European Council (Hansard, 27 June 1984)

§ 64. Mr. Dykes
asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on developments at the latest European Council meeting.

§ Sir Geoffrey Howe
As hon. Members will know, we reached agreement at Fontainebleau on a lasting and fair settlement of the budget problem which has been under negotiation for the past year. This is a good deal for Britain and for the Community. Heads of Government also set the course for future Community policies on other matters. My right hon. Friend the Prime Minister will be making a full statement to the House immediately after Question Time.

§ Mr. Dykes
I do not wish to anticipate my right hon. Friend's statement, but, in the wake of the excellent budget agreement between the United Kingdom and the Community, does my right hon. and learned Friend not feel the need to remind Labour Members and certain other hon. Members that practical measures for working together and for integration in the Community do not in any way lessen intrinsic national sovereignty, and that, indeed, they enhance it? Should we not now get to work to build up one coherent Community, as we should have done aleady?

§ Sir Geoffrey Howe
I thank my hon. Friend for his opening remarks. As he points out, the settlement of this long-running dispute enables the countries of the Community to get to work on the many measures that can and should be taken to establish and expand the working of the Common Market and to promote closer partnership in the Community.

§ Mr. Boyes
Is it not amazing and scandalous that at a time when Europe has never been so close to nuclear destruction, when there have never been so many unemployed and so much poverty, time was found to discuss at Fontainebleau such subjects as a European flag, a European anthem, and a European honours list?

§ Sir Geoffrey Howe
The hon. Gentleman should not conclude that a great deal of time was wasted or taken up in discussing those matters. However, it would be foolish to disregard such matters altogether.

§ Mr. Neil Hamilton
Will my right hon. and learned Friend confirm that, as a result of the agreement that was reached this week, the amount of money that Britain contributes to the Community will increase? Can he confirm the report in The Times this morning, which says that if the formula that has been adopted for the recalculation of Britain's budgetary contribution had applied in the past four years, we would have contributed and extra £115 million a year?

§ Sir Geoffrey Howe
The point that my hon. Friend must understand is that, in the absence of these negotiations being brought to a conclusion, there would have been no system for the abatement of our contribution. As a result of what has now been secured we shall have a substantial and lasting reduction in our contribution. We have made a substantial change in the entire relationship between us and the rest of the Community.

§ Mr. Robin Cook
Will the Foreign Secretary respond to figures that have been produced by the Presidency of the European Council and which purport to show that this formula, if it had been in existence in previous years, would have cut our earlier rebates? So that the House can be clear on the matter, will the right hon. and learned Gentleman explain how the VAT expenditure share formula is calculated? Will he clarify how he is able to describe the settlement, which will produce smaller rebates, as a good deal for Britain.

§ Sir Geoffrey Howe
The hon. Gentleman fails to address himself to the central point. Under the system that has existed until now, refunds have had to be negotiated each year. As he has said, that has become increasingly difficult from year to year, as we have seen in regard to our 1983 refund. Under the arrangements thus far, the level of our ad hoc repayments has been declining from year to year and there was no assurance of the existence of any such arrangement this year or in any future year. What is now in place is an automatic system for reduction of our contribution on a durable basis. That is on the basis of a correction. On the hon. Gentleman's second point, the basis that has been agreed covers the great bulk of our payments to the Community, since the gap means that our levies and duties are counted as if they were paid at the VAT rate. It means that in any increase in expenditure along those lines we shall pay only 7 per cent., rather than 21 per cent., on a lasting and durable basis. I assure the hon. Gentleman that the conclusion is substantially better 988 than any alternative that has so far been available. It is overwhelmingly better than the disastrous conclusion that was arrived at by the Labour Government.