HC Deb 19 July 1979 vol 970 cc1968-70
3. Mr. Skinner

asked the Chancellor of the Exchequer when he next expects to meet other EEC leaders; and if he will make a statement.

The Chancellor of the Exchequer (Sir Geoffrey Howe)

I expect to meet my fellow Economic and Finance Ministers of the Community at the next meeting of the Finance Council on 17 September. I shall be reporting the outcome of that meeting to the House.

Mr. Skinner

When the right hon. and learned Gentleman does meet them, will he remind them that the figure of more than £1,000 million, which is now our contribution to the Common Market budget, is looming large in our balance of payments account every month? Will he also ask them what the reaction will be when we ask for a reconsideration of our contribution over the next two years? If, for example, the Finance Ministers refuse to agree to the concessions for which we are asking, will the right hon. and learned Gentleman give a guarantee to this House that he will say forthrightly to them that there will be no further contribution from Britain until this matter is resolved?

Sir G. Howe

My right hon. Friend the Prime Minister and all my right hon. Friends lose no opportunity of reminding our colleagues in the Community of the importance that we attach to securing a substantial reduction in our budgetary contribution. I am glad to say that as a result of the more constructive attitude adopted by this Government towards the Community the Prime Minister was able to achieve substantial progress in getting recognition of our case at the Strasbourg meeting. We shall continue to press the case with as much conviction as the hon. Gentleman, but with rather more success than he has had.

Mr. Skinner

I have never been there.

Mr. Budgen

If my right hon. and learned Friend receives any advice from the financial leaders of the EEC to the effect that he should follow the Swiss example of abandoning monetary restraints, even temporarily, will he remind them that the Swiss example is not relevant here, that the Swiss have an entirely different social and financial history, that they have a background of nil rates of inflation and that the Swiss people are unlikely to take up a large increase in the money supply in the way that the British people would?

Sir G. Howe

I am grateful to my hon. Friend for drawing my attention to those points, and also to the fact—which was implicit in what he said—that the Swiss response was founded upon the successful record to which he drew attention, rather than upon the record of disastrous money supply growth that we inherited from the right hon. Member for Leeds, East (Mr. Healey).

Mr. Denzil Davies

As the right hon. and learned Gentleman is well aware, the European Commission has put forward a proposal to increase the VAT ceiling from 1 per cent. Will he make it clear to the House that the Government will not agree to that increase—in fact, to any increase—until the question of the budgetary contribution has been satisfactorily resolved?

Sir G. Howe

The Government certainly do not regard as acceptable any proposal of that kind for increasing the Community's resources. Quite apart from that, the case for a reduction in our budgetary contribution has to be pursued, and will be pursued, in its own right.

Mr. Hordern

Can my right hon. and learned Friend say whether the Government propose to join the European monetary system?

Sir G. Howe

As my right hon. Friend the Prime Minister told the House recently, we shall be reaching our next stage of consideration of that after the review of the convergence mechanism has been undertaken, which will not be before September of this year.

Mr. John Evans

Will the Chancellor try to persuade his EEC colleagues to slash their expenditure on regional aids by as much as the Government have slashed ours, otherwise areas such as the North-West will increasingly suffer from the vast aids that European countries give to their depressed regions?

Sir G. Howe

It is certainly a legitimate part of the Community's organisation to see that the contributions to regional and other aid programmes do not get out of line with each other so as to produce unfair competition of that kind. But, beyond that, one must recognise that the success of our Community partners depends largely upon the fact that they have a much more sensible system of taxation than we do. It is to that that we are moving as a result of the measures that we are taking.