HC Deb 07 December 1994 vol 251 cc328-84

'This Act shall come into force only when the House of Commons has come to a resolution on a motion tabled by a Minister of the Crown as to the measures the Government intends to take in order to implement Article 8(2) of the Council Decision of 31st October 1994 on the system of the European Communities' own resources.'.—[Mr. Andrew Smith.]

Brought up, and read the First time.

Mr. Andrew Smith

I beg to move, That the clause be read a Second time.

The Chairman

With this, it will be convenient to discuss also the following: New clause 4—Own resources calculation: annual reports

  1. '.—(1) In implementing the provisions of Articles 2, 4 and 10 of the Council decision of 31st October 1994 ("the Decision") on the system of the European Communities' own resources, Her Majesty's Government shall lay a report before Parliament in each year to the end of 1999, on the operation of the system set out in Article 10 of the Decision in respect of the United Kingdom; and each such report shall include an analysis of—
    1. (a) the revenue which the United Kingdom would be required to provide as own resources entered in the budget of the Communities as compared to the revenue required be provided by other Member States, by reference to the percentages of annual GNP set out in Article 2 of the Decision;
    2. (b) the methods of calculating the GNP of the United Kingdom and each other Member State and their accuracy; and
    3. (c) the effects on the United Kingdom, were it to be implemented, of any re-examination made in any year by the Commission, under Article 10 of the Decision, of the correction of budgetary imbalances granted to the United Kingdom.
  2. (2) Each annual report made to Parliament under the provisions of subsection (1) of this section shall be subject to approval by a resolution of each House of Parliament.'.

New clause 12—Annual report to Parliament'Each year Her Majesty's Government shall make an annual report to Parliament concerning the operation of the Decision in section 1 (e) above in respect of the preceding financial year, which shall include:

  1. (a) a general presentation in text and tables of the financing and expenditure of the European Economic Communities in sterling equivalent and any common unit, which shall include comparable tables of income derived from each member state and expenditure therein in respect of each principal category of expenditure;
  2. (b) an account of rebate mechanisms applicable to any member state;
  3. (c) the operation of each article of the Decision;
  4. (d) action taken by Her Majesty's Government in respect of financial discipline;
  5. (e) the text of any regulation, directive or financial regulation relating to the operation of the Decision to which Her Majesty's Government has given its assent.'.

Mr. Smith

I will begin with new clause 1. The article to which I referred—article 8(2)—states: Without prejudice to the auditing of the accounts and to checks that they are lawful and regular as laid down in Article 188c of the Treaty establishing the European Community, such auditing and checks being mainly concerned with the reliability and effectiveness of national systems and procedures for determining the base for own resources accruing from VAT and GNP and without prejudice to the inspection arrangements made pursuant to Article 209(c) of that Treaty, the Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament, adopt the provisions necessary to apply this Decision and to make possible the inspection of the collection, the making available to the Commission and payment of the revenue referred to in Articles 2 and 5. That raises several important matters of concern to the House.

4.30 pm

We have emphasised time and again our anxiety, which is widely shared both in the country and in the House, about the inadequacy of present arrangements in the European Union for the detection or elimination of fraud and waste, and about the shortcomings in the working of the common agricultural policy. We have said especially that the common agricultural policy is wasteful and economically and environmentally damaging. We have also said that the Government have not done nearly enough to combat waste and fraud in the European Union budget.

As recently as last weekend, there were disturbing reports in the press of the way in which Ministers appear to have gone along with the cut of £3.9 million in the budget to counter fraud in the European Union. That was a matter of enormous concern to many hon. and right hon. Members because, if fraud is to be properly eliminated and the people responsible for it properly brought to account, the mechanisms have to be in place and they have to be properly enforced in each of the member states of the European Union. The fact that the Government accepted that cut calls into question the assurances given on Second Reading about the Government's commitment to eliminating fraud. I ask the Minister to reply specifically to that argument when he replies to the debate.

We believe that the House of Commons has a right and a duty to the people of Britain to scrutinise and, as appropriate, to amend the very important measure before us. We believe that the Government have sought, by the confidence motion and the other pressures that they have brought to bear, effectively to curtail the right of the House to determine the way in which money is paid to Europe, the uses to which that money is put and the extent of waste and fraud in its application. The new clause therefore seeks to insist that the Government bring a motion before the House showing the way in which article 8(2) would be implemented.

Article 8(2) mentions many important subjects. One of those touches on the United Kingdom abatement, because the article refers to articles 2 and 5 of the decision. I shall now mention an important issue. When we discussed the matter in European Standing Committee B, as long ago as 15 December 1993, I asked why papers were not available in the Vote Office setting out details of the United Kingdom abatement. In replying to my question, the former Paymaster General said something interesting. He said: The working methods paper"— the paper governing the operation of the United Kingdom abatement— is a Commission document that gives detailed examples of how the UK abatement is calculated. The current paper was produced in 1988 following the own resources decision … in that year. It is still extant. It was the subject of an explanatory memorandum on 1 July 1988. He continued: The Commission is working on a new working methods paper. So far no copy is available so we could not lay it before the Committee. As soon as we receive a copy, we shall do so."— [Official Report, European Standing Committee B, 15 December 1993; c. 7.] I understand that there is now extant a paper SEC(92)/1412/final, dated Brussels 22 July 1992, about the United Kingdom abatement. Will the Paymaster General say whether that paper updates the one to which the former Paymaster General referred in European Standing Committee B? Was it presented to the Committee for discussion in line with the undertaking that I was then given?

An interesting aspect of the working paper which will be of concern to hon. Members is its reference to a number of changes, described as technical changes, in the operation of the UK abatement. Page 11 of the working paper states: Taking into account the combined effect of these changes which should reduce the abatement by over—1 billion ecus in 1997 from the 'No change' scenario, the Commission's proposals should thus contribute towards a diminution of the UK abatement relative to the EC budget. The size of the abatement would fall from around 5 per cent. to under 4 per cent. of the budget by 1997. That raises an important question to which the House should have a full and comprehensive reply from the Minister. The working papers on the UK abatement are certainly complex and dense to wade through, as anyone who has sought to do so will confirm. If discussions and negotiations—even if they are described as technical— have been taking place about the UK abatement, that must greatly concern hon. Members in the light of the assurances that they have been given on the abatement and the importance of safeguarding the abatement. The Government should make the position clear.

Our new clause has other implications. Before the Act can be ratified, the House of Commons must pass a Government resolution on a motion setting out what steps the Government intend to take to ensure that the United Kingdom has the mechanisms to calculate accurately its contributions. Article 8(2) states that each country should have the mechanisms to calculate accurately its own contributions according to the terms set out in articles 2 and 5 of the decision. Those articles refer to gross national product at market prices and VAT—the VAT harmonised base—so that each country calculates its own GDP and VAT base in the same way as other member countries.

The question has been asked before as to how far variations in the adequacy of the arrangements in different member states affect the contributions that each member state is asked to pay. We can all think of examples of European Union member states where the arrangements for properly calculating the level of liability to VAT payments, the way in which they are collected and the measurement of gross national product are not so reliable as they are in this country. The system misses the operation of the informal economy, which is not properly recorded in the official statistics.

Will the Paymaster General tell us what discussions he has had with his counterparts in the other European Union states to ensure that common and high standards are applied to the measurement and assessment of those matters, which have an important bearing on the contributions that this country has to make to the European Union budget?

Mr. Eddie Loyden (Liverpool, Garston)

Returning to his earlier remarks about what is happening in Europe and the concerns that have been expressed about certain practices in member states, does my hon. Friend believe that the weakness is within European legislation or within the member states?

Mr. Smith

There are clearly weaknesses in the operation of the regulation and the law both at European Union level and in member states. Clearly, procedures are more satisfactory in some member states than in others. Equally, there is a need for a binding convention in European law for fraudulent acts against the European Union budget to be contrary to the law in each member state.

A dual approach is necessary to tackle such a serious problem. We need to ensure both that there are proper arrangements in place in each member state and that European law is able adequately to cover the situation. We have advocated that the convention currently being discussed by the European Union should be enacted into United Kingdom law properly to tighten up on procedures and to bring those engaged in fraud to account.

We have also suggested that, where it can be shown that lax procedures operated by individual member states are responsible for shortcomings, fraud and waste, either because the basis for calculating payments has not been properly assessed, or because receipts of money from the Union have not been properly applied, it would be entirely appropriate to have a proper penalty regime which would require member states to pay money back, either by an addition to their required contributions or by a deduction from the revenues they receive.

Mr. Christopher Gill (Ludlow)

The hon. Gentleman will be aware that many Opposition Members and many of my hon. Friends have stood at the Dispatch Box and solemnly promised the House that they would get a grip on fraud, and are constantly talking about altering the mechanisms to do so. Has it occurred to the hon. Gentleman that much of the fraud cannot be eliminated without eliminating the system on which that fraud is founded?

The Chairman

Order. Before the Committee goes any further, the next group of amendments—new clause 3 and the new clauses grouped with it—is specifically about fraud. It would be appropriate to develop the arguments on that point when we get there.

Mr. Smith

I am, as ever, guided by your ruling, Mr. Morris, but the hon. Member's point is relevant to new clause 1. We are proposing the opportunity for the House, on a Government motion, to have further and proper discussion of the implementation of the decision in article 8(2).

That would give us the opportunity further to develop the case for precisely the reforms to which the hon. Gentleman was referring and, as we have emphasised, the crucial importance of reform of the common agricultural policy. Notwithstanding the agreements which have been reached in Europe and such reforms as have received commitments from member states, expenditure under the CAP continues to bang up against the ceiling that was agreed at the Edinburgh summit and which forms the basis for the Bill that we are discussing. It can come within the ceiling only by using the devices agreed at Edinburgh, whereby differences in the charges to the CAP accounted for by currency fluctuations allow dipping into Community reserves to provide extra resources for the agricultural guarantee fund. Nobody can be satisfied with that; it perpetuates waste, with all the examples that we shall discuss in the next group of amendments which is concerned specifically with fraud and waste and which worries so many Members of the House and members of the public.

Mr. Hugh Dykes (Harrow, East)

Bearing in mind the fact that the Labour party has in recent years changed its view and become more enthusiastic about the European Union, does the hon. Gentleman share my concern that, given the primitive nationalism about Europe that one sees in Britain, particularly in the press, there is an attempt to negate the validity of the concept of the European Union and the Community having its own resources—money that belongs to the Community, having been passed over by member states under these complicated formulae? The suggestion is often made in some anti-European journals here that it is our money and we should have it back, notwithstanding that we are the only ones to benefit from the rebate. Will he assert categorically that Labour is very much in favour of the concept of own resources and that the Community budget remains a modest proportion of the total public spending, allowing for all the large amounts in the member states, and that that concept should be developed for the common good of everyone in the Union?

4.45 pm
Mr. Smith

We recognise the importance of the European Union having the resources that it requires to do its job, and there is important work to be done at European level. I shall not return to all the arguments on the Maastricht treaty, and I would be out of order if I attempted to do so, but we made it clear that in today's world, with the extent of interdependence of economies and peoples in Europe, it is clearly appropriate to have institutions, policies and resources operating at a European level for the common benefit of all European Union members.

I wish to make two important points about that principle. First, it should be governed thoroughly by the principle of subsidiarity. Government works best when it is closest to the people and some enthusiasts for the European Union endeavour have in the past overstated the case for those measures which need to be taken centrally. Proper subsidiarity should operate in that the conduct and implementation of policy should be carried out at the level which is most effective and closest to the people.

Secondly, nothing undermines people's confidence in common action throughout the European Union and its institutions more than the extent of the fraud, waste and the unnecessary bureaucracy to which the European Union Court of Auditors' report so frequently draws our attention. If those charged with those responsibilities in Brussels, in the European Union or in the European Parliament let too wide a gap open up between the project in which they see themselves engaged and the perception of the ordinary citizens in different member states and their experience of the European Union, as we saw in the reaction to the Maastricht treaty, not just in Britain and in Denmark but also in Germany, France and elsewhere, it sets up a reaction that is damaging to the concept of European co-operation.

We need to emphasise what can be achieved by popular co-operation which engages people in trade, visits and cultural and sporting exchanges which bring practical benefit to people in their day-to-day lives. The £20 a week extra that the average family in the country is paying to keep the common agricultural policy going and the extent of waste from food mountains, wine lakes and tobacco subsidies is unacceptable. Britain needs to assert that and to be much more forceful in pressing for change and reform. It needs to build alliances with others within the European Union who think similarly so that we can get the European Union on to a more sensible course which will benefit people in this country and in other member states.

I repeat from the Dispatch Box Labour's commitment to European co-operation and our concern to see that the European Union works properly in the interests of the people of Britain and throughout Europe. The new clause, which addresses the important issues that I have raised, would give the House, on a motion tabled by the Government, the opportunity more fully to consider the issues. I commend it to the House.

Several hon. Members


The Chairman

Order. I remind hon. Members again that this debate is essentially about own resources, so they should resist the temptation to talk about fraud until we reach the next group of new clauses.

Mr. Cash

First, I want to follow up the arguments that have just been put to us by the hon. Member for Oxford, East (Mr. Smith) regarding the implications of article 8(2) of the Council decision on own resources. The hon. Gentleman said that that is based on the Edinburgh agreement, but that is not strictly true.

The decision arises out of what has been described as an international commitment by the Prime Minister, but it was taken only on 31 October 1994 and in what could be described as extraordinary circumstances, not least of which is that it was taken only 10 days after the Chancellor of the Exchequer was summoned somewhat peremptorily by the commissars in Brussels in order to get him to give in to the Italian blackmail perpetrated as a result of the fraud that the Italians had committed for which they were to be fined.

The consequences of giving in to that blackmail have tainted the Bill with the fraud to which we capitulated by remitting a degree of the penalty in order to get through the own resources decision. That is a great pity. We all want to ensure that we can prevent fraud. I hope that we will have some interesting and useful observations from the Prime Minister through the Minister when he replies and that we will have some reassurance that the British taxpayer will have better value for money as a result of proper investigations into the way in which own resources are dealt with, most particularly with regard to the United Kingdom.

There is another disturbing feature of the manner in which the own resources decision went through. As far as anyone can tell, the decision was in breach of the undertaking given by the then Paymaster General to the Select Committee on European Legislation on 24 April this year. The Select Committee told the Government, in response to the explanatory memorandum, that we would expect the Government to come back to the Committee if the proposal was amended and resulted in a substantial change to the arrangements that were previously thought to exist.

I was astonished to find that that scrutiny reserve, which goes to the heart of the Select Committee's scrutiny process, should have been broken on such an important matter. The resolution of the House in October 1990 stipulates what is effectively a kind of veto by the Select Committee, and therefore the House, on the implementation of a decision. Therefore, the Minister who is our representative in the Council of Ministers should not, in almost any circumstances, make a decision when the Select Committee has put on a scrutiny reserve.

On 31 October 1994 the own resources decision was passed, it would appear in breach of the resolution of the House in October 1990. That is a pretty serious state of affairs. I raised the matter on a point of order yesterday and I hope that the Minister will deal with it when he replies to the debate.

In addition, the decision is in breach of our European manifesto. I fought hard, with great vigour and determination, during the European elections to support my local candidate and I remember well what the manifesto said. It used words to the effect that we would resist all pressure to raise the ceiling on public spending in the European Community.

We had the presidency conclusions of the Edinburgh summit in December 1992. We then had the European elections in May/June 1994. We know from the sequence that I have described that the decision was not made binding in any respect until 31 October 1994. It would have been perfectly possible to have done a Fontainebleau by saying that circumstances had changed, so we should change with them, just as the Prime Minister said that circumstances had changed when we were ejected from the exchange rate mechanism. We should have said on 31 October, in all honesty and fairness to the other member states, particularly having regard to the behaviour of the Italians in all this, that we would not agree to the provisions.

As I said on a point of order at the beginning of these proceedings, we know from the enormous row going on in Holland, rather unreported in the British press, that the Dutch are so concerned about the additional moneys that they might have to pay in order to implement the decision, that the measure may not go through until February. That throws considerable doubt over whether, in accordance with article 11 of the own resources decision, it would be able to come into effect at all. That is a remarkable state of affairs.

The pressure that has been applied to get the measure through by 1 January 1995 is liable to be vitiated by the behaviour or attitude being adopted in Holland at the moment. That is Holland's affair, but no one should be under any misapprehension that we are being told to get the measure through by 1 January, when on any reasonable reading of the situation in the other member states that will not happen.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

I am listening to the hon. Gentleman's reasoning with some interest. Is he saying that if the Government had a later implementation date the measure would be acceptable to him? He is using a sophist's argument if he objects to the measure in terms of the trigger date if there are difficulties in other member states. The measure is either acceptable to him or it is not and that should be the basis of his argument.

Mr. Cash

I have made it clear that I intend to support the Bill although, as I have said, with grave reservations, one of which is the matter to which the hon. Gentleman has just referred. It is important to make that position clear.

Mr. Kennedy

Is the hon. Gentleman saying therefore that he has grave reservations vis-à-vis January, but not March?

Mr. Cash

No, I am afraid that the hon. Gentleman does not understand what I am saying. I support the Bill but it is at least relevant to consider the extent to which the situation in other member states will delay the Bill beyond the legal requirements that are laid down in article 11 of the own resources decision.

The Court of Auditors' report on fraud makes serious criticisms about the way in which the moneys that are received under the own resources decision are being handled.

