcliffe, Mr Gerry

Tami, Mark

Thomas, Mr Gareth

Thornberry, Emily

Timms, rh Stephen

Trickett, Jon

Turner, Karl

Twigg, Derek

Umunna, Mr Chuka

Vaz, Valerie

Walley, Joan

Watson, Mr Tom

Whitehead, Dr Alan

Williamson, Chris

Winnick, Mr David

Winterton, rh Ms Rosie

Wright, Mr Iain

Tellers for the Ayes:

Phil Wilson and

Jonathan Ashworth

NOES

Adams, Nigel

Afriyie, Adam

Amess, Mr David

Andrew, Stuart

Arbuthnot, rh Mr James

Bacon, Mr Richard

Baker, Norman

Baker, Steve

Baldry, Sir Tony

Baldwin, Harriett

Barclay, Stephen

Baron, Mr John

Beith, rh Sir Alan

Benyon, Richard

Beresford, Sir Paul

Berry, Jake

Bingham, Andrew

Binley, Mr Brian

Blackman, Bob

Blackwood, Nicola

Boles, Nick

Bradley, Karen

Brady, Mr Graham

Brake, rh Tom

Bray, Angie

Brazier, Mr Julian

Brine, Steve

Brokenshire, James

Browne, Mr Jeremy

Bruce, Fiona

Bruce, rh Sir Malcolm

Buckland, Mr Robert

Burley, Mr Aidan

Burns, rh Mr Simon

Burrowes, Mr David

Burt, Alistair

Burt, Lorely

Cable, rh Vince

Carmichael, rh Mr Alistair

Cash, Mr William

Clappison, Mr James

Clark, rh Greg

Clarke, rh Mr Kenneth

Coffey, Dr Thérèse

Collins, Damian

Cox, Mr Geoffrey

Crockart, Mike

Davey, rh Mr Edward

Davies, David T. C.

(Monmouth)

