Order for Second Reading read.
I beg to move, That the Bill be now read a Second time.
I begin by thanking the sponsors of my Bill, my hon. Friends the Members for Wellingborough (Mr. Bone), for Stone (Mr. Cash) and for Ribble Valley (Mr. Evans), my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory), my hon. Friends the Members for Poole (Mr. Syms), for Isle of Wight (Mr. Turner), for Gosport (Sir Peter Viggers) and for Macclesfield (Sir Nicholas Winterton) and the hon. Member for Castle Point (Bob Spink). At the time when the Bill was drafted and presented, they were all my hon. Friends. All bar one still are, and since then my hon. Friend the Member for Gosport has rightly been awarded a knighthood in the honours list.
Not enough, no. I think that everybody on that list is entitled to a knighthood.
Who could have known when the Bill was presented, seven months ago on 10 December, that today it would top of the billing for Second Reading and that it would be so highly topical? There is even a petition on the Downing street website calling for exactly what the Bill would deliver—an audit of the benefits and costs of the UK’s membership of the European Union.
In The Sunday Telegraph last Sunday, there was as leading article headed, “If EU will not listen, it risks popular revolt”. It stated that
“institutions today need democratic endorsement if they are to be legitimate: it is now accepted by almost everyone that people cannot be ruled against their collective will, as expressed in elections or referendums.”
That leads me to a quotation from our distinguished former Speaker, the late Lord Weatherill. He wrote a preface to the excellent work by Ian Milne, “A Cost Too Far?—An analysis of the net economic costs and benefits for the UK of EU membership”. I am delighted to see that my hon. Friend the Member for Stone has a copy of it with him. It was published in July 2004, and in his foreword, Lord Weatherill stated that when he was the Conservative Government’s deputy Chief Whip in 1972, he supported entry into the European Common Market
“on the assurance of the Prime Minister, Mr. Edward Heath, that ‘joining the community does not entail a loss of national identity or an erosion of essential national sovereignty.’”
He stated that things had moved on a bit since then, and that what was important was that
“Parliamentarians now have a sacred duty honestly to explain the pros and cons of our developing relationship with the European Union. Only then can the people make an informed choice.”
Of course, at that stage we had as our Prime Minister somebody who had said that he wanted to dispel the myths about Europe and “let battle be joined”. He suggested that we would have a referendum and that the Government would win it. I shall not go over the history since then, but the Government are now running away from the will of the people.
My hon. Friend may care to mention the fact that Ian Milne wrote that pamphlet on behalf of Civitas and that, I am glad to say, he was the first director of the European Foundation, of which I happen to have been the chairman since 1993. He has held that post since 1993. He was also the director of Global Britain, so his analysis credentials are absolutely first-class. He is one of the most distinguished economists in his field.
My hon. Friend is absolutely right. I am sure that Ian Milne would be in a strong position to give evidence to the commission.
Only as recently as Wednesday, the Prime Minister was using that familiar refrain of justification for our position in the European Union, by saying that 60 per cent. of our trade is with the EU and that 3 million jobs depend on the EU. He told my hon. Friend the Member for Congleton (Ann Winterton) that it would be “bad for Britain” to be out of Europe altogether.
However, the Prime Minister’s claim about trade is wrong. The Library note for this debate summarising national statistics data says that in 2007, 52 per cent. of the UK’s total trade in goods and services related to the European Union, which was lower than it was in 2006. The Prime Minister was therefore wrong in asserting that the figure was 60 per cent. He was also wrong in implying, as the Euro enthusiasts do so often, that, because perhaps 3 millions jobs depend on exports to the European Union, they would be in jeopardy were our relationship with the European Union to be different.
My hon. Friend the Member for North Essex (Mr. Jenkin) made that point well in the debate on European affairs earlier this week, saying:
“In fact, 6.4 million jobs in continental Europe depend on trade with the United Kingdom. Germany exports more goods and services to the UK than we do to it. Some 3.2 per cent. of German gross domestic product is exported to the United Kingdom.”
He then gave some other figures and concluded by saying:
“Imports from the EU 27 to the UK have grown by an average of 13 per cent. over the past two years.”—[Official Report, 18 June 2008; Vol. 477, c. 1040.]
At the same time, our exports have been static or declining. Anybody who suggests that our having a different relationship with the European Union would put those 3 million jobs at risk will find that there is no evidence for that suggestion.
As my hon. Friend knows, I agree with him wholeheartedly about that. Does he agree that there are plenty of examples of countries that have free trade agreements with countries in the European Union, but which are not members of the EU? Therefore, not being a member of the EU would in no way jeopardise our free trade agreement.
My hon. Friend is absolutely right. The figures for Norway, Lichtenstein or Iceland, for example, show that those countries have increased their wealth far in excess of what we have been able to achieve, because of their relationships with the European Union, which are different from ours.
Does my hon. Friend agree that there is a further dishonesty, in the argument that states that because people vote against the Lisbon treaty, for instance, they wish to pull out of the European Union altogether? Is anybody seriously suggesting that when the French, the Dutch or the Irish voted no, they wished to leave the EU? They want to see the EU doing less and doing it a lot better.
My hon. Friend is absolutely right. What really grates with the Euro bureaucracy is the fact that most Irish people support the concept of Europe and the European Union, but have seen through what is contained in the Lisbon treaty and have voted it down overwhelmingly.
If the Government accept my Bill today, as I hope they will, they will have the opportunity to have a proper audit of whether 3 million UK jobs depend on Europe and of whether there would be a net loss or gain of British jobs if we had a different relationship with the European Union. The Bill is essentially about transparency and openness. The Government support labelling on products, so that consumers know what they are buying. The Bill would ensure that our people knew what was in the EU chalice, if anything other than poison.
As my hon. Friend knows, I am a member of the Better Off Out campaign, which tries to highlight how we would be financially better off out of the European Union. Is it not striking that the most fanatic supporters of our membership of the European Union are also the most fanatic objectors to his Bill? Does he agree that that shows that if such an audit was conducted, people would see the European Union for what it really is?
My hon. Friend is absolutely right. It is significant that in this packed Chamber today there is nobody on the Government Benches, other than the Minister replying to the debate and the Government Whip. That suggests that the Government think that by freezing out debate on the issue it will go away, but it will not.
Is there not a more fundamental problem than transparency about the costs and benefits to UK plc, which is that the accounts have not been signed off for some 13 years. I was in business for 20 years before I came to the House, and frankly, I would not have invested a penny into any company unless I had seen fully audited accounts. That is where the real shame of the EU and its auditing process lies.
My hon. Friend is absolutely right. It is wonderful that the Chairman of the Select Committee on Public Accounts is in the Chamber today. I hope that he will make a major contribution to this debate, because his Committee has done some useful work on the failure of the EU to eliminate fraud or even account for the money that we pay into it.
Britain has done quite well over the past 30 years in terms of GDP, but some of that was down to the supply side reforms of Mrs. Thatcher’s Government and some of it may be because the EU is a big market. How would my hon. Friend’s commission distinguish between what is British and the effect that Europe has had?
That would be a matter for the commission. My hon. Friend, who is kindly supporting my Bill, will see from its contents that we are talking about setting up a commission that would be independent, in the sense that the chairman would be truly independent and the other members would be drawn equally from those in favour of continued membership of the European Union and those against it. It would be unfair to restrict them in what they did or the evidence that they gathered.
It is not good enough for any Government to say, “This is all far too difficult to calculate; therefore, we’re not prepared to go in for the calculation.” If people who manufactured food said that it was too difficult to say on a label what was contained in a package, neither consumers nor the Government would accept it. However, that is effectively what the Government are saying to us, the people, about our relationship with Europe. The Government are saying, “We can’t go into the costs and benefits in detail, because it’s all too difficult.”
It may well be—indeed, I am sure that it is likely—that my hon. Friend will come to the issue over-regulation. In order to determine the costs and benefits, one must also look into the costs of the burdens on business that result from over-regulation. Mr. Verheugen, the German commissioner, said that over-regulation was costing Europe £600 billion a year. The Government’s better regulation task force also said that over-regulation was costing the British £100 billion a year. That is an astonishing state of affairs, which demonstrates the fact that the whole thing has to be renegotiated and revamped, and that we have to get some common sense, through the audit that my hon. Friend suggests.
My hon. Friend is right in citing those figures. However, instead of prejudging their validity, I want an independent assessment of them. That is why the Bill is expressed in neutral terms. It will not have escaped hon. Members’ notice that the short title talks about the benefits of EU membership before the costs.
In one respect, my hon. Friend’s wording is a little too fair. Some of the comments coming from the European elite following the Irish referendum show a certain arrogance that the House needs at least to acknowledge. I will not bore hon. Members with them for too long, but I shall just give one or two quotations. Wolfgang Schaeuble, the German Interior Minister, said that
“a few million Irish cannot decide on behalf of 495 million Europeans”,
while the Polish Prime Minister said,
“irrespective of the results of the referendum in Ireland…Europe will find a way of implementing this treaty”.
Comments like that smack of arrogance, and that is one good reason why people in this country and on the continent are fed up with the European elite dictating to the peoples of Europe what they should be voting on.
My hon. Friend is absolutely right. That view is very much reflected in the opinion polls. I find it disappointing that our own Government are not being more robust in this respect. The Irish people have spoken, but when I intervened on the Foreign Secretary on 16 June to ask him whether he would condemn people—particularly Members of the European Parliament—who refused to respect the verdict of the Irish people, instead of saying, “Yes, I will”, he said, in rather circumlocutory language:
“Anyone who refuses to respect the decision of the Irish people is obviously not doing justice by the systems that exist”.—[Official Report, 16 June 2008; Vol. 477, c. 720.]
That kind of language makes our people very suspicious of the real motives in Europe.
Did my hon. Friend also hear the Foreign Secretary talking about the Irish vote this morning, and pivoting most of his comments on the suggestion that the Irish constitution should be revised? That is what people seem to be aiming at, judging by his remarks this morning.
The Irish people have done us all a favour and we should thank them. Many countries have not had the opportunity to hold a referendum, but if they did, I suspect that most of them would say no. The initial vision of the European Union as a European free market has changed, and people today are saying that enough is enough. I find it strange that we have reached a stage at which the European Union has almost become an Orwellian state—it is a shame.
I do not think that my hon. Friend is exaggerating at all. If we look at the background to the Irish referendum, we see that the people supporting a no vote asked for the treaty—the subject of the referendum—to be given to the people so that they could read it for themselves and see what was involved. The Irish Government, who supported the yes vote, refused to allow that. That just shows the extent to which the European elite are keen to keep their people in the dark. This is all about evidence-based policy making.
I do not know whether my hon. Friend has had an opportunity to read the Metro this morning. It contains a fantastic letter stating that one of the reasons why the Irish voted no was that they did not understand the treaty. The letter went on to suggest that they would have had to be bonkers to vote for something that they did not understand.
I apologise for intervening on my hon. Friend a second time—we really must let him make some progress—but I want to point out that recent press reports suggest that there might be a backlash in Ireland as a result of the arrogance that has been shown. Let me give the House another example of that. Axel Schäfer, the SPD Bundestag leader, has said that
“we cannot allow the huge majority of Europe to be duped by the minority of a minority of a minority”.
That has not gone down well in Ireland. If the Commission decides to put this matter to the vote again in Ireland, it might get a worse result than it did this time.
I know that we must not intrude upon private Conservative grief, but this rather reminds me of what happened at the Winchester by-election, when there was a rerun. Basically, the people of Winchester had spoken and, although they had not defeated the Conservative party candidate completely, they had effectively defeated him. He had the temerity to stand again, and the rest is history, as we know. I am trying to tempt the hon. Member for Kingston and Surbiton (Mr. Davey) into the debate, because the Liberal Democrats have an interest in this subject. If my Bill were to become law, it would enable the information to be made available to inform the referendum for which I understand he is still campaigning—namely, a referendum on whether we should remain in the European Union.
On the question of a referendum on the costs and benefits of membership, does my hon. Friend know that, in Ireland, under the Nice treaty, a proper evaluation was sent to each person, which is why they voted yes? However, the cost involved was subsequently trimmed to the extent that such an evaluation was not made available for the next vote. It will be essential, in any referendum held in this country, to have an impartial analysis, both politically and economically, along the lines proposed in my hon. Friend’s Bill, in order to ensure that every person in the country has a fair and objective analysis of what is going on, so that they can make an informed choice.
My hon. Friend is absolutely right. That is the point that I was trying to develop when I spoke of evidence-based policy making. That concept is often supported by hon. Members on both sides of the House, but when it comes to making evidence available on this particular issue, the Euro-enthusiasts seem to develop an aversion to it. I wonder why.
My hon. Friend mentions the word “aversion”. Does he agree that there appears to be an aversion to democracy and to listening to the voice of the people? We have a democratic deficit in Europe and in this country. Many of the people who said yes to Europe in 1975 did not know then what we know now, which is that it would be a political union rather than a trading union. There are people alive today who were not old enough to participate in that referendum—indeed, there are people alive today who were not even born at the time of that referendum. That is why it is critical that the British people should have a voice. I believe that the Prime Minister has acted in a disgraceful way in not fulfilling his promise on a referendum on the Lisbon treaty. Does my hon. Friend agree that the British people must be given a chance at the earliest opportunity to express their views on the position of the United Kingdom within the European Union?
Yes. When that opportunity arises, the decision must be taken with the benefit of the evidence that would be made available as a result of my Bill.
As a result of all the support that I am receiving, and of the wealth of material that is being provided, I am in danger of going on for up to five hours and talking out my own Bill. I certainly would not want to do that. I should like briefly to explain the main elements of the Bill. It would require the Chancellor or the Exchequer to set up, within six months, an EU membership audit commission to report, within 12 months thereafter, on the matters set out in clause 2. The commission would be required to
“examine the costs and benefits of the UK’s continued membership of the European Union, taking into account the impact of membership on the UK’s economy (including consideration of public expenditure and receipts resulting directly from membership), national security and defence, and constitutional arrangements.”
Would the commission take into account whether the identified costs were reversible? Many people in the European Union—including, I suspect, the Irish—are worried that, whereas the benefits might come and go, the costs are irreversible. An example is the directive on the resale of art, which gives an incentive for people to take their art to be sold outside the European Union. That measure was passed despite the objections of the British Government and the British Parliament, and even an incoming Government after a general election will not be able to reverse that acknowledged cost, because it is enshrined in treaty law. Would the commission take into account the constitutional effect of these costs, as well as their amount?
I very much hope so. That is why the terms of reference have been drawn as widely as they have been. I do not think that the commission would be able to take into account cumulative past costs, but current and continuing costs would be taken into account as against the current and continuing benefits. My right hon. Friend is absolutely right to say that, with so much European regulation, once it has been brought in, it can be changed only by a majority vote in support of such a change.
For a recent example, people in my constituency have been complaining about changes to the bus timetables that resulted from a European regulation. Buses travelling more than 31 miles continuously had to have tachographs in them and extra form filling was required. The bus companies said that the costs were disproportionate, so they refused to allow their buses to travel more than 30 miles continuously. As a result, the outlying areas are no longer on the bus routes. I presented a petition to the House about that and the response I had from the Government was, basically, “Woe is me.” When the Government negotiated on the regulation, they did not realise that it would have this perverse impact. Are the Government able to do anything about it? In responding to the petition, they said that they could not do much about it because changing it back to where it was before and removing this unexpected consequence would require a majority vote in favour of that change and others might want to go further. That is a good example of the European Union ratchet, which my right hon. Friend the Member for Wells knows more about than any other right hon. or hon. Member.