I understand perfectly, Mr. Morris, if you would rather we elaborated those questions on the next amendment, but for us to understand the implications of the own resources decision we had to have accurate figures. As you know, I was deeply concerned because there was a serious omission from the letter sent by -the Chancellor of the Exchequer to all hon. Members, which made the matter, unusually, a national issue. There was a £750 million gap, but I am glad to say that it has now been sorted out. Although the Chancellor of the Exchequer described my original figures as rubbish, he had to change his tune somewhat as the week went by, and fortunately the mistake has now been rectified by information later presented to the House.

All those aspects throw substantial doubt on the way in which the Bill has been brought before the House. However, we have to make the best of the situation as we find it—and that brings me to a question that has caused me much concern, arising out of the manner in which the mechanisms to investigate own resources will operate.

I have argued that the Public Accounts Committee ought to work in a spirit of mutual co-operation with the Court of Auditors, and be brought in to play a much larger role than it has so far been able to perform. I have been reading an excellent publication called "The Committee of Public Accounts of the House of Commons", which gives a full description of the functions of the PAC, and explains how it is set up under Standing Order No. 122.

5 pm

It is clear that it would be highly convenient for the British taxpayer to know with some certainty that the audit would be subject to the high degree of scrutiny and efficiency exercised by the Public Accounts Committee, the second most important Committee of the House. The Privileges Committee is the most important in terms of what is described as scrutiny seniority, and the Public Accounts Committee comes second. The Select Committee on European Legislation, on which I serve, is yet another Select Committee.

The degree of independence of those Committees is reflected by their composition, their chairmanship and the fact that they—or at any rate, the Public Accounts Committee and the Scrutiny Committee—are chaired by members of the Opposition, to ensure that their scrutiny is totally independent. That is significant because the scrutiny process, the audit of the accounts on behalf of the taxpayer, has to be done with the complete independence that will guarantee the public the right results from the mechanisms described.

New clause 1 refers to article 8(2) of the own resources decision.

Mr. Nigel Spearing (Newham, South)

The hon. Gentleman has just elaborated on the importance of the PAC. Every Member of the House would endorse what he said about that. New clause 6, which the hon. Gentleman tabled but which has not been selected, is also relevant. Has he noticed that new clauses 14 and 15, which have not yet been selected either, but which deal with the same issue, now appear as starred amendments? Does he agree that it would be useful and appropriate to the matters that he is now raising if those new clauses could come into play in a later debate?

Mr. Cash

I understand what the hon. Gentleman means, and I have much sympathy with what he says—but of course I defer entirely to your selection, Mr. Morris. However, it would be possible for a starred amendment to be selected tomorrow so that the matter could be considered then. But even now, as I shall explain, because article 8(2) raises the question of the mechanisms to be employed in investigating questions of audit and accounting, the provisions of Standing Order No. 122 could be extended to give the Public Accounts Committee that additional opportunity to consider such matters and to satisfy the British taxpayer.

Article 8(2) says: Without prejudice to the auditing of the accounts and to checks that they are lawful and regular as laid down in Article 188c of the Treaty establishing the European Community, such auditing and checks being mainly concerned with the reliability and effectiveness of national systems and procedures for determining the base for own resources accruing from VAT and GNP and without prejudice to the inspection arrangements made pursuant to Article 209(c) of that Treaty, the Council shall, acting unanimously", adopt those provisions, arid so on.

In a nutshell, article 188(c) says that The audit shall be based on records and, if necessary, performed on the spot in the other institutions of the Community and in the Member States. In the Member States the audit shall be carried out in liaison with the national audit bodies or, if these do not have the necessary powers"— that is an interesting point— with the competent national departments. These bodies or departments shall inform the Court of Auditors whether they intend to take part in the audit. So even in article 188(c), which is referred to in the own resources decision, what I have been saying about the extension of the functions of the Public Accounts Committee is anticipated. All that we need to do is simply to turn the key and allow the PAC to take up those powers, which article 188(c) already anticipated might be necessary to make the system work effectively.

The article continues: The other institutions of the Community and the national audit bodies"— in this context I presume that that would include the PAC and the National Audit Office, on which the PAC relies extensively for its reports— or, if these do not have the necessary powers"— that is the defect that we hope to rectify— the competent national departments". I hope that the Minister does not mind if from time to time I suggest that the words "the competent national departments"— might sometimes be changed to "the incompetent national departments"—for instance, in connection with the Treasury figures the other day. But I do not want to be too rude about that. The article says that the competent national departments shall forward to the Court of Auditors, at its request, any document or information necessary to carry out its task. That means that we have a good working opportunity to get the procedure straight, and that would be of immense value and importance to British taxpayers, who would be assured that we were not only working within the context of the treaty itself, as amended up to and including Maastricht, but ensuring that taxpayers' money, as it relates to United Kingdom matters, was properly covered.

There is another argument here. The Maastricht treaty contains an important declaration that national Parliaments should be more involved. What better opportunity is there to run all these things together than to provide a means of achieving those mutual objectives and to make the system work in the interests of the taxpayer? That would show the Government's good faith in tackling fraud and irregularities, and in ensuring proper accounting procedures.

I never thought that I should say this, but I must say it because I like to use all the weapons that I can deploy. Even that dreadful concept of subsidiarity could be applied to this issue in the sense that there would be an opportunity to ensure that we got the proper examination of accounts in our domestic sphere in conjunction, as I said, with the operations of the Court of Auditors.

Mr. Rupert Allason (Torbay)

Does my hon. Friend agree that one of the principles of subsidiarity, if we truly understand what that term means, is that individual Governments should make up their own minds and be masters of their own destinies on matters relating to the countries concerned? If we cannot rely on our European partners to tackle fraud in the rest of the Union, would it not be highly appropriate for our Government and this Parliament to exercise some control over British taxpayers' money that goes to the rest of Europe?

Mr. Cash

Absolutely. As I shall say when I move to the analysis of gross national product, we must ensure that we do not have two separate sets of books of the kind that are, apparently, well known in Italian domestic tax collection. There are profound reasons why we want to be sure that the arrangements that we propose through our Public Accounts Committee become a model of the manner in which these matters should be dealt with in other countries. The knock-on effect in practical terms of what happens if we do things properly and other member states fiddle the books is that we end up paying much more. It is not merely a question of fraud; it is also a question of mismanagement, the result of which is that we end up paying a much bigger contribution than we should. A lot of profound and important questions are tied up in the intervention by my hon. Friend the Member for Torbay (Mr. Allason).

As I have said, a whole range of matters are laid down under article 209, which deals with obtaining the opinion of the Court of Auditors; that is the dovetailing exercise I have in mind. Article 209(c) says that the Council shall lay down rules concerning the responsibility of financial controllers authorising officers and accounting officers, and concerning appropriate arrangements for inspection. There we have it in the European context, complemented by our arrangements with the Comptroller and Auditor General, the National Audit Office and the Public Accounts Committee. It is really quite a reasonable package which could result from the Government being constructive and forthcoming in making a change to Standing Order No. 122.

I now refer briefly to Standing Order No. 122; members of the Committee may be interested to be reminded of it. It says: There shall be a Select Committee to be called the Committee of Public Accounts for the examination of accounts showing the appropriation of the sums granted by Parliament to meet the public expenditure, and of such other accounts laid before Parliament as the committee may think fit". The words and of such other accounts laid before Parliament as the committee may think fit are important. The Standing Order then says that the Committee shall consist of not more than 15 Members, of whom four shall be a quorum. Standing Order No. 122(3) says: The committee shall have power to communicate to any committee appointed under Standing Order No. 130"— Standing Order No. 130 deals with the setting up of Select Committees— such evidence as it may have received from the National Audit Office (having been agreed between that Office and the government department or departments concerned) but which has not been reported to the House. It so happens that the other accounts laid before Parliament include the reports of the Court of Auditors. We in the Select Committee on European Legislation consider those reports and they are then laid before the House.

Recently—I say this with some concern and I have been critical of this—the reports have been shuffled together with a lot of other reports and have not been given the single-minded, independent debate that we used to have. Those debates were extremely valuable because people focused on the reports and they were not lost in a welter of other documents. If anything sensible came from the Government on the matter this evening, that point would be sorted out at the same time, thus giving the boxing blue clarity that I seek. Under Standing Order No. 122(3), the Public Accounts Committee would receive the evidence. Thus the whole package is neatly contained in my proposals.

5.15 pm

New clause 4 is grouped with new clause 1; I have examined new clause 1 to the extent that I wished. I raised the question of gross national product in the debate on convergence criteria some months ago. I happened to be rifling through my papers for the debate when I suddenly came across a table that took me a little by surprise. Our distinguished Chancellor of the Exchequer places much importance on the vital matter of convergence criteria and only yesterday, the President of the Board of Trade told us how wonderful it was that we were bringing down inflation, and so on. I had to point out to him that it was only because we were now out of the exchange rate mechanism which he so strongly advocated. You will be glad to know, Mr. Morris, that I think that we can skip over that one for the moment.

The fact is that this business of gross national product is really serious. In the debate on convergence criteria, which was prescribed under the European Communities (Amendment) Act 1993, the position became clear. In the tables that deal with how convergence criteria are calculated, east and west Germany are treated separately. I found that pretty astonishing. I thought that the wall had come down and that we were now dealing with one country.

The report by the Court of Auditors, which has only just come out, gives special attention to the scope for manipulating the GNP of a country. The Court of Auditors is, rightly, deeply concerned about the way in which GNP is being calculated. I am prepared to say that there is a higher probability that we are accurate in the way in which GNP is calculated in this country. If GNP is calculated on a double-book basis by some other countries, in which case a shady GNP figure is produced, there will be a profound impact on the amount of own resources that are collected. That is a very serious matter. For many reasons, we want to be quite certain that the GNP is properly calculated in each of the member states.

New clause 4 puts the matter in a nutshell. It says: In implementing the provisions … of the Council decision of 31st October 1994 … the Government shall lay a report before Parliament in each year to the end of 1999, on the operation of the system set out in Article 10 of the Decision in respect of the United Kingdom; and each such report shall include an analysis of— (a) the revenue which the United Kingdom would be required to provide as own resources entered in the budget of the Communities as compared to the revenue required be provided by other Member States, by reference to the percentages of annual GNP set out in Article 2 of the Decision; Secondly, the methods of calculating the GNP of the United Kingdom and each other member state and their accuracy should be put in a report. Finally, the new clause says that there should be an analysis of the effects on the United Kingdom, were it to be implemented, of any re-examination made in any year by the Commission, under Article 10 of the Decision, of the correction of budgetary imbalances granted to the United Kingdom. That final matter is gobbledegook for the Fontainebleau rebate. It may come as some surprise to hon. Members that, under article 10 of the own resources decision, to which our Government have agreed, it says that the Commission shall, not might, by the end of 1999, submit a report on the operation of the system, including a re-examination of the correction of budgetary imbalances granted to the United Kingdom—that is the rebate—established by that decision. It shall also, by the end of 1999, submit a report on the findings of a study on the feasibility of creating a new own resource, as well as on arrangements for the possible introduction of a fixed uniform rate applicable to the VAT base.

Bearing in mind the fact that under the Maastricht treaty as enacted, there will be economic and monetary union, if not for the United Kingdom, depending on our decision under section 2, certainly for the hard core of other countries, it is no exaggeration to say that by 1 January 1999 those countries will enter into economic and monetary union in the third stage. That is the failure of Maastricht.

However, if we combine the provisions in article 10 to which I have just referred with that 1999 situation, we arrive at a nuclear point. 'The new own resource system, which could well be produced under article 10, may well be the arrangements for a completely new financing of the European Community, in addition to anything that we now have before us—all of that by 1999. So, we need to know, through a Government report, what that means, because the own resources report does not say "in 1999": it says "by 1999".

If, for example, by some terrible misfortune, the Government were to fall and if, for example, the Labour Government were to be in power, they would whistle through section 2 of the European Communities (Amendment) Act 1993 and, with the possibility to which I have just referred on the back of it, it is my belief that we could be in a very serious and difficult situation.

Mr. Spearing

The hon. Gentleman has drawn to the attention of the House, and possibly the country, the importance of article 10 of the decision, which the Bill endorses. He is quoting properly from the Official Journal of the Community, No. L 293/9 of 12 November 1994. Is he aware that the words that he is pointing out are also on the amendment paper? If, in future, there were an amendment to include those words as part of a schedule to this new Act, it would be plain for all to see. If that amendment were ever selected, would the hon. Gentleman vote for it?

Mr. Cash

I do not believe in hypotheses, certainly not when confidence motions are floating around. It is difficult enough to make up one's mind when one is faced with a real vote. I shall certainly not engage in a hypothesis of execution as well.

The question of GNP is very important because in 1993, the European Community raised £52 billion from the 12 member states, of which the United Kingdom's share was £6.3 billion. Each member state's contribution arises from four sources: VAT, fourth resource payments, customs duties and agricultural and sugar levies. The relative importance of each of them is shown by the proportions which they represent. VAT represents 55 per cent. of the member states' contributions, fourth resource payments 22 per cent., customs duties 20 per cent. and agricultural and sugar levies 3 per cent. The first two items, VAT and fourth resource payments, account for 77 per cent. of the Community's own resources and they are assessed wholly or partially by reference to GNP.

If we consider the way in which article 2 is drawn, which is the basis of revenue for the own resources, we see that a change is taking place. In 1995, the percentage of GNP required of the member states is 54 per cent., but it is 53 per cent. in 1996, 52 per cent. in 1997, 51 per cent. in 1998 and 50 per cent. in 1999. A country's VAT contribution to the Community budget is capped by reference to the country's GNP, while the fourth resource payments are assessed and paid on the basis of a country's GNP as a share of aggregate Community GNP. At the Community level, the total size of the Community's budget has to be held within a certain percentage of aggregate Community GNP, which is currently set at approximately 1.2 per cent.

Therefore, the accurate measurement of each member state's GNP is of crucial importance on two counts—first, in determining the contribution for each member state and, secondly, in determining the overall size of the Community budget. The amounts of money involved are absolutely massive and an error of 1 per cent. only in calculating, for example, the German GNP, would mean a difference in her fourth resource payment alone of something like £30 million. The question is how accurate, and how fair between member states, is the measurement of each country's GNP? It is not that accurate and fair, as the Court of Auditors' report makes clear.

On the reliability of GNP measurements, the Court says: The Commission's conclusions do not make it possible to form a clear opinion of the degree of reliability of the data currently supplied by the 'Member States. That is not a joking matter. It is about the extent to which, and the manner in which the amount of our own resources will be calculated with regard to other member states. If anybody thinks that is a matter of little importance, all I can say is that the taxpayers do not think so. The Opposition, if I may so—I am sure that they would not want to fall out with me this afternoon—may take account of the fact that all their palaver about fraud and so on is relevant only in so far as they properly appreciate the amount of money that British taxpayers are expected to cough up in this exercise. That amount is calculated by reference to the country's GNP.

The Court of Auditors goes on to say: It would therefore seem to be rather unrealistic to think that a pronouncement can be made with the necessary rigour, on the reliability and comparability of the GNP aggregates that the member states supply to the Commission. In other words, the Court of Auditors is saying that the member states are cooking the books. The result is that if we do not cook the books and we come up with a proper and accurate assessment of our GNP, we end up carrying the can.

Earlier, in discussing the fact that estimates of GNP are out of date in general, with some countries' estimates being more out of date than others, the Court of Auditors goes on to say in paragraph 1.92: For example, there is the question of the updating of national accounts, with regard to which there is considerable disparity between Member States and for which 'reserve' should have been issued concerning GNPs that were determined on the basis of data that were too old (Greece and Portugal). There is also the example of the GNP of the former German Democratic Republic. Its previous planned economy is bound to pose problems for the assessment and integration into the GNP of the Federal Republic of Germany. As I have said, most people thought that we had a unified Germany. It seems that that is not the position when it comes to paying money into the Community. It is an amazing state of affairs. I hope that my hon. Friend the Minister will provide us with an explanation.

The Court of Auditors states: Despite the fact that the four-year time limit has not yet expired (Germany was unified in 1990), it is still astonishing that the Commission has not issued a reserve with regard to this question. This is a very serious matter. "Reserve" is a technical word for rectification and notification; actions which the Commission is supposed to take. Presumably it takes an incident of staggering magnitude to induce the Court of Auditors to use an expression such as "it is still astonishing", but it did.

What are we to make of all this?

5.30 pm
Mr. Nicholas Budgen (Wolverhampton, South-West)

We have seen some recent comment about these matters. It seems that the Commission thought that the Court of Auditors was behaving in an unhelpful way in issuing its recent report. The Commission felt that the court should be rather more careful. It felt that it was undermining the idealism of the Community by revealing uncomfortable truths. Is my hon. Friend aware of those observations from the Commission?

Mr. Cash

I certainly heard of them. As I am a member of the Select Committee on European Legislation, I have had the opportunity to visit the Court of Auditors and to have private sessions with it as well as the more formal ones. One of the most senior members of the court, Mr. Carey, was so dissatisfied with the way in which these matters were being conducted that he—I believe that the hon. Member for Newham, South (Mr. Spearing) had the original letter—tendered his resignation. He thought that the whole thing was going off the wall. Perhaps the hon. Gentleman will deal with that later. I hope that I have not misrepresented the position in any way. It was certainly deeply worrying.

Figures have been provided and the Select Committee on European Legislation in the other place referred to about £4 billion-worth of fraud, or £6 billion. I am coming to believe that we have no idea of the extent of the fraud and that the figure could be as high as £15 billion, or £20 billion for all anyone knows. The Commission has every apparent intention of putting the matter under wraps.

Mr. Budgen

I am grateful to my hon. Friend. I hope that he will forgive me for using that term to describe him. He may remember that the Chancellor of the Exchequer said that the figure of £6 billion-worth of fraud had been plucked out of the air. I know that my hon. Friend follows the Chancellor's observations with great care. What is the Government's figure for fraud in the Community?

