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Community Budget

Volume 978: debated on Wednesday 13 February 1980

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asked the Lord Privy Seal if he will make a statement on the outcome of his visits to other EEC member Stales in connection with the United Kingdom contribution to the Community budget.

My tour of European Community capitals was useful. As I informed the House on 31 January I discovered a general desire to get this problem solved. Following talks between my right hon. Friend the Prime Minister and Mr. Cossiga, the Italian Presidency is also taking an active part in finding a solution. We shall be having further talks with our partners in advance of the next European Council.

Dos the Lord Privy Seal now take the view that, in retrospect, the Prime Minister was singularly indiscreet in refusing the £350 million that was on offer at Dublin? Will he now say whether it is the considered view of his Department that it is legal or illegal to withhold VAT payments?

I cannot agree in any way that my right hon. Friend the Prime Minister was indiscreet, as the hon. Gentleman describes it, in refusing the £350 million. The hon. Gentleman does not seem to be aware that that sum was on offer only in full settlement of our problem. I am sure that the whole House would agree that £350 million is totally inadequate.

On the second part of the hon. Gentleman's question, as I said in reply to an earlier question, we are intent on finding a solution. We have not considered properly any measures that might be taken if we did not reach a solution.

Has any preparatory work been undertaken in any Government Department in connection with the possible unilateral withholding of our budgetary contribution?

I cannot answer that question, because I do not know what goes on in other Departments.

What is the Government's attitude to the Commission's proposal for spending in the United Kingdom? If the Government accept that proposal with few qualifications what additional mechanism does the right hon. Gentleman imagine would help us to get the matter settled?

As the right hon. Gentleman appreciates, we naturally think that the Commission's proposal is a useful step on the road to a solution. It contains a number of ideas for increasing the level of Community spending in this country. We continue to believe that—not in substitution for the Commission's proposal, but in addition to it—a receipts mechanism to control the amount of Community spending in this country in future years is the right approach.

Order. I propose to call one more question from each side and I shall add on the extra time at the end of Question Time.

Does my right hon. Friend agree that it is essential, as soon as possible, to eliminate the United Kingdom's excessive contribution to the budget? Has he pointed out to other member States that, adjusted to present-day prices, our contribution represents one-tenth of what the previous Labour Government spent on useless, wasteful nationalisation leading to the destruction of key industries such as the steel industry?

I agree that this problem should be solved as soon as possible. It is in the interests of all. It is a Community problem, and it is in the Community's interests that it be solved as soon as possible. That is all the more true in view of what is going on in the rest of the world. I have no doubt that my hon. Friend is right in saying that the previous Labour Government committed a lot of wasteful acts of expenditure. The fact is that our projected contribution to the Community budget is grossly excessive.

The House knows that the Lord Privy Seal has been spending a substantial amount of time on political philosophy as well as on his departmental duties in recent weeks. I should like to press him further on the reply that he gave earlier, when he said that he did not know whether any serious thought was being given to possible counter-measures that the British Government might take if we failed to reach a satisfactory solution on the broad balance of the budget. Is he, in effect, saying that no studies are being made inside the Foreign Office? If so, will he start them forthwith?

I said that I could not give an undertaking on what my hon. Friend the Member for Faversham (Mr. Moate) put to me, because I did not know what was going on in other Departments. As the right hon. Gentleman knows, the Foreign Office always takes all possible contingencies into account, and that is what we are doing.