Davies, Glyn

Davies, Philip

de Bois, Nick

Dinenage, Caroline

Djanogly, Mr Jonathan

Dorrell, rh Mr Stephen

Dorries, Nadine

Doyle-Price, Jackie

Duddridge, James

Duncan, rh Mr Alan

Duncan Smith, rh Mr Iain

Ellis, Michael

Ellison, Jane

Eustice, George

Evans, Graham

Evans, Jonathan

Fabricant, Michael

Fallon, Michael

Farron, Tim

Featherstone, Lynne

Field, Mark

Fox, rh Dr Liam

Francois, rh Mr Mark

Freeman, George

Fuller, Richard

Gale, Sir Roger

Garnier, Mr Edward

Garnier, Mark

Gauke, Mr David

George, Andrew

Gibb, Mr Nick

Glen, John

Goodwill, Mr Robert

Grant, Mrs Helen

Gray, Mr James

Green, Damian

Greening, rh Justine

Gummer, Ben

Gyimah, Mr Sam

Halfon, Robert

Hammond, Stephen

Hands, Greg

Harper, Mr Mark

Harrington, Richard

Harris, Rebecca

Harvey, Nick

Hayes, Mr John

Heald, Oliver

Heath, Mr David

Heaton-Harris, Chris

Hemming, John

Henderson, Gordon

Hendry, Charles

Hinds, Damian

Hoban, Mr Mark

Hollingbery, George

Hollobone, Mr Philip

Holloway, Mr Adam

Hopkins, Kris

Howell, John

Hughes, rh Simon

Hunter, Mark

Huppert, Dr Julian

James, Margot

Javid, Sajid

Johnson, Gareth

Johnson, Joseph

Jones, Andrew

Jones, Mr Marcus

Kelly, Chris

Kennedy, rh Mr Charles

Kirby, Simon

Knight, rh Mr Greg

Kwarteng, Kwasi

Laing, Mrs Eleanor

Lamb, Norman

Lansley, rh Mr Andrew

Leadsom, Andrea

Lee, Dr Phillip

Lefroy, Jeremy

Leigh, Mr Edward

Leslie, Charlotte

Lewis, Brandon

Liddell-Grainger, Mr Ian

Lidington, rh Mr David

Lilley, rh Mr Peter

Lloyd, Stephen

Lord, Jonathan

Loughton, Tim

Luff, Peter

Lumley, Karen

Macleod, Mary

Maude, rh Mr Francis

May, rh Mrs Theresa

McLoughlin, rh Mr Patrick

Menzies, Mark

Miller, Maria

Milton, Anne

Moore, rh Michael

Mordaunt, Penny

Morgan, Nicky

Morris, Anne Marie

Morris, David

Morris, James

Mosley, Stephen

Mowat, David

Munt, Tessa

Murray, Sheryll

Murrison, Dr Andrew

Newton, Sarah

Nokes, Caroline

Norman, Jesse

Nuttall, Mr David

Offord, Dr Matthew

Ollerenshaw, Eric

Opperman, Guy

Ottaway, Richard

Paice, rh Mr James

Parish, Neil

Pawsey, Mark

Penning, Mike

Penrose, John

Phillips, Stephen

Pincher, Christopher

Poulter, Dr Daniel

Prisk, Mr Mark

Raab, Mr Dominic

Randall, rh Mr John

Rees-Mogg, Jacob

Reevell, Simon

Reid, Mr Alan

Rifkind, rh Sir Malcolm

Robertson, Hugh

Rogerson, Dan

Rosindell, Andrew

Rudd, Amber

Ruffley, Mr David

Rutley, David

Sandys, Laura

Scott, Mr Lee

Selous, Andrew

Sharma, Alok

Simmonds, Mark

Smith, Julian

Smith, Sir Robert

Soames, rh Nicholas

Spelman, rh Mrs Caroline

Spencer, Mr Mark

Stanley, rh Sir John

Stewart, Bob

Stewart, Rory

Stride, Mel

Stuart, Mr Graham

Sturdy, Julian

Swayne, rh Mr Desmond

Swinson, Jo

Syms, Mr Robert

Teather, Sarah

Thurso, John

Timpson, Mr Edward

Tredinnick, David

Truss, Elizabeth

Turner, Mr Andrew

Vaizey, Mr Edward

Vara, Mr Shailesh

Vickers, Martin

Walker, Mr Charles

Wallace, Mr Ben

Ward, Mr David

Watkinson, Angela

Webb, Steve

Wharton, James

Wheeler, Heather

White, Chris

Whittaker, Craig

Whittingdale, Mr John

Wiggin, Bill

Willetts, rh Mr David

Williams, Mr Mark

Williams, Roger

Wilson, Mr Rob

Wright, Jeremy

Wright, Simon

Young, rh Sir George

Zahawi, Nadhim

Tellers for the Noes:

Jenny Willott and

Mr Brooks Newmark

Question accordingly negatived.

12 July 2012 : Column 539

12 July 2012 : Column 540

12 July 2012 : Column 541

Main Question put and agreed to.

Resolved,

That this House takes note of an unnumbered Explanatory Memorandum dated 5 June 2012 from HM Treasury on the Statement of Estimates of the Commission for 2013 (Preparation of the 2013 Draft Budget); recalls the agreement at the October 2010 European Council and the Prime Minister’s letter of 18 December 2010 to European Commission President Manuel Barroso, which both note that it is essential that the European Union budget and the forthcoming Multi-Annual Financial Framework reflect the consolidation efforts of Member States to bring deficit and debt onto a more sustainable path; notes that this is a time of ongoing economic fragility in Europe, with countries across Europe taking difficult decisions to reduce public spending; agrees that the Commission’s proposed 6.8 per cent increase in European Union spending in 2013 is unacceptable; agrees that the Commission’s proposal for a larger European Union budget is not the way to fix Europe’s problems, and that large savings are feasible without compromising economic growth; notes that the proposed increase would impose unaffordable costs on taxpayers in the UK and other Member States; notes that UK contributions to the European Union budget have also risen in recent years due to the 2005 decision to give away parts of the UK rebate; and so supports the Government in seeking significant savings to the Commission’s proposals across all budget headings and in its strenuous efforts to limit the size of the 2013 European Union budget.