Mr. Cash

If the Chancellor of the Exchequer's figures, as expressed in his letter—

The Chairman

Order. The hon. Member is getting into full flight. We are dealing with own resources and not exploring fraud in depth.

Mr. Cash

Absolutely, but I was dead on the point until I was diverted by my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen). I am delighted to refer to him as my hon. Friend.

The Chairman

The hon. Member is correct; he was in order until he was nearly tempted by his hon. Friend.

Mr. Cash

What are we to make of the GNP issue? The measurement of GNP and the way in which the Community raises money from member states are genuinely complex matters. I make no bones about that. If we read between the lines of the pronouncements set out in the recent report of the Court of Auditors, we find vast areas of what must be described as unfairness when it comes to assessing member states' contributions. If Portugal and Greece are still using 1970s data, as the court says, and if Germany is conveniently forgetting that unification took place, someone somewhere is being treated unfairly.

We can assume yet again that the country that the Court of Auditors does not mention in its catalogue of GNP sinners is the one whose Government want it to be at the heart of Europe. We are undoubtedly paying for that. The distortions in the figures show that as usual the United Kingdom is playing the game and that the other member states, according to the Court of Auditors, are not.

I say with some sadness that some hon. Members go pottering about claiming that people such as myself are inventing nightmares, goblins or whatever; that we are slightly off the wall; that we do not have any concept of what the European Community is or should be, and that we are a collection of ridiculous, pompous old bores. It might occur to one or two of those hon. Members, who have been grossly negligent in the way in which they have allowed the European Community to burgeon as it has, to reflect that some of us are merely trying to do the job that we were elected to do. We are examining what is going on. The figures that I have produced and the arguments that I have advanced have all focused on the relationship between the United Kingdom Parliament, the Court of Auditors, the European Parliament, the Commission and a mutual arrangement. If we are to make any sense of these matters, we must take up the-arguments that I have been addressing. These issues must not be bunged under the carpet.

I am informed by unimpeachable sources that during the debate on the EC budget on 28 October, when the House considered cutting out the European Parliament's proposals for an anti-fraud measure, it was said that the Government believed that the "Council's Second Reading budget" was "acceptable". That seems to suggest—I would like to hear the Minister's view—that the Government were going along with that budget rather than putting up a fight to increase the number of anti-fraud arrangements, which included the expenditure of 96,000 ecu for a unit to co-ordinate action against fraud. I would much prefer the matter to be dealt with through the Public Accounts Committee, but the arguments that I have been advancing are extremely relevant to the manner in which the own resources system functions.

Mr. Bill Walker (Tayside, North)

Paragraph 5 of the explanatory and financial memorandum states: The new Decision has to be approved by all member states in accordance with their national procedures before it can enter into force. It will take effect as from 1st January 1995. Everything that my hon. Friends and I have been trying to do has been designed to make sure that the House carries out its normal procedures and studies these matters, and that Committees are properly set up to do that as well.

Mr. Cash

Absolutely. If we are to have a Community that works—I have been writing recently about this—and a Community that we want to be a member of, one that does not bully, threaten and cheat us, it is essential that we have complementary arrangements that are enforceable in the other member states. Why should we have debates of this sort, scrutiny arrangements, sittings of the Public Accounts Committee and all our other procedures if the other member states are cooking the books and not properly scrutinising the arrangements? Surely we are not that idiotic. We must insist on complementary arrangements and proper scrutiny as preconditions to any movements within the intergovernmental conference. Given the connection between monetary union and own resources, we should also say no to a single currency now. That would clear up much of the trouble.

I see you stirring in your seat, Mr. Morris, and I would not want to inconvenience you by causing you to stand to put me back on the straight and narrow. Accordingly, I shall make my final point. I have sought to explain my reasons for tabling my amendments and new clauses. I am deeply concerned that the Fontainebleau rebate appears to be up for grabs. I cannot understand how that could ever have been incorporated in an own resources decision which is at the heart of the Bill that we are implementing, in accordance, it is said, with our constitutional requirements. In our own Bill—in our own legislation—we are carrying out an obligation imposed upon us by the Government as a result of their not resisting the re-examination of the rebate, to open the question whether what was negotiated for at Fontainebleau should remain on the table. That is a very serious matter.

I hope that we hear from the Minister, to minimise the potential man-traps that lie ahead this evening, a clear statement that we will have the opportunity, through the Public Accounts Committee, to look into all those questions. If we do, we will be able to get the finances of the European Community on to a better footing and, with a bit of luck and determination, also get the other member states to realise that we are not just an old, obsolete dinosaur of a Parliament, that we have some teeth and guts, and that we are going to do something about it.

Mr. Spearing

The hon. Member for Stafford (Mr. Cash) outlined in extenso, but most usefully, several matters to which the Committee and, indeed, the nation should pay attention.

We all know, I think, in outline form that own resources, which are the theme of the first important debate on this important Bill, relate to no fewer than three very complex and moving formulae: first, that which determines the maximum amount that the European Communities can spend in any one year; secondly, the formula that the nations of the Community contribute, which is an extremely complex affair dealing with levies, VAT and GNP; and, thirdly, the extremely significant rebate methods, to which the hon. Member for Stafford drew attention, whereby up to half of our contributions to the European Community are returned by way of rebates.

Each of those is an extremely complex formula—much more complex even than most people realise. The Bill authorises financial provisions that will last until 1999, at which point—the hon. Member for Stafford spoke of an atomic explosion—they will come to a head. In 1999, the whole caboodle will have to be renegotiated, and, under article 10, which is important, so will the recalculation and reassessment of the United Kingdom's own rebate mechanism. The Bill refers to and authorises a decision to which we will be committed.

The Government may accept the new clauses if they so wish as they are not essential to the purpose of the Bill. Indeed, Sir Michael, new clause 1, which was moved by my hon. Friend the Member for Oxford, East (Mr. Smith), new clause 4, which stands in the name of the hon. Member for Stafford, and new clause 12, which stands in the name of my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore), are essentially "glasnostic". They deal with the mechanism of the procedure, which is almost unbelievably complex, even for those of us who try to understand it and come back to it every five years or so.

The means by which the formulae are drafted, let alone how they work, are almost impossible to discern. Where does one find a textbook or a running commentary on how they have been worked out in the past five years? We had such debates in 1988, Sir Michael, although I do not think that there are many survivors of them, and we know that, in 1999, our successors—some of us might be here then, but probably not many—will face an enormous problem.

The new clauses, especially those on article 8(2), and the extensive requirements of new clause 4, will be an invaluable guide. In the intervening years, if the new clauses are accepted—and I see no reason for their not being accepted—the country will be able to trace a little more easily what is really happening. When the House debates the difficulties of 1999, which will be pretty bad—at least one very important nation in the European Community has said that the British rebate cannot remain as it is, and I heard that from an authenticated source—there will be the most colossal collision.

5.45 pm

I do not understand why the Government should not accept the new clauses. Are not reports to the House open government? Is that not what the Government are supposed to be about? Article 8(2), to which my hon. Friend the Member for Oxford, East referred, treads on the matter of fraud, which we must not debate yet, Sir Michael.

The Chairman

Order. There has recently been too much confusion of identity. I am not Sir Michael.

Mr. Spearing

I beg your pardon, Mr. Morris. I revert to the proper usage.

Why should not new clause 4 be accepted? I do not say that the Minister should accept it straight away, but, if it is not accepted, where else will such matters be raised? We can look with some sympathy upon at least the intentions of the hon. Member for Stafford. Even if the Government do not want the new clause, the issues that the hon. Gentleman has raised and the questions that he has asked, particularly in respect of the formulae of new resources, are tremendously significant. Indeed—dare I suggest it?—the sums involved might be as great as or greater than the sum involved in last night's dramatic Division. It is very easy to lose squillions of pounds in such formulae yet worry about the mere £1,000 million which we discussed last night.

I wish, in a relatively brief introduction, to refer to the terms of new clause 12, which you, Mr. Morris, have kindly included in this group. In view of its terms, my right hon. Friend the Member for Bethnal Green and Stepney, and my hon. Friends who might catch your eye to back him up, will request a separate Division if the Government do not accept it. I shall chance my arm and suggest that the Paymaster General accept it. It is a very straightforward request for an annual report to Parliament on the operation of the great big decision. The first thing that we want is a general presentation in text and tables of the financing and expenditure of the European Economic Communities in sterling equivalent and any common unit, which shall include comparable tables of income derived from each member state and expenditure therein in respect of each principal category of expenditure". I have no doubt that at some stage the Paymaster General will say, "Oh, the information is all in some report." It might be, but I suggest that what is sought by paragraphs (a) to (e) of new clause 12 will not be comprehensively available. It will not be gathered together in one slim White Paper which is presented to the House and which is available in public libraries for people in universities, colleges and schools to read and understand.

I found it necessary to gather that information when I read some figures in respect of our contribution to the European Union. It is particularly important in relation to rebate mechanisms. We should remember that our rebate is paid for by another sub-formula of countries that have to adjust their own contributions by paying more for the British rebate and other offsets.

I tried to get some figures from the Library to show how the European Community's receipts of expenditure had expanded at constant prices from 1973 to the present and how our own resources contribution and rebates worked out. The Library produced a graph, which I suggest is the only way for any citizen to understand what has happened. It looks rather like an atomic explosion because, even at constant prices, the amount of expenditure and income has expanded rapidly. This decision will authorise further expansion.

Some cynics say that the only way in which the European Community secures agreement is by lubricating disagreements with more cash. That is one of the reasons why the Government and the Community require greater own resources contributions at a time when the Community is telling the Chancellor to watch his own expenditure, but that is an aside.

The importance of our rebate formula cannot be overestimated because it zips up and down from year to year, as we were told during debate last week. Another graph that I commissioned from the Library shows the fluctuations only too well. The proportion of our receipts to our payments, without the rebate, is extraordinary. In some years, our receipts amount to only about one third of what we pay and the rebate makes up another third. However, if the rebate were taken away—as is envisaged in the decision that we will endorse in 1999—we would be in real shtook. Monitoring, which is the "in" word, as described in new clause 12 is very important indeed, as are the account of rebate mechanisms, which apply to any member state.

New clause 12, proposed by my right hon. Friend the Member for Bethnal Green and Stepney, would require the operation of each article of the Decision"— how it is worked out in practice. One article in the decision—which, incidentally, I believe should be a schedule to the Bill—relates to the British rebate. As I pointed out in an intervention, it is printed in the report to the Committee of the whole House. As you know, Mr. Morris, an amendment was proposed that sought to write the whole of the decision into the Bill as a schedule so that it would be there for all to see.

Article 4 of the decision, which appears in the Official Journal and on the amendment paper, is quite extraordinary. It contains 30 lines of excruciating mathematical formulae, which I was tempted to read into the record. I do not think that I will do so, although it may be educational for hon. Members. Almost every one of the 30 lines introduces another mathematical element into the decision— the magical formula multiplying the result by 0.66 and so on. Paragraph 3 states: The basic amount shall be adjusted in such a way as to correspond to the reference compensation amount", whatever that may be. Article 4 will affect the country most crucially but, unless a schedule is passed on Report or in another place, its yearly operation will hardly be debated at all because it is retrospective.

Much was said in the debate last Monday and in previous debates about how much extra money will be paid to the European Union—I could not understand all that farrago. The press went batty, arguing about whether it was £750 million or less. I suggest that one cannot tell how much it will be because the article is retrospective. I see that the well-informed hon. Member for Harrow, East (Mr. Dykes) is nodding his head. The press farrago about how much the Government will pay is a matter of speculation; it is merely an estimate. Unless the Government are forced to report annually to Parliament, we will not have a retrospective report of how the amount was worked out. The paragraph about reporting is a very important part of new clause 12.

If it does not appear in the schedule and we do not receive a report, as proposed under new clause 12, where will we get the information? The Official Journal, which was wielded by the Member for Stafford, contains the extraordinary statement: Council decision of 31 October 1994; Acts whose publication is not obligatory". Fortunately, because the decision is an important one it is contained in the Official Journal. Regulations are regarded as being important and therefore have to be published, but decisions are usually much less important than this one, which amounts to a treaty, and may not be published. I suspect that this decision, according to strict European Community treaty law, did not need to be published, even in the Official Journal. I suspect that that is so, but perhaps the Paymaster General will seek advice and confirm whether I am correct.

I hope that I have persuaded the Committee, particularly the Paymaster General, that new clause 12 is a democratic necessity. Without it, we will not be able to find out what has gone on and the Government will not be able to tell us comprehensively about the operation of this decision, and the 1998 decision which has to be considered with it. The decision of 1988 and the decision of 31 October 1994 have to be read together in order to find out what is going on. The 30 October 1994 decision comprised three different decisions, including one about budget discipline, which is related to this decision but is not the same. Perhaps the other place will include in legislation the reference number of another amendment which was put down but not selected and which is quite important.

I challenge the Minister to explain why we should not have some British glasnost on this matter. What is the Treasury afraid of in opposing the proposed new clause? I cannot think of any possible democratic, financial or moral reason to refuse it.

Mr. John Biffen (Shropshire, North)

I am glad that the debate is proceeding without the drama of an impending general election or the mass withdrawal of the Whip. Of course, it has lost a little excitement in the process, but that is more than compensated for by the very pertinent comments made by the Labour Front Bench, my hon. Friend the Member for Stafford (Mr. Cash) and the hon. Member for Newham, South (Mr. Spearing).

The three proposed new clauses—Nos. 1, 4 and 12—are an attempt by the House of Commons to at least have a presence in European Union decisions. Through the actions of this and past Governments, we are bereft of what are traditionally considered to be appropriate powers. However, that surrender has not taken place with total acceptance on the part of the House. Euro-scepticism is alive and vigorous, and—foolish or wise—believes that the future belongs to it. The more we travel with the evolution of the Union in post-Soviet collapse circumstances, the more we realise that the original blue paper judgments of the treaty of Rome are increasingly inappropriate.

Therefore, the questions that we consider this afternoon are how the House can be better informed about resource allocation within the European Union and where the net balance of political judgment lies. Above all, that must be underwritten by the Treasury Bench and not secured by reading The Financial Times or The Independent. That is an important and legitimate aspiration. Knowledge will be the precursor of repossessing greater parliamentary authority in the decision-taking processes of the Union.

6 pm

I hope that my hon. Friends on the Treasury Bench will feel generous towards the arguments that have been made, and will accept that we are trying to establish a partnership between the House of Commons and the Executive in the conduct of European policies. I say that because I believe that it is a matter of constitutional significance and one that will move in an evolutionary way, although not with high drama. As the hon. Member for Newham, South said, a few years from now people will look back and mark these debates. They will see what arguments were deployed and how they related to the way in which the Union has proceeded under the impact of our sister European nations.

The way in which the Union will proceed is a matter of speculation on our part. I believe that the forces operating against centralisation within the Union are powerful and will mesh with the attitudes that have been expressed this evening.

Mr. Geoffrey Hoon (Ashfield)

I have followed the right hon. Gentleman's arguments with some care. Is he saying that, in reviewing the way in which the House of Commons votes money for the European institutions, it is right that we should consider how those institutions spend that money? Is not his argument that the House of Commons should have that opportunity when European institutions also have that opportunity? The European Commission, the European Parliament and the European Council examine both how the money is raised and how it is spent. Does he not find it curious that the Bill deals only with how the money is raised and not with how it is spent?

Mr. Biffen

That is an interesting point. I have no wish to widen my area of dialogue with the Front Bench. I think that I am doing reasonably well on the present basis, but I take account of what the hon. Gentleman says.

There are great dangers in supposing that we can be some missionary force in the conduct of European fiscal affairs, and that the way in which we do things will eventually be accepted by our sister European countries. They all have their own traditions. One of the problems will be how those traditions relate to one another in a collective framework. Therefore, I am cautious about saying that we will stand out and have remarkable power in influencing future behaviour on such matters in Europe.

I do not intend to make a long speech. My hon. Friend the Member for Stafford and the hon. Member for Newham, South properly concentrated on the role of the gross domestic product in the calculation of the allocation of resources. As the hon. Member for Newham, South said, GDP is presented in the European Council decision in the most fantastic, sophisticated manner, running to heaven knows how many places after the decimal point.

In reality, the concept of GDP is hit or miss. It is not possessed of immense sophistication. I am led rather pedantically to quote the American economist Morgenstern, who said: Qui incipit numerari incipit errari. That is perfectly true. One has only to look—[Interruption.] I assume that the Latin tongue is well known on the Opposition Benches, but I will supply a translation for the Treasury Bench if it is thought appropriate. Hansard is well able to cope with these matters. It is when I lapse into Welsh that difficulties arise.

The concept of GDP is a matter for serious consideration. When substantial transfers of money from one country to another take place through a doubtful mechanism such as the present mechanism or whatever, do not suppose that there will not be eventually sharp political consequences. I see some Scots Members on the Opposition Benches. They will remember the days of rating revaluation. Something that ought to have been perfectly clear and manageable gave rise to a tremendous political furore.

How do we measure the black economy? How do we measure something which, by its nature, cannot be measured? How do we think it operates in Italy, Greece or other countries possessed of the Latin culture, as opposed to countries such as Denmark or Germany, which are Nordic in their traditions?

I do not see the point in any xenophobic way. It is a sheer practical consideration when we consider how we proceed with governmental co-operation, when the most intimate matters of resource allocation are decided by such dubious mechanisms. I will tell the House what will happen. There will be conflict and recrimination in all layers of government. The press will be expert in explaining how we are being ripped off by our partners. We see it already. We are forcing an arrangement which will compound all those difficulties.

