HC Deb 12 December 1984 vol 69 cc1045-7
78. Mr. Freeman

asked the Secretary of State for Foreign and Commonwealth Affairs if he is satisfied with the effectiveness of the proposed new principles for European Economic Community budgetary discipline.

Sir Geoffrey Howe

The principles agreed at Fontainebleau represented an important new step in the control of Community expenditure. Following the adoption at Dublin of a text incorporating these principles, the Community now has at its disposal the means of implementing effective budget discipline.

Mr. Freeman

I draw my right hon. and learned Friend's attention to article 5 of the agreement and ask him about two provisions. It is extraordinary, by normal business standards, that the overspending will be corrected within a two-year period and that let-out clauses will enable overspending not to be corrected in certain circumstances. Will my right hon. and learned Friend assure the House that overspending in the Community will be promptly corrected and that there will be no fudge?

Sir Geoffrey Howe

The point made by my hon. Friend in his last sentence is plainly important. The arrangements for correction over a period are designed to take account of the circumstances in which the correction might need to be made. It is of the highest importance that this budgetary discipline arrangement should be applied with full vigour and that its purpose and intention are met.

Mr. Deakins

Is control of public expenditure a matter of vital national interest for this country? If it is, why have we agreed to majority voting to deal with it in future?

Sir Geoffrey Howe

Control of Community expenditure has been and remains of the greatest importance to this country. It is regarded as a matter of the highest importance by a number of other member states. For that reason, we have been able to achieve agreement on this text to secure effective implementation of budgetary discipline. The reason why the budgetary discipline text provides for the Council to set the reference framework by qualified majority is that we want the new budgetary discipline arrangements to be incorporated, as I think the House would want, in the Community's budgetary procedure. All decisions on budgetary procedure are taken by qualified majority. The essential point is the stipulation that, in future, agricultural spending should grow at a rate less than the growth in the own resources base, and the Commission has bound itself to draw up its price-fixing proposals in the light of that guideline.

Mr. John Mark Taylor

As it seems likely that the European Parliament is about to reject the Community's budget, what advice will my right hon. and learned Friend give to the Council of Ministers? Will he take note of the fact that the last time the European Parliament rejected the Community's budget the Commission observed little discipline by way of sticking to the principle of one twelfth per month of the previous year's budget?

Sir Geoffrey Howe

My hon. Friend has come at the end of his question to the point that arises at the beginning of his question. If the Parliament rejects altogether the 1985 draft budget, the Community will have to operate under the provisional twelfths regime within the 1 per cent. ceiling. It is important that that is done properly.

Mr. Robin Cook

The Foreign Secretary was once Chancellor of the Exchequer. During the annual round of public expenditure reviews, would the right hon. and learned Gentleman ever have dreamt of accepting an undertaking from a Government Department that it would not spend more unless exceptional circumstances arose, as under article 2, or barring aberrant developments, as under article 5? Would it not have been abundantly plain to him as Chancellor that such a Department was fashioning the boltholes down which it hoped to escape? Therefore, why should the right hon. and learned Gentleman invite the House to pretend that that is not precisely what the Community is also doing?

Sir Geoffrey Howe

If the hon. Gentleman studies the budgetary arrangements in this country he will see that a number of Departments have rather more flexible arrangements over the control of expenditure than the ones about which he is now complaining. As Chancellor I was not necessarily happy with all of them. The arrangements that have been made, which were debated in the House yesterday, represent a substantial achievement as a means of securing effective budgetary discipline.