12 July 2012 : Column 542

EU Charter of Fundamental Human Rights

4.46 pm

The Minister for Europe (Mr David Lidington): I beg to move,

That this House takes note of European Union Documents No. 18635/11, relating to the Joint Communication to the European Parliament and the Council on Human rights and democracy at the heart of EU external action-towards a more effective approach, together with an unnumbered Explanatory Memorandum dated 7 June 2012, submitted by the Foreign and Commonwealth Office, relating to a draft Council Decision appointing the European Union Special Representative for Human Rights, and the EU Action Plan on Human Rights and Democracy, and No. 8905/12 and Addenda 1 and 2, a Commission Report to the European Parliament and the Council, the European Economic and Social Committee and the Committee of the Regions on the Application of the EU Charter of Fundamental Rights; notes the Commission document on the Progress on Equality Between Women and Men in 2011; endorses the Government’s intention to support the draft Decision on the EU Special Representative for Human Rights; and welcomes the Government’s work to provide for enhanced Member State oversight of the Special Representative’s activities in Articles 10 and 11 of the draft mandate.

The motion deals with a number of European Union documents. As the House will appreciate, the Foreign and Commonwealth Office is responsible for those documents dealing with the EU’s human rights strategy and the proposed appointment of a human rights special representative. The Ministry of Justice is responsible for other documents included in the bundle, and I acknowledge the presence of the Under-Secretary of State for Justice, my hon. Friend the Member for Huntingdon (Mr Djanogly), in that connection.

Two years ago, almost to the day, the House debated the creation of the European External Action Service, an institution set up by the Lisbon treaty. The Government took the view that, whatever opinions the two parties in the coalition had about the creation of the EAS, now that it existed as the creation of the Lisbon treaty, we wanted the new institutional arrangement to complement our own strong commitment to an active British foreign policy and to use the EAS to help to deliver the diplomatic objectives of the United Kingdom. Our judgment is that the EU’s new human rights strategy is an example of how the EAS can be used to complement and amplify the UK’s own human rights policy.

This afternoon, I want to address some of the concerns expressed by the European Scrutiny Committee and others about the implications of the measures before us. I have singled out three matters in particular.

Oliver Heald (North East Hertfordshire) (Con): My right hon. Friend is absolutely right to address the concerns of the Scrutiny Committee, but does he accept that there is some concern in the Council of Europe Parliamentary Assembly, particularly about how the two jurisdictions of the special representative and the human rights commissioner of the Council of Europe will overlap and interweave, whether this will be duplication or a takeover, and whether it all makes sense?

Mr Lidington: I completely understand my hon. Friend’s point. I said that I wanted to address the concerns expressed by the European Scrutiny Committee and others.

12 July 2012 : Column 543

The three issues I have in mind are: first, the need to maintain the rights of member states to determine their foreign policies and to avoid any scope for competence creep towards the EU institutions; secondly, concerns about the balance of responsibilities between the EU institutions themselves and, in particular, the role of the European Parliament; and thirdly—this goes straight to my hon. Friend’s point—the relationship between the EU special representative on human rights and the work of the Council of Europe, particularly its human rights commissioner.

Let me deal first with the question of competence and the rights of member states to determine their foreign policy. Democratic freedoms, universal human rights and respect for the rule of law are at the heart of British diplomacy and policy. I believe that the new EU human rights strategy and in particular the EU special representative on human rights will help us to deliver our national foreign policy objectives better through the EU, by providing a strong and visible face for its external action on human rights.

The EU’s external human rights policy flows from the common defence and security policy, which will provide the operating framework for the special representative. Declaration 13, annexed to the treaties, provides confirmation that the CFSP does

“not affect the responsibilities of the Member States… for the formulation and conduct of their foreign policy”.

