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Harriett Baldwin winds up debate on the European Union (Finance) Bill


11th June 2015

Harriett Baldwin responds on behalf of the Government to the debate on the European Union (Finance) Bill which gives approval to the mechanism by which member states finance the EU budget.

The Economic Secretary to the Treasury (Harriett Baldwin): What a pleasure it is to see you in the Chair, Madam Deputy Speaker, and to respond on behalf of the Government to the debate on the European Union (Finance) Bill. I welcome the hon. Member for Wirral South (Alison McGovern) to her position as shadow Economic Secretary.

We have had a good-humoured debate today on this important topic. I have noticed that a large number of former university professors chose to speak in the debate.

I welcome the eight new Members who made their maiden speeches during the debate. As my opposite number pointed out, they have been shrewd—they know that Thursday afternoon business on a Bill that takes up all of one page and has general cross-party support is an excellent opportunity to enjoy less stricture from Madam Deputy Speaker in respect of a time limit.

We were privileged to hear a range of maiden speeches, first from the hon. Member for East Lothian (George Kerevan), who shocked us by revealing that he already has his bus pass. He tempted us all with the information that his vegetable garden is ambitious and painted a delightful picture of East Lothian. My grandmother, Flora Maclean Macleod Morrison, was born in Dunbar in his constituency, so he will forgive me if I take an entirely different view from him of our United Kingdom, but I enjoyed his maiden speech very much none the less.

We then had the pleasure of hearing from my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat), who emphasised the fact that his interest in European finance was related to the fact that his wife is French. He took us on a very interesting tour of his constituency that involved Wimbledon strawberries. He also spoke of his valuable and important tours of Iraq and Afghanistan, for which the nation is deeply grateful.

We heard from my hon. Friend the Member for South Ribble (Seema Kennedy) who, I think it is fair to say, is the first person of Iranian-Irish heritage to serve in this place. She took us back to the wars of the roses. The atmosphere seemed to get quite heated on the Conservative Benches at times during the afternoon, but my hon. Friend made a very funny speech and took us on a metaphorical open-top bus tour in a Leyland bus around South Ribble. The House was alarmed to hear that she reversed into her first constituent. We would all like to hear in her subsequent contributions what happened to that constituent. I was left worrying about what happened next.

We had an excellent speech from the hon. Member for Glenrothes (Peter Grant), who complemented the strawberries from Tonbridge and Malling with some Pimm’s from Glenrothes to add to our summer delights. We also heard from the hon. Member for Ealing Central and Acton (Dr Huq), who has been not only a university professor but, I understand, a DJ. She took us around the musical highlights of Ealing Central and Acton. She clearly knows her area extremely well from having lived there for so long, and she paid a well deserved tribute to her excellent predecessors, Angie Bray and Sir George Young. I only regret that Sir George Young’s letter to her when she was 18 failed to persuade her of the virtues of voting Conservative, but a place is reserved for her, should she ever wish to cross the Floor.

We heard a remarkable speech from my hon. Friend the new Member for Corby (Tom Pursglove), who enchanted us with his description of some of his perhaps less successful outings on the cricket pitch. I think it fair to say that he is already one of the most famous new Members, as his name has been mentioned on numerous occasions by his constituency champion, our hon. Friend the Member for Wellingborough (Mr Bone). We are delighted to meet him in the flesh. He was elected as the youngest councillor in the country in 2007, which we in Malvern Hills were slightly annoyed about, as we had only the second youngest. None the less, I congratulate him on being here so early in his life and look forward to his being here for many years to come.

We then heard from my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak), who has a very tough act to follow. Not only has his predecessor left a lasting legacy in this nation’s politics by ensuring that we kept the pound and remained strong in our approach to a wide range of foreign policy issues, but he turned up at his advice surgeries in a Harrier jet—a tough act to follow indeed, but the new Member for Richmond (Yorks) clearly shares the oratory, wit and intelligence of his predecessor. I am sure that his speech today gave us the first inkling of the great contribution he will make.

Today, the House has also had a picture painted for us of a spa. What could be nicer on a Thursday afternoon in the House of Commons than to hear about the city of Bath and its place in European tourism? It was an enchanting picture of an historic and famous place. My hon. Friend the Member for Bath (Ben Howlett) shared his pride in the fact—we all agree with him on the great news—that, after 23 years, Bath is once again a blue city. He told us about the innovative and prosperous place that he represents. He, too, will be a great champion for his area in the years to come.

A stable, prosperous society is possible only if the Government spend citizens’ money wisely. We have before us a Bill that is an eloquent rebuttal to all those who claim that we cannot get a better European settlement. Back in 2013, people said we could never do something as ambitious as cutting the EU budget—it was unheard of. But we worked with our partners, we negotiated hard and we did not give in, and that work paid off handsomely. The seven-year deal we secured represents the first ever real-terms cut to the EU budget, at the same time as protecting our hard-won rebate. That is what happens when we stand our ground, fight hard against unwelcome proposals and defend the interests of the British taxpayer. That is exactly the sort of leadership that is needed in Europe.

Barbara Keeley: I want to ask the hon. Lady a question that is important for the next stage of the Bill. Does she think that “standing our ground” will be extended to what the Labour party has suggested and Labour Members have talked about today, which is cutting the CAP and funding for agriculture even further and spending more on growth and jobs? Does she think that that switch of priorities is possible?

Harriett Baldwin: The hon. Lady mentioned that earlier and I was going to get to that point in a moment, but yes, we do accept that expenditure on the CAP is still too high both in absolute terms and as a proportion of the overall budget. As she will know, this settlement reduces the amount we spend on the CAP by 13%, but as the Prime Minister said at the time of the deal, reform of EU spending is a long-term project. I will say more later in my speech.

