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Baroness Chalker of Wallasey: My Lords, perhaps the noble Lord would like a little help. First, it would be helpful to your Lordships' House if we got some facts straight. The noble Lord has not noted the fact that in this country we work on a financial year basis, as does Sweden, while the Community works on a calendar year basis. That means that the movement of one month's figures during the period January to March or January to April can make a great difference in UK spending of approximately £400 million to £500 million. That is why it is difficult to forecast the net contribution.
The estimate of the net contribution has varied. Back in 1991 the net contribution for the current financial year 1994-95 was estimated to be £3.3 billion. In 1992 the estimate went down to £3.1 billion, and in 1993 it was reduced to £1.7 billion. The closer one is, the better one's forecast can be. The present forecast outturn is
However, the noble Lord cannot denyand his noble friend sitting next to him will tell himthat forecasting is not an exact science. With the movements between financial years and calendar years he will find that it is not possible to estimate these matters precisely, if he ever has a chance to do so.
Of course forecasting is difficult, but one would have thought that a competent government could have done better than to get the figures right only three days before the debate was due to take place. I shall, with attention, read in Hansard what the noble Baroness said, and I shall get out my slide rule to see whether I can make sense of it. Of course the nearer one is to the forecast period, the more able one is to work out what the figures ought to be. I entirely accept that. However, it may be true that one can be so far wrong because one is working on a different basis, but if it is true it is surprising that the Treasury did not spot the fact before the mistake was made. However, there it is. I can only say to the noble Baroness that she has made a confusing situation more confusing by her attempts at clarification.
First, on the whole it is undesirable that we should move too far away from the general understanding (to use a neutral phrase) that Bills in your Lordships' House receive a Second Reading. Given the revising nature of this House, that seems to me to be a sensible position.
Secondly, the argument applies a fortiori when the Bill in question is a money Bill. In that case our powers are so severely limited that to seek to amend the Bill on Second Reading would not seem to me to be a sensible exercise of a power which we may possess in theory but which in any real sense of the word is non-existent.
Thirdly, the issues which were raised by the Labour amendment in another place are perfectly legitimate matters for discussion by your Lordships' House, either on Second Reading or tomorrow. They can therefore be properly aired. The argument seems to me to be valid, although this is not perhaps the best vehicle for considering it in this House.
If any amendment is moved tomorrow in terms which are acceptable, I shall obviously advise my noble friends that they should support it. However, I have to tell the House that the party has not been whipped on this matter and we do not propose to do so.
I turn now to fraud and the common agricultural policy. There are legitimate concerns regarding fraud and waste in the Community. How much fraud and waste is there? By definition nobody can be certain. One estimate puts it at £4.5 billion (7 per cent. to 10 per cent. of the EC budget), while Mr. Knudsen, the Danish head of the European Commission's fraud investigators, suggests that the loss is 2 per cent. of the budget. We know the latest figures for detected fraud, which show that in agriculture alone the number of cases rose by more than 50 per cent. between 1990 and 1993 and looks set to rise again by another 30 per cent. in 1994.
However, we should not forget that no less than 80 per cent. of European Community spending is administered by the relevant departments of national governments. Our Government have acknowledged that the primary responsibility for the prevention of fraud falls on national governments and that the Commission has a co-ordination and support role only.
For the life of me I do not understand therefore why the Government have failed to take up money which has been on offer by the Commission for use in Britain for anti-fraud work, particularly relating to the common agricultural policy. In 1991 the Community made available to Britain 1.5 million ecus for anti-fraud work. The Government took up not one penny of it. In 1992 1.4 million ecus were available and 80 per cent. of that sum was not taken up. In 1993 92 per cent. of the available money was not taken up. I find it hard to believe that the Government are so confident of their own methods of detection and combating fraud that they can ignore money which is on offer. That is a real issue which so far the Government have failed properly to address.
