HL Deb 16 July 1984 vol 454 cc1174-6

2.46 p.m.

Lord Bruce of Donington

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they will list the EEC regulations governing expenditure under Titles 1 and 2 of the EEC Commission's Operational Budget (Official Journal L 12 of 16th January 1984) that require amendment to make such expenditure subject to cash limits established by an EEC budget in order to enforce budget discipline; and whether they will confirm their intention to use their veto under the Luxembourg Convention to prevent any price increase in the Annual Price Review which would result in established cash limits being exceeded.

The Chancellor of the Duchy of Lancaster (Lord Cockfield)

My Lords, as my noble friend the Prime Minister explained in her Statement in another place on 27th June, which was repeated in your Lordships' House, the European Council has agreed that net expenditure relating to agricultural markets should increase less than the rate of growth in the own resources base. Finance Ministers are now working on the precise measures to guarantee the effective application of this principle. It is premature to speculate what form these measures might take.

Lord Bruce of Donington

My Lords, I thank the noble Lord for that reply. Is he aware that agreements expressed in such general terms at EEC summits are quite meaningless? Is he also aware that there is established by law a network of regulations which ensures the payment out of money on a demand-led basis, and that the only way to limit that expenditure is simply by fixing cash limits—a fact of which he is well aware in other, more domestic fields? Is the noble Lord additionally aware that any agreement to increase the VAT resources beyond the existing 1 per cent., without firm guarantees of the imposition of cash limits on that demand-led expenditure, will be entirely worthless? Will he please answer the last part of the Question on the Order Paper?

Lord Cockfield

My Lords, so far as the first part of the noble Lord's supplementary question is concerned, the agreement of the heads of government on the need for budget discipline was clearly expressed both at the Brussels meeting in March and at the Fontainebleau summit. It was then remitted to the Finance Ministers to turn those general agreements on points of principle (which is where one has to start) into concrete proposals. The Finance Ministers are meeting this week, on Thursday, 19th July, to discuss those matters. I would have thought the right thing to do was to await the out-turn of that meeting.

So far as the second part of the noble Lord's supplementary question is concerned I do not think that it would be profitable to discuss at this stage what measures should or need be taken in relation to agreements which have not yet been reached.

Lord Bruce of Donington

My Lords, is the noble Lord aware that those answers are quite unsatisfactory? The uncontrolled expenditure of the European Community under Titles 1 and 2 exceeds £9½ thousand million a year—all uncontrolled, all demand-led. Is he aware that the last price review, which remained the one controlling mechanism as long as the provisions of the Luxembourg Convention held, has now apparently gone by the board, without protest even, by the Government? Does the noble Lord intend to insist, in future, that the annual price review is of vital national importance to the United Kingdom within the provisions of the Luxembourg Convention and will he ensure that in future, if necessary, it is enforced?

Lord Cockfield

My Lords, I do not accept, either in principle or in detail, the interpretation which the noble Lord endeavours to place upon events. May I start by reminding him that under the various agreements that this Government have negotiated we have paid £3,000 million less to the European Community than we would have paid under the arrangements bequeathed to us by the Labour Government. I am certain that this is the major reason for the noble Lord's indignation about these matters. I entirely agree with him that expenditure on the common agricultural policy needs to be kept within bounds. There was clear agreement between the heads of government on that principle. It now rests with the Finance Ministers to turn that agreement on principle into practical proposals.

May I also say that the agreement to the increase in own resources is entirely dependent on a satisfactory outcome on the other matters, and it will be open to Parliament to vote on this matter when the regulations are drawn up, when agreement is finally reached.

Baroness Llewelyn-Davies of Hastoe

My Lords, may I ask the noble Lord whether the announcements about the own resources and the possible postponement of the increase coming about would affect the 1986 budget, and could he indicate, in that case, what the implications are for the enlargement of the Community by Spain and Portugal?

Lord Cockfield

My Lords, the point made by the noble Baroness is an important one. One of the principal reasons for the proposed increase in own resources is to pay the cost of enlargement. The communique makes it quite clear that the increase in VAT, which is necessarily linked to the other matters—it is not a separate matter; it is linked to budget discipline and the control of agricultural expenditure—should come into force not later than 1st January, 1986.