European Union Budget: UK Contribution (Hansard, 24 October 1994)

§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)
My Lords, the Government's present forecast of the United Kingdom's net contribution to the European Community budget for 1994–95 is £1,700 million. As is usual, the Government will publish their updated estimates, following the Chancellor's Budget Statement.

§ Lord Molloy
My Lords, I am most grateful to the Minister for that reply. However, does he not agree that over the past few years although the top three contributors have changed the UK is always among those three greatest contributors? Does he not agree that it is about time that we had a closer look at why we should always be one of the biggest contributors of the funds that are required?

§ Lord Mackay of Ardbrecknish
My Lords, the noble Lord is right that we are among the top contributors to the European Community budget. However, the Germans have a substantial lead in their number one position. I am happy to tell the noble Lord that the new own resources decision will lead to the UK dropping down the league of net contributors. Indeed, by the turn of the century we would expect Germany, 402 the Netherlands, France and, on their accession, Austria, Sweden and Norway to pay more per capita than the UK, with Italy paying a similar amount.

§ Lord Shepherd
My Lords, can the Minister explain why we have dropped down that particular league?

§ Lord Mackay of Ardbrecknish
My Lords, one of the reasons is the accession of Austria, Sweden and Norway. The other reasons are shifts in items such as gross domestic product and the take in value added tax, all of which are included in the calculations making up each country's contribution.

§ Baroness Elles
My Lords, does my noble friend agree that one of the main reasons is the decision taken at the Edinburgh summit, at which my right honourable friend the Prime Minister was President, and that the United Kingdom abatement has been preserved until the year 2000? Does he agree that that makes a major difference?

§ Lord Mackay of Ardbrecknish
My Lords, my noble friend is right to draw the attention of the House to the important role which the UK's abatement plays in the calculation. That abatement was confirmed at the Edinburgh summit and was won by my noble friend Lady Thatcher in the early 1980s. Frankly, if that victory had not been won we would have paid significantly more to the European budget year after year.

§ Lord Stoddart of Swindon
My Lords, does the noble Lord agree with estimates which have been brought forward by the Treasury and others that the net contribution which this year, as he said, is £1,750 million will double to more than £3,500 million for 1996–97 and will continue to increase until the end of the century?

§ Lord Mackay of Ardbrecknish
My Lords, I certainly would not deny the two figures quoted by the noble Lord, because I suspect that I am looking at the same table as he was. However, I should point out to him that the net contribution figure varies considerably year on year. While the figure this year is £1.7 billion, last year it was £2.1 billion and the year before it was £2.2 billion. Therefore one has to look at a run of figures. However, I confirm to the noble Lord that there will be a small increase over the next year or two, as is clearly set out in the table.

§ Lord Thomson of Monifieth
My Lords, do the Government agree that, given the British abatement, the important aspect of the Community budget is dealing effectively with fraud and getting value for money rather than continually grumbling, girning and bellyaching about Britain's contribution to a European Union which has great political and economic advantages for us?

§ Lord Mackay of Ardbrecknish
My Lords, I am delighted to agree with the noble Lord on both counts. Indeed, next Monday we have a chance to debate the problem of fraud in the European Community.
However, the second part of his question is very relevant. The news last week that Samsung is to open a new manufacturing plant in Cleveland, County Durham, 403 with planned investment of £450 million, is an example of the investment that we achieve in this country because of our membership of the European Community, as Samsung made clear to the Financial Times.

Lord Bruce of Donington
My Lords, will the noble Lord inform the House whether the figures he gave the House earlier are on the basis of cash payments and receipts or accruals? Do those figures have some basis in accounting or economic practice? A number of different versions of the figures that the noble Lord has given today are published by the Government. Will he take steps to unravel the mystery of these matters rather than continue to be party to publishing figures which are mutually contradictory and which vary from week to week?

§ Lord Mackay of Ardbrecknish
My Lords, I do not believe that there is anything mutually contradictory in the figures that I gave. They come from Table 11.1, on the cash plans, of the Chancellor's departmental report. The line that I have cited twice—in fact the noble Lord, Lord Stoddart, also cited it—is the one in that cash plan document which indicates the net contribution to the European Community budget.

§ Lord Peston
My Lords, noble Lords sometimes refer to questions being rather wide of the Question on the Order Paper. I considered that his answer on Samsung was slightly wide of the Question on the Order Paper. However, that is a matter for him.
Perhaps I may ask the Government's view on this. What is the right amount? Does the noble Lord say that £1.7 billion is about right in the sense that it is fair? Alternatively, since the noble Lord spoke about our moving down what he called the league table, does he consider that the current figure is right? Does it imply that the £1.7 billion was too high? What is the Government's general assessment about the rules or principles which ought to be applied to give us the right number? Are we overpaying for what we receive or are we not?

§ Lord Mackay of Ardbrecknish
My Lords, that is a complicated economic question, if I may be allowed to say so. The figures that I gave were the cash plan figures. Of course, they derive from the agreements which member states make regarding the Community budget. However, as the noble Lord knows, the ceiling is currently 1.2 per cent. of Community GNP for the Community budget. As we are party to the agreement, we believe that such a figure is about right. As I mentioned earlier, we believe quite firmly that if it had not been for the rebate we certainly would have been paying a great deal too much money. However, thanks to the efforts of my noble friend Lady Thatcher, I 404 believe that we are paying roughly what is reasonable given our economic position and the position of the whole Community.

§ Earl Russell
My Lords, does the Minister agree that, like other good things, membership of the European Union is subject to the rule that you cannot have something for nothing?

§ Lord Mackay of Ardbrecknish
My Lords, I sought to indicate that we receive quite a lot back for the investment that we put into the European Community. I refer to the market that we gain in the remainder of the Community and the amount of foreign investment that we attract to this country because we are a member of the Community.

§ Lord Dormand of Easington
My Lords, will the Minister agree that after the level of our contribution, the next most important consideration is the amount of that contribution which is lost in corruption? Noble Lords on all sides of the House have expressed deep concern about corruption in the European Union. Will the Minister say what is being done about that matter in view of the very large contribution that he announced today?

§ Lord Mackay of Ardbrecknish
My Lords, as noble Lords will know, the Government have always taken a firm line on corruption inside the European Community. We have been at the forefront in various Council and other meetings in attempting to pursue the matter and to reduce the amount of fraud. As I believe I indicated earlier, I do not wish to go wider than that. However, next Monday I can invite the noble Lord to what I believe will be an all-singing, all-dancing debate on the subject of fraud in the Community