I believe that it is perfectly possible for beneficial circumstances to result from resource transfer. Of course I do. The Marshall plan was easily the most successful internationally mounted system of resource reallocation. It was done without any of the absurd formulae which will be but an apple of discord for the future.

The conclusion I draw is that what we are being asked to nod reverentially and acquiesce to is the blueprint for the next phases of European co-operation, which will produce exactly the opposite outcome to that intended. It is bad enough that the mechanism has to deal with the present budgetary ambitions of the European Union. If it is to be the fulcrum for the transfer of resources to bring about economic cohesion and the preconditions for a single currency, it will simply lead to disaster.

Of course, I shall give the Treasury Bench all the support that it requires of me. But do not let it ask me to say that I have been intellectually convinced by Maastricht, by Edinburgh or by this Bill. For it simply will not stand the most severe testing—that of time.

Mr. Denzil Davies (Llanelli)

The right hon. Member for Shropshire, North (Mr. Biffen) had a short dialogue with those on his Front Bench. Perhaps I may have a short one with mine.

I commend the speech of my hon. Friend the Member for Oxford, East (Mr. Smith). He will be surprised to hear that. Some of us were critical of his approach during the Maastricht debate, but his reply to the intervention of the hon. Member for Harrow, East (Mr. Dykes), who tried to trap him into a complete defence of own resources, gave some of us Euro-sceptics some encouragement.

As my right hon. and hon. Friends see the doors of government opening and getting ever nearer, before long we on the Opposition Benches who have been the Euro-sceptics will gradually move to the main stream of the Labour party's attitude to Europe. All my hon. Friend needs to do is attend a session of what used to be called the Budget Council—I do not know whether there is still a Budget Council. The Budget Council is not about the budget, and its members cannot have any influence over spending decisions. In 1977–78, all the money went on the common agricultural policy, so there was not much point in going to Brussels for the Council. That is part of the problem—spending is set.

I understand that surpluses can be carried forward. The Treasury used to shudder at the very thought of carrying forward surpluses, or money not spent, from one year to the next. That system does not provide any sensible control over public expenditure.

I predict that, once my right hon. and hon. Friends get into government, the Labour party will move back to its original Euro-sceptic state. Whatever Government are in power, at some time they will have to stand up and defend British interests at the Councils of Ministers.

Mr. Iain Duncan Smith (Chingford)

Does the right hon. Gentleman agree that the main point that so differentiates this budget from a domestic budget is the simple fact that, if we did nothing today, or on Third Reading, the Community would still get its money year on year? The increase is the only thing that it would not get. If a domestic budget is not voted through, there is no money for the following year, and therefore there can be no control.

Mr. Davies

I understand that very well. The object of this debate is to make a charge on the Consolidated Fund. It is that terrible thing, hypothecation. A chunk of money—about £2.5 billion net next year—is hypothecated. The Chancellor is scrabbling around to find £1 billion as a result of what happened last night. He can touch all other areas of public expenditure—I do not think that he can touch judges' salaries, as they also have their backsides on the Consolidated Fund—but he cannot touch the Euro-budget. That is the object of this sort of exercise.

To return to the own resources debate, I must inform the Paymaster General that I was intrigued with article 8(2) of the European Council's decision, whereby the Commission is given certain powers to do certain things to apply the, decision. I do not understand what that means. I am sure that the Paymaster General is well briefed, and will tell us what it really means from a technical point of view.

On the abatement provisions, I was a great admirer of Lady Thatcher and those people who negotiated the Fontainebleau agreement. It was not an easy thing to do, and our contributions decreased for a while. Now, that agreement is written into the document under discussion, as it presumably was in 1988. It is codified, and has been taken away from Fontainebleau and become part of article 4 of the Council's decision.

When the document comes to the end of its life, the Fontainebleau agreement will do so also, and there will have to be more negotiations. On top of that, article 10 of the decision states that the Commission has to do something about it by 1999. It is therefore slightly disingenuous for the Government to say that they have preserved the Fontainebleau agreement, because it is up for grabs again.

I do not know what will happen in 1999, or even before then. I do not know what will happen in 1996—the year of the intergovernmental conference. Perhaps new institutions and new common policies will be created, as well as new work found for the old institutions. Article 2(2) refers to common policies and new charges. Presumably, if a new policy is created, new money will have to be obtained.

6.15 pm

I wonder whether what we are debating is really as sacrosanct as the Government seem to think. If substantial changes were to be made in 1996, it might give the Commission the opportunity to slip in a few figures, raise the ceiling a little and gain more powers for certain institutions.

The history of this European centralised state has been the history of the battle to acquire power between the institutions. It is the Europe of the institutions and not of the people. The struggle is not between nation state and centralised European state, but within that centralised state for more power and more money. Power needs money, and more money produces more power. I would not be as sanguine as the Government that everything is all right until 1999. That is not how such things work. The Commission is adept at finding itself more money—not necessarily to spend for itself, but because of the power that goes with expenditure.

The cost of the CAP is increasing. Perhaps it is a smaller percentage of the budget than it used to be, but the amount spent on it will still have increased by 1999. As I said on Second Reading, some people seem to think that the Poles will save us from the CAP and that they will smash it when they join, but they will need regional and structural funds. Enlarging the Community with countries from the east, which are poorer than ours, will not mean a smaller budget or getting rid of the CAP.

The balance of payments is not a fashionable subject these days. The Paymaster General is present: he probably writes the cheques once a week, or whatever it states in the agreement, which probably also states, "If you don't, the Commission will come down on you like a ton of bricks." So he has to write the cheques. I imagine that they are in ecus or deutschmarks. I do not suppose that they are made out in pounds. Presumably the money comes out of the exchange equalisation account. Perhaps things have changed, but that used to be the case.

If our net contribution is to be £2.5 billion next year—I know that one cannot identify a particular year, because money goes in and comes back out—in my book that is £2.5 billion on the balance of payments deficit. In his Budget speech, the Chancellor said how wonderfully the balance of payments was doing. I am not so sure. I found in the Red Book that we would have a deficit of £6.5 billion on manufacturing industry and £7 billion on something called "other", which is in effect food and drink. That is a total of £13.5 billion, but it will be reduced by about £2 billion or £3 billion in invisibles and £5 billion in oil, as it has doubled in the past few years.

Old oil is being called on once again to save the Conservative Government, although it is probably too late on this occasion. Earnings from invisibles and oil bring the total down, but the £2.5 billion has presumably been subtracted, and it amounts to half the surplus on oil exports. That sum of money is not merely public expenditure, as it goes across the exchanges. Perhaps it will do so less and less if we move to a single European currency. The great advantage of such a currency would be that no one would have to worry about such matters any more.

The hon. Member for Harrow, East is nodding. He is very pleased. There would be no problems about a balance of payments deficit with Europe, or a large manufacturing deficit. Unemployment is the problem in my constituency, but I do not expect the hon. Gentleman to worry much about that. The problems will appear in different ways, but they will not appear in the balance of payments.

Mr. Dykes

Unemployment is a separate problem, which needs to be dealt with by a separate mechanism. The programme on jobs, growth and employment was the beginning, and that is why more resources are needed to reduce unemployment. It still remains a modest amount of money in comparison with what other member states do.

Mr. Davies

We have heard that speech so often. People say that more resources are required to counteract unemployment, and it is not very much really. As unemployment increases, more and more resources have to be found to combat it. Who has to pay? Constituents like mine, many of whom are unemployed anyway.

If I may digress a little, I am surprised that the hon. Member for Harrow, East is considering unemployment in terms of little Europe. Perhaps we can debate the matter again. The world is passing us by, and moving away from Europe. We have the general agreement on tariffs and trade and a global economy, yet the hon. Gentleman is still stuck in that old groove.

The Chairman

Order. We are certainly not discussing the global economy in the debate on this new clause. The right hon. Gentleman must get back to own resources.

Mr. Davies

I accept that we are talking about the European Union own resources decision, and nothing more global than that. The Library has assessed that we have spent £22 billion since 1974 across the exchanges on being a member of the club, or on having a seat at the top table. I am not quite sure what the justification is supposed to be. By 1999, it is projected that we will probably add to that another £13 billion. Let us round it up. It is just £35 billion—not very much to the hon. Member for Harrow, East, who thinks that that is a small amount in terms of total Government expenditure.

That is the money that we have spent, but I do not know why we have spent it. Other countries have not spent similar amounts. As I said on Second Reading, my constituency is at the far end of Wales—Dylan Thomas described it as west Britain—far away from Brussels and further away from Berlin.

I do not have the figures for Ireland here, but the Irish do marvellously. We talk about GNP—part of the GNP of the southern Irish economy comes from us. It comes from some of my constituents. The figures for income per head around Dublin are probably much higher than the income per head in Llanelli, Merthyr Tydfil or the Rhondda valley. Luxembourg does just as well as Ireland, and it has the second-highest per capita income in the European Union. That is the nonsense that we are discussing in the context of this new clause.

The more information and control we have in the House the better. I would have thought that somebody would have to say that the ceiling should come down, and that, if we believe in subsidiarity, the ceiling should not go up. The battle between the centralised European state and the nation states will go on.

I agree with the right hon. Member for Shropshire, North. I think that the tide is turning, and that it will not be long before even the Labour leadership recognises that change is necessary.

Mr. Tim Renton (Mid-Sussex)

It strikes me as one of the ironies of my political life that, way back in 1979 when Lady Thatcher first formed her Government, I suddenly found myself made a Parliamentary Private Secretary to my right hon. Friend the Member for Shropshire, North (Mr. Biffen). He was already known as a fairly strong Euro-sceptic, while I was clearly on the Europhile wing of my party. That difference between us has not changed in the intervening years.

My right hon. Friend tolerated me as a PPS with great good humour, until Lord Howe's Budget of 1981 when I resigned for not supporting the retrospective tax elements in it. My right hon. Friend tolerated my little rebellion. In those days, the resignation of a PPS earned about three lines on page 17 of a major newspaper, and my resignation did not make headline news. But he tolerated my departure with great good wit, just as, I am sure, the Front Bench will tolerate any rebellion by my right hon. Friend today.

I have always found that, despite our philosophical differences about the EC, my right hon. Friend and I have many other things in common. I agree very much with what he said about the need for greater transparency in the issues which we are discussing this afternoon. Clearly, that is not easy to achieve.

My hon. Friend the Member for Stafford (Mr. Cash)— he is temporarily not in his seat—and the hon. Member for Newham, South (Mr. Spearing) bring to the issue enormous experience from sitting on relevant Committees, such as the Select Committee on European Legislation and the Committee on the Maastricht Bill. Most of the rest of us—myself included—do not have that experience. There are times when they are speaking—however wise the speech may be—when a certain miasma or a fog of lack of perception comes over one, simply because one does not know the details. That is one of the troubles with a debate such as this.

The greater the transparency, the better. The House of Commons and all hon. Members need to be informed, no matter whether they have sat on the relevant Standing or Select Committees or not. I certainly accept that. Putting the issues of fraud or financial mismanagement aside to a later debate—that is what you want us to do, Mr. Morris—this first debate is therefore in search of transparency.

The debate is about two prime questions: the first concerns the formula of own resources, and whether it can last until 1999, while the second is about the competence of the institutions that already exist to deal with the checking and control of the funds disbursed by the European Union.

I shall deal with the resources question first. My hon. Friend the Member for Stafford—in a lengthy but well-informed speech—did somewhat exaggerate the problems of using GNP as a measurement of each country's proportionality or its suitability for contributing to own resources. That is borne out by the comments in the Court of Auditors report.

The report carefully looks at whether the current, different definitions of GNP are adequate, but the court's summary on the issue states that employing a statistical concept such as GNP that does not correspond to a fiscal base that can be checked with reasonable certainty may provide a means of ensuring that the financial responsibilities of the European Union are fairly divided up between member states; the report states that the use of GNP may provide a fair division.

To be fair, the report then goes on to say that the use of such a concept requires a considerable effort from the Commission and member states to ensure that national accounts are reliable and harmonised, and thus to ensure that the budget and the policies of the European Union are managed rationally. That is a far cry from the picture that my hon. Friend the Member for Stafford painted—that, as a result of conscious or unconscious distortions in GNP, the UK could find itself paying perhaps 1 billion ecu or 2 billion ecu more a year than was justified. My hon. Friend may have had his tongue in his cheek when he arrived at that over-dramatic conclusion.

Of course GNP can be improved as a formula, and there is a necessity for the formula to be harmonised throughout member states. I do not believe that the formula has in it—either at the moment or inherently—the degree of distortion which my hon. Friend painted. I do, however, agree much more readily with those who wonder whether the present own resources formula which is encapsulated in the Bill—clause 1 of which we passed with extreme rapidity—will last until 1999.

The accession of the Visegrad countries—which hon. Members on both sides of the Chamber hope and believe will happen—is likely to increase the common agricultural policy budget by 50 per cent. and the regional budget by perhaps 100 per cent. By the time the British budget comes up for renegotiation in 1999—which is the present aim—the picture will be totally unrecognisable and different from the present situation. That should be put on the record, as we agree to the new higher limits based on an individual country's GNP.

The second point is about the efficiency of the existing institutions to check on the disbursement of funds, and how carefully they are spent. It is remarkable that, during this interesting debate, no one has given credit to the European Parliament for having set up the Court of Auditors, which it decided to do in the early 1980s. I think we would all agree that that was very much a step in the right direction.

As the hon. Member for Newham, South said, there is clearly friction between the Court of Auditors and members of the Commission. The Court of Auditors produced a fairly critical report, comprising 450 pages of detailed analysis of what, in many cases, constitutes financial mismanagement rather than fraud. Members of the Commission immediately stated, in print, that they considered some of the criticisms unfair and not properly based.

6.30 pm

On one point, however, the Commission and the Court of Auditors established common ground. Shortly after presenting his annual report in Strasbourg on 15 November, Mr. Middelhoek, president of the Court of Auditors, said: eighty per cent. of the European Budget is actually spent in the Member States so eighty per cent. of the problems come within the remit of the Member States". But what precisely does that word "remit" mean?

The underlying thought, surely, is that if 80 per cent. of the money is passed on to the member states—remitted to them—by the Commission, it is up to those states to check that it is properly spent. Judging by some of the comments that I have heard, I think that there may be a gap in our present mechanism, which we and other member states must fill ourselves.

I have never been a member of the Public Accounts Committee, but I fully appreciate its importance and its seniority in the pecking order of the House. Hon. Members have asked why the PAC is not empowered to look into the disbursement of European funds in this country, along the lines suggested by Mr. Middelhoek. What, in fact, is to stop it from doing so now? What is to stop the Comptroller and Auditor General from examining—at this very moment, if he so wishes—the way in which European funds are spent in this country, and establishing whether those funds are spent efficiently, fairly and honestly?

Mr. Spearing

The quick and rather brutal answer to that question is that new clauses 14 and 15, and another tabled by the hon. Member for Stafford (Mr. Cash), have not been selected. I understand that those new clauses would have done what the right hon. Gentleman asks.

As for the 80 per cent. figure to which the right hon. Gentleman referred, it is difficult for a member state to say that the amount has been improperly distributed to some of its areas, regions and towns. The right hon. Gentleman might ask his city council, and I might ask mine, but it would be difficult to say that money sent by Brussels to perform—supposedly—many good works had been improperly sent by Brussels. It would be hard to question both the distribution of the money and the advisability of sending it.

Mr. Renton

The hon. Gentleman has considerable experience in this context. Perhaps my hon. Friend the Minister will comment when he replies, but surely it would not be difficult for the Comptroller and Auditor General to examine the issue. Nowadays, for instance, bypasses are often built and little signs are put up, saying, "This bypass has been built in part with funds from the European Union." Surely it is easy to check whether the funds have been properly and fairly spent.

This is, I think, very relevant to the common agricultural policy. As the CAP grows, which it is bound to do, with the accession of the Visegrad states, there is likely to be increasing demand for each member state to be responsible for CAP disbursements made within it—responsible in the sense of checking financial irregularity.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

I should like the position to be as the right hon. Gentleman has described, but it is not, and I cannot see how it will be. The CAP does not involve British Government money; it is not part of any estimate in any individual Department. The accounting officer in the Ministry of Agriculture, Fisheries and Food is not responsible for CAP money, and is therefore not responsible for that expenditure to the National Audit Commission or the Public Accounts Committee. That is very sad: it represents one of the ways in which the House has lost control over the expenditure of large sums. I am afraid that the PAC is not the answer, however, although I should like it to be.

Mr. Renton

Perhaps this is a genuine lacuna. Later this evening, we shall debate the PAC's role. New clauses which some of us tabled referred to it specifically, but they have not been selected.

As a non-member of the PAC, I do not see any statutory bar that would prevent the Comptroller and Auditor General from examining the disbursement of the money. Furthermore, I believe that there will be increasing pressure from the Court of Auditors and the Commission on member states—not just because of the principle of subsidiarity but because of a genuine wish for the work to be done efficiently—to become more involved in checking that there has been no financial mismanagement.

Mr. Duncan Smith

My right hon. Friend has said that a problem exists, and that it should therefore be scrutinised. He should approach the issue from another angle. The real problem lies in the fact that money passed to Brussels is then redistributed back to the nation states, where all accountability is lost. Surely the money should not go to Brussels in the first place, but should be disbursed in the nation states originally. Brussels should then adjudicate.

Mr. Renton

That issue lies at the heart of the way in which subsidiarity will develop in the years ahead. I strongly believe in the strength of the European Union and its ability to do some things better than individual nation states, but I think that because financial mismanagement—if not fraud—clearly accompanies international subsidy in particular, there will be a growing demand for better methods than subsidies to be found to redress regional or national imbalances. We do not yet know what that better way will be, but I think that allied with the pressure that I have mentioned will be pressure for fraud or mismanagement within member states to be the subject of redress within those states.