Returning to a point raised by my hon. Friend the Member for Stone (Mr. Cash), the European Commission has been very helpful in acknowledging that the cost of regulation is €600 billion and that the benefits of the single market are something in the region of €160 billion. On its own admission, the costs of regulation are about three times more than the benefits of the single market. Does my hon. Friend agree that whereas only about 10 per cent. of businesses in this country get any benefit from the single market, every single business faces the cost of all the regulations?
Would my hon. Friend consider amending his Bill in Committee—we all hope that it will get there—to ensure that the seven members serving on the commission are suitably qualified in economic analysis? I am thinking of someone like Ian Milne, but there should be similarly qualified people on the other side—Will Hutton, for example, who gave evidence to the European reform group that I set up. He criticised the way in which the Lisbon agenda was operating. Speaking as a rapporteur on a European Commission proposal for improving the economy of Europe, he was quite open in criticising it. That is particularly notable, given that he is generally regarded as being very pro-European.
My hon. Friend makes a fair point, but I must say that I would prefer to get the Bill into Committee before discussing the detail of amendments. Let us take things one step at a time.
The commission would have to report within a year of its appointment and a copy of the report would have to be provided to the National Audit Office. The report, together with the views of the Comptroller and Auditor General, would then be presented to Parliament and a Minister would have to table a motion for debate, expressing a view on the contents of those reports. Fundamental to the process would be the membership of the EU membership audit commission, to which I have already referred; thereafter there would be further audits every five years, as long as the UK remained in the EU.
My hon. Friend is absolutely right. Those who have looked into the subject have been much informed by the Swiss Parliament, for example, which sought to establish whether joining the European economic area—not the EU itself—would be in the Swiss economic interest. That information was used to inform the Swiss for their own referendum and they voted against joining the EEA.
I do not wish to be too pedantic, but I note that neither MEPs nor employees of the European Commission are to be included in my hon. Friend’s commission. However, I believe that we, as elected representatives of this sovereign Parliament, should have some input into the commission. I am curious to know whether my hon. Friend feels that Members of this House should be included—my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) or my hon. Friend the Member for Gainsborough (Mr. Leigh), for example, as they both have tremendous experience on this particular issue.
I do not have it mind for them to be included in the commission, mainly because the amount of work needed over a short period of time would make it very difficult for them to carry on their constituency duties. What is important is that their knowledge and expertise would be available when we receive the Government’s report based on the evidence provided by the commission. Knowledgeable and commendable as those individuals and others are, it would be better to draw on their experience in that way rather than in the way that my hon. Friend suggests.
Given the amount of work required, I presume that members of the commission—no doubt these will be very well qualified people—would be paid. What is my hon. Friend’s view on that? People serving on the commission might have other busy jobs. If an hon. Member serving on it were paid, it might be viewed as an office of profit under the Crown and lead to a by-election, so that provides another reason why it may not be a good idea to have MPs sitting on the commission.
My hon. Friend makes another good point. The Bill makes provision for the costs of the commission to be met out of public funds. If we want people of the right quality to devote the necessary time to the job, we could not expect them to do it wholly without remuneration.
Does my hon. Friend agree that what he is seeking to set up is extremely important constitutionally? It would be sort of equivalent to the wise men of the Bank of England’s Monetary Policy Committee. We would know that when the commission made judgments, they would be really considered judgments. As we conduct our proceedings on this excellent Bill today, it is immensely important that we quell any argument that those who want the sort of independent audit suggested in the Bill are somehow outrageously anti-European and all the rest of it. That is a complete travesty of the truth, as it always has been. It is just that the establishment and the elite of Europe have absolutely no interest, as shown by their response to the Irish vote, in listening to anything that is independent, impartial or objective—even when, as over the last 20 years, we have been proved right.
My hon. Friend is correct and brings me to my next point. In a recent Global Vision/ICM survey, 41 per cent. of voters said that their ideal relationship with Europe would be one based simply on trade and co-operation. Only 27 per cent.—a very small percentage—wanted Britain to stay a full EU member, while 26 per cent. wanted to withdraw altogether. The centre ground—as hon. Members know, I am always interested in discussing that ground in our Friday debates—is very much focused on 41 per cent. saying that they want a different relationship from the current one, while still wishing to maintain a relationship. Under my Bill, we could have a factual analysis of what a relationship with Europe based simply on trade and co-operation would entail in terms of costs and benefits. The factual background could then be used to inform a referendum on renegotiation of our relationship with Europe. Sooner or later, it will come to that. We are going to need a renegotiation and we will need to have a referendum in order to take the people with us.
How detailed will the Commission’s report be? Will it give details of some of the costs that we must bear? Here is a perfect example: every month the European Parliament moves from Brussels to Strasbourg for a week at a cost of, I believe, over €100 million. That is clearly ludicrous, but in the same week in which the European Parliament talked of saving the planet, it voted to continue this procedure of flipping between Brussels and Strasbourg—an exercise that makes “Monty Python’s Flying Circus” look like a documentary.
My hon. Friend has cited a well-known example of totally avoidable waste of United Kingdom and other European Union countries’ taxpayers’ money, all to satisfy the vanity of—one supposes—Members of the European Parliament and/or members of the French establishment who consider it important to maintain large premises in Strasbourg and subvent the Strasbourg economy.
However, monstrous and wholly unacceptable though that is, it pales into insignificance in comparison with some of the much larger costs of the European Union. I have not time to go into all of them, but let me remind Members of a document produced in December 2005 by the Treasury, no less: “A Vision for the Common Agricultural Policy”. It states that
“economic analysis, even on conservative assumptions, suggests the CAP will leave the EU economy around €100 billion”
—about £80 billion—
“poorer over the period…2007-13”.
It adds that
“the financial cost to ordinary citizens is much greater—€100 billion each year according to OECD estimates…This is an average cost to an EU family of four of… €950 a year”
—over £750. The cost, says the report, is shared by taxpayers and consumers.
The report also states—this, I think, is one of the most amazing figures—that
“the CAP has been estimated to be equivalent to a value added tax on food of around 15 per cent”.
Can we imagine what would happen in the Chamber if the Government announced that they were going to impose value added tax of 15 per cent. on food? I seem to remember the present Prime Minister, when he was Chancellor, teasing us all in one of his Budgets by saying that he was not going to impose VAT on food; but we are already paying the equivalent of a 15 per cent. VAT rate, at a time when food costs are spiralling out of control.
The annual costs of the common agricultural policy fall disproportionately on the poorest in society. That policy alone represents 40 per cent. of global market price support for agriculture, and the Treasury document estimates that
“global income could increase by $290 billion by 2015 if trade-distorting policies… were eliminated.”
It also estimates that
“removing market price support would bring a one-off reduction in inflation”
in this country
“of 0.9 per cent”.
It would be very useful, would it not, to reduce inflation by about 1 per cent. as a result of reform of the common agricultural policy. What happened, however, was that the Government said that in order to enable the European Union to deliver its “vision for the common agricultural policy”, we would agree to pay even more to the European Union by forfeiting part of our rebate over the next few years. As a consequence we have given up a large part of it. By 2011 we shall probably have to pay an extra £2 billion a year of taxpayers’ money for membership of the European Union, and what have we been given in return? A hollow promise that something might be done about the common agricultural policy. We need do no more than listen to the leaders of countries in continental Europe to know that they have no intention whatever of doing anything fundamental to the common agricultural policy. Our costs will go up, and the position will be made worse by the fact that we are also paying extra to try and get something done about the common agricultural policy, which is never going to happen.
Although the Bill’s provisions are confined specifically to the United Kingdom and our Parliament, should not the other member states be urged to produce similar Bills so that they too can assess the consequences of the increasing dangers visited on their populations, such as rising food and commodity prices and all the difficulties resulting from the common agricultural policy that my hon. Friend has described? Should not each Parliament—throughout the European Union, not just at the bureaucratic Orwellian centre to which my hon. Friend has rightly referred—have the opportunity to make an assessment of the kind that he, in a most moderate speech, is advocating so satisfactorily?
I agree with my hon. Friend, and thank him for his generous comments.
It would be wrong not to refer to the benefits of the common agricultural policy, so let me add for the sake of balance that 10 per cent. of this enormous amount of market price support reaches farmers. However, 25 per cent. is lost through economic inefficiencies, and about 35 per cent. goes to suppliers of imports such as pesticides and fertilisers. We know from the Treasury report that the United Kingdom alone bears the cost, amounting to hundreds of millions of pounds each year, of cleaning up water supplies that are polluted as a result of the intensification of farming under the common agricultural policy.
Is my hon. Friend aware of the substantial disaffection in the farming communities—not only in this country but in others—and the fishing communities? Riots are taking place in other parts of Europe. Not much of that features in the media, but it is enormously indicative of the dismay felt by ordinary people. Under this failing system, the economies of Italy, Greece and Spain are imploding. The situation is incredibly dangerous. Ultimately, in some countries in particular, it is likely to lead to civil disorder because of the lack of a democratic safety valve.
It is true that the world price of food is rather lower than the price in the EU, but it is also true that Norway and Switzerland subsidise their farmers at quite a high rate. There may be no savings to be made. I presume that if we left the EU, we would need some system of subsidy for our farmers unless we decided to take the New Zealand route, which I think is very brave. Perhaps some of our colleagues with more agricultural constituencies will comment on that later.
But if we did not have to pay for the common agricultural policy, we should be able to decide, in this sovereign Parliament, how we wished to distribute the money. If we wanted to help farmers in some way, that would be a decision for our Parliament rather than for the European Parliament.
We could do what the New Zealanders do—their farming is hugely successful now—or we could introduce a working farmer tax credit. We could give money only to poor hill farmers. What we should not be doing is siphoning huge amounts of money into large agri-businesses, some of which, in my constituency, receive more than £1 million a year in subsidies alone. That is what is so scandalous about the situation.
My hon. Friend is absolutely right. We often have debates about the common agricultural policy in the Chamber, and what is common to all of them is the feeling of frustration and impotence among those who participate. We are completely at odds with almost all our partners in the European Union on the issue of the common agricultural policy and support for the farming community. The fact that the common agricultural policy is still consuming about half the European Union’s budget is surely the top issue for the membership audit commission to consider.
My hon. Friend made an extremely important point a couple of minutes ago regarding the question of the decisions that should be taken by this Parliament on behalf of the electorate of the United Kingdom. Does he not agree, in line with his other Bill that we will be considering later in this Session, on the supremacy of Parliament—I originally introduced such a Bill a few years ago, and I pursued the issue during the Lisbon treaty debates—that we have to assume that our Parliament will, in the vital national interests of the people of this country, make the decisions on behalf of the electorate? That is the way to achieve, for example, the economic competitiveness that my right hon. Friend the Member for Witney (Mr. Cameron) rightly insists upon, so that we achieve the kind of results that this Bill would produce, while at the same time ensuring that it is this Parliament that decides the fundamental questions on behalf of the British people.
My hon. Friend is right and I hope that there will come a time when the Bill to which he refers can be discussed in a similarly lengthy way to the one before us.
I want in conclusion to refer to the administrative burdens. I know that the issue of regulation has been raised a lot, and my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) made a fantastic contribution to it with his ten-minute Bill the other week, drawing attention to the extent to which we have lost control over the legislative process in this House and how we were faced last year alone with 177 directives, 2,033 directly enforceable regulations and 1,045 decisions. Linking in with what my hon. Friend the Member for Stone just said, part 4 of the Regulatory Enforcement and Sanctions Bill currently going through this House refers to making it incumbent on UK regulators to reduce unnecessary regulatory burdens. However, the gaping lacuna in that Bill is that it does not cover EU regulations, which as we know are responsible for a substantial burden on industry and small businesses.
The noble Lord Stoddart of Swindon, a former distinguished Labour Member of this House, was told by a Minister in the other place on 15 May last year that
“The Government estimate that the total administrative burden on businesses, charities and the voluntary sector in England derived from EU legislation is approximately £6.3 billion per annum”—
in other words, over £100 per head. That, moreover, excludes the cost of EU administrative burdens in financial services, because, as that answer states, that information was
“not available in this format.”—[Official Report, House of Lords, 15 May 2007; Vol. 692, c.23W.]
I do not know what format it is available in, but that is just the sort of information that we need to be brought before this House and the people, so that proper evaluation of the costs and benefits of our continuing membership can be carried out.
My hon. Friend may recall that he signed an amendment that I put down immediately after Second Reading in this House of the Bill to which he has just referred because of this huge hole. It applied the same formula as the Conservative party voted for en masse on the Legislative and Regulatory Reform Bill two years ago, and again in the House of Lords to reassert the supremacy of this House where it is in our vital national interest to ensure that we achieve the objective of reducing burdens on business. Does he also know that the Minister has informed me that the Government are going to oppose that amendment—clearly because they do not want in any shape or form to interfere with the European regulatory system in its application to this country? So in effect, that Bill will be a complete waste of time, because 80 per cent. of it and the 400 Acts of Parliament that are referred to in it will be derived from the European Union and nothing will be done about it.
What a depressing intervention that is, Mr. Deputy Speaker, but it confirms our worst fears.
I have not had a chance to go into other issues such as the costs of the common fisheries policy—perhaps the Minister will be able to tell us about its benefits—and the costs of the social chapter, which I am delighted we Conservatives are committed to getting rid of our involvement in, following the next general election. Nor have I been able to comment on the defence that the Government try to put forward regarding European Union membership and its benefits, but it is set out succinctly on the Department for Business, Enterprise and Regulatory Reform website and makes no mention whatsoever of the CAP, the social chapter, the common fisheries policy or anything else. Indeed, the European Union single market is regarded as being something separate and apart from the European economic area, when we know jolly well that the EEA includes countries such as Norway and Iceland, which benefit just as much from the single market as we would continue to do if were in that sort of relationship with the European Union.
I am very grateful to my hon. Friends, and I hope that we can hear from my hon. Friend the Member for Gainsborough (Mr. Leigh) in particular—I know that he has other commitments later on—as he and his Committee have a direct involvement under the terms of this proposed legislation. I hope that he can say whether he supports this proposal, and whether it has any legs.
Well, he should be my right hon. and learned Friend, if there were any justice in the world, given the way in which he has moved this Bill and the care and interest that he takes in these matters. Clause 3 mentions the National Audit Office and having seen that reference, I thought it only right that I make a few comments.
Of course, I have my own views on our membership of the European Union but I am not going to labour them before the House; I will stick today very narrowly to the work of the Committee that I am privileged to chair, and to the audit of the European Union. I hope that anything that I say in those comments could be supported by everybody in the House—there is nothing party political about them. There is nothing behind my comments that is predicated on a Eurosceptic or a Euro-enthusiast attitude to the European Union.
I was talking only this week to a very senior European diplomat, who admitted to me that the problem of the Irish referendum was not just an Irish problem. Wherever the referendum might have been held, the people of that country would at this moment have said no. If it had been held in France or anywhere else, the people would have said no, so there is a real problem with accountability. It does not matter whether we are dubious or enthusiastic about our membership of the European Union—surely, we want to make this organisation work well. There are institutional problems that will doubtless receive a lot of discussion. Issues such as the weight of votes attributed to the populations of France, Germany and Italy compared with, say, Spain and Portugal, are certainly problems, but one of the main issues that worries people in Europe is the feeling that there is waste and inefficiency at the heart of Europe and a lack of a clear audit. I hope that we can achieve a consensus throughout Europe on the need to try to improve matters.
