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As the Bill is really only a skeleton, and as so much is left to secondary legislation that is yet to come, it is important that national authorities agree on the action that they will be involved in implementing. Having a provision that requires their agreement is the only way in which they can exercise their functions jointly, as it says in the Bill. Thus, in order to ensure that all national authorities will be able to implement the various complicated measures contained in the Bill, I strongly support the amendment of my noble friend Lord Dixon-Smith.
Baroness Morgan of Drefelin: I am delighted to do my best to respond to this probing amendment. I hope that I can help. As we have discussed already, the Bill covers the whole of the UK. It will be important to ensure that its application to the devolved Administrations is set out very clearly and to ensure a joined-up approach between Administrations as far as possible, as the noble Duke and the noble Lord have already highlighted. We will be agreeing a concordat with the devolved Administrations about how we will work together on implementing the detailed elements of the Bill. The Bill describes the UK Government and the devolved Ministers together as “national authorities”, as the noble Lord, Lord Dixon-Smith, has already pointed out, for the purposes of some clauses.
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The Duke of Montrose: I apologise for asking the noble Baroness to give way, but I wonder whether the other political parties will be included in drawing up this concordat. This legislation will require a long-term development.
Baroness Morgan of Drefelin: My immediate response is to say that the concordat is agreed on behalf of the Administrations, of whatever political composition they might be. The agreement will be with the Administration concerned rather than with political parties. The important point to note is that the formal agreement of the Administrations will be sought, and equally it is important that the concordat is practical and realistic. We have said at earlier stages in Committee that we have experienced positive working relationships. I appreciate the concerns of the noble Duke about the future because this is a very long-term Bill, and I will come on to what might happen if there is a disagreement.
The Bill describes the UK Government and the devolved Ministers together as the “national authorities” for the purposes of some clauses. Clause 67, as the noble Lord pointed out, defines the term “national authority” to mean the Secretary of State, the Scottish Ministers, the Welsh Ministers and the relevant Northern Irish Ministers. Further, to make it clear, we would expect the Scottish Ministers to decide among themselves who should be the relevant Minister. The clause provides that:
This means that they must agree on the way the functions should be exercised and then act together. “Acting jointly” is a well used and well understood legal term which means bodies acting together to do the same thing. In order to act jointly, all must agree on what they are doing, so “acting in agreement”, as proposed in Amendment No. 187A, would not add any further safeguards to the clause because the devolved Administrations will need to be in agreement in order to act jointly.
I want to stress what would happen if there were a disagreement between the different legislatures. As I have said, the concordat is being developed by the UK Government and the devolved Administrations. It will set out the procedure for resolving any differences. However, it is worth reiterating that UK government departments and officials already have a constructive relationship with their counterparts in each of the devolved Administrations in drawing up the Bill, which is truly UK-wide in scope. We expect this good working relationship to continue as proposals for trading schemes emerge and that this kind of disagreement is most unlikely. There are probably several options available to us if the situation did arise, but it would be wrong to speculate on the detail at this stage when there are no obvious risks of that happening.
However, I know that the noble Lord will push me further, so I shall make it clear. In the unlikely event that a procedure laid out in the concordat does not succeed in resolving an issue, a number of things could happen. First, the proposal would simply not
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Lord Teverson: I was fascinated by the explanation that the Government are going for a unanimity rule here. I wonder whether they might like to introduce qualified majority voting. They could go, for instance, for 55 per cent of UK nations and 65 per cent of the total population. The fact that we have a veto for one of the nations is quite interesting.
Lord Dixon-Smith: After that frivolous intervention, could I ask the Minister a slightly more difficult question? If I heard her correctly, I thought she said that acting jointly means that all must agree, and “all” is defined in the Bill as all of them. She then went on to say that she thought the Scottish Ministers might agree on an “appropriate Minister”. That would put the Scottish practice outwith the wording of the Bill as I read it. We need to think about this because I am concerned about the way the Bill has been drafted. I accept entirely that we can amend practice, and we can amend the Bill. Indeed, the definition would be far better if it were changed.
Perhaps the noble Baroness would kindly indicate that she will perhaps think about that particular wording—she may say it is clear but to a layman reading the Bill, it is most confusing.
Baroness Morgan of Drefelin: In my experience, many Bills are confusing to the layman because they seem to be largely the territory of lawyers; that is perhaps the case for some of this Bill. I want to make this clear because I am not sure that I was that clear on the question of the Scottish Ministers. The devolved Administrations are expected to agree a collective position in the same way as the UK Government would, so the fact that there are a number of Scottish Ministers is not material. What matters is that they agree a collective position and that those collective positions need to be in agreement in order to act jointly.
Lord Dixon-Smith: I shall read what has been said with great care. With the greatest deference, I do not think that we have sufficient clarity of explanation of this issue to be satisfactory, so we may need to return to it at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
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[Amendment No. 188 not moved.]
House resumed: Bill reported with amendments.
