§ 51. Mr. Teddy Taylorasked the Chancellor of the Exchequer what estimate has been made of the effect on the economies of the United Kingdom and Europe of the increase in public expenditure involved in the recent decision of the Council of Ministers to increase the value added tax resources of the Common Market by 40 per cent. in real terms.
§ Mr. Ian StewartThe agreement at Fontainebleau to increase the VAT ceiling from 1 to 1.4 per cent. was taken into account in the projection of the United Kingdom's net payments to Community institutions contained in the public expenditure White Paper published on 22 January. Because the United Kingdom's contribution will be reduced by an abatement, the Fontainebleau agreement actually provides for a maximum increase in VAT own resources of substantially less than the full 1.4 per cent. By resolving the budget problem, the Fontainebleau agreement should now allow the Community to concentrate on achieving a genuine common market in goods and services, leading to more efficiency in the economies of Britain and other member states.