In what will not be a very long contribution, I want to deal with four issues, and I hope that what I say will get the support of the House. Before proceeding, may I apologise to the Minister and to the shadow spokesman? Unfortunately, for many months I have been committed to meeting the chief executive of a Government agency in my constituency later this afternoon. It is the vital matter of a driving test centre being closed down, so I hope that I will be forgiven, Mr. Deputy Speaker, if I cannot stay for the entire debate. However, as this debate is so central to the work of the Public Accounts Committee, I was very anxious to speak. I want to deal with the state of the financial management of the EU; fraud and irregularity; measuring what we get for the money spent by the EU, which is very much the purport of the Bill; and the vital role played by national Parliaments in the scrutiny of EU expenditure. Those are all very important matters.
We are all familiar with the chorus of concern and negative media attention that greets the release of the annual report by the European Court of Auditors. For each of the past 13 years, the Court has, in effect, qualified the accounts of the European Community. “Qualified” is a technical term, but it means that the Court of Auditors—the supreme audit body of the European Union—has not been prepared to accept the accounts as valid. That record of the accounts being qualified for every one of the past 13 years is an almost unique achievement; it is exceeded only by the Department for Work and Pensions. Many of the problems facing the DWP are precisely those facing the European Commission.
To be fair, the Court of Auditors has reported a slight, but steady improvement in the Commission’s performance in recent years, most significantly in its previous report. However, the Court continues to point to problems with the legality and regularity of transactions, particularly on structural measures and on parts of the common agricultural policy. That is not just anything, because a large proportion of the European Union’s expenditure is concerned with structural measures, regional policy and the CAP; it is fundamentally what the European Union is about. We all know that there is an imbalance in the European Union’s expenditure, so for the Court of Auditors to go straight to the heart of the matter and to say that it does not trust the figures that are given to it on the CAP or on regional policy is, in a sense, to drive a spear straight into the heart of the regular expenditure of most of the European Union. The situation is very worrying.
Does my right hon. Friend—well he should be my right hon. Friend too, but that is another story—accept that when the spear carrier, the person who raised the question in the European Commission, Marta Andreasen, said that it had to sort out its accounts and get them right, she was shoved out of the job? That is how the European Commission works; it does not want any criticism and it does not want to hear whatever the Court of Auditors may say. The fact is that the European Commission is determined not to get the facts out. In addition, despite the fact that the European Scrutiny Committee, on which I have sat for many years, has sought to insist that debates on the Court of Auditors should be held on the Floor of the House, the Government have insisted that they go to Standing Committee, which, of course, has a much lower profile.
I was not going to mention Marta Andreasen, because I wanted to frame my remarks in a way that all parts of the House could accept. She has been cited, so I should mention that she was quoted by the BBC as saying that 80 per cent. of the budget, including the entire agricultural budget, was suspect, even though EU auditors had, at the time, cleared 70 per cent. of the agricultural budget. If one takes her view, one should be extremely concerned. Even if one is not prepared to go down that route and even if one does not accept her concerns, one should still be very concerned by what the Court of Auditors—the EU’s own body—has said.
Indeed, the Budgetary Control Committee of the European Parliament has been active in pushing for improvement. That effort has been led by British MEPs. Manuel Barroso, the President of the European Commission, made striving for clear accounts one of the Commission’s objectives. People who are actively involved in trying to make the European Union work and who believe it in passionately are aware that there is a fundamental problem.
I agree with a lot of what the hon. Gentleman is saying and this is one issue on which the Bill might focus, because improvement is clearly needed. Given his experience as Chair of this House’s most important Committee, will he tell us the improvements he would like to see? In my view, one such improvement would relate to the way in which member states, which manage 76 per cent. of the EU’s budget, are brought to account for how they spend EU taxpayers’ money.
I am grateful for that intervention. I am trying to frame my remarks in such a way that members of the Liberal party, including the hon. Gentleman, can agree with me, and I shall deal with precisely the point he raises. Although there is a lot of criticism of EU bureaucrats and the Commission, most of the money is spent in the European nations, and what we are talking about is trying to improve accountability within the European nations. My Committee made a great deal of progress with the Government on trying to get a consolidated account, so that we can follow the money all the way through the European nations. I pay tribute to those on the Treasury Bench, because we have been working with them to try to obtain that.
I am grateful to the hon. Gentleman for making that point, because part of the problem with the way we do business in this House—let us forget the European Union for the moment—is that we do not have those whole Government accounts for the UK Government. He will be aware that the National Audit Office told a Lords Select Committee examining the Court of Auditors that the NAO would not be able to give the UK Government a clean bill of health in the way that it is required to do so for the EU because the UK Government do not provide the information. So, this House has a huge problem with the UK Government’s accounts.
As a result of a campaign by the Public Accounts Committee and the NAO, we are now getting this information and we are making progress; for the first time, we are leading the way in Europe, because we are going to follow this money with a consolidated account all the way through and we will see how the money is spent here. If the hon. Gentleman is patient, I shall deal with that point in a moment.
The aim of achieving a clear audit opinion is important, but it is highly ambitious. If offered the task of tidying-up the EU’s accounts, Sisyphus would have stuck to his day job of endlessly pushing his huge stone to the top of the mountain. Tidying-up those accounts is a monumentally difficult job. Each year, the Comptroller and Auditor General reports to the PAC on the results of the European Court of Auditors’ work and on progress towards improvement, and the PAC reported on progress in 2005. Since then, members of my Committee and me have regularly met our counterparts in member states—I was even invited to speak to the relevant Committee of the European Parliament on this matter—and we were all amazed about how much agreement there was on these issues. There was a slight problem with our French colleagues, but we shall leave that to one side.
Throughout Europe, there was a lot of agreement on this matter. A persistent theme in all the discussions that we have been having with our European colleagues is the sheer complexity of what we are talking about. One of the conclusions of our 2005 report stated:
“A major factor contributing to the qualified audit opinion is the level of errors identified by the Court. This is partly due to the complexity of schemes and programmes”.
I would say that it is almost entirely due to that complexity. That statement is as true now as it was in 2005, and a key factor in the failure to achieve a clear audit certificate is the sheer complexity of the rules and regulations governing European programmes. My hon. Friend the Member for Stone (Mr. Cash) is a leading expert on the complexity of the programmes.
The Court of Auditors agrees with all that, and it is not some obscure Eurosceptic British body. For the first time, its most recent report on the accounts observes that
“in the area of CAP expenditure, structural measures and internal policies…complicated or unclear eligibility criteria or complex legal requirements have a considerable impact on the legality and regularity of underlying transactions”.
Across Europe, a plethora of bodies are administering these programmes. That organisational complexity is compounded by fiendishly complex individual schemes, making them difficult and costly for member states to administer, and frustrating for those at the receiving end who are coping with the bureaucracy, such as our farmers. They tell me that they spend more and more time in the office trying to cope with ever more complex schemes. Such schemes and programmes, especially those implemented under the structural measures, have a propensity to lead to many errors and therefore to a qualification. In its last report, the Court of Auditors reported that at least 12 per cent. of the total amount reimbursed to structural measures projects should not have been. So 12 per cent. of spending on regional policy should not have been spent on those programmes. That is the level of complexity and error.
The situation becomes even more worrying when the different bodies involved cannot even agree on the rules. For example, the Court raised several concerns about the application of the single farm payment in the UK. We always complain about other countries, especially Mediterranean countries, and we laugh about corruption there, but the single farm payment was a disaster because our Government tried to gold-plate an EU directive—even more than our colleagues in Wales and Scotland did. It was the English Minister gold-plating an EU directive that led to a massive qualification of our single farm payment scheme and a fine from the European Commission.
I am glad that the hon. Gentleman made that valid point. Perhaps we should ask the promoter of the Bill how the audit will take account of gold-plating and incompetent Ministers, whether English, Italian or Spanish, failing to get the basics right to ensure that money is not wasted.
The hon. Gentleman will have to address that point to my hon. Friend the Member for Christchurch, but I would have thought that it was obvious we need to have that discussion. If we are going to have these directives, we need to simplify them, if possible, and not make them even more fiendishly complicated. The hon. Gentleman makes a valid point, and I agree with him.
We are all aware of the problems with the Rural Payments Agency, but the issues raised by the Court related for the most part to different interpretations of the rules. It noted, for example, that on the basis of maintaining land in a “good agricultural and environmental” condition, England made payments to railway companies, golf and leisure clubs and city councils. That issue was not limited to the UK. Payments to horse riding and breeding clubs were noted in Germany and Sweden. It is supposed to be a scheme to help struggling farmers. The UK authorities took the view that although the fairway of a golf course would not be eligible for a payment under the CAP, other land owned by a golf course could be eligible. But why is the money of the hard-pressed European taxpayer going to golf clubs? I shall resist the obvious temptation to comment on possible discrimination against cricket, football and rugby. We might elicit French and Italian support for the latter two, but I fear that cricket is probably a lost cause—
Well, I am glad we have a chance of beating someone at cricket.
The issue of complexity has to be grasped. The PAC has drawn parallels with the experience of the Department for Work and Pensions, whose complex schemes had led to the Department’s accounts being qualified for successive years. We said again and again that the Department should have less means-testing and less churning of money, and should leave more money in people’s pockets and erase tax thresholds—simple points to improve matters. But no, every year the schemes get more and more complex. The Department is ground down by ever more complex schemes that result in its accounts being qualified. Much the same happens in Europe.
We recommended that the European Commission consider the relationship between the desired outcome of a particular scheme, the complexity of the rules governing it and the consequential likelihood of an error occurring. That is obvious stuff. I recognise that there has been some simplification of the regulations as part of this campaign. That is part of the new financial perspective, and simplification is also one of the themes of the Commission’s action plan. That is welcome.
The new single farm payment, for example, replaced 11 previous schemes, but even that programme is far from simple. But even when there is a will—and there is now a will to try to address some of these problems—nothing moves quickly in Europe. The cognoscenti of such matters will be aware that the legacy of old and multi-annual programmes lasts for years. It is like the old cliché of the super tanker taking years to turn round.
Well, there is a will in the sense that the problem has been identified and the debate is being had. The problem is whether the will exists to take tough and difficult decisions that will remove subsidies from particular interest groups, but that is always the problem in politics. The difficulty is compounded many times over in Europe where there is a lack of clear accountability. As I understand it, one of the aims of the Bill is to try to achieve clearer lines of accountability.
That question is difficult to answer. I suspect that the hon. Gentleman is trying to lead me into saying that there should be a new treaty that would make decision-making faster, but I do not want to get into that. I want to concentrate on the narrow audit points. For what it is worth, I think that if we are going to be in the European Union, there should be more democratic accountability. How we achieve that, I do not know, but we do not have it at the moment. Whether people are enthusiastic about the project or not, there is clearly something wrong that needs to be addressed.
My hon. Friend the Member for Christchurch (Mr. Chope) mentioned tobacco. When the European Scrutiny Committee met the Court of Auditors a few years ago, we asked for the European Commission’s report on tobacco, which was regarded as a very hot potato. As I understand it, that report has never been released, even to the Court of Auditors. I do not know what the state of play is now, but perhaps my hon. Friend the Member for Gainsborough (Mr. Leigh) will bear that in mind for the future. That shows a lack of accountability and transparency.
There has been a problem with secrecy. It is in the interests of everyone, including those who believe passionately in Europe, to achieve more transparency and accountability, so that such reports are released, whether they are hot potatoes or not—and especially as they relate to tobacco. [Laughter.] I must carry on.
Before I was distracted, I was saying how difficult it is to turn the situation around, even when the will exists to do so, and I wish to give an example. In its last annual report, the Commission noted that some £89 billion of outstanding commitments from the 2000-06 financial framework were yet to be paid. The outstanding commitment relating to the structural measures programme was equivalent to more than two and a half years’ expenditure at the 2006 spending rate. That means that while officials in member states are busy launching new programmes for 2007-13, they are also dealing with the running down of programmes from the previous period. It is no wonder that they and we are confused.
It is clear that before we can hope for a clear audit of the EU accounts, member state Governments must take every opportunity to push for simplification and a reduction in the bureaucracy. The EU-wide review of the European budget, on the face of it, provides just such an opportunity, but I fear that it is all too easy for good intentions to be lost once bureaucrats begin to argue over the fine detail. We want to know what the Government are doing to lobby for change and whether they think that the Commission’s review will deliver on simplification. There is a clear opportunity for the British Government to lobby for change as this is where we can lead opinion in Europe.
Let me now look at fraud and irregularity. The lack of a positive audit opinion on the EU accounts does not necessarily indicate that high levels of fraudulent or corrupt transactions have actually taken place. For instance, in 2006 member states notified the Commission of more than 12,000 irregularities with a total value of £788 million, of which some £220 million was estimated to be due to suspected fraud. That is only 0.3 per cent. of the budget. No fraud is acceptable, but different commentators will have different views on what these figures tell us. There is some confusion about that. Of concern to us, however, is the reliance we can place on any of those figures.
The figures quoted are influenced by the timeliness and accuracy of the member states reporting to OLAF, which is the European anti-fraud office. OLAF has reported that recording practices vary and that data communicated by member states are sometimes incomplete. Furthermore, the distinction between suspected fraud and other irregularities is not consistent. We simply do not have that famous level playing field throughout Europe. We do not know exactly what is going on.
Member states do not always have the same definition of criminal risk. A significant proportion of reports do not distinguish between suspected fraud and irregularity. A crime in the UK might not necessarily be a crime in Greece, and vice versa. If we do not properly judge the EU’s performance on this vital issue, we surely need to apply greater pressure to get these reporting systems up to scratch so that we know what is going on.
I may be trying the hon. Gentleman’s patience, but he is making an important point. Some things are crimes in this country but not in others, though they affect the whole Union through trade and the management of accounts. Is he therefore arguing that there should be some sort of EU-wide work on justice and home affairs so that we can ensure that a crime in this country is also a crime in another country?
There is no enthusiasm throughout Europe to try to get some sort of EU-wide common criminal code. There is enthusiasm throughout Europe—people take an interest in this—about getting some sort of understanding about what is going on and having some sort of transparency, so that we can know which countries are particularly open to fraud and irregularity. We simply do not know at present.
For the record, neither my party and I nor anybody here would argue for a common EU code of criminal law. That would be absolutely wrong. However, some matters affect all countries—such as fraud to do with EU money or other, cross-border crimes—and I would argue that they require EU action. From the direction of his remarks, I would think that the hon. Gentleman seems to agree that there is a case for some crimes, such as those that affect EU money or cross-border activity, having some sort of decision-making process at a supranational level.
I am a reasonable man and I will listen to any proposals that the hon. Gentleman wishes to make. If a clear case were made for going in that direction, I would not necessarily be opposed to it. However, I would like to start with at least a level of knowledge before I jumped to a conclusion.
Let me now talk about the benefits derived from EU expenditure. Over recent years, the focus of the debate has rightly, in my view, focused on how to strengthen basic financial management and we have arguably paid less attention to what we get from those programmes. Our Committee’s 2005 report noted that the European Court of Auditors had a duty to examine
“whether the financial management has been sound”.
That corresponds broadly to the value-for-money audits carried out by the Comptroller and Auditor General in the UK. It is very important. We have a superb system in this country of post hoc audit. Every Government Department is subjected to very close scrutiny by the National Audit Office, which reports to a Committee of the House— the Public Accounts Committee. We know what is going wrong. The equivalent process is weak in the EU. I should say that we have very weak budget control in this House—that is a long-standing campaign of mine—but we have very good audit control.
So, what are we doing in Europe? Despite the importance of such work, we discover that the European Court of Auditors published only a handful of such reports a year. The concept of producing value-for-money reports, having a lot of publicity and going to a committee of the European Parliament to try to get a grip of what has gone wrong is still weak in the EU. We believe that the scale of that work is wholly inadequate. Perhaps it is not yet part of the continental tradition, but we can lead opinion on it because we are good at such work in this House.