European Communities (Finance) Bill
7.28 pm
Lord Davies of Oldham: My Lords, I beg to move that this Bill be now read a second time.
The purpose of the legislation is to enable the United Kingdom to give effect to the new own resources decision agreed by the Council of Ministers on 7 June 2007. This own resources decision reflects the December 2005 agreement on the financial perspective from 2007-13 which had three complementary and inseparable elements: expenditure, revenue and budget review. That agreement was good for Europe and good for Britain. The own resources decision contains the detail of the revenue element of that financial perspective agreement. It amends the arrangements for financing the budget of the European communities for the period 2007-13.
Clause 1 allows the own resources decision to be put into effect by providing for it to be added to the list of community treaties in Section 1(2) of the European Communities Act 1972. This means that payments made by the United Kingdom as a result of the decision can be charged directly onto the consolidated fund under Section 2(3) of the European Communities Act 1972. Clause 2 simply cites this Act as the European Communities (Finance) Act 2008 and repeals the European Communities (Finance) Act 2001, which it supersedes.
The new decision has a number of effects. Appropriations ceilings will be frozen at the levels set for the 2000-06 budget period. The ceiling on annual appropriations for payments is 1.24 per cent of EU GNI and for appropriations for commitments it is 1.31 per cent of EU GNI. Appropriations for commitments are forecast to fall below 1 per cent of EU GNI during the current budget period. The current arrangements for VAT-based contributions will be amended by reducing the maximum call-up rate to 0.3 per cent, increasing member states’ residual contributions based on GNI. This is to be welcomed and further develops the trend towards fair and transparent contributions.
Between 2007 and 2013 only, the maximum rate of call on VAT-based contributions will be further reduced for Austria, Germany, the Netherlands and Sweden: 0.1 per cent for the Netherlands and Sweden; 0.15 per cent for Germany; and 0.225 per cent for Austria. For the same period, 2007-13 only, gross reductions in GNI contributions are introduced for the Netherlands of €605 million per annum and for Sweden of €150 million per annum. Both of these amounts are in 2004 prices.
The new decision also retains a correction mechanism in favour of the United Kingdom—the
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In summary, the UK’s abatement remains intact on all agricultural expenditure across the EU and on all expenditure in the EU 15. So the rebate is preserved and will rise in value. Along with the fact that the ceilings on budget expenditure are retained and that budget expenditure will fall to less than 1 per cent of EU GNI during this budget period, that makes this a good deal for the taxpayer. At the same time, we will, along with the other net contributors to the EC budget, pay our fair share of the costs of enlargement. The UK supports enlargement, which we know will be good for Britain, creating new trading opportunities and new jobs. So the December 2005 agreement is right for the taxpayer and for Britain’s economic interests. It is good for Britain and Europe. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord Davies of Oldham.)
7.34 pm
Lord Waddington: My Lords, the Minister, with his customary charm, has put such a gloss on events that it will take a little while to scrape off the coats of varnish and reveal the unvarnished truth. In plain language, the Bill puts the stamp of legality on a major betrayal of this country’s interests. It seeks to legitimise the act of Tony Blair in surrendering a part of our rebate, which was protected by our veto and which no one could touch without our agreement, for precisely nothing. We have a duty to put on record what happened and to explain in simple terms what led up to Mr Blair’s abject surrender before history is rewritten.
It all started honourably enough with Mr Blair championing the expansion of the EU into eastern Europe and his acknowledging that the new members would need help as they shed socialism. The money could only come from the farm budget and that would lose the French money. But, thought Mr Blair, the French would be persuaded to agree to the reform of the common agricultural policy and to a drastic decline in farm payments if Britain sacrificed at least part of its rebate. It is not, as you will see, quite what Mr Blair told the British people, but it is clear when one pieces together his utterances that that is what he had in mind.
It is fairly difficult if not impossible to understand how Mr Blair ever persuaded himself that the plan would work because back in 2002 he had persuaded Monsieur Chirac to agree to enlargement by promising the French president that French interests would be protected and, to that end, he had signed up to a common agricultural policy settlement which
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Faced, however, with the inevitable, “Non”, there was not the slightest need for the Prime Minister to do what he did, which was, with great alacrity, to abandon his call for a budget freeze, abandon his call for a fundamental reform of Europe’s finances, and hand over part of our rebate on a plate. That is what he did, and no amount of ministerial waffle can disguise that fact. What, of course, he should have done was to take the rebate off the table, pack his bags and return home. But he surrendered.
The tale now is that all this was necessary to secure enlargement and we could not “will” enlargement without being prepared to pay for it, but that really is rewriting history. Mr Blair told the Commons:
“The UK rebate will remain and we will not negotiate it away. Period”.—[Official Report, Commons, 8/6/05; col. 1234.]