So far as concerns the common agricultural policy, I should like to mention two facts. The CAP budget has risen from £6.4 billion in 1979 to £30.4 billion in 1994. That is a rise of 50 per cent. in real terms since the party opposite came to power. On the latest available figures, the CAP is now costing a family of four £20 a week.
Those are real issues which, in our submission to the House, the Government have failed properly to address. The fact is that spending on the common agricultural policy is too large and should be diminished. So far the Government's success in that area is not marked.
We do not oppose the Bill. We recognise that it is necessary in view of the decisions taken at Edinburgh and in the Council of Ministers. However, we say that in the two fields of fraud and the further reform of the common agricultural policy the Government could and should have done more than they have. In that spirit we are prepared to give the Bill a Second Reading.
Lord Thomson of Monifieth: My Lords, as the noble Lord, Lord Richard, has just said, in many ways this is a strange debate. This is a certified money Bill which is not usually the stuff of debates in your Lordships' House. It is a short, simple, two-clause Bill. As the noble Baroness, Lady Chalker, says, it arises from an inescapable international commitment made at the Edinburgh conference. It relates to a relatively small
However, the Bill raises issues of significance. The first concerns the current financial management of the Community. Even more importantly, it provokes a legitimate debate, about which we shall no doubt hear a great deal, relating to the most important issue in British foreign policy for the next generationBritain's role and relationship with the European Union.
On the management of the Community's finances, the avoidance of bureaucracy and waste and the prevention and punishment of fraud there is a great deal of common ground in your Lordships' House and in another place between those who are anti-European Union and those of us who are pro-European Union. We are all opposed to waste and fraud and unnecessary bureaucratic rigidity, but we hold those positions for widely different reasons. The "antis"I refuse to dignify them by the name of Euro-scepticsare against British membership of the Community as a matter of conviction, a perfectly honourable position. The antis exploit waste and fraud for the purpose of persuading people in Britain that we made a mistake in entering the Community and that we would be better to find some escape route out of it. Those of us who are pro-European Union want to tackle waste and fraud because it discredits the European Union and obstructs its development. It is better for us to be clear about the opposing motives.
Waste and fraud, and bureaucratic arrogance and inertia are part of every society. We have our share of them domestically in this country, as reports of the PAC in another place and the reading of the City pages in our newspapers tell us. We should not get into that mood of self-righteousness which indicates that fraud is for foreigners. We should combat fraud vigorously both at home and abroad, and indeed eternally, because to restrict bureaucracy and to deal with waste and fraud is a never-ending battle in a democratic society. In the European Union the antis must recognise that fraud is primarily due to the laxity of national administration, as the noble Lord, Lord Richard, said. If fraud is to be dealt with more effectively, it requires more Community enforcement, with a pooling of sovereignty over our jealously guarded police and judicial processes.
Equally, those of us on this side of the House who are pro-European Union but critical of the Government's performance over European Union waste and fraud had better be a little cautious. At a time when the Government are 39 points down in the public opinion polls, I would be careful in Opposition with any rash promises about cutting the costs of the CAP or of transforming the performance of the Court of Auditors. The reality of the European Union, as the noble Baroness, Lady Chalker, said, is that all progress has to be made by compromise and consensus, and is a slow and painstaking business.
However, it is a worthwhile business. Britain's financial contribution to the European Union, however it is finally calculated, is the price that we pay for being at the European Union table as a major member with the possibility it is only a possibilityof shaping the economic and political development of the Union in a
In an extraordinary speech in another placeextraordinary in the sense that he was the Chancellor of the Exchequer who helped to negotiate the financial arrangements contained in the BillMr. Lamont said that we should consider all our options, including withdrawal. The option of withdrawal would leave the United Kingdom in a much worse position in Europe than Switzerland or Norway, which have never been in the Community and have never had the responsibilities or the possibility of influence in international affairs which Britain has. In an atmosphere of bitterness and hostility, we should be at the mercy of developments made by the other members of the Union in their own interests.
The more likely option, if the Government maintain their present approach, is that we are to become a semi-detached member of the Community, opting out and grumbling all the time, eroding the experience and influence which Britain should be bringing to the developments in our increasingly dangerous and violent continent.
