European Union: UK Budget Contribution (Hansard, 14 November 1996)

§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)
My Lords, the Government's current estimate of the United Kingdom's net contributions to the European Community budget in the financial year 1996–97 is £2.9 billion. A revised estimate which will take into account the latest developments will be included in the Chancellor of the Exchequer's Financial Statement and Budget Report later this month.

§ Lord Boyd-Carpenter
My Lords, I thank my noble friend for that not very illuminating reply. Will he tell the House whether there is any intention of securing that there is no increase in that enormous figure?

§ Lord Mackay of Ardbrecknish
My Lords, one of the reasons why our contribution is £2.9 billion and not £4.8 billion is of course the rebate that our noble friend Lady Thatcher won at Fontainebleau. The figures I have given underline the importance of that rebate. 1023 The contribution to the European budget varies for a number of reasons. We are determined to keep budget discipline within the European budget itself. I am happy to say that we are now being joined by other countries which are or are becoming contributors to the budget. Germany, which has always been a contributor, the Netherlands, Austria and Sweden are all joining us in a determination to ensure that the budget is frozen.

Viscount Tonypandy
My Lords, in view of the fact that the Foreign Secretary said that we buy from Europe more than we sell to her—this part is my quotation and not the Foreign Secretary's—and that we have done so ever since we joined; and bearing in mind the fact that Europe is the only continent with which we have been in the red for the past 23 years; that we have fortunately made a profit through our invisibles and the market in general in the rest of the world; has not the time come for Her Majesty's Government to give serious consideration also to the invisible factors that hurt the pride and self-respect of the British people?

§ Lord Mackay of Ardbrecknish
My Lords, the important thing about the EU is that it is the world's largest trading bloc. It has 40 per cent. of the world's trade. Of course we in this country are the world's fifth largest importer and exporter. It is vital that we take all the advantage that we can of being a member of that big trading bloc—a trading bloc with many well paid customers who can buy our products. I do not want to go on at length, but our motor exports to other EU countries are up twofold in the past five years; our financial services are hugely advantaged by our membership of the EU; London is the major financial centre for the whole of Europe. Those matters are all vital for our country's economy. They must be weighed in the balance when one considers the advantages of our membership of the EU.

§ Lord Molloy
My Lords, should any disadvantages occur in the future because of our membership of the Union, have the Government any rights to make a protest on behalf of this country?

§ Lord Mackay of Ardbrecknish
My Lords, I presume that the £2.9 billion that I mentioned earlier could be construed as a disadvantage, and of course it is. All of these matters have to be looked at in terms of a balance sheet. They have to be weighed against the advantages, some of which I have just read out. There are many others. We have to consider them all when we face those people who would have us withdraw from the EU, which seems to me to be a foolish idea.

§ Lord Marsh
My Lords, does the Minister agree that whether we were members of the EU or not, it would be totally contrary to the World Trade Organisation, the GATT, and every other international understanding to seek to exclude us on the basis of fortress Europe? Does he not agree that, in or out, we would have the same right to trade as Japan, the USA and every other country?

§ Lord Mackay of Ardbrecknish
My Lords, we certainly would have the same rights on the face of it but I do not think that we can guarantee that we would be as closely involved in the development of the European Union or various other trade aspects in which the European Union can be involved throughout the world. If our interests are represented in trade negotiations on a European basis, they obviously carry a lot more weight than they would do were we there as one individual trader, no matter how important that trader might be. The other aspect is the very considerable amount of inward investment which is coming to Britain as part of the European Union.

§ Lord Thurlow
My Lords, will the Minister tell the House how much of the £2.9 billion is represented by our CAP contribution and whether I am right in thinking that that sum comes back to this country?

§ Lord Mackay of Ardbrecknish
My Lords, the noble Lord is wrong in the last part of his question because the £2.9 billion is net. The gross figure is, I think, £9.6 billion. There is then £4.8 billion in receipts. It is in those receipts that one finds the benefit, if there are benefits to us, of the CAP. Those which come back to this country come via the £4.8 billion of receipts. As I have already mentioned, on top of that there is the £1.9 billion of the Fontainebleau agreement negotiated by my noble friend Lady Thatcher.

§ Lord Peston
My Lords, I congratulate the Minister on taking a positive view of Europe, which is unusual these days since it seems to me that almost all that we hear about Europe is negative. I do not make that as a political point; I make it with absolute sincerity.
Does the Minister agree that one of the most preposterous arguments is to do with our balance of payments deficit with the Union? If the argument is that because we run a deficit with the Union, we should leave it, since we run a deficit with the rest of the world, logically that would suggest that we should leave the rest of the world as well.
My main point is does the Minister agree—and that was my immediate response to his Answer—that £2.9 billion in the context of both Britain's GDP and total government expenditure is a trivial sum? I am not saying that we should not like it to be smaller or that we do not congratulate the noble Baroness, Lady Thatcher, on getting it as low as it is, but surely £2.9 billion is not a sum about which we should get terribly hot under the collar when we consider some of the fundamental problems which confront our country today.

§ Lord Mackay of Ardbrecknish
My Lords, perhaps speaking more as a social security Minister than as a Treasury spokesman, I cannot agree that £2.9 billion is a trivial sum, even in the context of the European Union. But the noble Lord is absolutely right about the importance of the European Union. One of the reasons that we can make that contribution to the European Union budget to help its poorer members is that we run a successful and competitive economy. I only wish that 1025 the Commission and the European Court of Justice would take that on board when they make their decisions.

§ Lord McNally
My Lords, has the Minister yet had an opportunity to read the speech by Mr. Niall FitzGerald, chief executive of Unilever and chairman of the CBI (Europe) Committee? At the CBI on Tuesday he made it clear550 that an overwhelming majority of the membership of the CBI see continuing membership of the European Union as essential to the prosperity of the British manufacturing industry. Surely those are the voices to which we should listen.

§ Lord Mackay of Ardbrecknish
My Lords, indeed, I did notice that the CBI underlined the importance of our membership of the European Union. Perhaps I should draw attention also to the fact that it underlined the need for us to be competitive and not to be bound by restrictive labour laws emanating from the Commission.