Since 2005, the Court has, to a certain extent, improved the quality of its special reports as a result of our campaigning. I know that the work is respected. For instance, in 2007, nine such reports were published, but they were limited. For instance, the subjects that they covered ranged from
“the effectiveness of technical assistance in the context of capacity development”
of government in beneficiary states to
“The institutions’ expenditure on buildings”.
That is all well and good, but I remain concerned that the volume and range of that audit work remains limited compared to the reports that we are doing week by week on our Government. We surely need to know much more about whether the money that we are contributing as European taxpayers is achieving good value for money, but we simply do not know yet.
More fundamentally, properly to inform debate on these European programmes we need a much greater focus on measuring the value derived from them. I would be interested to know what the Minister is doing to encourage the EU institutions to address the important issues of having good reports on audit.
As I understand it, the Public Accounts Committee and all the laws relating to it originated with Mr. Gladstone when he was Chancellor of the Exchequer. I think that I am right to say that when he introduced it and subsequently, he constantly reiterated the fact that the Committee was important because it directly related to democracy as well as being of benefit to the taxpayer, and my hon. Friend has ably demonstrated that today. That is the key question. The lack of a proper system, which the Bill would seek to remedy, has caused a great deal of concern about the operation of the financial affairs of other countries.
That is a serious point. We have had a bit of fun today—it is a Friday, and the Bill will no doubt be talked out—but there is a serious point behind all this. It is not a joke. Mr. Gladstone, that great Liberal Prime Minister 150 years ago, put his finger with great accuracy on what was wrong with 19th century politics—the corruption and the lack of control and of audit. So much of the progress that we have made in this country in achieving good governance and rooting out corruption so that we are one of the least corrupt countries in the world—what is more important than rooting out corruption?—goes back to what Mr. Gladstone was doing and to what my hon. Friend has been saying. We have a role to play in Europe in trying to get auditing and the equivalent of a Public Accounts Committee in the European Parliament and we have an interest in how the money is spent, both centrally and in the member states.
The hon. Gentleman is absolutely right, but it is not merely about corruption, is it? It is about efficiency and value for money. I hope that he agrees that in this country, in many areas, we do not get value for money or have efficiency of government, just like they do not in the EU. That is why his Committee is so important.
Of course. We have a tendency to think that we do things much better than the French, Germans, Danes or Dutch. I do not think that we do. We are not corrupt, and I am not making a party-political point as the PAC has been around for 150 years, but we are just as afflicted by waste and incompetence in government programmes as any other country. That is why we need a Public Accounts Committee, and that is why we need to follow the European money all the way through so that we see how it is being spent and where all the waste and efficiency is. That simply does not happen at the moment.
On this historical point, John Bright, with others, was responsible for the removal of corruption and inefficiency in the East India Company. It was precisely because he and Gladstone were determined to bring in efficiency and democracy, complementary to one another, that we managed to get things right. The EU is, quite rightly, a target for us today.
You might take me to task, Mr. Deputy Speaker, if I speak at great length about the East India Company, as that all happened a long time ago. Still, the point is important.
As I say, we should take a lot more interest in how EU money, which is taxpayers’ money, is spent in our own jurisdictions; that is the point. It is a sobering thought that more than three quarters of EU expenditure takes place at member-state level. In 2006, the then Comptroller and Auditor General, Sir John Bourn, put a proposal to a Committee of the House of Lords advocating the production of a new consolidated account to improve the transparency of expenditure of EU moneys in the UK—the point made today by the Liberal spokesman, the hon. Member for Kingston and Surbiton (Mr. Davey). In 2006, I wrote to the then Chancellor of the Exchequer, now the Prime Minister, in support of that idea. The aim was to obtain a much clearer statement of the way European moneys were spent in the UK, in particular how much money was spent on what programmes. To my amazement, the right hon. Gentleman accepted the idea almost immediately, which was great. We are now to get that consolidated account.
At present in the UK, those moneys are accounted for only in large Department accounts, such as that of the Department for Work and Pensions, where they are almost wholly obscured by other domestic expenditures. It is difficult to track European money. Then, in 2006, the Treasury announced that it intended to pursue, in close consultation with Parliament and the National Audit Office, a statement of assurance on the national use of EU funds. We were one of the first countries to agree to do this, along the lines that we had suggested in our letter to the Chancellor of the Exchequer. The statement will take the form of an annual consolidated statement on the UK’s use of EU funds. That will be prepared to UK accounting standards and audited by the NAO. Production of the statement for 2006-07 is well under way. I understand that we are likely to see the fruits of that endeavour very soon.
The statement represents a step forward in transparency and I welcome it, but such initiatives will be effective only if the elected bodies of other member states and their federal tiers take a similar interest. It is heartening to see that our campaign is making some progress in Europe: we are being joined by the Netherlands and Denmark, and some other member states are taking similar initiatives—indeed, I went to talk to our Portuguese colleagues, who are interested in the idea. Each is trying to work up a programme tailored to their own needs. One of the difficulties is that the French are violently opposed to the idea. I do not why they should be violently opposed to tracking how EU money is spent in their own country.
They are very strongly opposed—not in the sense of physical violence, but every time we make this proposal in the Council of Ministers or the European Parliament, it receives a “non” from our French colleagues. However, there is no reason why opinion should not change under President Sarkozy—a French President whom I greatly admire. There is a great opportunity, given that President Sarkozy’s thinking is much more in line with ours, and I hope that he can change the French Government’s attitude.
Partly as a result of the French action, many member states are waiting to see how our efforts fare, so we are, as usual, in the vanguard with the Danes and the Dutch. We will see what happens. Until more member states follow suit, progress toward strengthening the scrutiny of EU expenditure will be stymied—it simply will not work. That raises the question of what our own Government are doing to convince other member states to improve the transparency of their own use of EU money and whether the Commission is taking tangible action to support such efforts. I hope that the Minister will make a point of arguing that other member states should follow our Government’s excellent endeavour.
Has my hon. Friend seen the report the Government produced yesterday, “Global Europe : vision for a 21st century budget”? At paragraph 2.11 is the statement that
“there is significant spending on agricultural subsidies that lack a credible policy rationale and on regional aid to parts of the EU that are no longer poor. Far-reaching reforms will be required to reorient the budget so that it is fit for the 21st century.”
Does he think that that is realistic, given the opposition that he has described from the French Government and others?
No, but at least as a result of the campaign the Treasury is producing the report and starting to identify the problems. We are starting to work out what is going wrong in our own country. There is no point lecturing other people unless one gets one’s own house in order. To give the Treasury due credit, it now doing that, and the report published yesterday is the first part of a long programme. To be frank, I see no reason why the French and every other nation should not conclude that it is in their interests to follow how EU money is spent. We will continue the campaign.
In recent years, we have expended a lot of energy discussing the shortcomings of the EU accounts. Some progress has been made, but the Commission and member states need to root out the complexity and bureaucracy that entangle EU programmes. Greater efforts also need to be made to measure what European taxpayers are getting for their money. We need to convince colleagues in member state Parliaments to take a greater interest in how EU money is spent. Unless all that happens, I fear that we will be here again discussing these issues in much the same way in five years. However, Bills such as this, debates such as this and what the Government are doing are all part of good progress. Let us continue it.
Let me make it clear at the start that I have no objection in principle to the Bill. There can be no objection to an audit that is independent and genuine. I have been reading the Bill to check that there are no points on which I fundamentally disagree with the hon. Member for Christchurch (Mr. Chope). There are some details that I shall question in general debate, but I have found nothing in principle that I believe should prevent the Bill from receiving its Second Reading.
I hope that the hon. Member for Gainsborough (Mr. Leigh) does not mind my saying that his speech was both fascinating and fabulous. His predecessor, the former right hon. Member for Haltemprice and Howden, was also a distinguished Chairman of the Public Accounts Committee, and I enjoyed many debates with the right hon. Gentleman along similar lines to this morning’s. There seems to be a fairly large degree of agreement across the House on some of the financial accounting minutiae. I served with the hon. Gentleman and the right hon. Member for West Dorset (Mr. Letwin) on the Bill that became the Government Resources and Accounts Act 2000, when we considered modernisation of the framework that Gladstone bequeathed to this House. Some useful work was done in connection with that Bill that has some parallels with what ought to be done in the EU. Scrutiny of that Bill also showed that further progress was needed.
I do not know whether I have to declare this as an interest, but in 2000 I wrote a pamphlet, “Making MPs work for our money: The reform of Parliament’s scrutiny of the budget”. When I entered Parliament, although I knew it in theory, I was dismayed by the lack of financial scrutiny that goes on here. The hon. Gentleman is correct: ex post, this House and this country do some fantastic work through the NAO, the Audit Commission, the district auditors, the Public Accounts Committee and other such bodies.
Speaking from 14 years’ experience as a local councillor, I think that local government has a lot to teach Parliament about how to control money. In local councils I have seen many arguments over small sums of money badly spent and good accountability. Here, measures tend to shoot through while we debate other subjects.
The hon. Gentleman brings me to my point. As I was saying, ex post, this House, this country and local authorities do very well, but ex ante, as the Budget goes through the House, we do shockingly badly—far worse than local authorities up and down the country, where councillors question budget items before the money is spent. Indeed, some right hon. and hon. Members might be surprised to hear that even the EU does better than this House.
Will the hon. Gentleman support the campaign that I am waging—so far unsuccessfully—in the Liaison Committee to persuade my colleagues to set up a Budget Committee? The Government carry out their spending review three years in advance, but there is no proper scrutiny by this House of how the money is to be spent. We need a separate Select Committee to do the equivalent, before the money is spent, of what the Public Accounts Committee does afterwards.
I would genuinely like to see the hon. Gentleman’s proposal. I will agree to consider it if he agrees to read my 2000 pamphlet, where I make a set of recommendations on how we could improve ex-ante scrutiny of public expenditure. In the pamphlet, I drew on a report written for the OECD that looked at how 27 Parliaments scrutinise budgets ex ante. I have to tell the House that this country performed worst on all the objective criteria. I carried out a detailed analysis of how reform of ex-ante scrutiny came about in the USA, Sweden and New Zealand. The case of New Zealand was particularly interesting, not least because its traditions are similar to those of the House and because it uses the Westminster model of democracy.
It is absolutely clear that we could perform far better with some very modest reforms. We should have something like an estimates office—the equivalent of the National Audit Office, but answerable to this House—to look at budgets as they are presented, and before a decision is taken on them. It could serve Committees. On the point made by the hon. Member for Gainsborough about whether there should be a Budget Committee or departmental Select Committees, I think that we should look at the European Union—
Order. The hon. Gentleman saw that I was about to rise to remind him that he is concentrating rather too much on domestic matters. Perhaps he should remind himself of the title of the Bill that we are debating.
You are absolutely right, Mr. Deputy Speaker; I was slightly carried away, but in my defence, I may say that my points were made in response to the excellent speech of the hon. Member for Gainsborough.
Coming back to the Bill, there are a few questions to ask before I come to how the audit would work. There is the issue of frequency to consider. The hon. Member for Christchurch proposes that the audit be carried out every five years. I am not sure whether that is the right frequency. When it comes to something as important and valuable as the European Union, I do not think that referendums or audits should be done so frequently. I would not object to an audit being done perhaps every 15 years, but five years seems a relatively odd period for such an important and indeed expensive piece of work. I am sure that the hon. Gentleman would not want to waste taxpayers’ money on too-frequent audits, which may be the result of the Bill.
I will come to another issue of substance that the Committee considering the Bill would need to look at; I hope that the hon. Gentleman can reassure us on the subject when he winds up the debate.
I think that the hon. Gentleman’s figure is wrong; the amount is actually slightly greater. I understand that it is about £4.69 billion, but I am sure that there are different ways of working out contributions. I have no problem with our considering the amount of money that he mentions—the public expenditure. That should be audited every year under current processes. However, the Bill of the hon. Member for Christchurch goes far wider.
Clause 2 refers to the terms of reference. Although they make some sense, I am not sure whether they are drawn widely enough, as the rest of my speech will show. Bodies such as the European Union have quite a number of indirect but absolutely critical benefits. I will go on to talk about peace, the spread of democracy and human rights. I do not want to shy away from an argument based simply on easily quantifiable financial costs and benefits, but there are benefits that are more difficult to quantify. When the hon. Gentleman makes his winding-up speech, I would like reassurance that his terms of reference will cover the sorts of issues that I am talking about.
The hon. Gentleman is right; if one talks to young Czechs and Poles, one finds that many of them do not see the EU in purely economic terms, but see it as moving on from the communist past that they have had to put up with. They see the EU more as an exercise in civilisation and democracy.
I shall come to those points directly, because I want to talk about the concept of peace. We now enjoy peace in western Europe, southern Europe and central and east Europe, and looking at history, that is unusual. Decades of peace have meant that we have not seen tens or hundreds of thousands, or millions, of citizens of Europe slaughtered on the battlefields of Europe, and that is relatively unusual. The question is: what role has the European Union played in that, and what role does it continue to play? I have never sought to argue that the past 63 years of peace in Europe are down solely to the European Union; clearly, that would be nonsense, and it would ignore the importance of NATO, the alliance with the US, the US umbrella in the time of the Soviet Union, the nuclear deterrent, and the economic growth that would have happened without the European Union. All those things have played an important part in keeping the peace.
I am interested to know how the hon. Member for Christchurch thinks that the EU membership audit commission should go about the difficult task of working out cause and effect—working out what role the European Union has played, and continues to play, in keeping the peace. What is the probability that our country would have been involved in a war or armed conflict if there had been no European Union? I seriously think that that has to be assessed if the audit is to be correct. Frankly, I could not support the Bill if it did not consider those pretty fundamental questions. I would want to be sure that the terms of reference covered that issue. What assumptions would he wish the commission to make in respect of the value of lives—the lives of British servicemen and women that might have been at risk if we had had more wars because the EU was not there to play a role in preventing them?
The hon. Gentleman will see that clause 2(b) mentions “national security and defence”, so many of the concepts that he talks about would be included under that provision. If he is suggesting that we should have some sort of historical treatise on what has happened in Europe since the last war, I point out that that would not be the proper role for the Bill, because we are trying to look forward, rather than back.
The hon. Gentleman raises a difficult issue that his commission would have to deal with: how would it consider the benefits that have accrued, and the benefits that will arise, and how does the intergenerational aspect of the costs and benefits work? If one accepts the thesis that the European Union has played an important role in keeping peace, one must accept that without it, we would be living in a very different—a much less secure—Europe today. His commission has to grapple with that, and I hope that he will not shy away from the issue.
The hon. Member for Poole (Mr. Syms) intervened to talk about the importance of democracy, and pointed out that in 2008, a Polish citizen, or a citizen of the Czech Republic, may well have a different view of the EU’s historical importance and their country’s membership of it from that of a British person. We are quite a long way away from earlier wars and from those very difficult, dark days, but they are very much in the memory of people who have recently joined the European Union, who have escaped the shackles of communism and dictatorship, and who really value their freedom and human rights, which they feel are better protected as a result of their country being a member of the European Union.
We have just had several months of debate on the Lisbon treaty Bill and its political and economic impacts, both in a historical context and in the context of planning for the so-called future. The Irish people have just given their verdict on the issue. Does he not think that trying to mix up the broader historical landscape to which he refers with the narrower, more precise economic questions that arise under the Bill would be detrimental, and that the merit of the Bill is that it deals with those narrow questions? May I briefly add that unfortunately I will have to leave, as I have to attend my nephew’s wedding? However, I will listen with interest to the rest of what the hon. Gentleman has to say.
