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European Community (Budget)

Volume 986: debated on Wednesday 18 June 1980

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The following question stood upon the Order Paper :

32.

To ask the Chancellor of the Exchequer how much of the rebate on the United Kingdom's contribution for 1980 will be paid in cash, and when; and how the remainder will be repaid, and when.

With permission, Mr. Speaker, I wish to answer question No. 32.

All the payments due under the arrangements described to the House by my right hon. Friend the Lord Privy Seal on 2 June will be made in cash. The precise timing of the payments remains to be decided, but we expect the bulk of the money due in respect of a particular calendar year to be paid in the corresponding United Kingdom financial year.

Does the Minister's reply mean that no part of the rebate will be tied to projects under the regional fund or other funds to which the principles of additionally will have to apply? Does he agree that as the repayments will form part of the 1981–82 budget the French Government are right to claim—as they have repeatedly done—that the fact that they will form part of next year's budget and not this year's gives them the right of veto over the repayments and makes the repayments subject to a full agreement on the farm price settlement in the spring of next year?

I think that the hon. Gentleman is slightly mistaken. It is true that part of the refund will be paid by means of Community assistance for agreed domestic expenditure under a new article 235 regulation, but that is intended to help to finance programmes rather than specific projects. As to the second part of the hon. Member's question, there is no such thing as a Community 1981–82 budget. The Community's financial year is the calendar year. The money will come in the 1981 budget, but it is understood that it will be paid in the first quarter of 1981. Therefore, it will come within the current financial year.

Has not my hon. Friend's answer given the lie to the widespread attempts by the Labour Party to suggest that the deal was not as good as it seemed to be? Every other country in Europe thinks that Britain has achieved a major change to its advantage. Why cannot the Labour Party cheer when we have done well?

My hon. Friend is right. If the Labour Party had achieved a settlement half as good, we would never had heard the end of their crowing.

Does not the hon. Gentleman agree that the Prime Minister's promise to cut interest rates because of the cut in the PSBR was based on a gross misunderstanding about the reduction in the PSBR during this fiscal year? The hon. Gentleman has just told us that we shall receive only the bulk of the money in this fiscal year, and he has admitted that a good deal of it will not go towards reducing the PSBR but will go towards the financing of programmes that may not be included in the Government's present policy. Can the hon. Gentleman tell us specifically by how much he expects the PSBR to be reduced in this fiscal year as a result of the agreement reached by the Prime Minister?

The Prime Minister has made it perfectly clear that this money will be applied to reduce the PSBR. The right hon. Gentleman must be aware from his own experience as Chancellor—a sorry experience, admittedly—that it is not customary to publish interim figures for the PSBR after the Budget Statement. I forget the second question that the right hon. Gentleman asked.

Let me remind the hon. Gentleman. First, the effect of the various financial transactions that were not envisaged at the time of the Budget have always been announced. I announced them repeatedly when I was Chancellor. Will the hon. Gentleman answer the question that I put to him? By how much does he expect this year's public sector borrowing requirement to be reduced as a result of the agreement in Brussels?

I now remember the other question that the right hon. Gentleman put. He asked about interest rates.

The point that the Prime Minister made was that the money would be applied to reduce the PSBR and that, by keeping the PSBR down, a downward pressure would be exerted on interest rates. The right hon. Gentleman made that point when he was Chancellor of the Exchequer.

The hon. Gentleman really is dodging and weaving. I asked him a specific question, to which he must know the answer. Why is he frightened to tell the House that the reduction in the PSBR this year will be far less, as a result of the Brussels agreement, than the increase of £700 million since the Budget that was estimated in last year's PSBR?

The right hon. Gentleman is always good at making assertions for which he has no back-up. It is impossible to say at this stage by how much the PSBR will be reduced.

Does my hon. Friend agree that, bearing in mind that the previous Government did nothing to renegotiate our excessive financial payments and spent 10 times as much as our net budget contribution on the useless, wasteful nationalisation of steel and other industries, the Opposition have no right to ask impudent questions about the PSBR just a few weeks after the agreement in Brussels?

Although I am not always wholly in agreement with my hon. Friend, I agree with him on this occasion.

The Financial Secretary said two things that appear to be incompatible. He mentioned that this sum would be paid in cash, but later he referred to programmes. Will he now tell the House whether all this money will be available for the reduction of the PSBR or whether it will be put into programmes of expenditure in this country? If so, what will be the conditions, and under whose auspices will those programmes of expenditure be conducted?

Inasmuch as the cash is used to finance, programmes—and it will be cash, rather than money debited through the financial mechanism, which, as the hon. Gentleman knows, is the other part of the solution—they will be our programmes, not Community programmes in the sense that the regional fund is a Community programme.

On a point of order, Mr. Speaker. My question No. 33 is precisely on all fours, in its history, with that of my hon. Friend the Member for Blackburn (Mr. Straw). Will my question also be answered?

Further to that point of order, Mr. Speaker. My question is identical, and it was dealt with identically by the Lord Privy Seal. Therefore, may I ask the same question about my question?

I can understand that both hon. Members thought that I would have read their questions and called them for supplementary questions. I promise to bear that in mind next time. I am very sorry about today.