EU Funding (Hansard, 23 February 2004)

§ Lord Davies of Oldham
My Lords, the Government do not support the Commission's proposals for large increases in EU budget expenditure over the period 2007–13, which the Commission presented on 10 February. The Prime Minister has made clear, in a joint letter sent to Commission President, Mr Prodi, on 15 December 2003, along with the heads of government of Austria, France, Germany, the Netherlands and Sweden, that average expenditure during the next financial perspective should be stabilised at around current expenditure levels and should not exceed 1 per cent of EU gross national income.

§ Baroness Noakes
My Lords, I thank the Minister for that response, which was encouraging. I have one specific question for him. Will he confirm that the Government will not allow the UK's rebate, which was so heroically negotiated by my noble friend Lady Thatcher some 20 years ago, to be reduced or limited, in the next EU budget round?

§ Lord Davies of Oldham
My Lords, I can confirm that position. As the noble Baroness knows, the UK gets the rebate because of its disproportionately low share in the receipts—about half the EU average—and above average contributions. We intend to defend that position.

§ Lord Tomlinson
My Lords, does my noble friend agree that, if the common agricultural policy was reformed—which so many of us have asked for, including noble Lords opposite—the rebate itself would disappear? It is as a consequence of that that we have a rebate.
In relation to the Question, does my noble friend also agree that in the Convention on the Future of Europe, the working group on future financing of the European Union specifically rejected the proposal to increase the budget, having noted that the present budget is substantially below the present budget ceiling?

§ Lord Davies of Oldham
My Lords. I thank my noble friend for both his helpful contributions. He is of course right that a principle area for reform is certainly the common agricultural policy, and he is also right in saying that it helps to create the situation in which we disproportionately contribute more and receive less. He is also right in saying that there is widespread anxiety throughout Europe, as reflected by the letter from the heads of government, that the Commission is proposing too large an increase in its future budget.

§ Lord Wallace of Saltaire
My Lords, when can we expect for debate the Government's response to the Commission paper, which is after all the first shot in negotiations on the next budgetary package from 2007–13? Does the Minister accept that some of the proposals in the Commission's paper—for example, that a larger share of the budget must go on external relations and that a great deal more should be spent on innovation and less on agriculture—are precisely the sort of thing that British governments should be in favour of?

§ Lord Davies of Oldham
My Lords, the noble Lord is right in saying that this is very much the opening skirmish in a protracted debate. The decisions do not have to be taken until the middle of next year. He is right that there are some sensible proposals from the Commission, but what stands out is a very substantial demand for an increase in budget, which we do not support while other crucial features of the EU budget remain unreformed.

§ Lord Stoddart of Swindon
My Lords, the assurance has been given that the Government would not agree to an increase in the 1 per cent ceiling and that they will resist—to the last, I hope—any suggestion that we should lose our rebate, which amounts to £3,600 million a year. Those assurances are welcome. However, can I have the further assurance that the Government will not yield to the blandishments or coercion of other member states, as they apparently have done over the European constitution?

§ Lord Davies of Oldham
My Lords, true to form, the noble Lord, Lord Stoddart, adds a further demand to his approval of the position that the Government have already taken up in two instances. However, he will recognise that when a letter is sent on behalf of the Prime Minister and other heads of state of significant countries in Europe, one can scarcely look on such a body of people, who represent such a substantial interest in Europe, as being subject to coercion by anyone.

§ Lord Watson of Richmond
My Lords, given the facts of the matter—that at the end of the day the balance of spending and the strategic direction of the budget will largely be determined by the Council of Ministers—why do Her Majesty's Government continue to be agnostic, or perhaps just undecided, on the future of voting inside the EU?

§ Lord Davies of Oldham
My Lords, the Government are never agnostic, as they always think deeply about their position, on the basis of known facts. However, it is clearly important that crucial issues with regard to constitutional change are clarified. When they are, the Government will announce their position.