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EU: Budget

Volume 713: debated on Tuesday 27 October 2009


Asked By

To ask Her Majesty’s Government what impact the United Kingdom’s net expenditure transfers to the European Union budget for 2010, forecast in the Budget Red Book to be £7.9 billion, will have on infrastructure spending in the United Kingdom.

My Lords, the UK’s net expenditure transfers to the EU budget for 2010 will have no impact on infrastructure spending in the United Kingdom.

I thank the Minister for that reply and for the idealism that I know configures it. However, would it not be more sensible for us to spend £8 billion on ourselves rather than on other people’s infrastructure —wonderful roads and railways in Spain, Portugal and, not least, Ireland—while here at home we cannot even find the cash to dual carriageway the A1 to Scotland? Is it not time that we put British interests first?

Our membership of the EU does put British interests first. It gives us direct access to a community of 490 million people. The EU accounts for 20 per cent of world trade but 57 per cent of Britain’s trade. Some 3.5 million jobs in Britain are directly attributable to our membership of the EU, as is the fact that we receive over 25 per cent of all foreign direct investment coming into European countries.

My Lords, as the noble Lord, Lord Vinson, knows very well, the alternative to paying our dues to the European club is to get out. Would my noble friend not agree that it would have been more to the point if the noble Lord had asked that question directly so that we could consider the highly damaging consequences for Britain of that course of action, diverting not £10 billion but tens of billions of pounds of global investment from this country?

I cannot but agree with my noble friend, who expresses himself so eloquently on this subject. We are a significant beneficiary of being part of a larger, more prosperous and safer Europe. It creates jobs and trade and it gives consumers more choice and better prices. That is clearly in the national interest.

My Lords, the Minister said that 3.5 million jobs in the UK depend on our membership of the EU. Since we have a very significant trade deficit with the EU—a deficit that has grown hugely in the last decade—is it not true to say that there are more jobs in the EU dependent on trade with the UK than the other way round?

The European economies are much less globally focused than that of the United Kingdom and therefore we have a far higher proportion of our employment in the UK focused on meeting the needs of other countries in addition to those of the EU. But I repeat my assertion that the EU is a positive contributor to job creation in the UK and that is what matters to this country: people having jobs with secure employment prospects. I only wish that the Benches opposite could understand that.

My Lords, does the Minister accept that our contribution to the EU budget is a complete red herring when it comes to infrastructure expenditure in the UK? However, if we were concerned to increase infrastructure expenditure in the UK, does he agree that we could take a leaf out of the EU book—namely, from the European Investment Bank—and create a UK investment bank for long-term infrastructure expenditure that could attract funding both from institutions and from individuals?

I agree with the first observation of the noble Lord, Lord Newby, about the link between EU contribution and infrastructure. However, the EU, through the EIB and the European Bank for Reconstruction and Development, is a significant source of support for infrastructure expenditure. This year, EIB funding to the UK will exceed £3 billion, compared with £2.2 billion last year, and is likely to increase to £4.2 billion or so next year, largely as a result of the sterling efforts of my noble friends Lord Mandelson and Lord Davies. There are many cases where significant expenditure is taking place in the UK as a result of European support. I shall cite just one example. In my home county of Cornwall, the very exciting Wave Hub to create energy opportunities is being financed by European money.

My Lords, does the Minister agree that the maintenance of a single market of 27 member states of the European Union is hugely in the interests of the British economy and of Britain as a country? Will he continue to do all that he can to resist whatever protectionist tendencies there may be that might put it at risk?

I can assure the noble Lord that I will do so, as I have been doing in respect of financial services regulation.

My Lords, why do we not hear from my noble friend and then from the noble Lord, Lord Lawson? I am sure that we have time for both.

My Lords, I will be brief. The questioner raised the issue of putting Britain’s interests first. If after Lisbon is agreed Mr Tony Blair decides to run for the presidency of the European Union, would that not be putting Britain’s interests first?

I am sure that the envisaged role for the president of the European Council will be important and one for which the former Prime Minister, Mr Blair, is eminently well qualified.

My Lords, while the surrender of the British rebate negotiated by my noble friend Lady Thatcher in the 1980s by Mr Tony Blair at the last European Council before he resigned as Prime Minister may have enhanced his reputation among other European countries, with whatever consequences may flow from that, what benefit has it brought the United Kingdom?

The disapplication of part of the abatement negotiated and agreed in 2005 was designed to ensure that the UK, along with other major European nations, made an appropriate contribution towards welcoming into the EU the eight countries that joined in 2006. I am delighted to see that our trade with those countries has increased by 40 per cent since they joined the EU.