I think I speak on behalf of the whole House in saying that we are very disappointed that the hon. Gentleman will not be present for much longer, as we enjoy his speeches, not least because they are exceedingly well informed and researched. May I on behalf of the House wish the hon. Gentleman’s nephew and his wife-to-be the greatest happiness in the years to come living in Britain, and in Europe?
On the intervention, I think it would be the wrong approach for the audit to be narrow and conducted simply in financial terms, although I also think that if it were, the outcome would show a big positive from membership of the European Union. My support for the EU is not based simply on financial and economic grounds—although I think it is in the interests of the UK to be in on those grounds. The benefits are much broader. If we look at our membership of the EU in the historical context of peace, human rights and democracy, we begin to see the essence of the EU ideal. I was grateful when the hon. Member for Christchurch intervened to say that part 2 of the terms of reference is aimed at capturing such matters; I am much happier because of that clarification.
Of course, there are many causes of the emergence of more democratic nations in Europe, particularly in southern, central and eastern Europe. I do not claim that the EU is the only contributor to that welcome development. The collapse of the Soviet Union, and all the reasons behind it, are probably more important—and the rise of some of the nationalist movements in central and eastern Europe has contributed, too.
All this shows what a difficult job the commission will have to do; it will have to conduct a thorough and comprehensive analysis and get through some tricky issues. I am reminded of Sir Nicholas Stern’s recent work in looking at the potential costs and benefits of climate change. I refer the hon. Member for Christchurch to that study. The Stern review of climate change had to deal with some difficult risk and probability analysis, using some clever econometric and mathematical models to work out the monetary value of any particular scenario. The hon. Gentleman’s audit would have to do much the same in looking at democracy, human rights and peace. Although I think the commission would be engaged in a laudable exercise, I also think it would have to do some tricky work, such as assessing the value to Britain of having more democracies.
One can take a very narrow view and say that it is good that there are more countries such as China whose economies are growing and that are able to trade with us, and that we need not worry about other aspects of life in those countries. However, I believe that people in Britain and Members of this House are concerned about the human rights of the Chinese people and the lack of democracy in China, and I believe that that applies within the European context, too. I hope that the audit would look at that.
I also hope that the audit would look at what the EU enables Britain to achieve by working with other partners which it might find difficult to achieve if it were outside the EU. Let me give a couple of examples. The EU is leading the way internationally in measures to deal with climate change. We have had a lot of problems working with our American colleagues on this issue, as they have been very reluctant to take the next step. Also, Australia, Japan and other countries that are leaders in the world have been unprepared to sign Kyoto and to make more commitments. Within the EU, we have managed to get many other countries to work with us to start addressing these issues at both global level and within the European context. I wonder how this audit would analyse that cost and benefit. Would it be more difficult to achieve these sorts of agreements if we did not have the EU, which has processes and develops closer relationships between countries so that they can trust each other and take another step forward?
Oui—or “yes” in whatever language we want to use; I shall not go on, as I do not wish to be ruled out of order again. I have no problem with the Bill. All I am doing is setting out some of the issues that I hope any commission established through this proposed legislation would address. It would be vital that it did so. However, if we did not have cast-iron assurances on Third Reading that those issues would be addressed, I would be less willing to support the Bill. Nevertheless, in principle and on the face of things, having read the Bill and having already got assurances from hon. Member for Christchurch, I think it moves in the right direction.
There are other issues to do with the nature of international co-operation that the institutions of the EU make possible, and that would be more difficult to address if we were not members of it. Let me give a practical example, following the problems to do with bovine spongiform encephalopathy and how that affected the beef industry in our country. The Americans have not yet allowed British beef properly into USA markets. When there was a similar situation to do with the French, we were able through the European institutions to take them to court and force them to do so. The British beef industry was then able to start exports into the French market. Without the EU, I suggest that that would have been—I shall pronounce the following word in the French manner—“impossible”. I hope the audit would be able to take account of many such benefits. When we have genuine disputes with countries, our farmers—or whatever industry is involved—can be put at a disadvantage if there is not a dispute mechanism to sort them out.
I sort of accept the hon. Gentleman’s point, but the position is not quite so clear. I am sure he has been following the spat between President Sarkozy and our Trade Commissioner, Peter Mandelson. Sarkozy is now on the record as putting much of the blame for the Irish “No” on Peter Mandelson’s negotiation of the reduction in food growth by 21 per cent. when 800 million people are starving in this world. Can the hon. Gentleman therefore appreciate that these matters are not quite as clear as he is saying?
The hon. Gentleman simply shows how difficult such an audit would be, as it would have to take into account many matters. My purpose is to make sure that if and when this audit is conducted, it is genuinely comprehensive and is not narrow and focused on only one aspect. It is quite difficult to make a full assessment of some of these issues, which are vital to the interests of business in this country.
I am chairman of a number of committees in the field of international development. Does the hon. Gentleman agree that my Bill to do with an anti-corruption audit, which involves looking at what the EU does, and at what other bodies such as the World Bank and the International Monetary Fund do, demonstrates that he has a point: in order to evaluate the kind of analysis that this Bill would provide for, it would be necessary to address international development issues, because a lot of that money is spent through the European Union, but that needs to be properly monitored and at present is not?
Although I have not read the hon. Gentleman’s Bill, from his description of it I think I probably would be able to support it. I am concerned that any money spent by the EU should be spent properly. On financial scrutiny of EU budgets, let me first say that I enjoyed the speech of the hon. Member for Gainsborough. The EU budget represents just over 1 per cent. of gross national income across the EU, and slightly less than 2 per cent. of UK public expenditure. Although we should make sure that every single penny is properly audited and scrutinised, the idea that that should be the only focus of corruption analysis or value-for-money analysis does not bear much scrutiny. There are many other examples of wasted money, and they are far greater than the examples of wasted money in the European Union. They occur in Whitehall and in local government, and as elected representatives, it is our job to hunt down such waste.
Another factor that the commission would find it quite difficult to get its head around, and that shows the nature and benefits of the European Union, is the freedom to move. It is a core freedom in the European Union—the freedom to travel on holiday, to work, to live and to set up a business anywhere throughout the EU. All those freedoms are crucial, and millions of UK citizens benefit from them. We all know about the UK citizens who live in France and in Spain, but when I holidayed in Bulgaria last year, I was impressed by the estate agents in Plovdiv, who advertised all their properties in English with the price in sterling, not just in euros, which I am sure will please the hon. Member for Christchurch.
That situation shows both the number of British people who want to buy property and land in Bulgaria, and some of the protections, safeguards and freedoms that come from the European Union, because the flow of British people to Bulgaria has increased substantially since Bulgaria joined the European Union. I should be interested to know how the hon. Gentleman’s commission would take account of the value to Britain and to British people of those extra freedoms. Clearly, it would have to assess whether those people could have followed that course without Bulgaria having joined the European Union, and there would have to be some very complicated analysis. It is important that we examine the value to individuals of the freedom to move, because my concern is that if we were to leave the EU and there were restrictions on the movement of individual British people, there might be a cost to every single person.
The issue of trade is more about a narrow financial and commercial analysis, which was the original intention behind the hon. Gentleman’s Bill. There is the vexed question of whether the EU has increased trade and how many jobs that in turn creates. There are many different estimates. The hon. Gentleman quoted Civitas’s estimates, but there have been estimates from the National Institute of Economic and Social Research and many others, and surprise, surprise, they all disagree with each other, so a properly constituted body may need to look more deeply at the analysis of trade. However, we in this House are all concerned about the unnecessary cost of regulations, and his audit will have to be rather careful about how it examines the European Union’s role in that area.
I always like quoting the regulation on strawberries, because it says what a strawberry is and is not. The hon. Gentleman may find it outrageous that the EU has a regulation on strawberries, and I am sure that the popular press would like to pillory the situation, too, but the truth is that before the EU had a single regulation throughout the single market, every single, individual member state, almost without exception, had a regulation on what a strawberry was. The EU regulation on a strawberry resulted in all the other individual regulations on strawberries being torn up. So if one is going to analyse the costs and benefits of regulations in the European Union, one must work out how many extra regulations pulling out of the EU would impose, because we might have to go back to a series of individual member states’ regulations on what a strawberry is, and heaven forbid that we go that way.
That makes my point: the idea that we will not have regulations if we are outside the EU is nonsense. We had regulations before we went into the EU.
The hon. Gentleman is moving into territory that I regard as extremely dangerous. When the European regulations impose burdens on business, the real question is: how does one manage to get rid of them and/or modify them? The only means by which one can achieve that is either negotiation, which requires a majority vote that is not regarded as feasible because of the number of member states involved, or getting the individual member states, particularly this country and its Parliament, to take a decision to modify and/or to remove the burden through their own parliamentary processes. That is the way one must do it, and there is no way around it.
I am delighted that the hon. Gentleman took me up on that point, although I must say that I did not realise that I was moving into dangerous territory by talking about strawberries. The idea of soft fruit being dangerous is an interesting one.
I am afraid that the hon. Gentleman’s intervention just shows some of the problems that the commission would have and that his argument has always had. If Britain were to pull out of the European Union, the European Union would still exist and make regulations on strawberries and on many other things. British exporters who wanted to export to EU member states would still face those regulations. This Parliament by itself is not able to wish away EU regulations, so it is very easy for the hon. Gentleman to suggest that if we left the EU, those regulations would not hit our businesses, but I am afraid that they would, because the EU would remain in existence.
I was not actually arguing about the case for withdrawal. I said in the debate only the day before yesterday that that is where we may end up going, but it is not one of my specific objectives. The real question is whether one can reduce the burdens on business in order to achieve economic competitiveness. The only basis on which one would have to pass unilaterally a law in this country in our vital interests would be other member states simply refusing to do anything about the issue. That is the crucial point. I am interested in the impact, as the Bill provides for it, on the United Kingdom, although I recognise that other member states can be foolish and unwise if they wish.
If the hon. Gentleman will just hold on and let me finish, I shall be very happy to let him in before he goes to the wedding.
The audit would have to analyse the cost of the regulations, but it would also have to admit that those costs would not go away if we left the EU. If we were to leave, our exporters would still face those costs, but the Government would not have been around the table when the regulations were being decided, and they would not have been able to have an influence or to try to ensure that the cost of compliance had been lessened. Indeed, if we were not at the table, other EU countries could ensure that the cost of those regulations was higher to people who were not in the European Union, so there would be some fundamental problems.
We could be in danger of developing a completely separate argument on a separate Bill, but if I may say so to the hon. Gentleman, we must decide what kind of regulations we want our businesses to have to comply with. The other member states must work out, in relation to the global marketplace, the extent of the burdens, including the £600 billion to which Mr. Verheugen referred in respect of the European Union, that they can afford to have inflicted on their businesses.
That is the key question. I think that the hon. Gentleman will find that the result would be that if the evaluation was a proper one of the kind that my hon. Friend the Member for Christchurch suggests, and the other member states were prepared to listen, we would end up with a more comprehensive reduction in burdens on business all round.
Let me be absolutely clear about this. I agree, my party agrees and Liberal Democrats in the European Parliament agree that we need to reduce the regulatory burden that comes out of Brussels and to simplify the administrative arrangements so that the cost of compliance is reduced. The hon. Gentleman will know that there are programmes in place to try to do that. [Interruption.] He says from a sedentary position that they will not do that. I remind him that it is the job of MEPs elected from this country to the European Parliament to hold the Commission to account in doing that. Indeed, it is the job of Ministers who go to Brussels to ensure that the Commission does it, because they are pledged to reduce the costs of the regulatory burden. My fundamental point to the hon. Gentleman is that if we were not in the European Union we could not try to reduce the costs of these things—we would have no influence on them—but we would still be hit by the regulations. If the proposed cost and benefit analysis were carried out on regulations, I cannot see how it could conclude anything but that there is a benefit to Britain being in the EU because it can influence the regulations.
I do not want to intrude in the debate between the hon. Gentleman and my hon. Friend the Member for Stone (Mr. Cash), but as my hon. Friend is just about to go to the wedding—for all I know, there may be strawberries there—I should like to take the opportunity from our Front Bench also to wish his nephew and nephew’s wife-to-be all the very best for the future. I hope that it is a wonderful day, that the weather is good to them and that they have a happy life together.
We are moving into Wimbledon fortnight, and a lot of strawberries will be eaten there. I am sure that the regulations run to many pages as to what is and is not a strawberry. However, there is one benefit to having the European Union working on our behalf, in this respect: if one were having Cornish clotted cream with the strawberries, one would be having a brand that is now protected so that that cream has to come from Cornwall and cannot be produced somewhere else.
I do not know what the hon. Gentleman’s hon. Friends will think about that, but he makes a strong case for the advantages to many parts of Britain and British business of our membership of the European Union. I hope that the audit would take into account the extra protection given to UK brands that the European Union provides.
I want to touch briefly on the competition regime. In recent years, the UK Government have rightly toughened up the competition regime as it applies within the UK. Of course, UK competition authorities cannot exercise any influence on any other country. However, through our membership of the European Union we can ensure that the EU’s competition authorities, working with member states’ national competition authorities, can pursue the important objective, which is in this country’s national interests, of liberalising markets across the EU. In the case of the telecoms market across the EU, it is estimated that cost of making international telephone calls has fallen by 80 per cent. in the past 25 years. It is difficult to think that that would have happened through technology alone; the European Union has been a very important factor in making it happen. We have seen a recent example of the EU cutting the mobile phone costs of roaming across the EU. That has a massive benefit to individual consumers.
I ask the hon. Member for Christchurch how his audit would take account of the reduction in prices that consumers have seen in many markets because of the liberalisation that has been driven by the European Union, following a very British, Anglo-Saxon agenda. One of the reasons why the French and Monsieur Sarkozy get so uptight is that they think that the European Commission is following a British agenda of liberalised markets, market forces and competition—and I think that it is. We have had a huge influence, and that brings massive benefits to our own people. His audit would have to take that into account.
Let me give another example. The cost of air travel has fallen by about 40 per cent. in the past decade. That is also to do with Europe-wide measures that would not have been possible without the institutions of the European Union. The hon. Gentleman’s audit would have to take account of all the potential future liberalisations that the European Union may well be able to bring about, particularly in the energy sector, that might not be possible if Britain were not in the EU. Britain is one of the driving forces behind the push towards energy liberalisation, and I would hazard a guess that if we were not a member of the European Union, that would not move forward. Again, I hope that the hon. Gentleman’s audit will take account of that.
I have spoken for far longer than I had intended, partly because we have had an enjoyable debate about strawberries, weddings and the accounts. There is merit in the Bill, as long as the audit is as thorough and comprehensive as it should be.
I congratulate my hon. Friend the Member for Christchurch (Mr. Chope) on the measured and reasonable way in which he introduced the Bill. A lot of figures are bandied about, and a decent study would help to inform public debate.
Going back to first principles always creates the best debates, and one would have hoped that the Government would do as a matter of course what my hon. Friend wants the proposed committee to do. Indeed, the reason why we marched out of a lot of the world, including Africa, after the independence of India, Burma and other countries was that the Treasury and the Foreign Office examined the costs and benefits of the British empire. They were overcome not by democracy but by the fact that a lot of the states in question cost us money. That was why, throughout the 1950s, Britain allowed a lot of countries in Africa to become independent—they did not pay. Ultimately, we as a nation must examine our associations, including our membership of the EU, and constantly keep under review their various benefits or disbenefits.