The hopes of a new world order which we had at the time of the ending of the Cold War have quickly crumbled. America is distancing itself from Europe, leaving Europe to get its own act together. In Europe, including Russia, the uglier aspects of nationalism and ethnic fanaticism are rearing their head. The European Union remains a centre of cohesion and stability in an increasingly turbulent continent. It is vital that Britain should play a major role in building an economic union of employment and prosperityand, on those economic foundations, a much more effective European foreign and security policy.
But what are the Government doing? Even when they have sensible ideas about, for example, subsidiarity or Europe's international competitiveness, they pursue those with opt-outs and vetos which undermine our influence on the big long-term issues of collective policy-making. And in our Parliament where the great majority, while not uncritical of the European Union, are in favour of Britain being a member of the European Union, the Government conduct their policy to appease a small minority of their Members who are fundamentally opposed to the European Union.
What the Government appear to overlook is that that small minority is not to be appeased, since its views are rooted in conviction. A referendum has been widely canvassed by the antis in this appeasement game. Whatever the case for a referendum in the future, if big constitutional issues arise and there are good arguments both ways on that issueone thing is certain: a referendum does not work in uniting a divided party. I believe that I can speak with a little authority and experience on that with regard to what happened in the Labour Party. The Labour Government's referendum of 1975 was designed to hold together a divided party. It produced a decisive two-thirds majority in favour of remaining in the Community. But to this day the antis
The antis in the Tory Party would act no differently in a future referendum when it went against them. In the meantime they would treat the offer of a referendum as an invitation to step up their campaign for the withdrawal in which they actually believe. As the noble Lord, Lord Richard, said in the opening remarks of his speech, the Prime Minister carried his appeasement policies a great deal further yesterday in his television interview with Sir David Frost, when he said that at the 1996 IGC he would veto any suggestion of constitutional change. There is little to choose between that commitment and the views of Mr. Portillo and those whom he leads inside the Conservative Party. The Prime Minister seems to be surrendering to the anti-European Union minority in his own party. "If you can't beat 'em, join 'em", seems to be the mood of resignation in which he has started the New Year.
That blanket commitment to veto change in the European Union is at a time when expanding membership makes constitutional change inevitable. It is not a question of that much abused word "federalism", but of effective decision making and of making the institutions of the Union, including the European Parliament, more democratically accountable. The ambitions of the Visegrad countries for membership will compel radical and welcome reform of the CAP. There are complex and difficult changes ahead for the European Union to which there are no simple answers and to which Britain should be making a positive and constructive contribution. The changes will take place in any case. The Union will move forward slowly but inexorably to economic and monetary integration. Britain can help to shape those developments or Britain can develop a policy of opting out. Both Britain and Europe badly need an opting-in not an opting-out government in this country. Yesterday's surrender by the Prime Minister makes it plain that that can now come about only with a new Government with a new approach to the future of the European Union.
Lord Kingsland: My Lords, I understand that of all the characteristics of a maiden speech, the one that really matters is that it be short. I well recall the words of my noble friend Lord Harmar-Nicholls regarding first impressions addressed to me when I became a Member of the European Parliament some 16 years ago. He said that once you gain the reputation of getting up at midday, it does not matter how often you subsequently get up at dawn. I shall bear those words in mind in making my remarks to your Lordships this afternoon.
I should like to touch, telegraphically, on three matters: on the question of fraud; on the share of the British contribution to the budget; and on the structure of the budget. The most important point to make about fraud is the most obvious one. If you are going to reduce the propensity to fraud, you must remove the opportunities to be fraudulent. The biggest opportunities to be fraudulent lie in the guarantee section of the
The other point I wish to make about fraud is this. The incidence of fraud differs greatly, depending on the country we look at. The rules about spending are made at the centre, by the Community institutions, but they are implemented and enforced by the member states at the periphery. Different member states have different views about the implementation and enforcement of laws; indeed, to some extent, different views about the treatment of commercial corruption.