Therefore, the new human rights package will not affect our ability to formulate and conduct our own national foreign policy. Furthermore, decisions at European level on CFSP require unanimous approval by the Council, with agreement by every member state. No EU position on external human rights policy or any other aspect of common foreign and security policy can be agreed without the approval of the British Minister or other representative in the room, and of course the same right of veto applies to every other member state. There is no suggestion in these documents or elsewhere that there should be any change to those arrangements.

The Government’s view remains firmly that the EU must act only where it has the competence to do so under the European Union treaties. We will remain vigilant against any threat of competence creep through the actions of the External Action Service. It is essential that the EAS continues to complement and support, not replace, national diplomatic services. That is why, for example, we have been so resolute on the principle that the EAS should have no front-line role in consular services, which would go beyond the supporting role for member states provided for in the treaties.

So far the EAS has delivered best when it has worked closely with member states and capitalised on the resources of member states and EU institutions. I will quickly highlight what I think are a number of genuine achievements from the past year where the EAS has worked well and, in doing so, has helped to deliver important British foreign policy objectives. First, there was the review of the European neighbourhood policy, which has produced an ambitious framework for the EU’s approach to the emerging democracies of north Africa and the middle east. That is now starting to have a practical impact through structures such as the EU-Tunisia taskforce.

12 July 2012 : Column 544

Secondly, the EAS and Baroness Ashton personally have worked closely with the E3 plus 3 to engage Iran over its nuclear programme, and the EU recently agreed to the most far-reaching sanctions ever imposed on any other country, working in that case closely and efficiently with the Governments of the individual member states. Thirdly, the sanctions already in place against the Syrian regime—16 rounds already agreed—are still under consideration and may be strengthened further.

The proposed EU special representative will allow us to deliver more such examples of successful EU external action. The role is granted in article 33 of the treaty on European Union, which provides:

“The Council may, on a proposal from the High Representative …appoint a special representative with a mandate in relation to particular policy issues.”

The way in which the mandate is implemented will be critical, and I am glad that the European Scrutiny Committee noted the United Kingdom’s successful efforts to secure an additional layer of member state oversight of the special representative’s activities, in order to guard against any unwelcome or unwarranted expansion of their responsibilities. Article 11 of the mandate provides that

“the EUSR shall work in coordination with the Member states.”

Article 10 requires that he or she

“shall also report to the competent Council working parties”,

and article 4 states that the Council’s

“Political and Security Committee shall maintain a privileged link with the EUSR”.

The last provision is common to all EUSR mandates. In practice, that “privileged link” means that the special representative will be able to communicate directly with the Council, bringing together the representatives of the 27 member states, rather than having to go through the High Representative or through other structures. The mandate also ensures that the Political and Security Committee will

“provide the EU special representative with strategic guidance and political direction.”

Given those safeguards, I am confident that the United Kingdom is well placed to play a leading part in giving that direction and guidance to the EUSR and in holding the special representative to account for his or her actions.

The appointment of a special representative will in no way affect the United Kingdom’s ability to speak, as now, on its own behalf in international organisations, including the Human Rights Council of the United Nations. As is the case now, the European Union may speak on our behalf only if there is a shared position to which the United Kingdom has signed up, and which requires unanimity. On the basis of those safeguards, I seek the House’s approval for the establishment of the role.

Jeremy Corbyn (Islington North) (Lab): Having attended many meetings of the UN Human Rights Council, I was consistently disappointed when the member state representative said nothing and left it all to the EU representative. I am pleased that increasingly the UK representative speaks independently, particularly about the death penalty, but can the Minister assure the House that we will continue to have an independent voice at the UN Human Rights Council and will resort to the EU representative to speak on our behalf only in a case of absolute unanimity?

