HL Deb 01 June 1992 vol 537 cc706-8

2.48 p.m.

Lord Bruce of Donington asked Her Majesty's Government:

Whether they will state, for each of the years 1993 to 1996 and in respect of the European Commission's financial proposals set out in The Means to Match our Ambitions, their estimates of the United Kingdom's net contribution (after all receipts but before abatement) to Community funds, together with their estimate of the abatement due to the United Kingdom under the existing abatement agreement.

The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)

My Lords, the Commission has not yet provided sufficient information to allow a firm year-by-year estimate of the cost of its proposals to the United Kingdom to be made. But, if the Commission's proposals were agreed, our provisional estimate is that in 1997 the UK's net contribution before abatement would rise to some £5.5 billion (at 1992 prices); the UK's abatement would be some £2.9 billion. The implied 1997 net contribution after abatement of £2.6 billion compares with a figure of £1.7 billion for 1992 prepared on a similar basis.

Lord Bruce of Donington

My Lords, I am most grateful to the noble Lord for that reply. Is he aware that when the Treasury submitted evidence to the Treasury and Civil Service Select Committee in another place the Government indicated that the existing net contribution out of taxpayers' money after all abatements amounted to £2.5 billion per annum, that in the event of the general proposals as set out in the Commission document being implemented there was a likelihood that that net contribution would rise by a further £0.5 billion to £3 billion of taxpayers' money every year and that in certain eventualities, with the VAT basis going up on the lines proposed by the Commission, there would be a further £0.5 billion, making a net total of £3.5 billion of British taxpayers' money per annum?

Lord Henley

My Lords, the noble Lord is perfectly correct. They are very, very large sums of money indeed. The figure that the noble Lord quoted of £2.5 billion was the figure that my noble friend Lord Brabazon gave to the noble Lord last November, some six months ago, for 1992–93. I gave the figure of £1.7 billion. The reason for the difference in the two figures is that the figure that my noble friend gave dealt purely with public expenditure and did not include other receipts which came back to the United Kingdom. Nevertheless, as the noble Lord has said, they are very, very large figures indeed. We have made it clear that we do not believe that the Commission's proposals are justified. Maastricht very much stressed the importance of sound public finance and the need to maintain budgetary discipline; and that is tailoring one's ambitions to one's means.

Lord Stoddart of Swindon

My Lords, is the noble Lord aware of press reports that the Spanish Government have threatened that unless the Commission's financial proposals are agreed they will not ratify the Maastricht Treaty? Can we be assured that the Government will not cave in to such blackmail?

Lord Henley

My Lords, I am not aware of such press reports, but any changes to the financial arrangements have to have the unanimous support of all member states. Her Majesty's Government would certainly not cave in to such threats and we shall certainly not agree to any adverse change to the abatement.

Lord Peston

My Lords, when we are discussing the abatement I assume that we are discussing everything that we get back, in particular what the noble Lord's right honourable friend the former Prime Minister negotiated for several years ago. Can the noble Lord say whether, as in the rumours we have heard, the Community is determined to take those abatements from us this time round because it regards that deal as over and done with and that post-Maastricht we shall end up with a much larger net figure because the abatement will be smaller?

Lord Henley

My Lords, the means of calculating the abatement is fairly complicated. I refer the noble Lord to a Written Answer given by my noble friend Lord Brabazon on 21st January 1992 which explains just exactly how the abatement is calculated. It is far too complicated for me to run through it today, but I can repeat to the noble Lord what I have just said to his noble friend. Her Majesty's Government will not agree to any adverse change in the way in which the abatement is calculated, and it needs Her Majesty's Government as well as all the other governments of the EC to agree before we can have any change. Unanimity is necessary here.

Lord Bruce of Donington

My Lords, is the noble Lord aware that the figures I cited to him originally were based not upon the figures given to me by his noble friend six months ago but on the Treasury's own memorandum dated 4th March last, which set out the latest up-to-date figures? Will he explain how he or the Government propose to resist Commission proposals or other proposals for the elimination or recalculation of Britain's abatement? Can he confirm categorically, without any shadow of doubt, that the British Government retain the complete right of veto over any such proposal?

Lord Henley

My Lords, I agree with the noble Lord on the first part of his question. His figures come from the Treasury. The ones that I quoted were from my noble friend Lord Brabazon. Nevertheless, they are the same figures. I was trying to explain why they were different from the first set of figures I gave to the noble Lord. As regards the second part of his question, I can reassure the noble Lord that we have an absolute veto in this matter. It is a matter that requires the unanimity of all governments of the EC. Her Majesty's Government made their position on this matter very plain indeed.