When the then Chancellor of the Exchequer was asked in an interview whether the rebate was non-negotiable, he answered in one word—“yes”. Mark you, this was all said in 2005 when enlargement was already a fait accompli. With enlargement a done deal, Mr Blair was still saying the rebate was non-negotiable. He knew enlargement was going to cost money, but some of the money would have to come, he thought, from reform of the EU finances and reform of the CAP; as to the rest, everyone would have to chip in under the then existing system, which involved of course the continuance of Britain’s rebate. That is what he was, in effect, telling the British people.
That was the plan, that was the promise, but it is certainly not what he finished up with. If the rebate had remained, Britain would have paid over the next seven years an extra £12 billion. Because of Blair’s surrender we stand to pay an extra £19 billion over the period, with things set to get worse after 2013 because the limit on the cost to Britain of the reduction in the rebate ends in that year—and, of course, there is no meaningful reform of the EU’s finances, let alone any reform of the common agricultural policy.
Now we come to perhaps the most dismal part of the story. Where has the extra money gone? Scandalously, it is not, in the main, going to the main entrants. Unbelievably, Ireland, whose per capita income is 30 per cent higher than the EU average, is to get more per head than Lithuania, Slovakia or Poland. Furthermore, France, while becoming a net contributor, will remain the EU’s biggest recipient and the UK will remain the smallest.
Mr Blair surrendered. As Philip Hammond in another place put it, that is something we have grown used to, and every surrender carries with it the same lame excuse. It is always said that we had to surrender; failure to do so would have precipitated a crisis and, even worse, shown our lack of commitment to the EU. We have heard that so many times. French critics of the French Government do not call it anti-EU when the French Government fight to protect the interests of their own taxpayers and citizens, and the British people are entitled to expect the British Government to fight for the interests of Britain in the same way as
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Clearly Mr Brown was watching in horror while all this was going on. At the time a Treasury official told the press,
“We have ended up giving away much more than we expected and with precious little to show for it in return”.
Does anyone doubt that he was expressing his master’s view? One of the then Chancellor’s aides went even further and said that the sell-out—that was his word—would inevitably lead to public spending cuts. The Prime Minister knows well enough what he could have done with the £7 billion that Mr Blair threw away; he could have built 28 new general hospitals every year, employed an extra 220,000 nurses, cut the basic rate of income tax by 2p or cut council tax by nearly 35 per cent. He would not even have had to break faith with the police. But when he could, on first coming into office, have refused to accept the deal and demanded a renegotiation, instead he lamely accepted the deal. He has proved as supine and neglectful of the national interest as his predecessor and now must share with him the responsibility for a shameful as well as a costly business.
7.42 pm
Lord Barnett: My Lords, I should say at once that I disagree with almost everything the noble Lord has just said, but I will leave it to my noble friend to reply to that. For my part I make it clear that I am a Europhile, but one does not need to be a Eurosceptic to have considerable concerns about the European Union budget. The only thing I could not understand about the noble Lord’s speech was his absolute certainty about what the budget would provide in the years ahead; I wish I could be so certain.
I have been concerned about the lack of a clear audit certificate on EU budgets for years, but our own all-party European Union Select Committee said, about own resources, that it saw no need for changing it. The committee was, however, concerned about costs and expenditure, although it did not refer to the nonsense of expenditure and waste arising from travelling between Brussels and Strasbourg every month. I wish some of the recent renegotiations might have taken account of that and got some concession for it out of the way. In any large organisation, whether it be one of 27 nation states or even a small country like the United Kingdom, which has comparatively reasonable management of its budget, such an arrangement is bound to be costly—and that would apply with or without the new treaty.
The Explanatory Notes to the Bill are interesting on the question of costs. Paragraph 16 tells us, with regard to the financial effects of the Bill, that:
“The calculation of the UK correction shall be adjusted by progressively excluding expenditure allocated to member states which have acceded to the EU”—
So, that tells us. Or does it? Paragraph 17 goes on to say:
“The additional UK contribution resulting from the reduction in allocated expenditure is limited to €10.5bn”,
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not in today’s prices, but “in 2004 prices”. Then we are told that the European Agricultural Guidance and Guarantee Fund, Guarantee Section, will also have other effects, and:
“This change will be phased in as follows: 20 per cent budgeted in 2009, 70 per cent in 2010, 100 per cent from 2011”—
always assuming we can live that long. That should tell us what the cost will be to us. But does it? Paragraph 18 says:
“The effect of the new decision on the United Kingdom’s net contribution to the Community budget will depend on the total size and pattern of Community expenditure”.
Of course it will—but what will that expenditure be?
I wondered how I could find out what this is literally costing us as a net contribution to the European Community budget. It seemed a reasonable thing to ask. I got a copy of the April 1997 spending review. This should be simple, I thought; it will tell us immediately what the cost is. In table 6.2 on page 72 we are told that the net expenditure transfer to the EC in 2005-06 was £4.435 billion—the figures were not yet in trillions. Even that is not clear, because that is billions in accrued public spending. Then we are told that the estimated outturn for 2006-07 will be an accrued £4.652 billion. The plans for the following year—that is, the year we are now in—were for £5.01 billion. Now we know.
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