The task that the Bill would set the commission is particularly difficult, as this wide-ranging debate has shown. The assessment is difficult, and I suspect that if the commission came up with any figures, they would have to be in ranges and based on a rough model. I suspect that given currency movements and terms of trade, the benefits would change over time. However, the Bill is a good and sensible way of moving forward and leaves to the commission how it would conduct its review. I would guess that taking evidence would be a very good way. Many public bodies and organisations, both supporters and opponents of the European institutions, would want to give evidence and put their views on record to form part of the public debate.
I am particularly pleased that my hon. Friend has included national security and defence in the terms of reference. As the hon. Member for Kingston and Surbiton (Mr. Davey) pointed out, there are much broader reasons for being in the EU than purely economic arrangements. It is largely about not trade but the French and the Germans living together. They have had three wars in the past century, if we include the French occupation of the Ruhr in the 1920s. They have had a fraught history, and politicians from both those states determined in the post-war period that they wanted to trade, live together and form new institutions. That was logical in two countries where millions of people had died and there had been massive struggle.
That is largely what the EU is about. After all, Germany has invaded every one of its neighbours in either its Prussian or German incarnation, except Switzerland. The Swiss were largely part of the greater German economy supply in the last war. Clearly, living with a Germany of 80 million is difficult. All those who live close to Germany have a fear of the Germans, and ironically German politicians have a fear of the Germans because of their recent history. When we consider German politics, and the CDU and the CSU, there is an element of fear because there have been some awful events in recent history. The Bill must therefore go far wider than purely economic benefits.
The EU posed a particular challenge to us as a nation. Historically, we have always tried to divide and rule in Europe. We have always opposed the existence of one strong power source on the continent, whether it be a Napoleon or a Hitler. The challenge of the 1950s and 1960s, with the creation of the EU, was how to deal with a peaceful bloc, which had great influence on our trade, trying to work together. Our joining has always been a means of trying to influence what happens over the channel. It is no accident, considering the locations of Waterloo and the battlefields of Flanders—the Scheldt estuary is probably the shortest route for an invasion—that we have a legitimate public, political, military and economic interest in what happens over the channel. It is good that that element is included in the Bill. The hon. Member for Kingston and Surbiton made a good point about the broader issues.
To finish that point, John Major said that we ought to be at the heart of Europe. I strongly disagreed with him, because there are different motives for different people in the EU. Being at the heart of the EU is clearly more important for the French and the Germans than it is for us, who will inevitably be on the periphery. Our worldwide trading patterns, including with US, our open economy and our Anglo-Saxon attitudes do not always fit so comfortably into what the EU does. The hon. Gentleman made a good point, which is that some of those characteristics, which we take to the European debate, should make the EU a much more open, free trade organisation than it is.
We have always had a fraught relationship with Europe, not least because Britain is so framed by the development of its constitutional arrangements into the United Kingdom and Parliament. If someone wanted to show a cinema audience a five-second film that was a shorthand representation of us, they would probably show an image of Parliament and Big Ben. Whether it was a James Bond film or an Alexander Korda film in London, it would pan up the Thames and the world would know where it was, because that is how we define ourselves.
If you wanted to define an Italian in five seconds, Mr. Deputy Speaker, you might show the Colosseum or a plate of spaghetti, but Italy is really about language and family, not necessarily its constitutional arrangements. Would anybody know what the French Parliament, the French National Assembly, looks like? If you wanted to show what Parisians are, Mr. Deputy Speaker, you would pan across the Eiffel tower. Indeed, if you watched for what CNN correspondents sit in front of to show where they are, you would see the Eiffel tower, not the French constitutional arrangements. That is why it is so important that that element is included in the Bill. If you were to define the Dutch, you would probably choose the canals. Germans are much more difficult—you could go for Berlin or a Volkswagen factory.
Britain is unique, however, in that we are very defined by our constitutional situation. That is why we take the arguments to heart so much and become so uncomfortable with lots of constitutions being written. After all, there are people alive today in the eastern part of Germany who were born in the Weimar Republic, spent some time under Nazis, then lived in the German Democratic Republic and are now elderly pensioners in the German Federal Republic. They will have seen different capitals, different boundaries, different constitutions and different systems, whereas people in Dorset are rather rooted in things going on in the same way. The constitutional situation is clearly difficult for us in relation to Europe—it is not impossible, but there are different problems.
Then we come to assess the economic benefits. Our pattern of trade has been changed over the past 20 or 30 years, and many jobs are dependent on the European Union. The European Union is still a very rich part of the world and there is a still a potentially big market. As I said in my intervention on my hon. Friend the Member for Christchurch, a lot of the supply side changes made under Baroness Thatcher have made us a much more competitive economy, enabling us to be successful and to sell to people round the world. We have also been a major recipient of inward investment.
All those things would have to be taken into account. I am glad that the terms of reference are drawn quite widely, because any inquiry would have to consider immigration and the movement of peoples. In recent years we have all seen many citizens from Poland come to work in our country. Many of them work hard and benefit the economy, but there are pluses and minuses when people move, and they also need housing, the national health service and all the other things that this country must provide in the longer term.
All those things would need to be considered. If the committee chose a model, took evidence and produced a report, which I suspect would make some quite wide-ranging proposals, it would not need to do the whole job every five years. All it would have to do would be review what had changed since its previous report. I do not see the process as being quite as bureaucratic or as having to be repeated again. Once the committee had established a model to assess the impact, it would simply have to update its views and values.
When I first came to the House 10 years ago, there was a lot of debate about the potential benefits and disbenefits of the euro. Many people were saying that the City of London would disappear if we did not join, yet we now have a robust, successful City that has created many jobs, including jobs for Europeans. Anyone who goes to Hyde park on a Sunday will hear lots of foreign voices, and many of those people work for banks in the City of London, which is very successful. Clearly, currency and trade arrangements would have to be considered as part of the terms of reference of the Bill.
This is a topical subject. Many of my constituents said, “Three cheers for the Irish!” because of what the Irish people have done. It is sometimes inconvenient for politicians when the public speak, but the Irish have clearly set out their concerns about the treaty, as other countries did at an earlier stage. The arrogance of the European elite was mentioned earlier. If we ask people to vote yes or no, and they vote no, how much analysis does that need? That seems to be a clear decision. The public view of politicians is undermined when we get an inconvenient answer and try to ignore it or get round it. There is now greater scepticism among the peoples of Europe about the direction in which Europe is going. In my view, if there were an in-out vote today, I would still vote to be in, because I think that on balance there are still benefits to be had. However, public debate in the UK would be much better informed if we had some learned people looking at the pluses and minuses of the organisation, to give us a factual basis for remaining in it and, more importantly, to enable us to improve the situation.
There is some unfinished business involved in this, and we might well have to go down the route of renegotiating certain terms—I hope that we would still maintain our membership—as that would be beneficial for Europe as a whole. There are now so many measures on the statute book, and the costs to industry and to many EU citizens are such that I cannot see the present model lasting over the next 40 or 50 years, unless Governments start to kick up a fuss and throw their weight around.
One of the first votes that I ever took part in was in the referendum on whether we should join the common market in the middle 1970s. I voted yes—just. That was the only vote in my life in which I could put my hand on my heart and say that I could never be sure that I had done the right thing—
Indeed. In every vote in Parliament, I have always thought that I was, broadly speaking, right, for good or bad, although with varying degrees of enthusiasm for the various leaders of my party. I voted yes in that referendum and I think that I would vote yes again today. However, there is now a great gulf between what happens in Brussels and what people on the streets see. There is a lot of false information around, and we need someone to do a decent job of work in providing a proper analysis of the costs and benefits and of the facts. That would help public policy debate.
It is always a delight to follow my hon. Friend the Member for Poole (Mr. Syms), who has made a thoughtful speech. I did not agree with all of it, particularly the last bit, but that is the way we are. I congratulate my hon. Friend the Member for Christchurch (Mr. Chope) on winning the ballot and bringing this issue to the House. I am delighted to support his Bill and I look forward to hearing whether the Minister is minded to allow it to go through to its Committee stage. Such deliberations would be useful for fleshing out many of the issues that the hon. Member for Kingston and Surbiton (Mr. Davey) raised in his speech.
Like the constituents of my hon. Friend the Member for Poole, I raised three cheers for the Irish. Indeed, that night, I went into my local pub, the Swan with Two Necks, and had a pint of Guinness to celebrate. Guinness is not my usual tipple; I am a bitter man, as will become apparent as I continue my speech. I like a pint of Copper Dragon, but I deviated in order to show my support for the Irish. Having said that, after the Danes voted, I remember having a pint of Carlsberg, but that did not help us much.
What the Irish result demonstrates more than anything else is that there is a disconnect. The only countries that have said yes—we have to be very careful about our use of words here—are those that have gone through their parliamentary systems; and the only countries that have said no have been the ones where they asked the people. That just shows how out of touch parliamentarians and politicians have become with their own peoples. It is not just the MEPs who are remote—most people accept that they are; many do not even know their names—as so many Members of Parliament are getting it wrong by not listening to their own peoples. That makes the Bill more essential than ever.
When the French had the opportunity to vote in 2005, they voted no, and the Dutch did exactly the same. The issue was then re-mashed a bit, but as I understand it, it was 96 per cent. the same when it came before us again. Many European politicians said that the treaty was basically the same as the old constitution. Only in this country were we told that it was not—and that was only to get the Government off the hook because they did not want to hold a referendum. When I asked the Foreign Secretary earlier this week whether he felt that if the British had voted on the same day as the Irish, they would have voted any differently, he sort of smiled and said that he only wished as many British people thought as positively about the EU as the Irish did. Many of us accept that it was not an anti-EU vote per se: the Irish were saying not that they wished to pull out of the EU, but that they did not like the constitutional treaty. They wanted a referendum, and their voice was heard.
Let me demonstrate how dangerous the disconnect is getting. Today’s Daily Express says, “Brown joins EU plot to make Irish hold another treaty vote”. If that is the case, we are going into very dangerous territory. The former French President, Valéry Giscard d’Estaing said yesterday that the Irish should hold another referendum:
“A country that represents 0.7 per cent. of the European population cannot decide for the others”.
That shows arrogance. Under the current system, 27 countries have to say yes. It is not a matter of 26 countries saying yes and the other country having to roll over and have another referendum.
Peter Mandelson was mentioned earlier. He blamed the result on—and I love this—
“an appalling number of rumours on which people’s prejudices and fears were built… All those fears should have been addressed, all those misrepresentations should have been corrected. The untruths that were put out by some of the propagandists should have been rebutted at the beginning of the campaign”.
All I have to say to Peter Mandelson is that what goes around, comes around. I just love it—the cheek, the brass neck of it. Mandelson is reported as saying that he did not believe that the Irish people were rejecting Europe, which I agree with, but he went on to say that he saw the treaty as “absolutely essential”. He cannot have it both ways. That is what leaves people cold. What is he actually saying? Are the Irish to have another referendum on exactly the same treaty? That is what would have to happen, because if it were changed in any way, shape or form, it would have to come back to all the other Parliaments as well.
This issue is not just about the Irish. I believe that if the British people had had their say, they would have said no by an even larger majority. For another example, the Czech Prime Minister is now on record as saying that he was not going to put the brakes on to halt ratification, but that he
“would not bet 100 crowns”—
the equivalent of $6 or £3—on a yes from the Czech Parliament. Clearly, a number of other countries have a problem.
Is not the attitude of the Czechs particularly significant? This is a country that knows what it is like to be lacking in independence and under the control of the Soviet Union. Now that the Czechs have won their freedom from the Soviet Union, they want to continue to have freedom without European bureaucracy.
My hon. Friend the Member for Poole put his finger on it when he described how a country’s history moulds how it thinks and causes it to think in a different way, a more distinct way than the way in which some other countries think. He mentioned Germany in particular, and also France. Given the Czechs’ history, they want to protect the hard-fought freedoms that have cost the lives of many of their citizens. They do not take lightly the fact that some peoples, however small they happen to be, have rejected a constitution. If that is the system under which we operate, it is the system under which we should all operate.
My hon. Friend should bear it in mind that the Czechs were part of the Austro-Hungarian empire, which was a multicultural, multinational state under the Habsburgs. They spent a long time breaking away from that, after which they came under the influence of the communists. They have a considerable history of trying to ensure their own independence.
That is why the Bill is so important. It can at least start to put into some form of context the costs, which clearly exist, and the benefits, which clearly exist as well. It informs the debate. It does not necessarily mean that when we receive the commission’s account, even if there is a net cost to the United Kingdom—which I understand that there is—we will all say “Let’s pull out.” I think that what many of the peoples throughout the European Union want is reform. They want the European institutions to become more accountable and more representative of themselves. I suspect that we are not alone in wanting the sovereign Parliaments of member states to be properly recognised and respected, and in wanting to be allowed to do our job rather than having our powers siphoned away—not just by this treaty, but by successive treaties—in a way that dilutes our ability fully and properly to represent the people who send us here.
That could not be demonstrated better than by José Manuel Barroso. Whenever I mention his name in a pub, I add, “If he walked in here now, how many people would recognise him?” The chances are that not many would. If he walked into the Swan with Two Necks, I would buy him a pint of Guinness, but I think I would be the only one to recognise him—yet this man is incredibly powerful.
When José Manuel Barroso met the Prime Minister yesterday, he said that he wished to thank the British Government for the fact that the constitutional treaty was being ratified. I thought “That is absolutely right: don’t thank the British people, because the British people haven’t been consulted, and every poll shows that had they been consulted, they would have voted no.” I felt that Barroso was absolutely right to thank the Prime Minister for ensuring that the British people were not consulted. I also find it slightly ironic that two days after the Irish people voted no, the unelected Chamber at Westminster decided not to reflect on the Irish decision but to give its endorsement.
On a point of order, Mr. Deputy Speaker. I apologise for interrupting my hon. Friend’s speech, but I have just been notified that Lord Justice Richards, who sits in the High Court, issued a statement a few minutes ago, saying that he was “very surprised” that the Government were proceeding with ratification of the Lisbon treaty when the case brought by Mr. Stuart Wheeler before him demanding the referendum that the Government promised in their manifesto had not yet been determined by the court. Moreover, he has asked that the Government “stay their hand voluntarily” until he has been given an opportunity to deliver judgment on this extremely important matter. As we have a Foreign Office Minister in the House this morning, may I ask whether you have received any indication, Mr. Deputy Speaker, that the Foreign Office intends to make a statement to the House replying to an important announcement made by a judge in the High Court that affects the future of this country?
Further to that point of order, Mr. Deputy Speaker. I think it vital for the Government to make it clear that they will not deposit the instrument of ratification of articles in the treaty in Rome until they have heard the outcome of the Stuart Wheeler case. To do otherwise would seem to me to be going against due process and flouting the courts. I speak, as you know, Mr. Deputy Speaker, as someone who supports the Lisbon treaty, but we must uphold the rules of the game—the rules of law—and it would be wrong to see the instrument of ratification in Rome before we have heard the outcome of that case.
I am sure that the House appreciates that I have had no notification of this whatever—I did not even know of the information that the hon. Member for Rayleigh (Mr. Francois) has just imparted to the House. It is very new, and I have had no indication that any Minister intends to make a statement on it. It is not, strictly speaking, a matter for the Chair, but the hon. Gentleman has made his points and they are on the record—although they do not, of course, directly relate to the business before the House.
I think that I have dealt adequately with that point of order; we ought to move on. I call Mr. Nigel Evans.
