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Budget (United Kingdom Contribution)

Volume 984: debated on Wednesday 14 May 1980

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38.

asked the Lord Privy Seal what further meetings have been arranged involving Ministers of his Department concerning the re-negotiation of the United Kingdom's contribution to the EEC budget.

I expect the United Kingdom's contribution to the European Community's budget to be discussed at the informal meeting of Foreign Ministers scheduled on 17 and 18 May and again at the Foreign Affairs Council in Luxembourg on 2 and 3 June.

Does the right hon. Gentleman agree that the farm price deal that has been agreed so far by the other Eight is wholly unacceptable in any circumstances, involving as it does a £1 billion increase in the cost of the CAP, and that it is wholly contrary to the Government's stated intention of reducing the CAP? Will the right hon. Gentleman confirm that, in the Government's anxiety to get a deal on Britain's overall budget contribution, there will be no surrender on the farm price deal?

We are not in the surrendering business. On the first part of the hon. Gentleman's question, he should pursue his quarrel with his own leader. The Leader of the Opposition said on 29 April:

" I repeat very strongly that we shall support her "—
that is, my right hon. Friend the Prime Minister—
" in not giving way on the agricultural price freeze until the budgetary issue is settled."— [Official Report, 29 April 1980; Vol. 983, c. 1154.]

Does not my right hon. Friend agree that the demand by my right hon. Friend the Prime Minister for a substantial cut in our EEC budget contribution is fully justified, bearing in mind the lethargic and slow method of operation in the EEC, which means that much of our industrial base is being undermined? I refer particularly to the very slow way in which the EEC processes applications for anti-dumping measures and so on.

I am not sure how closely connected the two parts of my hon. Friend's question are, but I agree with him 100 per cent. on the first part.

Can the right hon. Gentleman confirm that the nub of the negotiations about the budget is the relative GNP per head of the member States in relation to contributions rather than any argument about juste retour, or broad balance?

We have never sought juste retour, and that has nothing to do with our case. The main point is that we are the seventh richest member of the Community and by far the largest contributor. But the matter goes beyond that. On the present basis, if nothing happened, we should be supplying about 60 per cent. of the Community budget. Germany would be supplying the rest, and virtually everybody else would be in surplus. That is plainly wrong.

It is manifestly wrong, as the Prime Minister has made it plain on a number of occasions. But will the right hon. Gentleman make clear to the country that there is no question of trading off a temporary concession on the British net contribution to the budget against a major new imposition on the British housewife and consumer and additional cost through the already over-costly CAP? Will he also make plain that he is trying to get at the heart of the matter, which is the whole crazy system of own-resources and the pattern of budget expenditure?

The right hon. Gentleman should pursue that matter fundamentally with his own leader.

I will. It is worth bearing in mind that the previous Government, which the right hon. Gentleman adorned, as did his hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands), agreed to average price increases of 7·5 per cent. a year. Therefore, even if we agreed to a 5 per cent. increase, it would be much lower than the average increases conceded by the previous Government.

Does my right hon. Friend agree that the 5 per cent. farm price increase would add a mere 0·2 per cent. to the retail price index, whereas excessive wage claims in this country are pushing inflation up to 20 per cent?

That is largely true. Nevertheless, everything that adds to inflation is in itself to be regretted. The 5 per cent. increase is large, but is not large compared with that which was normally agreed to by the previous Government.