12 July 2012 : Column 545

Mr Lidington: I can give the hon. Gentleman two assurances. We are members of the UN Human Rights Council in our own right. When there is no unanimously agreed common foreign and security policy position, the United Kingdom’s representative will speak on behalf of the United Kingdom Government’s position. When there is a unanimously agreed CFSP position, normally that will be represented by the European Union’s representative, but member states do speak—particularly if the occasion is sufficiently important—in support of the EU representative’s view, giving extra weight to the views expressed on behalf of all 27 members. It is best left to judge on a case-by-case basis exactly what tactic will be the most effective in delivering the outcome we want, but I take to heart the hon. Gentleman’s point about wanting to hear the vigorous expression of British policy objectives, whether on our own or in support of a unanimously agreed EU position.

Jacob Rees-Mogg (North East Somerset) (Con): I am extremely grateful to my right hon. Friend for giving way in a second debate this afternoon.

If there is not a unanimously agreed position, can the EU representative speak at all, or do they have to remain silent?

Mr Lidington: If there is no unanimously agreed position, there is no locus for the EU representative to speak at all; they have a right to express a view only when there is an agreed European Union position. As hon. Members on both sides will probably recall, there have been occasions when, regrettably, European Union member states have split two or three different ways on a particular issue before the Human Rights Council.

Jacob Rees-Mogg: Does that apply to the noble Baroness Ashton as well? Can she speak on foreign policy matters only with the consent of the British Government?

Mr Lidington: Baroness Ashton is an office holder, in accordance with the treaties, as both vice-president of the Commission and High Representative of the European Union. She can speak out on foreign policy issues in that capacity; what she cannot legitimately do is express a view purporting to be the commonly agreed policy of the European Union, and therefore on behalf of all 27 member states, unless the decision to adopt a common position has been taken by those member states.

In practice, what happens is that a common foreign and security policy position is adopted. An incident may then occur—another outrage in Syria, for example. Nobody quarrels with the idea that Baroness Ashton would comment on that, just as my right hon. Friend the Foreign Secretary would; the test is whether the statements are in line with the foreign policy position that has been unanimously agreed. In my experience, Baroness Ashton has observed very well the requirements of the treaty and the importance of unanimity for a commonly agreed position.

Mr Edward Leigh (Gainsborough) (Con): Is the Minister aware of the widespread concern among Members of the Parliamentary Assembly of the Council of Europe? We already have a perfectly good commissioner for human rights. Given that the Government’s rhetoric is all about avoiding competence creep by the EU and that

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we already have a perfectly good person doing a perfectly good job on behalf of nation states throughout Europe, we cannot understand why we are going along with the measure. The Minister has to reassure us further that in no way will it go against British national policy.

Mr Lidington: I have explained why the measure does not cut across British national policy, but I will come in greater detail to the relationship between the EU special representative and the Council of Europe.

I turn to the action plan. The European Scrutiny Committee noted that it is a comprehensive text and suggested that it constitutes a departure from the approach outlined in the previous joint communication. The High Representative has described human rights as

“a silver thread that runs through everything that we do in external relations.”

That is very much how the Government see human rights, too. In 2010, early in the Government’s life, my right hon. Friend the Foreign Secretary said that

“values are part of our national DNA and will be woven deeply into the decision-making processes of our foreign policy at every stage.”

The action plan is comprehensive, because integrating a human rights perspective across all areas of the EU’s external action is the best way to ensure that the European Union maximises its influence on these issues.

We did not just agree to the action plan on the nod. We conducted a line-by-line assessment of the items, and we are content that what is proposed is in line with our policy objectives and does not pose a risk of competence creep. In addition, the Council has formally agreed that the action plan will fully respect the existing division of competencies. Although it is a comprehensive document, it both builds on the original joint communication and has been examined closely by the Government on precisely the question of competence that concerns my hon. Friend.

Mr William Cash (Stone) (Con) rose—

Mr Lidington: I will give way, but I am very conscious that a lot of hon. Members wish to speak.

Mr Cash: It is also true that the Minister is at the Dispatch Box and has a responsibility to answer these questions. There are four pages under the headings of outcome, action, timing and responsibility. Is he seriously suggesting that in every single respect, given the general nature of all these things and the fact that the legal consequences will ultimately end up in some court or other, he is right in making such a general assertion?