The 450-page Court of Auditors report is an immensely impressive document; its authors have done a fantastic amount of work. The question now is this: how do we and other national Governments—and the Commission and the Council of Ministers—ensure that some of the report's many recommendations are implemented, and that problems are put right?

I have been told, although I have not checked personally, that at present fraud against what are loosely defined as the European Union's financial interests is a criminal offence only in Germany, Italy and Portugal. If that is so, it means that there is a gap in the criminal justice provisions of individual countries, including our own. We should make certain that we have the legal and penalising weapons to ensure that, when we know that funds have been mismanaged, we have the capacity to right the position domestically when that is possible.

I wholly agree with hon. Members who have said that the matter is deeply important to those of us who believe in the European Union. We know that, unless we get it right, the Union's image will be increasingly tarnished.

Mr. Rowlands

I listened with considerable interest to the right hon. Member for Mid-Sussex (Mr. Renton), and all his speech demonstrated to me was the sad and tortuous way in which we are now realising exactly how much power has gone and is going from this place.

I hope that the Minister will take the opportunity now, although the issue of control of public expenditure and its disbursement should arise when we discuss our next set of amendments, to clarify whether I was right in saying, when I intervened on the speech of the right hon. Member for Mid-Sussex, that there is no means by which the accounting officer in the Ministry of Agriculture, Fisheries and Food—the permanent secretary—can be hauled before the House of Commons or the Public Accounts Committee over expenditure on the common agricultural policy, because it is not part of any estimates in any Government Department. I shall illustrate that argument to him later, with the example of a Department for which he had some responsibility, in overseas aid.

The right hon. Gentleman also, I think, left out a major aspect in his speech. He said that there were two issues—first, how money was raised and, secondly, the control of its disbursement and the competence and accountability of disbursement. There is one stage between those two— where the money is spent. The other aspect that requires transparency is the expenditure that will be given, as a result of the Bill, to the European Commission and Commissioners.

An important feature of new clause 12 is that we say that not only own resources but the expenditure that will flow from those own resources should be the subject of annual reports. If you have any doubts, Mr. Lofthouse, paragraph (a) of new clause 12 covers the point clearly.

I therefore draw to the Committee's attention the aspects of expenditure that we shall approve. However, first I should like to say something to the Paymaster General. I listened to the Budget last week. I sat and listened to the Chancellor boasting about the degree of financial and Budget discipline that he had managed to instil and obtain. One of the key successes that he claimed in our last Budget was that he had stopped carrying over expenditure; the savings resulting from lower inflation had been clawed back, and that is why the public sector borrowing requirement was decreasing. That was one of the central things that he said. How could the same Minister and the same Cabinet likewise approve article 7 of the own resources decision, which reads: Any surplus of the Communities' revenue over total actual expenditure during a financial year shall be carried over to the following financial year"? That means that there will be, presumably, built-in continuing expenditure, irrespective of whether one can find meaningful plans for spending the money and whether it will be efficiently spent—it does not matter. The money will be carried forward from year to year.

How can the same Government who, in their national Budget, argued passionately that they had achieved that form of budget discipline approve an article of that type? We might want to carry money over to spend, but how can a Government who actually preached about prudence of that character, endorse and support article 7 of the own resources decision?

Mr. Spearing

I suggest a possible answer to my hon. Friend. It is the old style of secret package bargaining. They have said, "And if you do not agree with that, we will not maintain your rebate."

6.45 pm
Mr. Rowlands

My hon. Friend is absolutely right.

There is another matter to which I draw the Committee's attention because it has not been discussed tonight, although my right hon. Friend the Member for Llanelli (Mr. Davies) mentioned some aspects. The other part of the bargain that was made was the determination of the expenditure that will arise from those own resources between now and 1999. It is not true that, one of these days, we shall decide where the money is to be spent. That matter was also determined at Edinburgh. It should be the subject of annual reports of the character that we suggest in new clause 12.

I should like the Minister, when he replies, to tell us the status and nature of the "Financial perspectives 1993 to 1999—Appropriations for Commitments" which was attached to the own resources decision after the Edinburgh conclusions, which said not only, "This is how we shall raise the new money and the new own resources," but, "This is where it will be spent."

Let me draw the Committee's attention to those commitments and decisions. For example, it was decided that there would be an increase of no less than 19 per cent. in real terms in administrative expenditure. The current Government, who have said that administrative savings must be made so that all pay and salary increases in the public services may be met from increased productivity in each Department, support a policy that the administrative expenses of the Commission, and so on, should increase by 19 per cent. in real terms.

Where is the consistency in the approach? Why is there that complete set of double standards—that we have to have the greatest possible control of the administrative costs of running the public services in this country but we shall endorse, as a result of the Bill, a 19 per cent. increase in the Commission's administrative expenses? I honestly do not understand how one squares those arguments.

We were left with the major impression that somehow we had capped CAP—that we had capped the costs of CAP. But a commitment—as I understand it, a legally binding commitment—of the same kind and character as the Bill makes on the own resources decision was contained in the Edinburgh decision, which ensures that, far from the expenditure being capped, there will be another increase in CAP in real terms of about 9 per cent. between now and 1999.

I considered the two aspects that should matter most to a constituency such as mine. Initially, I was pleased to note that the cohesion fund will increase by 73 per cent. between now and 1999—again, as I understand it, a legally binding commitment to spend the money which we are raising in the Bill, and which is being raised in the own resources decision, on the cohesion fund. I was pleased, that is, until I found out—this is why we need reports of the type suggested in new clause 12—the way in which it has been rigged. The criteria that will be used for cohesion funds ensure that only three or four countries will benefit. Communities such as those in parts of Mid-Glamorgan whose gross domestic product per capita is as low as that of many communities in Spain or Portugal will not be able—partly as a result of the present Government's policies—to qualify for any expenditure under the cohesion fund.

I should have been delighted at the 39 per cent. increase in structural funds; here, at least, some money might be repatriated back into communities of the character of those in my constituency. However, one finds that the whole of Wales is ruled out of objective 1 status and therefore will not qualify for anything but a fraction of that 39 per cent. increase in structural funds. In fact, one encounters such problems repeatedly.

The hon. Member for Harrow, East (Mr. Dykes) said that those moneys could be used to improve the lot of the constituents of Llanelli and of Merthyr Tydfil and Rhymney. I want to tell him the sad story of RECHAR— of trying to obtain funds for coalfield communities such as mine when the pits were closed. We bargained and haggled. Haggling between the Government and the Commission went on and on until such expenditures were way behind the closures. They were supposed to be lifelines; the lifelines came very late indeed as a result. So, even when we have tried to manipulate and utilise the expenditures that are envisaged in the decision, we have found them horrifically bureaucratic and difficult to apply.

Finally, I draw the Committee's attention to the aspect that is the most extraordinary result and consequence of the Edinburgh own resources decision, and therefore makes necessary the reports which are provided for in our new clause 12. Did any Minister come before the Dispatch Box between the Edinburgh summit and May 1994 to tell the House that, as a consequence of the determination of the expenditures that I have described, more than 50 per cent. of the overseas aid budget will be spent by agencies outside the United Kingdom? Was any hon. Member informed by any Minister at the Dispatch Box that the consequence of agreeing those guidelines, those appropriation commitments, legally bound the overseas aid budget to increase and increase in European terms although the United Kingdom's sum total has been capped?

We shall be in an extraordinary situation. Next year, because of expenditure in the United Nations, but primarily because of the increases in the European overseas aid budget, which we shall be legally bound to pay, more than 50 per cent. of a major Department's public expenditure will be spent by agencies outside the control of the House and the Government. That is extraordinary.

Ministers who grappled with the problems of financial accountability should be horrified. I believe that the right hon. Member for Mid-Sussex was once responsible for the aid programme. He should be horrified at such Government expenditure and the fact that most of the money is now spent on agencies outside the control of the House, without any accountability to the Public Accounts Committee in the way that he suggested.

Mr. Renton

For the record, I should put the hon. Gentleman right. The Minister responsible for overseas aid to whom he referred was my good friend and namesake, now Sir Timothy Raison, not Timothy Renton.

Mr. Rowlands

I apologise—I thought that, in his Foreign Office days, the right hon. Gentleman had some responsibility for such matters. However, I hope that he is similarly horrified by the results of such policies.

According to the table on the appropriations for commitments, the European external aid budget will increase by 42 per cent. in real terms between now and 1999, while the British overseas aid budget will be capped, held at the same level or given a marginal increase. More than 50 per cent. of the aid budget will be spent on external matters outside our control.

More interestingly, 45 per cent. of the European aid budget is outside the control of the European Parliament because it belongs to the European development fund, which is not part of the budget. We do not control, supervise or scrutinise money from the European development fund—the European Parliament does not have any right to do so either, because that fund is not part of the budget. That is extraordinary, and all the more reason why we need information and knowledge. The right hon. Member for Shropshire, North (Mr. Biffen) said that knowledge was power. Information would warn us and we would see the pattern of expenditure developing. We would not be in our present position, where we find that decisions made in 1992 have led to extraordinary figures on overseas aid expenditure, with the House lacking control over them.

It is time for us to assert ourselves, not on a party basis but on a cross-party basis. This is a parliamentary matter and we need the information and reports on which to try to re-establish some degree of accountability and scrutiny—at least to know the consequences of the decisions being made. We did not know the consequences of many of the decisions made in Edinburgh in 1992. I thought that it was unfortunate and unfair when, on Second Reading, the Chancellor chided his Conservative Back-Bench colleagues—I think that the hon. Member for Tayside, North (Mr. Walker) was one of them—for not raising various matters about the 1992 Edinburgh decision. In fairness, the information was not available to the House. It was only gradually, as a result of questioning in Committees and vigilance, that we became aware of what was happening, what would happen and the consequences of some of the decisions.

Mr. Spearing

The Government seem to have forgotten that about a year ago in European Standing Committee B they dealt with the matter and there was a Division. One day later, on the Floor of the House, there was another Division on a measure being taken forthwith, and more than 40 Opposition Members voted against the sort of proposals contained in the legislation. Ministers have probably forgotten about that—they probably did not even know that it happened.

Mr. Rowlands

Every time we discuss such matters I become more worried. I was a slow learner, but on Second Reading I found myself becoming more sceptical as I began to realise how accountability was moving from the House as a consequence of the decisions being taken.

We are entitled to ask for the sort of information that we demand in new clause 12. Will the Paymaster General tell us the status of the appropriations for commitments that I have been describing and outlining to the Committee? Are they legally binding commitments to expenditure? The own resources decision is a legally binding commitment on which the Government are unable to renege. Are the expenditures that were forecast and the commitments attached to the own resources decision legally binding? When it investigated the overseas aid aspects of the Edinburgh decision, the Select Committee on Foreign Affairs was told that those commitments were legally binding and we could do nothing about them.

Over and over again, the European Commission has failed to spend quite a lot of the money and has carried it forward or held it in account until it can find appropriate projects. Anyone who has begun to look, not at the corruption but at the waste and incredibly divided management of the European aid budget, will understand what I am saying. The Select Committee has been uncovering such problems in the past few weeks and hopes to report to the House soon. Without important changes to the management and accountability of the programme, the Committee would not agree to a 42 per cent. real terms increase in the European overseas aid budget. There will be an opportunity to raise those issues in our discussion on the next set of amendments.

We are calling for greater transparency and information so that we do not get caught unawares. We want to foresee the consequences of the decisions made in 1992.

Mr. Allason

I rise to support new clause 4 in the name of my hon. Friend the Member for Stafford (Mr. Cash) and a number of others, including myself.

I have no enthusiasm for the Bill, but it does not have the constitutional implications of the Maastricht treaty. New clause 4 is important because it will enable the House and the public to understand the matters that will be decided at the intergovernmental conference in 1996. We are seeking a sort of annual report which will describe our contributions precisely and in simple terms so that comparisons can be made with other countries. That is significant because it is in line with the traditions of the House in scrutinising all our expenditure.

Our traditions are not automatically accepted or followed by our European partners. Baroness Thatcher used to boast of her twice-weekly visits to the House to answer Prime Minister's questions. She would then remind her European partners that her Spanish counterpart, the Spanish Prime Minister, had the sole constitutional responsibility of visiting the Cortes just once a year to answer questions.

Scrutiny by the House is of enormous importance; it goes back to the principle of no taxation without representation. The issue before us today is taxation without information. We are seeking to ensure that the maximum information is placed before the House in a manner which enables us to scrutinise expenditure. If that is not allowed to happen, we shall certainly be moving towards taxation without representation. The issue of representation falls outside the scope of the subject of own resources, however, and I shall therefore not expand on it.

It is important that the public should have confidence, not necessarily in the fact that the money is well spent, but in the acceptance of all the principles of subsidiarity. Elected Members of Parliament should have the right and the ability to scrutinise where and how tax is being spent and to ensure that there is maximum transparency and scrutiny of the fraud that we understand has taken place in the European Union in recent years and thus to seek to minimise the disappearance of significant amounts of taxation.

The Minister was eloquent on the subject of fraud. I know that it is a subject close to his heart because I heard him on my car radio on Friday afternoon when he emphasised the information that had been laid before the House. In an interview with Nick Clarke on "The World At One" he got the better of his interviewer by demonstrating that some rather abstruse items of information had been laid before the House. He clearly believes that the availability of information is important; that is also at the heart of new clause 1.

7 pm

It is our desire to ensure that the maximum information can be laid before the House. There is, of course, a danger in misinformation. Christopher Booker has written numerous columns about interference from Brussels and the ridiculous bureaucratic rules that are produced by directives. Apparently, they are the guiding light for environmental health officers up and down the country. If Christopher Booker is to continue his campaign, it is essential that the information he uses is accurate. We heard yesterday that he was uncharacteristically incorrect in saying that VAT on domestic fuel was a requirement of the European Union. Apparently that is not the case; Brussels makes no demands in that direction, so in those circumstances Christopher Booker would appear to be wrong.

Mr. Spearing

Without looking at the records, perhaps the Paymaster General would agree that our zero rating arrangement will come to an end in 1998 or 1999, when we shall have to negotiate whether a zero rating continues. In other words, there is a presumption under treaty regulations that we shall have to give it up or obtain an exemption in the future.

Mr. Allason

The hon. Gentleman is quite correct when he says that 1999—the date mentioned in new clause 4—is the date when all bets are off and all the assurances received in Edinburgh will be up for grabs. That is a cause for great concern, particularly as by then we shall already have experienced the intergovernmental conference, which has often been described as Maastricht 2. Who knows what kind of European structures will be developed as a result of Maastricht 2. I have no objection to having a debate on the subject and discussing in the House and elsewhere what Maastricht 2 will entail, but if we are to have that important debate with all its constitutional implications, it is essential that the House should have access to the information. There is only one way to get that information, and that is to ensure that it is included in the legislation by putting new clause 4 into the Bill.

The Minister clearly supports maximum transparency, and it is of enormous importance as we run up to this second critical time when the Maastricht structure will be reconsidered. The implications for Britain are enormous. There is no doubt that we went through an extremely dramatic trauma—I certainly did—over the Maastricht issue. If we are to repeat that exercise, it is essential that the public are reassured that they and their elected representatives have access to the maximum amount of information.

The question is how can that be achieved. New clause 4 does not describe the mechanism for that scrutiny. We have heard today all the problems related to fraud, all the problems related to how we judge gross national product and our doubts about Mediterranean practices in accountancy. We know what the problems are; the question is what our solution is.

All hon. Members on both sides of the House who have spoken today have praised the experience, skill and dedication of the Public Accounts Committee. It is held in very high regard and its status as the second most important Select Committee is recognised by the House. So the solution must be to allow the House to scrutinise the books by requiring the Public Accounts Committee to do so.

Accordingly, I call upon the Minister to think carefully about including new clause 4 in the legislation. It is not a wrecking amendment; it would receive enormous support in the country because the bottom line is that those who elected us would have confidence that the House is exercising at least a degree of control over the expenditure—the vast grant that we are giving the European Union. Perhaps equally significantly, we must also ensure that the Public Accounts Committee takes those statistics and figures to pieces and makes annual reports to the House. That would be welcomed in all parts of the House and, more importantly, by the voters who—goodness knows—have little enough faith not just in the legislation but in the European Union.

Mr. George Stevenson (Stoke-on-Trent, South)

In considering the accounting mechanisms for own resources, I agree with right hon. and hon. Members who have stated clearly that we cannot engage in that exercise without examining the demands on those own resources.

I also agree with my hon. Friend the Member for Oxford, East (Mr. Smith) that a continued majority demand on those own resources is the common agricultural policy. It is no coincidence that at the same time as the own resources decision was taken by the Council of Ministers on 31 October a decision was taken on budgetary discipline. The two are very much intertwined.

We are talking not about fraud, but about expenditure that at the moment is envisaged. We are talking about expenditure and demands on own resources that at the moment are planned. Of course, the House can speculate all it likes about what is to happen over the next few weeks or months to the planned expenditure and, therefore, the demand on own resources, but at the moment when we are asked to take this decision I suggest that the votes of right hon. and hon. Members must be determined by the information that we have.

New clause 1 is therefore vital. It says, in effect, that cross-party concerns are involved and that there are serious matters to consider when we examine own resources and the demands made on them, particularly by the common agricultural policy.

Why can we not have a report? Perhaps a motion to the House over the next few weeks would help to clarify the position. We have to remove some of the uncertainties. That would give us an opportunity to put the Government to the test—to test their sincerity and their commitment to ensuring that the demands on own resources are kept within the constraints already described to us. We cannot calculate properly through the own resources mechanism what is required by the Community unless we consider its expenditure, not only in terms of the expansion of expenditure but in terms of its control. At present, we are not in that situation; I will give some examples to show why.