In my submission, therein lie the strength and weakness of the doctrine of subsidiarity. As your Lordships know, the doctrine, as it applies to the Community, requires rules to be made at the centre but the application of those rules to be by the constitutional traditions of each member state. In this system, the European Commission does not have executive powers; it does not have powers akin to those of a national government. Indeed, the Commission has no executive powers except in one area on which I wish to touch in a minute.
The great advantage of the system is that, apart from rule-making, member states do all the governing. The great disadvantage is that the law is unevenly implemented; and, where financial matters are concerned, citizens are taxed in one country only to see their money squandered in another country.
Thus the question we must ask ourselves is: ought we to make an exception to the doctrine of subsidiarity in budgetary matters? There is only one other area in the Community where such an exception has been made and that is in competition policy, where the Commission has powers on the territory of member states akin to the powers of their own national governments.
It is an attractive thought in some respects because of the scale of the problem of fraud, but I believe that we ought to reject that solution. We must find a solution which is consistent with the principle of subsidiarity. That is why I believe that the decisions made at Edinburgh were sound: at the centre, to tighten up the rules that are made by institutions and, at the periphery, to encourage member states to apply their criminal law more vigorously and treat fraud on Community reserves as seriously as they would treat fraud on reserves raised by their national budgets. I greatly welcome the initiative in that regard by my right honourable friend the Home Secretary in his draft convention last March.
As to the British contribution, I simply say this. In my view, Her Majesty's Government obtained an extremely good deal at Edinburgh. The Fontainebleau provision was preserved. The new rules enshrined in the Own Resources Decision relate national contributions much more closely to gross national product and much less
In conclusion, I believe that we have the scale of the European Community budget about right. Our own budget is 43 per cent. of our total GNP, and the Community budget is about 1.18 per cent. of the total GNP of the Community. That is not a large sum of money. Moreover, the Community is not entitled to borrow money, so there is no question of the budget being used actively as a means of economic regulation.
What we must guard against in the future is the budget being used as a substitute for national budgets. It should be complementary to national budgets, not competitive with national budgets. Above all, it should not be used as a system for transferring massive sums of money from the wealthier countries to the poorer countriesattractive though that may seem to some. The reason is this: with the national budget, where we give up large sums of money to the Exchequer, we accept the legitimacy of the Government in spending them on other people. But that degree of legitimacy does not exist yet within the Community institutions. Whether it will ever do so is a matter for future generations to see.
Lord Bruce of Donington: My Lords, it is a pleasure for me, on behalf of the whole House, to congratulate the noble Lord on his speech. This is an appropriate occasion for him to make his maiden speech because he has been a Member of the European Parliament since 1979. I regret that I had to leave the European Parliament at the time he arrived and unfortunately we never met officially within the Parliament. I should like to commend him on his thoughtful and helpful speech made to the House this afternoon.
The noble Lord and I have other interests in common in the sense that he was a Member of Parliament for a constituency which I twice contested unsuccessfully in The Wrekin. I do not know whether there is a philosophical connection between us, but I observe that he wrote a book called Market Socialism in Yugoslavia in 1985. I shall read it with renewed interest. In the meantime, on behalf of noble Lords, I hope that he will find it convenient to address the House quite frequently on a subject of which he is quite obviously a master.
My noble friend Lord Richard announced that, in his view, the Bill before us this afternoon is uncontroversial. I am glad to observe that the coalition between the Government Benches and my ownor at any rate the Front Benchesremains in existence. They appear to be near each other on the matter. However, from the outset I have been a little puzzled, and I remain puzzled, as to the rationale that lies behind the conduct of the Government in relation to the Bill and the principles behind it and those which the Government apply here at home. We are repeatedly told, practically every day, of the necessity for the utmost economy in public expenditurea sentiment which is from time to time endorsed, especially by the noble Lord, Lord Boyd-Carpenter and many other Members on the Government Benches. Day after day, we hear of niggling economies being madereally niggling ones which hurt. Indeed, the whole principle appears to be: "If it isn't hurting, it isn't working". We get silly, ridiculous, sometimes harmful and hurtful economies relating to the National Health Service; to the ambulance services; to education, in relation to books, the size of classes, repairs to buildings, and so on. Economies are the order of the day.