Mr Lidington: Yes, of course the action plan is expressed in general terms, because the intention is that those general principles should be applied to the European Union’s human rights activity across the range of EU dossiers and areas of external policy action.

On the common foreign and security policy—CFSP—the freedom of the EU special representative or the High Representative to express a view and develop a policy on behalf of the EU collectively will depend on whether a CFSP position has been unanimously agreed for a particular country, region or crisis. The action plan describes in general terms how the EU and its High Representative and special representative should determine their priorities for action, but we cannot sit down in

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July 2012 and write down in detail which countries and crises will be involved and in what manner such work should be undertaken. Foreign Ministers in the Foreign Affairs Council and national representatives in the Political and Security Committee will consider these matters case by case.

The European Parliament saw a role for itself on the CFSP following the Lisbon treaty, and we were equally clear that the CFSP would remain intergovernmental. The High Representative has made a gesture to the Parliament in a non-binding declaration on political accountability, which says that she will seek the views—nothing more than that—of the European Parliament on CFSP matters. As one would expect, the European Parliament has taken a keen interest in the new human rights package. In accordance with article 36 of the treaty on the European Union, the mandate for the special representative provides that he or she

“may be involved in briefing the European Parliament.”

However, such briefings may take place only in a committee or sub-committee configuration and never in plenary debates, in which only the High Representative may participate. This reflects the arrangement, which we firmly support and uphold, that on issues pertaining to the CFSP the High Representative may be replaced in plenary only by a Minister of a member state.

I want to move on to the possible overlap with the Council of Europe, which concerns several Members. I start by acknowledging the important work that right hon. and hon. Members in all parts of the House play as Members of the Parliamentary Assembly of the Council of Europe. I recall the very pleasurable visits that I made to the Parliamentary Assembly during the United Kingdom’s six-month presidency of the Council of Europe. It is clearly important that there be effective, mutually trusting co-ordination between the Council of Europe, particularly its human rights commissioner, and the EU’s new special representative on human rights. That is reflected in the wording of the mandate, which I will describe shortly.

I note that the two roles have distinct responsibilities. The Council of Europe’s human rights commissioner is mandated to promote awareness of and respect for human rights within the member states of the Council of Europe. The EU special representative’s role is different; it is to promote human rights globally as part of the EU’s unanimously agreed CFSP. Both office holders will be involved in work on promoting respect for human rights in states of the Council of Europe that are not EU member states. To avoid any risk of unhelpful overlap and duplication, article 11(3) of the EUSR’s mandate expressly requires him or her to

“liaise and seek complementarity and synergies with other international and regional actors”.

To turn that jargon into English, it means that the special representative should maintain a regular dialogue with the commissioner to avoid duplication. The secretariat of the Council of Europe has expressed no concern to us about the creation of this role. Indeed, subject to proper co-ordination, it welcomes an increased focus on human rights within the EU’s external action.

During the UK’s presidency, I discussed with Secretary-General Jagland the relationship between the Council of Europe and the European Union. I was pleased to

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learn from him and other senior officials in the Council of Europe that, over the past year or so, there had been a distinct improvement in the quality of liaison and co-operation between the two organisations. There was a feeling, certainly among the secretariat, that there was no longer the pressure from the EU that there had been for its institutions to take over the work of the Council of Europe; rather, efforts were being made on both sides to agree the areas where each was likely to be the most effective actor.

Mr Christopher Chope (Christchurch) (Con): That may be the view of officials at the Council of Europe, but it is certainly not the view of the members of the Parliamentary Assembly. In a debate at the last part-session, members from all political parties and from right across the 47 member states expressed grave concern about the duplication and the additional cost involved in this project. Why are we spending money on this project in an age of austerity?

Mr Lidington: The budget for the special representative and his or her office and team has to be found from within the existing budget of the External Action Service. It will therefore have to be found at the expense of other potential items of expenditure. I have no doubt that some people will argue that, given the creation of the role, a bigger budget is needed, as with any EU special representative role, but we do not accept that. We continually resist calls for increases in annual and multi-annual budgets and seek to bear down on the costs of, and to secure better value for money in, individual special representatives’ missions and common security and defence missions more generally. I do not want my hon. Friend to think that this will lead to a vast new bill.