As I understand it, the Government are saying, as of today, that expenditure is likely to be 2.6 billion ecu in excess of the agricultural guideline. The Government also say that we need not worry because they have measures in hand which are likely to remove that. I wish them luck. They may be successful. On the other hand, they may not. Demands on own resources will therefore be far greater than we are told at the moment.

In the course of the next few weeks we shall, I hope, know whether the Government have been successful. They have told me that alternative measures—appropriate steps—may have to be taken to raise a further 919 million ecu. They say that olive oil payments of 1.2 billion ecu to southern member states will be deferred until next year and are not contained in the present budget.

In those circumstances, how can we tell the Government that we trust them, that they should go away and do their best and that we will give them what can be described only as a blank cheque for own resources? That is not sensible. It should not be acceptable to the House, not in the interests of any right hon. or hon. Members, but in the interests of the House as a whole and the public whom we are here to represent.

I do not know how hon. Members will be able to tell their constituents that they voted for an own resources resolution that puts demands on the British taxpayer, but that they do not know how 2.6 billion ecu—about £1.8 billion—which is in excess of the present agricultural guideline, will be found. The Government tell us not to worry because they have the matter in hand and are not prepared to accept that. That is fine. I am prepared to take them at their word, although many of my right hon. and hon. Friends may castigate me for so doing.

If we are prepared to put the Government on trust, what is so unreasonable about asking them to accept new clause 1, which asks them to trust us, too? If they are so determined to clarify the issue and to ensure that demand on own resources is kept within the budgetary guidelines and disciplines that they have accepted, why can they not trust us a bit? Why do the Government insist that it is they who need a blank cheque?

Mr. Andrew Robathan (Blaby)

Would the new clause allow the House to scrutinise what is happening right now, when taxpayers' money to the tune of about £20 million is being spent on advertising to discourage smoking while £1 billion—I think that it is pounds and not ecu—of resources which come mainly from the British taxpayer is being spent in the European Union on producing tobacco which is completely unusable and has to be buried or burnt?

Mr. Stevenson

Without going into the detail of particular expenditure headings under the common agricultural guarantee fund, I have tried to show the crucial relationship between own resources and expenditure. The two cannot be divorced. We cannot say that we will concoct an amount of revenue to be spent, but that we are not sure how it will be spent.

In a letter sent to me today by the Paymaster General, the Government admit that they are not sure how a significant part of that demand—2.6 billion ecu, which is about £1.8 billion—will be met. That sum is made up of 919 million ecu which may have to be obtained by what the Government describe as appropriate measures but which they do not specify, 1.2 billion ecu in olive oil payments which have been deferred to future years and 500 million ecu of the monetary reserve. The Government say that the 500 million ecu monetary reserve cannot be included in the calculation because it is there to be used in any case. But it is outside the agricultural guideline and outside the discipline that the Government have accepted. It is therefore financial sleight of hand, to say the least, for the Government to seek the support of the House for own resources when they are using expenditure that is outside the budgetary guideline that they have accepted as the limit of expenditure.

7.15 pm

If one accepts that the two elements of the equation cannot be divorced, as I argue strongly that they cannot be, the answer to the hon. Gentleman's question must be yes. It is therefore crucial that new clause 1 be accepted. It is also crucial because time is not on our side. If the Bill goes through unamended, the system will come into force on 1 January 1995. Unless new clause 1 is accepted and the Government are required to report back to the House on the implementation of article 8(2) of the Council decision, the Government will have, if not a completely blank cheque, a cheque with a significant number of noughts missing from it.

The British people expect nothing less than that we should tell the Government that we want to know exactly how they intend to control demands on own resources before we are prepared to support own resources as put to us at the moment. That is perfectly sensible and reasonable. As I have said, we are asking the Government to trust us a bit. We cannot get away with calling on the Public Accounts Committee to scrutinise the issue at this time—it is not practical to argue for that—but new clause 1 is a reasonable attempt at asking the Government to come back to the House and show us what they have done; if they have tried their best and made some progress, hon. Members may then support them. But to go ahead in this sort of blind-alley fashion cannot be right.

For those good reasons, I urge all right hon. and hon. Members to support new clause 1.

Mr. Heathcoat-Amory

The group of new clauses that we have been considering for the past few hours falls into two parts. New clause 1, which was tabled by the hon. Member for Oxford, East (Mr. Smith), states that the Act shall come into force only when the House of Commons has come to a resolution on a motion tabled by a Minister as to the measures that the Government intend to take in order to implement article 8(2) of the new own resources decision.

The other two new clauses, which I shall deal with in due course, call on the Government to publish annual reports on various aspects of the own resources system and the Community budget. But first I shall dwell a little on what may be called the lead amendment, concerning article 8(2), which is about the detailed provisions necessary to put the own resources decision into practice—in other words, the implementing mechanism for giving effect to the own resources decision that is the subject of the Bill.

First, I believe that new clause 1 is based on a misunderstanding, because it refers to the Government implementing article 8(2) of the new own resources decision, whereas in fact it is the Council of Ministers that agrees measures to implement that article. The Government have an effective power of veto over any measure that they find unsatisfactory, but they do not implement measures on their own, as the new clause implies. Of course the Government will be vigilant in using that veto if it proves necessary, and the House has a right to expect that.

Secondly, there is nothing new in article 8(2). The text introduced in the new own resources decision is virtually identical to that in the existing ORD dating from 1988, but a few cross-references have been altered because of changes to the underlying treaty.

However, the most important point, which has been overlooked by the Opposition, is that there are no plans to revise the existing implementing regulations. So article 8(2) will not be used as a consequence of the new own resources decision, or at any rate not in the foreseeable future.

Mr. Hoon

The Paymaster General said that there was consistency between this decision and previous decisions on own resources. Will he explain why the original draft decision that gave rise to the decision we are debating contained specific reference to "fraud and irregularities" in connection with the Community budget, and the preliminary clause went on to detail the Commission's role in improving national VAT registration, calculation, recovery and control procedures? That was in the original draft, but it is not in the version that we are debating. Why was there a change, and were the Government responsible, in Council, for making that change?

Mr. Heathcoat-Amory

It is not clear whether the draft that the hon. Gentleman is talking about is a Labour party document or one of ours. He owes it to the Committee to be a little more specific in providing a reference if he wishes to ask a question. But when we deal with future new clauses or amendments, if they are debated, I shall endeavour to answer his question.

What I am saying is important to the Opposition Front-Bench spokesmen, because their new clause is postulated on the idea that a number of revisions will be made in the implementing regulations. That is simply not in prospect. In 1988, there were quite profound and radical changes to the implementing directives and legislation. There were two large regulations and a directive, which profoundly changed the system whereby own resources were raised.

The 1994 own resources decision makes no such radical change. It simply changes the figures within the programme. The programme itself is rolled forward into the new own resources decision. Indeed, that is specifically required and provided for separately by article 11(2)(a) of the new own resources decision, which explicitly provides the legal authority to continue using the earlier legislation.

However, in due course new changes may be necessary to the implementing legislation, and any such decisions taken by the Council must be taken unanimously. That is a safeguard for the House and for this country. Any proposals from the Commission along those lines would be subject to the scrutiny requirements of the House. I believe that, on reflection, the hon. Member for Oxford, East will agree that it makes no sense to make the coming into force of what I hope will be an Act dependent on a resolution that contains nothing, because there is nothing at present to introduce under that heading.

The hon. Member also talked about the United Kingdom abatement. He was joined in that concern by several other hon. Members, including my hon. Friend the Member for Stafford (Mr. Cash), and I believe that the right hon. Member for Llanelli (Mr. Davies) raised the issue as well. The Committee is right to be extremely vigilant about the British rebate.

First, I shall answer a specific question asked by the hon. Member for Oxford, East: the new working methods paper on the United Kingdom abatement that the hon. Gentleman mentioned is set out in Council document 5455/94, and an explanatory memorandum was provided to the Scrutiny Committee on 22 February this year. I assure the hon. Gentleman that the formula by which the United Kingdom abatement is calculated has remained unchanged since 1988.

Of course the Commission and many other member states would love to change and undermine the British abatement in one respect or another, and that brings me to a point raised by other hon. Members. There is nothing sinister in the requirement in the ORD that the Commission re-examine the British rebate by 1999, because it exactly replicates a similar requirement in the 1988 own resources decision. Indeed, the British rebate was examined in 1992.

However, the crucial fact for the Committee is that the abatement continues in force until it is changed, and it can be changed only by unanimity. As such a change would be contained in a new own resources decision in 1999 or later, and as the change can come into effect only through the constitutional requirements on member states, in this country that means that it can come into effect only through primary legislation. It therefore follows that not only the Government of the day but the House of Commons will have a veto over any alteration in the British rebate.

I share the concerns expressed on both sides of the Committee about whether the Government of the day will maintain their position on the abatement. Opposition Members have reason to doubt their own Front-Bench spokesman, because the hon. Member for Dunfermline, East (Mr. Brown) said in 1992 that the British rebate would have to be up for renegotiation. So if the House is concerned to maintain the British rebate in its existing form—certainly I am—it must ensure that a Conservative Government are in charge in 1999.

Mr. Andrew Smith

Having heard that allegation previously, my hon. Friend the Member for Dunfermline, East (Mr. Brown) has made it clear that he did not say that. Does the Minister accept that? Moreover, my hon. Friend has made it clear that it is and has been Labour party policy to maintain the United Kingdom rebate. I therefore hope that there will be no repetition of that charge by Conservative Members.

Mr. Heathcoat-Amory

It is no comfort for me to know that that is claimed to be Labour party policy. Labour party policy changes week by week. What I do know is that the hon. Member for Dunfermline, East said on a radio programme listened to by millions of people that the British rebate was a matter for renegotiation. That shocked the House.

Mr. Smith

Will the Paymaster General give way?

Mr. Heathcoat-Amory

No. I will not give way to the hon. Gentleman, because I am answering the point he raised with me before.

The hon. Member for Dunfermline, East, the shadow Chancellor of the Exchequer, said on the radio programme that the rebate was to be a matter for renegotiation. He may wish that he had not said that, and he may claim that it is no longer Labour party policy. I am illustrating to the Committee the fact that we get certainty and consistency on these matters only from Conservative Members.

7.30 pm
Ms Hilary Armstrong (Durham, North-West)

The Minister really should accept Labour's assurances about what my hon. Friend the Member for Dunfermline, East (Mr. Brown) said. We can give him chapter and verse. On the radio this weekend, the Minister made claims about his tackling of the budget in the House last week which were not borne out in Hansard. We pressed him on what he had done about the European Parliament's amendment on fraud which was before the Council, and he refused to answer. However, on Friday or Saturday, he said on the radio that he had never been asked about that and that he was not pressed about it. I know that he was in some distress in the debate last week, but I also know that he was pressed and that he never answered.

Mr. Heathcoat-Amory

I am not sure what all that was about. I was referring to remarks made by the hon. Member for Dunfermline, East. If he has changed his mind, I welcome that. Consistency comes from Conservative Members.

Mr. Smith

How many times do we have to say it? We have made it clear, and my hon. Friend the Member for Dunfermline, East has made it clear, that he did not say what the Minister alleges he said. We have made it clear that it has consistently been Labour party policy to uphold the abatement procedure and the United Kingdom rebate. We have given those pledges in good faith. I now call on the Minister to accept them, and to desist from repeating falsehoods.

Mr. Heathcoat-Amory

The record will stand for itself. If the Labour party has changed its mind about the importance of the British rebate, I welcome that. I give an unqualified welcome to that. All my right hon. and hon. Friends welcome a sinner that répenteth.

I now move on to a number of other issues raised in the debate. Serious points were raised about the GNP statistics, on which a great deal rests, especially the contributions from each member state. Again, this point was raised by my hon. Friend the Member for Stafford and, in truth, by the hon. Member for Oxford, East. I am glad to say that the Commission takes seriously the need to harmonise and to verify national GNP statistics. A GNP management committee set up in 1989 has led to improvements.

It was correctly said that the statistics emanating from former East Germany were unreliable immediately following reunification. It is not the case that the contributions from Germany as a whole are assessed separately from former East Germany and former West Germany. They are based on the whole country. It is, of course, true that the change from a command economy threw up great difficulties in correctly and accurately estimating GNP statistics. As the world now knows, they were all made up before Germany was reunified.

The other point raised in the debate has been the role of the Public Accounts Committee. The Committee is right to pay tribute to the work done by the PAC, and to raise the possibility of extending its remit to cover some of the matters that have been debated during the passage of the Bill.

The National Audit Office may have a more direct and continuing interest in the actual auditing of the figures. It already has close links with the European Court of Auditors. When I met members of the court in London early this year, they went on to talk to and exchange ideas with the NAO. That does not undermine the case that has fairly been made out this evening for looking for ways in which to involve the PAC more intimately in this work.

The PAC has a present remit which allows it to take a considerable interest in these matters. I may be able to be of assistance to the Committee, and especially to my hon. Friend the Member for Stafford who raised the matter specifically. It is a possibility that we could look again at the Standing Orders governing the PAC to see whether changes might be appropriate to give it this wider remit. My right hon. Friend the Lord President is amenable to doing that.

I have to put down the proviso that the PAC is a Committee of the House and not a Government committee. Decisions and discussions, therefore, of this nature will have to be conducted through the usual channels and, indeed, with the Chairman of the PAC. That very constructive suggestion has come out of the Committee, and it will meet some of the points raised in the debate.

Mr. Rowlands

As I understand it, the PAC is triggered off by the responsibility of the accounting officer—the permanent secretary of each Government Department. How will it be possible for the permanent secretary of any Department to be responsible for money that has been handed over to Europe and spent by the European Commission?

Mr. Heathcoat-Amory

I must not mislead the hon. Gentleman. I am not suggesting that the PAC can have a remit out of this country in pursuing expenditure in other member states. That would be stretching the terms of reference of the PAC to breaking point. That is not what I was suggesting.

Mr. Cash

I am grateful for the indication that my hon. Friend has given. I have been given to understand that the points he has just made resulted from discussions today with the Prime Minister. Furthermore, I was given to understand that a specific undertaking would be given that the intention that the PAC should be involved in the process was something on which I could rely in good faith.

If my hon. Friend put it in terms of an undertaking, I would then seek leave of the Committee to withdraw the motion. It would be a significant Euro-realist step for the PAC to be involved in dealing with fraud and own resources. That would indeed be a watershed in the whole European saga. I should be grateful for the words that I have asked for to be put in terms of an undertaking.

Mr. Heathcoat-Amory

I have already explained that neither I nor my right hon. Friend the Prime Minister can direct the PAC, which is a Committee of the House. What I have already undertaken to do—I have the agreement of the Lord President—is to examine and to give a fair wind to changes in the terms of reference of the PAC, if the PAC considers that the terms of reference are a restraint on its action in this respect. My right hon. Friend the Prime Minister is certainly aware of this. He believes that tackling fraud and mismanagement, and getting better financial disciplines into the workings of the Community, are among the highest priorities that he takes into discussions in the European Union.

I turn now to points raised by the hon. Member for Newham, South (Mr. Spearing), among others, on the connected but separate issue of reports to the House and the opportunities that the House has for scrutinising not only the Government but the workings of the European Union. The hon. Gentleman has a long and honourable role in defending the privileges of the House in this respect. I can give him some of the assurances he seeks. First, however, I would like to point out to the Committee just how regular and numerous the reports already made by the Government to the House are.

My hon. Friend the Member for Torbay (Mr. Allason) said that he was a strong advocate of information and transparency on such matters. I strongly agree. I believe that the House has a right in that respect. I must say, speaking as a former deputy Whip, that it is not always frightfully easy to get people to sit on the Committee to undertake the scrutiny. Indeed, some of the debates held on such matters are rather thinly attended. But that does not detract from the fact that the House has a right to the information. Indeed, many right hon. and hon. Members attending this debate have, over many years, taken a close personal interest in these matters.

I emphasise that the quantity of information given to the House is seen by some as being too much, and of an indigestible nature, rather than too little. The figures for the net contributions to the EC budget are given out in the Red Book and at Budget time. In addition, the departmental report of the Chancellor's Departments is an expansion of the information in the Red Book and is presented around March each year.

In addition to that, there is an annual statement on the Community budget, which takes the form of a White Paper. The statement for this year was published in March and it gave further information. There are also the Government's six-monthly White Papers on developments in the European Union, and an enormous number of explanatory memoranda on the Community budget. On European matters in 1994 alone, 673 explanatory memoranda have already been submitted to the House, 59 of which covered budgetary matters. They triggered no fewer than 31 scrutiny debates.

In answer to the point raised by the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) on the expenditure—

Mr. Spearing


Mr. Heathcoat-Amory

May I answer the point raised by the hon. Gentleman's hon. Friend on the expenditure side of the budget? That was, of course, one of the matters that we considered last Monday, when the 1995 budget was under discussion in the House.

I would assure the hon. Member for Merthyr Tydfil and Rhymney that the overall discipline on the European Union is a ceiling on contributions, which cannot be breached. If one allies that ceiling on contributions with the fact that the European Community cannot borrow, it is a very real discipline on its expenditure. It has a financial perspective, which is an agreement between the Council of Ministers and the European Parliament, which, although not legally binding, is a political agreement, which sets limits for each category of expenditure year by year. However, a number of legal agreements cover matters such as structural funds and the cohesion funds.