The whole government philosophy in regard to expenditure is that anything that is spent in this country, largely for the benefit of its own citizens, is subject to the most rigorous examination and controlwherever a cut can be made, a cut is made. When it comes to public expenditure which goes out of the countryas, for example, the net £3,000-odd million per annum which goes out of this country in the first instanceall that control seems to disappear. To incur an extra net expenditure (which is what is involved) in the British net contribution to European Community funds seems not only to be accepted (not even accepted as a kind of reluctant necessity) but accepted at a time when there is a three-line Whip and a suicide pact in the Cabinet to enforce it. That seems to me to be slightly odd. It almost defies rationale. On the one hand we agree, non-controversially, to anything between £2 billion and £3 billion a year being paid across the exchanges into the European Community; and yet we go down to the nearest half million or even £50,000 in making economies in all kinds of services that we provide. It simply does not add up.
The Government, of course, have an answer for this. In fact they give a number of answers, the first of which is that we are honour bound to do it because of an agreement that was concluded at Edinburgh. All that the Edinburgh agreement did was to confirm for each of the member states that they would recommend it to their own parliaments for acceptance. They did not accept it themselves as such on behalf of the country. All they did was to make a recommendation. Therefore, to say that somehow Edinburgh created a moral or even a legal obligation which excuses this seems to me to be a little wide of the mark.
The second excuse given is that, after all, under this Bill all we are doing is fixing a ceiling beyond which budgeted expenditure may go. The Chancellor of the Exchequerbehaving in the manner of Arthur Daley in "Minder" rather than that of a Minister of the Crown
The budget for the year 1995 did not in any case cause very great concern to Her Majesty's Government. It was debated in another place in a period of one hour with 20 Members present and was dealt with by way of noting all the documents. There was no disapproval of it. There was no examination whatsoever. The interest of another place in the budget is so minimal as almost to justify extended Sessions in this House, which takes these matters far more seriously, in order that the country may be better protected.
On the assumption that those arguments are disposed ofas I believe they arethe Government then have a fallback position; namely, that in any event it represents good value for money that this should be done. But they had some doubt about it. In a recent feature in The Times Mr. Douglas Hurd was able to claim as a benefit the fact that Britain was £3 billion in trade surplus with the Community. When I saw that statement I almost shot out of my seat. It is not true; but no correction has appeared. In point of fact, the trade balance between the United Kingdom and the European Community over a period of 10 years has been of the order of a £72 billion deficit; and a greater proportion of our invisibles, let alone visibles, goes to states outside the European Union. So that course will not run.
Then the Government say that there is value for money on other grounds; that somehow there is a general benefitunspecified, not reducible even to money termsto the United Kingdom as a result of being a member of the Community. We all know from Treasury sources, and the point is fortified by Mr. Hurd himself, that £28 a week is the extra cost to an average family of four of being in the Community.
Then it is said that there are other hidden values in terms of investment, and that it is well worthwhile incurring the extra expense because of inward investment into this country by interests outside the United Kingdom that would not otherwise invest here. Again, that argument will not stand up. Noble Lords will know by now, I trust, that the outward investment by financial interests in the United Kingdom exceeds very considerably the investment that domestic finance sources put into the United Kingdom itself. There is, in fact, a deficit on investment in the UK. Indeed, the evidence is that the reason for such investment as does come hereapart from the excellence of the services that the labour force provideslies more probably in the level of wages in the United Kingdom. So on the question of value for money, it simply does not add up save in terms of vague aspirations and very general statements.