Michael Connarty (Linlithgow and East Falkirk) (Lab): Some members of the Parliamentary Assembly of the Council of Europe have a different view from the hon. Member for Christchurch (Mr Chope). Some of us hope that the fundamental focus of the Council of Europe on human rights might reinfect the body politic of the European Union and add human rights to some of the agreed trade policies that have ignored human rights.

Mr Lidington: The hon. Gentleman has made his point for the record.

Oliver Heald: My concern is that the Council of Europe includes large and important countries such as Russia and Turkey. At the moment, those countries seem to be taking a constructive approach to the implementation of court judgments, criticisms and so on. There seems to be an improving picture. The Russians recently gave evidence to the committee on legal affairs and human rights about what they are doing. There is a great difference between being criticised and having a constructive approach within an organisation that one is part of and having another organisation that one is not part of shouting from the sidelines. Does my right hon. Friend understand that the 27 lecturing the others is not going to work and that we must avoid it?

Mr Lidington: If this is going to work to the benefit of the EU and its member states, it is important that it does not turn into the EU lecturing other countries, as

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my hon. Friend describes it. However, let us consider the situation in countries that are in the Council of Europe and not the EU. I repeat that a great deal is going on in EU relations with countries beyond Europe that are important but do not touch on the Council of Europe’s responsibilities.

For instance, let us take Ukraine. The problems of human rights there are quite properly being dealt with through Council of Europe mechanisms. In particular, individuals can take specific grievances about alleged abuses of human rights to the European Court of Human Rights and have them tested by judges. However, the European Union has important relationships with Ukraine in its own right. Ukraine is part of the EU’s eastern partnership and has been negotiating with the EU an association agreement and a deepened comprehensive free trade agreement, which include clauses on human rights and political reform.

The special representative for human rights can add value by giving extra coherence and force to aspects of specifically EU external policy that touch upon human rights matters. It is important that the two organisations respect each other’s important and complementary roles. I would be concerned if I thought that the EU had an appetite to take over what the Council of Europe was properly doing, but all I can say is that that is not what I am hearing from senior officials at the Council of Europe or from the High Representative and her senior team.

I turn briefly to the other documents in the bundle, although they are not the direct responsibility of the Foreign and Commonwealth Office. The first is the Commission’s 2011 report on the application of the European Union charter of fundamental rights. The European Scrutiny Committee questioned whether the annual report served as a tool effectively and systematically to monitor the implementation of the charter and how the effective implementation of the charter by member states would be measured in future.

It is important to note that the report is not an enforcement tool. It sets out a number of mechanisms that the EU institutions are developing to review EU legislation as it is drafted, to ensure that the rights and principles listed in the charter are respected. Although the charter is primarily directed at EU institutions and at member states only when they are implementing European law, the Government will consider any Commission proposal on how the actions of member states in that area might also be assessed.

The final text before us is the Commission’s report on progress on equality between women and men. This is the first time that the document has been included with the report on the application of the charter, and the Government consider that the two reports sit well together. The Government believe that the UK has a good story to tell on gender equality. Our priority is to support women in employment, whether through the provision of quality, affordable child care or by providing mentors for aspiring business women. The Commission’s report rightly reflects the fact that progress is being made but warns us against being at all complacent about gender equality.

In working with our EU partners on human rights issues, our objective throughout is to ensure that the EU institutions act to advance the prosperity, security and values of the UK by complementing and supplementing,

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not replacing, the work of the Foreign and Commonwealth Office and other arms of the UK Government. We consider that a new EU special representative for human rights will help us deliver our national diplomatic objectives through the EU by providing a strong, visible face for European external action on human rights. I therefore seek the House’s approval for the establishment of that role and commend the motion to the House.