Before I reply to points made in the debate, let me remind the House what the Bill covers and what it does not cover. It relates to the mechanism by which member states finance the EU budget. The mechanism was agreed unanimously by member states in 2014, in a Council decision that fully and accurately reflects the historic deal that the Prime Minister secured. The Bill therefore gives UK approval to that Council decision, finalising the Prime Minister’s historic deal in 2013, which the Government worked hard to achieve and which received widespread praise from both Houses as delivering a good deal for taxpayers.

The hon. Member for Worsley and Eccles South made a number of points, including on the common agricultural policy and the overall enthusiasm her party now feels for reform of the European Union. We welcome that new-found enthusiasm, but I encourage her to induct into that feeling her colleagues in the European Parliament, who play a vital role every year by scrutinising the European budget. I look forward to her being able to engage with them and ensure that there is a good deal of scrutiny, and not only on the points she raised about the common agricultural policy, but on the payment gap, because clearly the Commission has committed to publishing more frequently its analysis on payment forecasts. We welcome the greatly enhanced level of information on the budget but recognise that there is still a great deal more to do.

Barbara Keeley: It is worth saying for the record that in the latest round of CAP reforms, covering the six-year period from 2014 to 2020, Labour MEPs voted against the final outcome, because we believe that the reforms were not far-reaching enough. The Minister mentioned talking to those MEPs, but they have already voted against it.

Harriett Baldwin: As I said, I welcome the hon. Lady’s European colleagues’ new-found enthusiasm for rigour and reform in the European Union, and I look forward to working closely with them to ensure that happens.

My hon. Friend the Member for Daventry (Chris Heaton-Harris) made an excellent speech that revealed his deep knowledge of the subject. As a former MEP who sat on the Committee that scrutinised the European budget, he has been assiduous in his scrutiny of this legislation—no doubt the Whips will have noted his enthusiasm to take part when the Bill goes to Committee. He asked a range of questions about the ESA reporting and the accuracy of the EU budget. The UK agrees that more can be done to improve compliance, including simplifying the rules that member states have to comply with to release their funds. We believe that the Prime Minister’s deal on the multi-annual financial framework shows that EU spending can be improved, but that will require a strong UK voice to be heard.

George Kerevan: Again, does the Minister understand that the OBR analysis shows that in 2020 the net contributions in cash terms from the UK will be similar to what they are now? When the Prime Minister negotiated a reduction in the EU budget, it was a reduction in the global budget, not in the British contribution in cash terms.

Harriett Baldwin: I accept that the OBR has published figures that clearly show that there is a real-terms reduction in the overall envelope for the settlement period.

My hon. Friend the Member for Daventry also asked about the additional costs compared with the existing decision and any offsetting benefits. He raised a number of technical points about the VAT-based contributions, which are calculated by applying a call rate to a hypothetical harmonised VAT base—are not we glad we have him in this House, knowing all the information and all the right questions to ask on the details of the financial settlement? He also asked about the impact of the switch from ESA 95 to ESA 2010. It was taken into account in the own resources decision, but it does affect all countries’ GNI, so the effect on the contribution depends on how all countries’ GNI is revised. For the UK the key determinant of contributions is, in fact, the VAT base, thanks to our rebate, which the Labour party did not succeed in giving away fully in the early 2000s. Changes in the UK’s GNI are corrected in the rebate calculation.

The hon. Member for Luton North (Kelvin Hopkins) mentioned a number of negotiating red lines that he has, although he is in a slightly different position. He asked what are the Prime Minister’s red lines. The Prime Minister has clearly set out areas where he wants change, including reforming welfare to reduce the incentives that have encouraged such mass migration from Europe; increasing economic competitiveness to create jobs and growth for hard-working families; and protecting Britain’s interests outside the euro. They also include halting the constant flow of powers to Brussels, including by ensuring a stronger role for national Parliaments, and dealing with the concept of ever-closer union. That may be what some others want, but it is not for us.

In 2010, this Government took the tough decisions that were needed to pull this country back from the brink. We can have a stable, prosperous society only if a Government spend their citizens’ money carefully, and it is right that we took that approach to the European level of government as well.

Alison McGovern: Can the Minister confirm how the deficit is going?

Harriett Baldwin: I would be delighted to confirm that. When we took office in 2010, the deficit was the largest in our peacetime history, at well over 10%. It has more than halved over the past five years and will be eliminated during this Parliament.

Alison McGovern: The Minister says that the deficit has halved. Will she confirm the Government’s pledge in 2010?

Harriett Baldwin: The deficit halved—more than halved—over the course of the previous Parliament. Is the hon. Lady now arguing that she would like to have cut spending more? I have not heard that from Labour Members in this Chamber over the past five years. I have heard constant bids for more borrowing, more spending and more taxation, and nothing at all about reducing the deficit.

Alison McGovern: The Minister challenges me on what I would pledge. I did not write the Chancellor’s emergency Budget that set the Government on the wrong course. So let me ask her this: how did the pledge to get debt falling, not rising, for most of the previous Parliament go?

Harriett Baldwin: I must be living in a parallel universe. I have walked through the opposite Lobby from the hon. Lady on numerous occasions when we have taken the tough decisions on spending that we needed to take in order to clear up the mess that her mentor, Mr Gordon Brown, left behind.

In the negotiations on the European budget in 2013 we achieved real, historic change. We got a great deal for the United Kingdom, we proved that we can achieve reform in Europe, and we protected taxpayers’ interests. That historic agreement will be formalised with the passing of this Bill, and I commend it to the House.

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