The fourth fallback of the Government's position is that it ensures that we are at the heart of Europe. I do not know; I am still puzzling about what being at the heart of the European Community really means. I can only refer to the speech of the right honourable gentleman the Member for Kingston Upon Thames on 28th November, where he reveals what being at the top table, being on the inside, really means. He recounts, quite openly, what happened under the British presidencyperhaps we had a little more influence then than usualwhen he tried to call a meeting of members of ECOFIN to discuss the whole question of fraud. He told another place that only a few members of the council had turned up and that those who did read newspapers and made no contribution at all. He said that at the same meeting the President of the Commission, Mr. Jacques Delors, told him that he was out of order in raising the question of fraud at ECOFIN because it was a political matter. That does not seem to be buying much influence, does it? I should be grateful if some reply could be given to that point.
What will happen unless we put a stop to itit has happened over the yearsis that Britain will be at the mercy of an unrepresentative bureaucracy in Brussels which will see to it that on every occasion when it cannot publicly humiliate the British delegation it will at least take steps to ensure that any constructive suggestion coming forward from the British Government is immediately countered by a Commission move. It will use money and its control over the structural funds to obtain the support of countries such as Spain, Portugal, Italy and France to attack the British position and make quite sure that on no account will Britain get anything at all of which the Commission itself does not approve. I should be very glad indeed if the accusations that I now make, and which in due course I shall prove, can be denied by the Government. I do not believe that they can.
This is a bad arrangement. It brings no benefits at all to the United Kingdom. But one thing that it shows depressingly is that both the Government and Opposition in the United Kingdom seem automatically to have taken up a suppliant position in Europe. That is a posture to which I am not accustomed. It is a Britain that I decline to accept. I do not say that we should be unreasonable. We ought to do our best to co-operate with all member states. I am sure the noble Baroness will agree that such has always been my view and I have always sought to promote it, whether as a Member of the European Parliament or outside.
I hope that there will be a change of heart and that we abandon that suppliant posture and assert the rightsnot extraordinary but reasonable rightsthat a country of our history and democracy deserves. We should consider our whole record in the fight for freedom in the world, when most of those other states had no democracy at all. Those rights should be restored. I hope
As he sped along,
And now he's as dead
As if he were wrong."
Despite the injunction in the Companion to Standing Orders that only the immediately following speaker, because he speaks on behalf of the whole House, should congratulate the maiden speaker, on this occasion I should like particularly to congratulate my noble friend Lord Kingsland on an outstanding and valuable maiden speech, which was notable not only for its brevity but for the enormous amount of wisdom that was compressed into so short a period of time. Apart from being a Member of the European Parliamenta distinction that he shares with the noble Lord, Lord Bruce of Doningtonhe was also Chief Whip of the Conservative Party in the European Parliament and subsequently its Leader. I have no doubt that his experience will be of singular value not only to your Lordships but possibly even in a wider circle.
As has truly been said, this Bill has been certified as a money Bill and therefore what your Lordships can do about it is very strictly limited. Indeed, the limitations on your Lordships' powers in relation to financial matters certainly go back so far as the civil war. I refer of course to the civil war in which Charles I was involved. After 350 years I doubt very much whether, in the next 48 hours, we will change the rules so far as financial matters are concerned.
Therefore, the debate today and those which will follow tomorrow at the Committee stage, are no doubt intended as an opportunity to allow disaffected elements to express their views on a whole range of subjects, none of which has more than peripheral relevance for the Bill before your Lordships. Nevertheless, in view of the large number of noble Lords who have expressed views on a number of important matters, it is impossible for me not to tread the same broad path, despite what is said in the Bible about where the broad path leads one.
I shall start with a very brief word about the intergovernmental conference of 1996. It will be a very brief word because I spoke about it at some length in the debate on the Address on 17th November last year. The point that I made then, which I believe is critically important, was that the agenda for the intergovernmental conference is laid down in the Treaty of Maastricht itself. The agenda is specifically related to:
On more than one occasion I have expressed the view in your Lordships' House that it is a great pity that the Community did not proceed to a successful conclusion with economic integration before it embarked upon political union.
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