I can reassure the hon. Member for Stoke-on-Trent, South (Mr. Stevenson) one more time that the agricultural guideline will not be breached because it requires unanimity, and we will not sanction a breach of the guideline this year or next year. It is up to the Commission to organise its expenditure to fit that upper limit. We have long gone beyond the years during which revenue was set to cover all expenditure.

Mr. Stevenson

I am grateful for the Paymaster General's undertaking, as was communicated to me by letter, that the agricultural guideline will not be breached. First, does that include not deferring expenditure from this year to future years simply to keep within the guideline? Secondly, does that mean that such elements as the monetary reserve, which is not within the guideline, will not be used?

Mr. Heathcoat-Amory

As the hon. Gentleman fairly says, I have corresponded with him about this matter. I have explained the purpose of the monetary reserve and the fact that, if it was used for specified purposes, it would not be a breach of the agricultural guideline. I hope that he will accept that reassurance.

7.45 pm
Mr. Spearing

I think that the Paymaster General was responding to new clause 12 earlier. Despite what he says, does he not agree that the five sets of publications which he mentioned are disparate, come out at different times of the year and are not a comprehensive Command Paper? Indeed, the memoranda are many, duplicated and not easily available to the public. What objection does he have to new clause 12?

Mr. Heathcoat-Amory

I want to make a suggestion to the hon. Gentleman. I think that I have shown the Committee that what almost amounts to a deluge of information descends on the Scrutiny Committee. I pay an incidental tribute to the members of that Committee, who presumably have to read the stuff and decide whether it is to be debated in Standing Committee—or, indeed, recommended for debate on the Floor of the House. It seems that most hon. Members find the sheer volume, complexity and detail of that information extremely difficult to cope with. I therefore suggest that the annual report on the Community budget should be expanded into a report rather along the lines of what I think the hon. Member for Newham, South is suggesting.

It has to be owned that the report is not a best seller. It has been published annually for some 14 years, largely without alteration. I understand that it was published initially at the request of the Public Accounts Committee, so it is not a statutory requirement but a request that the Government have granted every year. To make it more accessible, it could be expanded and made more what one may call Member-friendly, and put into a form which could become the basis, if the House so wished, for a debate on its content.

I think that that would meet the terms of hon. Members' requests, which are not so much for more information as for better information in a more accessible way. It does not require legislation, and it does not require a new clause. It requires an undertaking from me, which I am very happy to give. If that satisfies the Committee, invite it to reject the new clauses.

Mr. Hoon

At the outset, it was suggested that this debate was reminiscent of some of the Maastricht debates, but the one significant difference is that, with the exception of the Paymaster General, almost every hon. Member is in agreement. The right hon. Members for Shropshire, North (Mr. Biffen) and for Mid-Sussex (Mr. Renton), the hon. Member for Torbay (Mr. Allason) and, I think, every Opposition Member have agreed about own resources. They agreed that a vote and a debate on an increase in own resources for the European Union should be accompanied by a discussion of how that money is to be spent and whether it is to be spent consistently, properly and in accordance with the normal rules of expenditure that we expect in the United Kingdom and with those set down by the various European institutions. That issue united hon. Members: only the Paymaster General took exception to it.

The Paymaster General took exception by using a very narrow construction of new clause 1. If he looks in more detail at new clause 1, as well as at article 8(2), he will see, especially in the final three lines of article 8(2), that the Council is enjoined to make possible the inspection of the collection, the making available to the Commission and payment of the revenue referred to in Articles 2 and 5. As a member of the Council of Ministers, it is obviously incumbent on the Government to play their part in ensuring that the revenue is made available on the basis of a proper system of collection and that appropriate inspection is available to those who, are responsible for ensuring that member states make their appropriate contributions to the European Union's budget.

In a sense, that approach links hon. Members on both sides of the Chamber. Everyone has said that there must be a proper system for expenditure. The first part of article 8(2) ensures that there are proper systems for expenditure and for collection. As we are debating an increase in own resources to be available to the European Union, we should consider the system that bears on the collection of revenue and on how that revenue is spent.

As much as anything else, article 8(2) is concerned with maintaining a consistent system of raising revenue across the European Union, which is crucial under the new system of calculating own resources. A proper understanding of the ceiling on own resources will be achieved only on the basis of a GNP calculation. At the same time, if we are properly to concern ourselves with ceilings on own resources for the European Union, we must be confident that every member state has a proper system for calculating GNP.

It is easy to refer to other countries' difficulties in calculating GNP, but from time to time GNP in Italy, for example, has fluctuated dramatically. Sometimes the fluctuation has been the result of concern about Italy's contribution to the European Union's budget. It is well known that at one stage an adjustment was made because the Italian Government were extraordinarily concerned that Italy was paying more into the European Union's budget than had been anticipated. Given the size of the GNP that had been recorded, Italy was receiving less by way of commitment from that budget. It was not entirely surprising that there was a significant adjustment downwards of Italy's GNP for the following year.

It is important that in voting extra funds for the use of the European Union—this view has been expressed by everyone who has spoken in the debate apart from the Paymaster General—we have regard to how the funds are spent. I am not advocating a wide-ranging, Budget-style discussion during which we consider every heading in the European Union's budget, but in being asked to make further contributions to the European Union's budget, British taxpayers should not be concerned that the budget contains significant elements of fraud and some elements of waste. They should be satisfied that there is an effective system of delivering an agriculture policy for the European Union.

It is difficult to understand how anyone in the House of Commons could object to that approach. I assume that even the Paymaster General is sympathetic to my argument, yet the Bill contains no reference to the matters that I have raised so far. It would have been open to the Government, in implementing the decision by which, I accept, they are bound under European law and an international obligation, to ensure that many of the provisions that have been discussed by hon. Members were incorporated in the Bill.

The Paymaster General has defended the Bill, and that is understandable, but the Government could have included provisions of the sort that have been suggested to ensure that the House has opportunities for proper debate, which the European Union's institutions have already.

The Government say that we must debate the Bill, but not more than the Bill. They say that we must debate only how an increase in own resources should be implemented. At the same time, the European Parliament, the Commission and even the Council consider own resources as they consider budgetary discipline and fraud. Curiously, an earlier draft from the Commission contained a specific reference to fraud, which was deleted only after the adoption procedure in Council. I am talking not about a Labour party draft or the publication of a quango or pressure group but about the text of a document that was agreed by the Commission. As I have said, it contained a specific reference to fraud, which showed that the Commission was concerned about fraud in terms of spending alongside own resources.

New clause 3 refers specifically to a Council regulation on the protection of the Community's financial interests. That regulation is not restricted to the raising of revenue or the spending of revenue, for both issues are raised in the same document. Fraud is defined in the regulation as being a "diminution" of the Community's own resources or other revenue. The document refers to fraud in the raising of revenue in terms of own resources, and it treats fraud in expenditure in the same way. That is what all hon. Members who have spoken in the debate have invited the Government to do, with the exception of the Paymaster General.

Mr. Stevenson

Perhaps my hon. Friend will reflect on the question that I put to the Paymaster General, to which he did not respond. We are talking about how revenue is expended as well as how it is raised. I argue that transferring significant parts of agriculture expenditure from one year to the next constitutes a de facto breach of the current guidelines.

Mr. Hoon

I shall not be tempted to go along that path too far, but where there are clear decisions of European Union institutions— such as the decision on budgetary discipline, which set out a framework for spending— and the guidelines are breached, surely that is a matter for consideration by the House of Commons, especially when we are considering the payment of extra funds to the European Union.

We do not need to investigate in detail as part of the budgetary debate precisely how each and every ecu in the EU's budget is spent. We should, however, have the opportunity of considering the broad framework within which the European Union spends its funds. It follows from that—I hope that this is consistent with what is happening in the EU—that we in the House should be considering the broad outline of the budget as we consider how the budget is raised, how own resources are secured and, in a general sense, how they are spent.

The essential question for the Government to answer, having introduced the Bill, is why they have not made that consideration possible. Why cannot we have provisions in the Bill that allow the House, along with the European Commission, the European Parliament and the Council of Ministers, to consider the broad outline of how funds are spent when the British taxpayer is being asked to devote significant sums of extra money to the European Union?

Mr. Bill Walker

I welcome the opportunity to speak, and the Committee will be pleased to know that I shall be brief because my hon. Friend the Paymaster General has taken up the concerns that I and others have felt.

I am pleased to see my right hon. Friend the Prime Minister on the Front Bench. He will know that I and others have been concerned about how the House can scrutinise European funding so that it becomes transparent.

There is no doubt that our constituents are concerned about how the moneys that they contribute in taxes are used within Europe. With that in mind, I intervened on my right hon. and learned Friend the Chancellor of the Exchequer on Second Reading to draw his attention to the explanatory and financial memorandum. I make no apologies for returning to the matter.

Paragraph 5 of the explanatory and financial memorandum states: The new Decision has to be approved by all member states in accordance with their national procedures before it can enter into force. It will take effect as from 1st January 1995. Hon. Members on both sides of the House have been trying to ensure that Parliament knows what is going on. That calls for transparency and scrutiny of expenditure by the House. That is what we have been after; we have not been attempting to torpedo the Bill. I felt very upset about being accused of attempting to do so, when, in private conversations, I had made it perfectly clear what my objectives were. I said that I would be brief, and I shall say merely that I welcome what my hon. Friend the Paymaster General said. I take his assurance for what it is worth, and believe it.

8 pm

Mr. Peter Shore (Bethnal Green and Stepney)

I listened with care to the Paymaster General. He was more forthcoming on some matters that have been raised than on others. He took seriously the point that was touched on by my hon. Friend the Member for Ashfield (Mr. Hoon) and by the hon. Member for Stafford (Mr. Cash)—that is, the importance of obtaining a correct, unified and uniform definition of GNP. The plain truth is that the component of own resources, which is now being taken up by GNP contributions, is growing. It was about 20 per cent. of the total some years ago. It certainly is destined, under the new arrangements, to rise to about 45 per cent. of the total. Therefore, it matters very much that there is a uniform, reliable definition of the GNP of the different countries.

I listened with sympathy to what my hon. Friend said about the Italians not always being entirely measured in their GNP figures. It is well known that they have a substantial black economy, and of course it is very difficult anyway to integrate that into the true picture of the GNP. Nevertheless, I broadly welcome what was said about efforts to establish, in a uniform way, the GNP of the member states.

On the role of the Public Accounts Committee, the Paymaster General rightly said that anything that he said tonight had to be in reference to the Committee itself. Indeed, it is for the Public Accounts Committee to decide whether it wishes to have its terms of reference extended in the way that has been suggested. I was glad to see, however, before my hon. Friend finished his remarks on that matter, the presence of the Chairman of the Public Accounts Committee. I am sure that he has taken on board, I hope, sympathetically, what was suggested.

I hope that it will be possible for the PAC, which is a very senior Committee of the House and one whose judgment and expertise we have come to value, to play a part in assessing expenditures made in the United Kingdom from the Community budget and the contributions that we make to that budget.

On the matter which was raised by my hon. Friend the Member for Newham, South (Mr. Spearing) and spoken to by my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) dealing specifically with new clause 12, I was not so happy with what the Paymaster General said. He rightly reminded us that several disparate reports, which come out at different and unpredictable times of the year, deal with the financing of the Communities. As he rightly said, the net contribution that is made by the United Kingdom is set out in the Treasury Red Book. Hon. Members have seen the Red Book for this year. It is true that we receive a departmental report in March.

Frankly, most of all, we are interested in our contribution to the European Community budget. Our contribution—that is to say, our gross contribution as well as our net contribution—how it is changing over time and how it compares with the gross and net contributions of other countries are of great importance. Although the Paymaster General expressed willingness to expand the Budget report in future to take account of some of our propositions, I do not think that that is quite good enough.

We gave some thought to what we are urging, and we have a new clause with a number of component parts, all of which we wish very much to see enter the annual report for which new clause 12 calls. It is an annual report which is necessary for one overwhelming reason: there is no annual debate on the United Kingdom's contribution to the European Community's budget. It is only at approximately five-yearly intervals, when a new European Communities (Finance) Bill is required, that the figures are revealed. As we recall, as a preliminary to the debate on the European Communities (Finance) Bill 1994, the Chancellor published what the Treasury described as an updated forecast of the UK's contribution to the EC Budget and a detailed paper describing the EC's Budgetary framework". There is much information in that publication which we do not normally see. Table 1, for example, gives the gross payments of the United Kingdom. I am not aware that that information is published in any other document on a regular basis. We know from table 1 of that Treasury document that there has been an enormous increase in our contributions, from £5,800 million in 1989–90 to an estimated £8,308 million in 1994–95, rising in the Treasury forecast to £10.5 billion in 1997, which is virtually double in seven or eight years. That is significant.

As was argued on Second Reading, it is not good enough simply to have the net figures—although we have those and they are important and relevant—because they reflect the priorities of the Community in spending money in its budget, not necessarily how we would wish that money to be spent. That is why, in new clause 12(a), we ask for a general presentation in text and tables of the financing and expenditure of the European Economic Communities in sterling equivalent and any common unit, which shall include comparable tables of income derived from each member state and expenditure therein". That is a matter of considerable importance. We know that Germany is by far the largest net and gross contributor. We are certainly, massively, the second-largest gross contributor, and certainly the second-largest net contributor. Whether or not the new formula for own resources will lead to a change in our relative position, and whether or not we see Holland and perhaps France and Austria overtake Britain as net contributors, which is something that we would welcome, the only way of obtaining that information is through an annual report of the kind for which we have asked.

I hope that that first requirement will be met, but it is not the only one. The Treasury report has helped to give us a real account of the rebate mechanism which has been used in adjusting Britain's net contribution. That is a very useful piece of information, as is the composition of own resources as between the three major components of agricultural levies, sugar levies, customs duties and VAT and now GDP, as the fourth component.

We need that information. In paragraph (c) of our proposed new clause 12. we ask for the operation of each article of the decision of 31 October 1994. Perhaps the most important of the new articles—the one that we would certainly keep an eye on—is article 10, which the hon. Member for Stafford referred to in his speech. It contains proposals for a new additional own resource component. That is a very important matter and we want to contribute to the thinking behind it at an early stage. Any proposals for additional own resources should be reflected in the annual report for which we have asked.

We have also asked, I think quite properly, for a report on any action taken by Her Majesty's Government in respect of financial discipline. Much has been said about financial discipline and more will be said about it in subsequent debates, but surely it is reasonable for the House of Commons to demand an annual report about financial discipline: what the British Government have proposed and how successful they have been in securing improvements in financial discipline.

In paragraph (e) of our new clause 12, we ask for the text of any regulation, directive or financial regulation relating to the operation of the Decision to which Her Majesty's Government has given its assent. I do not think there is a problem with that; we can expect to receive the information as soon as the European Community has made a decision under article 8(2).

I think that the precise categories of information for which we have asked are wholly reasonable. I think that they reflect the House's need to keep a close eye on the financing of the European Community, particularly as it affects the British contribution and British net receipts. I hope that we will be allowed to press the new clause to a Division tonight.

Mr. Andrew Smith

I do not wish to detain the Committee for long, although I think that it has been a very useful debate. As my hon. Friend the Member for Ashfield (Mr. Hoon) said, there is a large measure of agreement on both sides. Hon. Members are not satisfied with the way in which the collection of European Union resources is supervised and they are not satisfied with the way in which expenditure is scrutinised. Many hon. Members referred to fraud and the need for better controls.

When the Paymaster General replied to the debate I noticed that he did not answer the question which was put to him by my hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) about balances being carried forward from one year to the next. He asked whether that was consistent with the degree of financial control that the Government are seeking. Could the Paymaster General answer that question now?

As Labour Members have said, we are not satisfied with the system of collection and calculation of European Community resources. Conservative Members also referred to the implications of inconsistencies in the way in which different member states calculate gross national product and VAT bases. They drew attention to the inequity in the amount of money paid by different member states. That, in itself, is a good reason to press our new clause to a Division.

The Committee should also acknowledge that, in replying to new clause 12 proposed by my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) about an annual report to Parliament, the Paymaster General said that a good measure of the proposals could be incorporated in the annual report made to the House about the budget. But the Paymaster General will not incorporate some very important aspects of my right hon. Friend's new clause.

The information which is detailed in new clause 12—rather than the great pile of documents that the Government bring to European debates— would be very useful and enlightening. The public would find it very interesting reading. Why does the Paymaster General think that certain parts of new clause 12 are unacceptable? We intend to support my right hon. and hon. Friends if they wish to press the matter to a Division.

We also face the rather extraordinary prospect of the Paymaster General giving concessions to the hon. Member for Stafford (Mr. Cash)— concessions which were not given in the normal way in response to the debate, but which were negotiated at Downing street. That is a quite extraordinary turnaround for a Government who last week were going to beat the rebels and Euro-sceptics into the ground. All of a sudden, they are now negotiating with them at Downing street about terms. I suppose that the Government have learnt from last night that awarding concessions five or 10 minutes before a 10 o'clock Division does not work. Perhaps they are trying a more structured approach.

8.15 pm

This style of governing—making all sorts of last-minute concessions—reveals the Government's total disarray and confusion. The Government's tactics are as confused as their Whips must be, if last night's vote is anything to go by. The Government are in as much mess as the European Union when it comes to controlling fraud.

The Government have not responded adequately to the very powerful arguments for improved scrutiny and control of finances which were made on both sides of the Committee. In new clauses 1 and 12, my right hon. and hon. Friends advance the case for proper scrutiny by the House of what happens to money which is raised in this country and spent by the European Union. The public have a right to expect that control and scrutiny, and we intend to push the new clauses to a Division.

Question put, That the clause be read a Second time:—

The Committee divided: Ayes 259, Noes 318.