That is an historic intervention into today’s proceedings, and I am grateful to my hon. Friend the Member for Rayleigh (Mr. Francois) for bringing the matter to the attention of the House, and to the Liberal Democrats for making their position absolutely clear. The Government have another couple of hours, and I hope that a Minister can come to the Dispatch Box today to make a statement on what they intend to do. As I understand it, the Queen gave the legislation Royal Assent yesterday in order that it should become British law, but the fact is that if it has yet to be deposited in Rome, it is not properly ratified. Therefore, the procedure of not doing that until we have the outcome of that case is vital.
Order. I fear that we are now embarking on a different debate, and I should be grateful if the hon. Gentleman resisted the overtures that he is getting from other Members and continued with the Bill before the House.
Of course, Mr. Deputy Speaker, we will obey your guidance, but I suspect that it is the dislocation that is relevant to the Bill under discussion. When Ministers act outside of the law in order to progress a matter that they think vital, as clearly they think the European project is, this Bill is more necessary than ever. It is pointless—
The audit would have to take account of all aspects of different treaties that govern the European Union. Whether the Lisbon treaty comes into effect because the proper ratification process occurs and an instrument of ratification is, in due course, after the Wheeler case, deposited in Rome, or whether it does not come into effect, this audit—this Bill—will have to judge the scenario that emerges. Can the hon. Gentleman confirm that the ratification processes, as we have always argued, require this final step of the depositing of the instrument of ratification?
This is why we need a Minister here—somebody who is clearly expert in the matter. If the Minister present intervened on me to clarify the position on this issue, which is relevant and pertinent to what we are discussing today, we would be absolutely gripped and I should be delighted to listen to what she has to say on whether the Government do now intend not to place the Act in Rome, so that it is not properly ratified until after the court case. [Interruption.] All right—we will just have to wait until she feels it appropriate to do that, or until the Government bring somebody here to answer those questions.
Does my hon. Friend accept that this episode falls four-square within the provisions of clause 2(c), which refers to the need for the commission that the Bill would set up to take into account
“the impact of membership on the UK’s…constitutional arrangements”?
Here, we are talking about the ratification process that is potentially bypassing Parliament.
Absolutely, and that is why the matter is within the remit of this Bill, and why I hope that a Minister will come here as quickly as possible to clarify the Government’s position on the very important statement brought to our attention today by my hon. Friend the Member for Rayleigh.
On costs and benefits, every analysis that I have read leads me to believe that there are net costs of the UK’s being part of the European Union. I accept the comment made by the hon. Member for Kingston and Surbiton that if we were to withdraw—I do not believe that the vast majority of British people want to withdraw; they just want reform—not all the costs that we associate with being a member of the EU would be saved, because other costs would be involved. We were given the famous strawberry example in respect of regulations that would doubtless be introduced, or merely adopted, and I suspect that many of the regulations that we observe as a member of the EU would still be observed if we were not a member, because that would be a convenient way of doing things. A number of other countries, including Norway, observe many European Union rules and regulations, even though they are outside it.
Just for clarification, may I say that not only does Norway have to abide by regulations that it has not been able to influence but it pays the European Union money for access to markets? So, some costs would still fall on the UK if it were to pull out of the European Union and take on the status of a Norway.
That is right. Not only Norway but Switzerland and a number of other countries that want access to the EU markets pay voluntarily. I understand that the Swiss even had a referendum on paying substantial sums to the EU, and the Swiss people voted in favour. That came as a bit of a surprise to me, but it just shows how important trading is to that country.
Even when we talk about how much it costs to be a member of the EU, it is appropriate to mention that the cost would be that much higher had it not been for Margaret Thatcher. She went to Brussels and did what we were told was impossible—she secured the rebate. She got a substantial sum paid back to the United Kingdom because we were paying way more than what the vast majority of people thought was reasonable. The sad thing is that some of that rebate has been frittered away by Tony Blair, and I cannot see exactly what we have got back in exchange. This particular audit would demonstrate exactly what the true costs were.
That is important to mention when people say that the UK could never survive outside the European Union. It is a bit like the argument made by my hon. Friend the Member for Poole. We were told that if we did not join the euro, it would be a disaster and the City would collapse, but of course that did not happen. Norway is a perfect example of a country that is able to live a prosperous existence within the world, although it is not a member of the European Union—it shows no signs of wanting to be either.
The hon. Gentleman is right to reply to the hon. Member for Christchurch (Mr. Chope) by saying that Norway is a very wealthy country, but for the record, will he admit to the House that Norway has far greater oil and gas reserves per capita than any other European country? Its reserves are certainly far greater than any country in the European Union.
I feel somewhat like a post office, or at least like someone who mediates between Liberal Democrat Front Benchers and Conservative Back Benchers. In any case, we congratulate Norway on being a happy, prosperous country. I know some of its politicians, and they do very nicely outside the EU.
After the no vote, President Sarkozy said that we needed to explain Europe better to the peoples. He is right in many ways, but he misses the point, because he does not fully understand that one of the reasons for the Irish no vote was that they understand the EU very well. Everybody remembers the times when for every pound Ireland put in, it got six pounds out. Ireland was very pro the EU then, but that situation has dramatically changed because of the accession of a number of other EU countries. Those new countries are not as prosperous as some of the old traditional EU countries, and therefore some of the money that used to go to Ireland is now going to them. The Irish voted with their eyes open and they knew exactly what they were doing. I suspect that they voted no for several reasons, and I am not about to tell them that they got it wrong. President Sarkozy and the rest of Europe have to listen to what the Irish have said. We cannot force them to have another vote on the same treaty, because they have already made their voices heard. The process provides for 27 countries in unanimity, and I hope that the Minister will confirm that the British Prime Minister will under no circumstances let the Irish down. All 27 countries must support the Lisbon treaty or it falls. The sooner it is pronounced dead, the better.
When we consider the costs and benefits of being a member of the EU, it is a grave mistake for President Sarkozy to make the point that other countries are seeking to join, such as the Balkan states, Turkey, Georgia and perhaps Ukraine, and that that will have to be put on ice. That is an attempt to blackmail countries such as Britain, which is keen to get the EU expanded—I am sure we all think that the more countries are members, the more common sense will prevail, and the project will not be driven by one or two large countries who want to tell everyone else what to do. I hope that President Sarkozy will stop this approach of throwing his toys out of the pram and threatening to spite the rest of Europe by not allowing any other new countries in.
The problem is not only the common agricultural policy, the common fisheries policy or structural funds—the gamut of European spending. A slice of our international trade budget also goes to the EU for it to distribute, so that must also be taken into account. In the past couple of days, we have also seen a push towards a common defence policy, backed up by a common EU armed forces. That would have a huge cost, and if British forces were used in the EU contingent, it would not mean a net saving for us. Those forces would still have to be paid for whether they were part of the EU contingent or within the British armed forces. I disagree with the creation of any such EU force, and it helps to explain why so many people in the EU are distressed by the journey we are now on. We are all told not to miss the train, but it is being driven from the front cab by the elites—the politicians and bureaucrats—and the people have very little influence.
I remember listening to Hans-Gert Pöttering, the President of the European Parliament, when he spoke at the Council of Europe. He said how distressed he was that the changes to the constitution left out the flag and the anthem. Well, that is not much of a sacrifice. It might have distressed him, but it cheered me up no end—
It is relentless. If the Lisbon treaty is eventually pronounced dead, we need not think that every aspect of it will go away. We can be sure that the midnight oil will be burned in offices in Brussels and elsewhere while faceless, nameless bureaucrats try to work out how they can bring to life aspects of that dead treaty without consulting the people, such as the Irish, whose constitution requires a referendum. That is the dislocation. That is the arrogance. That is why people feel exasperated at the way in which Europe has progressed. Clearly, there are benefits.
Frankly, I think that the Bill concerns a pro-European issue, which will probably alarm my hon. Friend the Member for Christchurch no end. It will offer an opportunity to have a look at the benefits and not just the costs, as I know that newspapers already follow the costs. I pay tribute to Christopher Booker of The Sunday Telegraph who, every Sunday, cheers me up and depresses me at the same time. He cheers me up because we have a journalist who is prepared to put into print some of the waste and excesses of the EU institutions, bureaucracy and politicians. He depresses me because I get exasperated reading about what the EU is up to. It is important that people such as Christopher Booker are around and can inform us. Once the commission is set up, when the Bill becomes an Act, all the peoples will be better informed. That is all we want, surely. I cannot understand how the Government could oppose that in any way. We want transparency and proper accountability, and I believe that that is what the Bill will introduce.
On cost, I am becoming a little alarmed by the EU drive on biofuels. It is very difficult to put a cost on that, but we all know that food prices are going through the roof. Inflation is way above what the Government say it is. Part of the problem that is causing prices throughout the world to go up is the rush towards biofuels. I have read:
“Europe is considering a 10 per cent. target by 2020.”
I thought that a figure of 10 per cent. by 2020 had been agreed, but that quotation is from the Daily Mail so it must be true. The article includes a quotation from Kenneth Richter of Friends of the Earth, who said:
“The real problem is the scale of the biofuels targets.
Finding enough land to grow 10 per cent. of Europe’s road fuel will be bad for people and bad for wildlife.
Governments must drop these targets and concentrate on cutting fuel use by improving public transport.”
I agree with that person. He is an expert. Why are the elites pushing that target time and again?
At every turn we are seeing a move towards what some people want, although they are afraid to say it—a united states of Europe. I do not believe that the people want that.
Biofuels were not on the horizon five years ago, but they are now a core part of the potential burdens on the UK economy. Does that not show the need for regular audits rather than having them every 15 years, as the hon. Member for Kingston and Surbiton (Mr. Davey) seems to think would be sufficient?
Absolutely. In fact, I was wondering whether the five years proposed by my hon. Friend were perhaps too long to wait. There should be an opportunity for a constant update every year at least and perhaps a more comprehensive analysis every five years. That issue could be smoked out in Committee.
As I mentioned earlier, and although the costs are relatively small compared with the common agricultural policy, the common fisheries policy and some of the huge excessive wastes in the EU, I believe that the proposed procedure will bring out the circus of going between one European Parliament in Brussels and another in Strasbourg. The building of the second European Parliament in Strasbourg was an unnecessary luxury. MEPs go between one Parliament and another once a month with all their papers, some of them in crates that are never opened during the week that they are there but still have to be transported at a phenomenal cost to the EU. That probably demonstrates more clearly than anything how dislocated the EU is from the ordinary peoples. If the cost of that is €100 million—it may be more—I am sure that we would all greatly prefer the MEPs deciding where they want to sit, whether it is Strasbourg or Brussels, going there and staying there. Then, the €100 million saved could be put toward ensuring, for example, that the poorest peoples of Africa got access to clean water and to the drugs that they need to keep them alive.
The fact that MEPs are prepared to squander money in that way is scandalous. It would, I think, be properly exposed in the commission’s first report, and the people would have clearer information. so that during election campaigns for the European Parliament, if a candidate knocked on our door—one would have to be pretty lucky or unlucky to have that happen, depending on one’s point of view—we would be able to ask, “When you go to the European Parliament in 2009, will you stop the circus travelling between Brussels and Strasbourg, save the money and either give it back to taxpayers or spend it on the poorest sections of society?”
I will sit down now, but before I do, let me say that I hope that the Government will look kindly on the Bill and that we will get it into Committee. There, we will improve it as much as possible before it becomes an Act.
Before I comment in detail on the Bill, Madam Deputy Speaker, and as I have a Foreign Office Minister here to respond to the point of order that I raised earlier, I must press the hon. Lady regarding Lord Justice Richards’ announcement from his position in the High Court today that he is “very surprised” that the Government intend to ratify the treaty of Lisbon before he has given his judgment in the case brought by Stuart Wheeler. The House has approximately two hours to sit and we are fortunate in having a Foreign Office Minister present. I urge her to make a statement on the Government’s position before the House rises. It would be completely unacceptable if the House rose before the Government had given their reaction to that important statement by the judge.
I say to my hon. Friend that I do not intend to get into a row with the Chair. I simply made the point that we are lucky to have a Foreign Office Minister present. She cannot remain mute about what the judge has just announced.
Turning to the Bill, it was introduced eloquently by my hon. Friend the Member for Christchurch (Mr. Chope). It is clear that he has put considerable work into its preparation. He took a plethora of interventions during his very good opening speech, most of which were generally supportive. One in particular struck me: we were told that a politician—German, I think—had said that 1 million or so people in Ireland could not be allowed to hold up the treaty of Lisbon. To reply to that specific point, it is far more than 1 million. The people of France and the Netherlands—
I am sorry, Madam Deputy Speaker. The point is so important that I will look you directly in the eye as I make it. The people of France and the Netherlands voted against the EU constitution, which as the former Irish Taoiseach, Bertie Ahern, acknowledged was 90 per cent. the same as the treaty of Lisbon, so in fact 21 million people have voted in referendums against the European constitution and the treaty of Lisbon, which is the constitution by another name. The argument that we are talking about only 1 million people in Ireland holds no water.
I regret the fact that, throughout our debate on this important Bill about the considerable amount of money that we pay to the European Union, not a single Labour Back Bencher has sat in the Chamber, although the Minister and a Government Whip are here. That is indicative of the Labour party’s increasingly supine attitude to the British national interest with regard to Europe. Today was yet one more example of the attitude that we have seen the Government take in the past few months.
My hon. Friend the Member for Gainsborough (Mr. Leigh) gave a very good speech. He courteously offered his apologies to the House for the fact that he could not remain for the winding-up speeches as he had a meeting with the chief executive of the Driving Standards Agency to try to save a test centre in his constituency. As I have been involved in a campaign to save a test centre in Southend, I wish him all the best—
Yes, Madam Deputy Speaker. I was just wishing my hon. Friend the Member for Gainsborough luck, basically. He gave a knowledgeable speech on efforts to combat fraud, both in the European Union, and in the UK as a component part of the European Union. As Chairman of the Public Accounts Committee, he has spent a great deal of time looking into the issue in detail, and his speech was an important contribution to the debate.
We then heard from the Liberal Democrat spokesman, the hon. Member for Kingston and Surbiton (Mr. Davey). I confess that I have not read the pamphlet that he mentioned on parliamentary control of the budget; I hope that he will forgive me for that. He spent about half an hour discussing in detail the provisions of the Bill, and we thank him for his speech. My hon. Friend the Member for Poole (Mr. Syms) made a number of points about the history and evolution of the European Union, and I took careful note of them. We also heard from my hon. Friend the Member for Ribble Valley (Mr. Evans), who described himself as a bitter man. I think that he was referring to what he drinks, rather than to his character. Certainly, no bitterness was evidenced in his speech. So, there have been a number of good contributions on the Bill today.
The Bill seeks to establish a committee of seven members to inquire into the costs and benefits of Britain’s continued membership of the European Union, with regard to the economy, national security, defence and the constitution. The committee would report back to the Chancellor of the Exchequer and, through him, to Parliament, in a manner that would allow for scrutiny by the National Audit Office. That is quite an interesting idea for a number of reasons.
First, the EU accounts for a large and growing amount of money spent by our taxpayers, and that spending needs to be scrutinised properly. Secondly, as any small businessman can attest, a growing amount of red tape and bureaucracy comes from the European Union, and it needs to be controlled. Helping to quantify it, not least in financial terms, would be a good first step in undertaking that process.