Several hon. Members rose

Mr Deputy Speaker (Mr Nigel Evans): Order. Before I call the shadow Minister, I advise the House that I will interrupt the debate at 6 pm to put the Question on the deferred Divisions motion, and then the debate will continue. I do not want to surprise anybody.

5.19 pm

Emma Reynolds (Wolverhampton North East) (Lab): I welcome this second opportunity to discuss a European motion, this time on the EU’s role in promoting human rights and democracy and the EU’s external policy. In the context of the Arab spring and with the ongoing crisis in Syria, those issues are highly relevant and the EU’s role is more important than ever.

Three subjects are central to the motion: the new EU human rights strategy; the corresponding action plan; and the appointment of an EU special representative on human rights. The Opposition agree with the Government that the EU should use its collective weight to maximise its influence in promoting human rights and democracy around the world, and that the EU’s new human rights strategy will serve as a multiplier of the UK’s voice. The size of the European economy and the fact that the EU is the world’s largest provider of development aid gives it significant influence and leverage in the promotion of human rights.

We also agree with Baroness Ashton that human rights must be the silver thread running through the EU’s external strategy. For the first time, one document summarises all aspects of EU human rights work. The strategy emphasises the universality of human rights and the importance of making them central to the EU’s external policies. It is vital that promoting and protecting human rights is not considered an add-on to the EU’s external policies, so we welcome the fact that they will be mainstreamed into all EU external policies.

We welcome the strategy’s commitment to include human rights considerations in trade, investment, technology, telecommunications, internet, energy, environment, corporate social responsibility and development policy. The mainstreaming of human rights is further strengthened by the commitment for the geographical working groups in the Council to have responsibility also to fulfil the action plan. The EU will increase its support for freedom of expression, association and assembly. That is important, because, as the strategy says,

“democracy cannot exist without these rights”.

We welcome the increased emphasis on supporting the fair and impartial administration of justice—another important way of promoting the independence of the judiciary. More generally, there is an encouraging emphasis in both the strategy and the action plan on the need for the EU to evaluate the impact of its human rights policies. The EU’s annual human rights report will now

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evaluate the EU’s progress in meeting its objective as well as the human rights record of third countries. That is welcome in terms of increasing both transparency and accountability. Another positive development is the commitment to develop indicators for human rights dialogues.

The action plan further acknowledges the division of competence between the EU and member states on human rights and recognises that the role of the EU is to complement the work done by member states. Finally, both the strategy and the action plan underline the importance of the EU working even more closely with civil society in its human rights work.

The role of the new EU special representative on human rights will enhance the EU’s effectiveness and visibility in protecting and promoting human rights—this special representative will be the first to have a thematic role. Whoever is appointed will have a broader remit and a more flexible mandate than the existing EU special representatives. We agree with the Government that the person chosen to be representative should have

“an established track record and international experience in human rights”

and that he or she

“should have an excellent ability to maintain diplomatic relations at a senior level”.

The motion refers to the charter of fundamental rights and the Commission’s 2011 report on the application of the charter. The report underlines that progress has been made in ensuring that all EU institutions, bodies and agencies comply with the charter. It also contains a number of observations and recommendations. It notes that positive steps have been taken on, for example, disability rights, child protection and preventing human trafficking.

On disability rights, the EU has joined the UN convention on the rights of persons with disabilities, which is a welcome development. On child protection, the EU has adopted an agenda on the rights of the child, which is a prelude to developing new rules on combating the sexual exploitation of children and child pornography.

The report details the EU directive on the prevention and combating of trafficking human beings and protecting its victims, which came into force in 2011. As the report recounts, the directive took a human rights and gender-specific approach and sought to achieve more effective prosecution of human traffickers by national authorities across borders. The Commission also appointed an EU anti-trafficking co-ordinator.

The report highlighted areas for improvement, namely on gender equality, and to this end the Council of Ministers adopted a European pact for gender equality calling for equal participation of women in decision making and repeating the importance of integrating a gender perspective into all policies, including in the external actions of the EU. Progress has certainly been made, but there remains much to do.