Division No. 13] [20.17 pm
Abbott, Ms Diane Clarke, Eric (Midlothian)
Adams, Mrs Irene Clarke, Tom (Monklands W)
Ainger, Nick Clelland, David
Ainsworth, Robert (Cov'try NE) Clwyd, Mrs Ann
Allen, Graham Coffey, Ann
Anderson, Donald (Swansea E) Cohen, Harry
Anderson, Ms Janet (Ros'dale) Connarty, Michael
Armstrong, Hilary Cook, Frank (Stockton N)
Ashdown, Rt Hon Paddy Cook, Robin (Livingston)
Ashton, Joe Corbett, Robin
Banks, Tony (Newham NW) Corbyn, Jeremy
Barnes, Harry Corston, Jean
Barron, Kevin Cousins, Jim
Battle, John Cox, Tom
Bayley, Hugh Cunliffe, Lawrence
Beckett, Rt Hon Margaret Cunningham, Jim (Covy SE)
Beith, Rt Hon A J Dafis, Cynog
Bell, Stuart Dalyell, Tam
Benn, Rt Hon Tony Darling, Alistair
Bennett, Andrew F Davidson, Ian
Benton, Joe Davies, Ron (Caerphilly)
Bermingham, Gerald Davies, Rt Hon Denzil (Llanelli)
Berry, Roger Davis, Terry (B'ham, H'dge H'I)
Betts,Clive Denham, John
Blair, Rt Hon Tony Dewar, Donald
Blunkett, David Dixon, Don
Boateng, Paul Dobson, Frank
Bradley, Keith Donohoe, Brian H
Bray, Dr Jeremy Dowd, Jim
Brown, Gordon (Dunfermline E) Dunnachie, Jimmy
Brown, N (N'c'tle upon Tyne E) Dunwoody, Mrs Gwyneth
Burden, Richard Eagle, Ms Angela
Caborn, Richard Eastham, Ken
Callaghan, Jim Enright, Derek
Campbell, Menzies (Fife NE) Etherington, Bill
Campbell, Mrs Anne (C'bridge) Evans, John (St Helens N)
Campbell, Ronnie (Blyth V) Ewing, Mrs Margaret
Campbell-Savours, D N Fatchett, Derek
Caravan, Dennis Field, Frank (Birkenhead)
Cann, Jamie Fisher, Mark
Carlile, Alexander (Montgomry) Flynn, Paul
Chidgey, David Foster, Don (Bath)
Chisholm, Malcolm Foster, Rt Hon Derek
Church, Judith Foulkes, George
Clapham, Michael Fraser, John
Clark, Dr David (South Shields) Fyfe, Maria
Galloway, George McKelvey, William
Gapes, Mike McLeish, Henry
Garrett, John McMaster, Gordon
George, Bruce McWilliam, John
Gerrard, Neil Meacher, Michael
Gilbert, Rt Hon Dr John Meale, Alan
Godsiff, Roger Michael, Alun
Golding, Mrs Llin Michie, Bill (Sheffield Heeley)
Gordon, Mildred Michie, Mrs Ray (Argyll & Bute)
Graham, Thomas Milburn, Alan
Grant, Bernie (Tottenham) Miller, Andrew
Griffiths, Win (Bridgend) Mitchell, Austin (Gt Grimsby)
Grocott, Bruce Moonie, Dr Lewis
Gunnell, John Morgan, Rhodri
Hain, Peter Morley, Elliot
Hall, Mike Morris, Estelle (B'ham Yardley)
Hanson, David Morris, Rt Hon Alfred (Wy'nshawe)
Hardy, Peter Morris, Rt Hon John (Aberavon)
Harman, Ms Harriet Mudie, George
Harvey, Nick Mullin, Chris
Henderson, Doug O'Brien, Bill (Normanton)
Heppell, John O'Brien, Mike (N W'kshire)
Hill, Keith (Streatham) O'Hara, Edward
Hinchliffe, David O'Neill, Martin
Hodge, Margaret Oakes, Rt Hon Gordon
Hoey,Kate Olner, Bill
Hogg, Norman (Cumbernauld) Paisley, The Reverend Ian
Home Robertson, John Parry, Robert
Hood, Jimmy Pendry, Tom
Hoon, Geoffrey Pickthall, Colin
Howarth, George (Knowsley N) Pike, Peter L
Howells, Dr. Kim (Pontypridd) Powell, Ray (Ogmore)
Hoyle, Doug Prentice, Bridget (Lew'm E)
Hughes, Kevin (Doncaster N) Prentice, Gordon (Pendle)
Hughes, Robert (Aberdeen N) Primarolo, Dawn
Hughes, Roy (Newport E) Purchase, Ken
Hutton,John Quin, Ms Joyce
Illsley, Eric Radice, Giles
Jackson, Glenda (H'stead) Randal, Stuart
Jackson, Helen (Shef'ld, H) Raynsford, Nick
Jamieson, David Reid, Dr John
Jones, Barry (Alyn and D'side) Rendel, David
Jones, leuan Wyn (Ynys Mon) Robertson, George (Hamilton)
Jones, Jon Owen (Cardiff C) Roche, Mrs Barbara
Jones, Lynne (B'ham S O) Rogers, Allan
Jones, Martyn (Clwyd, SW) Rooney, Terry
Jones, Nigel (Cheltenham) Ross, Ernie (Dundee W)
Keen, Alan Rowlands, Ted
Kennedy, Charles (Ross,C&S) Ruddock, Joan
Kennedy, Jane (Lpool Brdgn) Salmond, Alex
Khabra, Piara S Sedgemore, Brian
Kilfoyle, Peter Sheerman, Barry
Kirkwood, Archy Sheldon, Rt Hon Robert
Lestor, Joan (Eccles) Shore, Rt Hon Peter
Lewis, Terry Short, Clare
Liddell, Mrs Helen Simpson, Alan
Litherland, Robert Skinner, Dennis
Livingstone, Ken Smith, Andrew (Oxford E)
Llwyd, Elfyn Smith, Chris (Isl'ton S & F'sbury)
Loyden, Eddie Smith, Llew (Blaenau Gwent)
Macdonald, Calum Soley, Clive
Mackinlay, Andrew Spearing, Nigel
MacShane, Denis Spellar, John
Madden, Max Squire, Rachel (Dunfermline W)
Maddock, Diana Steinberg, Gerry
Mahon, Alice Stevenson, George
Mandelson, Peter Stott, Roger
Marek, Dr John Strang, Dr. Gavin
Marshall, David (Shettleston) Straw, Jack
Marshall, Jim (Leicester, S) Sutcliffe, Gerry
Martin, Michael J (Springburn) Taylor, Mrs Ann (Dewsbury)
Martlew, Eric Thompson, Jack (Wansbeck)
Maxton, John Tipping, Paddy
McAllion, John Tyler, Paul
McAvoy, Thomas Walker, Rt Hon Sir Harold
McCartney, Ian Wallace, James
Walley, Joan Winnick, David
Wardell, Gareth (Gower) Wise, Audrey
Wareing, Robert N Worthington, Tony
Wray, Jimmy
Welsh, Andrew Wright, Dr Tony
Wicks, Malcolm Young, David (Bolton South East)
Wigley, Dafydd
Williams, Alan W (Carmarthen) Tellers for the Ayes:
Williams, Rt Hon Alan (Sw'n W) Mr. Stephen Byers and
Wilson, Brian Mr. John Cummings.
Ainsworth, Peter (East Surrey) Cormack, Patrick
Aitken, Rt Hon Jonathan Couchman, James
Alexander, Richard Cran, James
Alison, Rt Hon Michael (Selby) Currie, Mrs Edwina (S D'by'ire)
Allason, Rupert (Torbay) Curry, David (Skipton & Ripon)
Amess, David Davies, Quentin (Stamford)
Ancram, Michael Davis, David (Boothferry)
Arbuthnot, James Day, Stephen
Arnold, Sir Thomas (Hazel Grv) Deva, Nirj Joseph
Ashby, David Devlin, Tim
Aspinwall, Jack Dicks, Terry
Atkins, Robert Dorrell, Rt Hon Stephen
Atkinson, David (Bour'mouth E) Douglas-Hamilton, Lord James
Atkinson, Peter (Hexham) Dover, Den
Baker, Nicholas (Dorset North) Duncan Smith, Iain
Baker, Rt Hon K (Mole Valley) Duncan, Alan
Baldry, Tony Dunn, Bob
Banks, Matthew (Southport) Durant, Sir Anthony
Banks, Robert (Harrogate) Dykes, Hugh
Bates, Michael Eggar, Tim
Batiste, Spencer Elletson, Harold
Beggs, Roy Emery, Rt Hon Sir Peter
Bellingham, Henry Evans, David (Welwyn Hatfield)
Bendall, Vivian Evans, Jonathan (Brecon)
Beresford, Sir Paul Evans, Nigel (Ribble Valley)
Biffen, Rt Hon John Evans, Roger (Monmouth)
Bonsor, Sir Nicholas Evennett, David
Booth, Hartley Faber, David
Boswell, Tim Fabricant, Michael
Bottomley, Peter (Eltham) Fenner, Dame Peggy
Bottomley, Rt Hon Virginia Field, Barry (Isle of Wight)
Bowis, John Fishburn, Dudley
Boyson, Rt Hon Sir Rhodes Forsyth, Michael (Stirling)
Brandreth, Gyles Forsythe, Clifford (Antrim S)
Brazier, Julian Forth, Eric
Bright, Sir Graham Fowler, Rt Hon Sir Norman
Brooke, Rt Hon Peter Fox, Sir Marcus (Shipley)
Brown, M (Brigg & Cl'thorpes) French, Douglas
Browning, Mrs. Angela Fry, Sir Peter
Bruce, Ian (Dorset) Gale, Roger
Budgen, Nicholas Gallie, Phil
Burns, Simon Gardiner, Sir George
Burt, Alistair Garel-Jones, Rt Hon Tristan
Butcher, John Garnier, Edward
Butler, peter Gillan, Cheryl
Butterfill, John Goodlad, Rt Hon Alastair
Carlisle, John (Luton North) Goodson-Wickes, Dr Charles
Carlisle, Sir Kenneth (Lincoln) Gorst, Sir John
Carrington, Matthew Grant, Sir A (Cambs SW)
Cash, William Greenway, Harry (Ealing N)
Channon, Rt Hon Paul Greenway, John (Ryedale)
Chapman, Sydney Griffiths, Peter (Portsmouth, N)
Churchill, Mr Grylls, Sir Michael
Clappison, James Gummer, Rt Hon John Selwyn
Clark, Dr Michael (Rochford) Hague, William
Clarke, Rt Hon Kenneth (Ru'clif) Hamilton, Neil (Tatton)
Clifton-Brown, Geoffrey Hamilton, Rt Hon Sir Archibald
Coe, Sebastian Hampson, Dr Keith
Colvin, Michael Hanley, Rt Hon Jeremy
Congdon, David Hannam, Sir John
Conway, Derek Hargreaves, Andrew
Coombs, Anthony (Wyre For'st) Harris, David
Coombs, Simon (Swindon) Haselhurst, Alan
Cope, Rt Hon Sir John Hawkins, Nick
Hawksley, Warren Moate, Sir Roger
Hayes, Jerry Molyneaux, Rt Hon James
Heald, Oliver Monro, Sir Hector
Heath, Rt Hon Sir Edward Montgomery, Sir Fergus
Heathcoat-Amory, David Moss, Malcolm
Hendry, Charles Needham, Rt Hon Richard
Heseltine, Rt Hon Michael Nelson, Anthony
Hicks, Robert Neubert, Sir Michael
Higgins, Rt Hon Sir Terence Newton, Rt Hon Tony
Hill, James (Southampton Test) Nicholls, Patrick
Hogg, Rt Hon Douglas (G'tham) Nicholson, David (Taunton)
Horam, John Nicholson, Emma (Devon West)
Hordern, Rt Hon Sir Peter Norris, Steve
Howard, Rt Hon Michael Onslow, Rt Hon Sir Cranley
Howarth, Alan (Strat'rd-on-A) Oppenheim, Phillip
Howell, Rt Hon David (G'dford) Ottaway, Richard
Howell, Sir Ralph (N Norfolk) Paice, James
Hughes, Robert (Aberdeen N) Patnick, Sir Irvine
Hunt, Rt Hon David (Wirral W) Patten, Rt Hon John
Hunt, Sir John (Ravensbourne) Pattie, Rt Hon Sir Geoffrey
Hunter, Andrew Pawsey, James
Jack, Michael Peacock, Mrs Elizabeth
Jackson, Robert (Wantage) Pickles, Eric
Jenkin, Bernard Porter, Barry (Wirral S)
Johnson Smith, Sir Geoffrey Porter, David (Waveney)
Jones, Gwilym (Cardiff N) Portillo, Rt Hon Michael
Jones, Robert B (W Hertfdshr) Powell, William (Corby)
Jopling, Rt Hon Michael Rathbone, Tim
Kellett-Bowman, Dame Elaine Redwood, Rt Hon John
Key, Robert Renton, Rt Hon Tim
Kilfedder, Sir James Richards, Rod
King, Rt Hon Tom Riddick, Graham
Kirkhope, Timothy Rifkind, Rt Hon Malcolm
Knapman, Roger Robathan, Andrew
Knight, Dame Jill (Bir'm E'st'n) Roberts, Rt Hon Sir Wyn
Knight, Greg (Derby N) Robertson, Raymond (Ab'd'n S)
Knight, Mrs Angela (Erewash) Robinson, Mark (Somerton)
Knox, Sir David Roe, Mrs Marion (Broxbourne)
Kynoch, George (Kincardine) Ross, William (E Londonderry)
Lait, Mrs Jacqui Rowe, Andrew (Mid Kent)
Lamont, Rt Hon Norman Rumbold, Rt Hon Dame Angela
Lang, Rt Hon Ian Ryder, Rt Hon Richard
Lawrence, Sir Ivan Sackville, Tom
Legg, Barry Sainsbury, Rt Hon Tim
Lennox-Boyd, Sir Mark Scott, Rt Hon Nicholas
Lester, Jim (Broxtowe) Shaw, David (Dover)
Lidington, David Shaw, Sir Giles (Pudsey)
Lightbown, David Shephard, Rt Hon Gillian
Lilley, Rt Hon Peter Shepherd, Colin (Hereford)
Lloyd, Rt Hon Peter (Fareham) Shersby, Michael
Lord, Michael Sims, Roger
Luff, Peter Skeet Sir Trevor
Lyell, Rt Hon Sir Nicholas Smith, Sir Dudley (Warwick)
MacGregor, Rt Hon John Smith, Tim (Beaconsfield)
MacKay, Andrew Smyth, Rev Martin (Belfast S)
Maclean, David Soames, Nicholas
Madel, Sir David Speed, Sir Keith
Maginnis, Ken Spencer, Sir Derek
Maitland, Lady Olga Spicer, Michael (S Worcs)
Major, Rt Hon John Spicer, Sir James (W Dorset)
Malone, Gerald Spink, Dr Robert
Mans, Keith Spring, Richard
Marland, Paul Sproat, Iain
Marshall, John (Hendon S) Squire, Robin (Hornchurch)
Marshall, Sir Michael (Arundel) Stanley, Rt Hon Sir John
Martin, David (Portsmouth S) Steen, Anthony
Mates, Michael Stephen, Michael
Mawhinney, Rt Hon Dr Brian Stern, Michael
Mayhew, Rt Hon Sir Patrick Stewart, Allan
McLoughlin, Patrick Streeter, Gary
McNair-Wilson, Sir Patrick Sumberg, David
Mellor, Rt Hon David Sweeney, Walter
Merchant, Piers Sykes, John
Mills, Iain Tapsell, Sir Peter
Mitchell, Andrew (Gedling) Taylor, Ian (Esher)
Mitchell, Sir David (Hants NW) Taylor, John M (Solihull)
Taylor, Rt Hon John D (Strgfd) Ward, John
Temple-Morris, Peter Wardle, Charles (Bexhill)
Thomason, Roy Waterson, Nigel
Thompson, Patrick (Norwich N) Watts, John
Thompson, Sir Donald (C'er V) Wheeler, Rt Hon Sir John
Thomton, Sir Malcolm Whitney, Ray
Thurnham, Peter Whittingdale, John
Townend, John (Bridlington) Widdecombe, Ann
Townsend, Cyril D (Bexl'yh'th) Wiggin, Sir Jerry
Tracey, Richard Willetts, David
Tredinnick, David Wilshire, David
Trend, Michael Winterton, Mrs Ann (Congleton)
Trotter, Neville Winterton, Nicholas (Macc'f'ld)
Twinn, Dr Ian Wolfson, Mark
Vaughan, Sir Gerard Wood, Timothy
Viggers, Peter Yeo, Tim
Waldegrave, Rt Hon William Young, Rt Hon Sir George
Walden, George
Walker, A Cecil (Belfast N) Tellers for the Noes:
Walker, Bill(N Tayside) Mr. Bowen Wells and
Waller, Gary Dr. Liam Fox.

Question accordingly negatived.

8.30 pm
The First Deputy Chairman of Ways and Means (Mr. Geoffrey Lofthouse)

Before we move on, I advise the right hon. Member for Bethnal Green and Stepney (Mr. Shore) that, when the time comes, I am prepared to allow a separate Division on new clause 12, if he so wishes.

Mr. Spearing

On a point of order, Mr. Lofthouse. You and the Chairman will have heard the many references to the Public Accounts Committee. Indeed, in his reply the Minister referred to the Government's willingness, if the House permits, to take some action in that regard. May I draw your attention to starred amendments Nos. 14 and 15, which may be relevant to any future selection when the stars are removed?

The First Deputy Chairman

For the moment, the Chairman has decided that those amendments are not selected.

Forward to