The United Kingdom is the second largest net contributor to the European Union after Germany. We made a gross contribution of £8.5 billion in 2006. Even allowing for European Union spending in the UK, we still made a net contribution of £2.9 billion in 2006; I hope that we would all agree that that is a significant amount of money. The Liberal Democrat spokesman challenged me on whether the figure was not actually higher. To clear things up, I was using the 2006 contribution figure included in the NAO’s April 2008 report “Financial Management in the European Union”, but I understand that the figure has increased since then. In addition, the calculation is complicated by the fact that one may use current or historical exchange rates. However, I think that we can all agree that the UK’s contribution is now in excess of £3 billion. The figure is rising, and it will rise further because of the Government’s poor negotiations, which led to reductions to the UK rebate.
I thank the hon. Gentleman for his clarification. As he knows, Members hardly ever challenge Library figures; we generally regard them as authoritative. From what he has said, I think we can agree that the figure for 2006 was about £3 billion and the figure for 2007 was in excess of £4 billion—and I reiterate the point that because of the reduction in the EU rebate, that net contribution per annum is likely to increase still further.
That is an important point to make. We had thought that the budget rebate won at Fontainebleau in 1984 by Margaret Thatcher was safe, not least because the former Prime Minister, Tony Blair, said very clearly in 2005:
“The UK rebate will remain and we will not negotiate it away. Period.”—[Official Report, 8 June 2005; Vol. 434, c. 1234.]
He said that at Prime Minister’s questions in response to a question from my hon. Friend the Member for West Chelmsford (Mr. Burns), who has been present for part of our debate this morning. Unfortunately, however, like many of that former Prime Minister’s sayings, that did not stand the test of time. Within a year, the Government had agreed to sign away £7.2 billion of British taxpayers’ money in return for a non-binding commitment to have a review of the common agricultural policy. Therefore, one area this Bill should allow to be investigated in detail is the former Prime Minister’s surrender of our rebate, since endorsed by the new Prime Minister, and whether that represented value for money for our taxpayers. I am of the clear opinion that it did not.
However, the EU is more than just a balance sheet of payments and receipts. The main advantage the UK gains from the EU is access to the single market. We benefit both in terms of access to continental markets and from the foreign investment that comes here in order to benefit from our place in the market. However, access to the market comes with the price of regulation, and that cost has been rising. The British Chambers of Commerce “burdens barometer”, which measures the cost of regulation to business, has shown that the cost of regulation to British business is now £66 billion a year, compared with an estimated cost of £10 million in 2001. A large proportion of that has been caused by EU regulation, and in particular the estimated £1.8 billion cost of the working time directive—that issue has been raised a number of times in this House. One benefit of an audit of the costs and benefits of our EU membership could be to highlight where the Government are failing to reduce the costs to British business, and thus give a much-needed impetus to reform.
Does my hon. Friend agree that one of the issues the commission under the Bill could look at is the costs to the UK of judge-made law in the European Court of Justice? Everybody—including the Prime Minister at the time, John Major—thought that we had secured an opt-out from the social chapter, but then we found that article 118 of the treaty establishing the European Community was being used to undermine that opt-out.
My hon. Friend makes a good point. I am sure that the commission proposed under the Bill would want to take into account the effect of jurisprudence in terms of costs on British business, although ultimately that would be a matter for the commission itself.
Unfortunately, in many areas the reform agenda in Europe is going backwards, notably in the area of competition. Under French pressure, not only has energy unbundling faltered, thereby failing to deliver the lower energy prices consumers across Europe desperately demand—not least at present—but the wording of the treaty of Lisbon relating to competition has been so downgraded that further liberalisation is in danger. This is yet another reason to thank the good people of Ireland for voting against it.
The common agricultural policy would also benefit from an audit of benefits and costs. This country has repeatedly said it wishes to reform the CAP. The Prime Minister has stated:
“Let us seek to make the excesses of the CAP history.”
However, he has done very little in practice to push that forward, other than to use warm words. The cost of the CAP to farmers and consumers in this country would be an obvious area in which the commission would want to undertake much detailed work.
The Bill does not provide for the commission to cover in detail the benefits or otherwise of the Lisbon treaty itself. However, others have tried to sum up its effect on business. A writer in the business comment section of The Independent on 15 June said of the Irish no vote:
“I think that short-term the effect will be small but long-term it may turn out to be beneficial not just for Ireland but for the European Union economy as a whole.”
Such objective analysis of the damage that the Lisbon treaty would do to business might help inform the Government and perhaps help them come to the correct decision, which is to scrap the treaty for good. In a simple phrase—
So, in conclusion, Madam Deputy Speaker, there is much that is worthy of support in the Bill, not least because it raises the question of whether certain benefits of EU membership are quantifiable. For instance, how can we quantify the benefits of working together to tackle environmental problems such as climate change, or intergovernmentally on foreign policy issues, such as responding to Iran’s nuclear weapons programme or in respect of Russia’s relations with its neighbours? Can we quantify the benefits of enlargement and its help in rooting democracy and the rule of law throughout the continent? Those questions could be discussed in considerable detail in Committee and, if the Bill were to become law, ultimately by the commission itself.
Finally, this country pays a great deal of money in net terms to the European Union. Not all of that money is well spent; some of it is subject to fraud. Perhaps it is about time that that was audited in more detail, so that the British people could take a calculated look at how the money is spent and at the scale of their contribution. In that respect, I hope that the Minister will be able to support the Bill.
I am pleased to respond on behalf of the Government to what has been a wide-ranging debate. It has contained the usual hyperbole that we hear from Opposition Members when they get talking about the European Union, and a great deal of claims have been made for the process in the Bill.
When I read the detail of the Bill, I was somewhat surprised. First, I am not sure how the Bill’s suggested commission would do its job. We have explored in detail the problems with it. Most notably, the hon. Member for Kingston and Surbiton (Mr. Davey), who speaks for the Liberal Democrats, raised some issues, and I shall return to them in due course. I am also intrigued by the proposed process: how the commission—the committee of inquiry—would be set up, its costs, and why Opposition Members seem so wedded to such a bureaucratic process for something that could be extremely wide-ranging and take a considerable amount of time.
The Government strongly believe that the benefits of European Union membership clearly outweigh the costs. I am delighted to be able to set out in more detail some of the reasons why and, in doing so, to demonstrate why I believe that such a committee would face an impossible task, as was ably demonstrated this morning.
UK membership of the European Union is central to the pursuit of stability, growth and employment. It is firmly in our national interests, both economically and in a wider political and strategic context. Our membership of the European Union has brought real benefits in jobs, peace and security. Through it, we belong to the world’s biggest trading bloc, with a single market of more than 490 million people. It is a unique organisation that is looked at from around the world with great interest. With the development of regional organisations in other parts of the world, people are looking to the European Union, not necessarily to follow exactly the same route, but because they are interested in the wide range of benefits that come from co-operating with one’s immediate neighbours.
Half the UK’s trade is now within the European Union, with an estimated 3.5 million British jobs linked to it directly and indirectly. Fifty-seven per cent. of total British trade in goods is with the European Union, and 53 per cent. of our total exports go to the European Union. In 2005, British investment in the European Union totalled over £17 billion. However, the benefits are not limited to the rights of British companies to buy and sell across the single market. Our European Union membership allows our citizens to live, work, study and travel across Europe and entitles us to receive free medical care if we fall sick on holiday. These are all clearly benefits, and it would be interesting to understand in more detail how such a committee of inquiry would begin to quantify them.
We know that many Opposition Members have for a long time opposed the benefits that have accrued to our citizens through the social chapter; indeed, it has been reiterated this morning that the Opposition intend to pull out of it. The social chapter initially brought about the improved maternity benefits for women in the United Kingdom; before it came in, we were in a parlous state. I am delighted to say that this Government have gone a great deal further, not only on maternity benefits but on paternity benefits. Those benefits would need to be quantified as well. The right to paid holidays is enormously important, but was not seen as such by the Opposition when they were in power. The hon. Member for Kingston and Surbiton referred to the reduction in the cost of mobile phone calls when abroad. These are just a few of the practical benefits that the European Union has helped to deliver.
May I refer the Minister to the Bill? If she looks at clause 2, she will see that the terms of reference would include
“national security and defence, and…constitutional arrangements”.
As a Foreign Office Minister, she will know that national security and defence are fundamentally altered by article 28 of the Lisbon treaty. As the time has just turned 1 o’clock, can she tell us if she will be making a statement to this House, and if not, why not?
As consumers, we also benefit from competition across the single market. The European Union outlaws price fixing and stops companies agreeing with each other to restrict competition. Is that an issue that the committee would look into? Cartels in industries as diverse as vitamins, banking, airlines and energy have been examined by the European Union in recent years to ensure that the benefits of the single market are passed on to consumers.
On a point of order, Madam Deputy Speaker. I am sorry, but I am a bit confused. I drafted this Bill and presented it to the House, and it is called the European Union (Audit of Benefits and Costs of UK Membership) Bill. In my opening remarks, I quoted a paragraph from last week’s article in The Sunday Telegraph headed, “If the EU will not listen, it risks popular revolt”. Do I understand rightly the ruling that you made in response to the intervention by my hon. Friend the Member for Rayleigh (Mr. Francois)? Is it not possible to discuss anything under the terms of my Bill that is related to the treaty of Lisbon and its implementation, notwithstanding the fact that now that the treaty has been approved by the House, it must be regarded as a potential benefit or cost of the United Kingdom’s membership of the European Union?
The comment that I made was actually in connection with the furtherance of a point of order that had been raised and then dealt with by the previous occupant of the Chair. I stand by it. If a Minister is to come to the Dispatch Box and make any comment about anything that may have happened in some other place, I am sure that the Chair will be notified and that that will be passed to Back Benchers.
Thank you, Madam Deputy Speaker.
I was talking about the benefits to consumers, and I wanted to say a little more about trade. British firms are benefiting significantly from the enlargement of the EU. Exports to the 10 countries that joined in 2004 rose from £4.6 billion then to nearly £8 billion in 2006. That represents almost a doubling in just two years—not quite, but a significant change.
In the Government’s view, it is unlikely that those benefits would be available to the UK on the same terms, or even more favourable terms, if we were to leave the EU and negotiate our own deal from outside. British goods would be subject to customs controls, and we would need export certificates and certificates of origin for our goods. Tariffs would be payable on some of our goods, and our agricultural exports would be subject to them. The abolition of customs duties has saved British businesses an estimated £135 million a year. We know, as has been discussed in the debate, that businesses have concerns about red tape and regulation. I shall say a little more about that later, but we can see from the case that I have mentioned that the bureaucratic problems that would otherwise go with trading no longer exist, because we are in the single market.
Of course, hon. Members are quite right that we could no doubt negotiate some access to the single market for our goods and services. We know that that is what Norway and Switzerland have done, and a number of hon. Members have mentioned them. However, we are not Norway or Switzerland. We have one of the largest economies in the world, and it is bigger and more diverse.
We should be clear about the likely terms of such a deal. We would have to accept many of the EU laws that govern the operation of the single market to ensure access for our goods and services. Indeed, Norway and Switzerland have to accept them. A regularly quoted figure is that Norway accepts 85 per cent. of single market legislation. Of course, it is not party to the negotiations at which the content of those laws is decided. Whether to agree a deal with the EU along the lines of the Norwegian or Swiss model would be for the UK to decide, but the terms of the deal would have to be agreed by every remaining member state. That is not a route that I want this country to go down.
The hon. Gentleman spoke for a long time, as did many hon. Members. I have plenty to say, and I have no doubt that he will sit here throughout as we talk about the matter. We could discuss what we think are the various costs, and we have already identified the financial contribution that we make. I am happy to debate in greater detail what he sees as the costs. However, at this point, it is enormously important that I put on record what the Government believe, and are able to demonstrate, are the benefits of EU membership.
I thought that I was quite clear and up front. I did not want to keep hon. Members waiting in suspense to hear what the Government’s position is. We can see no benefit—indeed, we can see lots of costs—to setting up an inquiry, and then having the report of a commission, into what we are discussing today. I honestly struggle to see how an inquiry could accurately quantify the wide range of issues that we have debated, and I shall be happy to talk about that a little later.
Like many other hon. Members present, I thought that the hon. Member for Gainsborough (Mr. Leigh) made an extremely interesting contribution about the financial aspects and the need for better auditing, transparency and accountability. I will say a little more about that later. I have absolutely no problem with the assessment of how we spend our money or with looking into a wide range of issues relating to the European Union. Indeed, the information that I am providing today demonstrates that a great deal of work is already being done to assess the benefits and the costs of European Union membership.
However, I am arguing that the mechanism that the hon. Member for Christchurch (Mr. Chope) proposes is not the right way to do that, and that the costs and the bureaucracy involved are not things that we should support. In addition, I question, as have other hon. Members, how such a mechanism could effectively do the job that the hon. Gentleman has set out, because there are not only so many tangible benefits—for example, we talked about the peace that now exists in Europe, which all of us welcome—but many intangible benefits from being part of the European Union.
I want to focus in more detail on the trade benefits of European Union membership. In 2006, British companies exported about £150 billion worth of goods to European Union countries. Exports from the UK service sector to the EU—we know that that sector is an enormously important part of our economy—were worth more than £45 billion in 2005, which is an increase from £30 billion in 1995. Year on year, decade on decade, we see increasing growth in those areas, which benefits our economy. Approximately 70 per cent. of UK employment is in services. Economic analysts estimate that the services directive could be worth approximately £5 billion annually to the UK economy and could deliver around 600,000 new jobs.
I am glad that the hon. Gentleman, like me, sees that as impressive. Exports to Poland alone rose between by 89 per cent. between 2003 and 2006, which coincided with Poland’s accession in May 2004. The hon. Member for, I think, Poole (Mr. Syms)—a number of hon. Members from the south coast are in the Chamber, so I am trying to get the right place—talked about Polish people in the UK. Exports and trade are important, but there are much wider benefits from the contact between us and the Polish people who came here and are now returning to Poland, where the benefits of being in the European Union are only too visible.
That 89 per cent. increase in exports between 2003 and 2006 compares with an increase over the previous three years of only 11 per cent. We can therefore see that the benefits for our companies up and down the country of having access to those markets have been huge over time.
As I have already said, the abolition of customs duties has given a tremendous bonus to British businesses—an estimated £135 million a year. Before the frontiers came down, the tax system alone required 60 million customs clearance documents annually. They are no longer needed. Opposition Members are always talking about the need to reduce bureaucracy, paperwork and form filling. That not only saves people’s time; it is also good for the environment that 60 million fewer documents are now required.
The hon. Gentleman is tempting me into a discussion on freedom of information requests to Members of Parliament, but I am sure that you would have a view on that, Madam Deputy Speaker. I certainly have a view on the subject, but I am not going to enter into that debate today.
Membership of the European Union also brings benefits for the UK when negotiating external trade agreements. As the world’s largest trading bloc, the European Union has a leading role in World Trade Organisation negotiations. By negotiating with a single voice, the EU can make a stronger contribution to global trade negotiations than each member state could on its own.
People are concerned, quite rightly, about administrative burdens. It was therefore welcome that, at the spring Council last year, European Union leaders agreed to cut administrative burdens arising from EU legislation by 25 per cent. by 2012. That could be worth £150 million in efficiency savings.
I cannot, at this point in time. However, I would be very happy to look into the details. I should like to clarify for the hon. Gentleman that I am in no way against his desire to understand the benefits, or the costs, of the European Union. Debates about the European Union are important. Indeed, we have had a great many of them recently—even this week. I have absolutely no problem with that. My concern is that the mechanism that he is proposing is bureaucratic and unlikely to be able to fulfil the tasks that he would like it to fulfil. However, I am sure that we can return to the issue of how far we have got with the savings on administrative burdens. The aim is to cut those burdens by 25 per cent. by 2012. We shall need a process for monitoring how far we have gone towards reaching that target. So far, we are only a year into what will be a five-year process.