§ The Paymaster General (Mr. Peter Brooke)
I beg to move,That this House takes note of European Community Documents Nos. 7271/88 and 7758/88 on the preliminary Draft Budget for 1989, 7908/88 on the Draft Budget for 1989, 8996/88 on Letter of Amendment No. 1 to the preliminary Draft Budget for 1989 and 9286/88 on the European Parliament's proposed Amendments and modifications to the Draft Budget for 1989.
The 1989 Community budget is the first to be subject to the new arrangements for budgetary discipline which have been put in place since the February European Council. This debate gives us a useful opportunity to consider how those arrangements are working.
Three aspects of the new arrangements are particularly relevant to the documents before us today: the ceilings on the growth of the Community's own resources; the control of agricultural and other expenditure; and improved budget management.
First, let me deal with own resources. Under the new own resources decision, which the United Kingdom has now formally ratified, annual sub-ceilings have been imposed for the first time on the overall level of the Community's resources. The ceiling for 1989 is 1.17 per cent. of Community gross national product. The sub-ceilings set an absolute upper limit on the growth of the Community's total expenditure, year by year.
As regards control of agricultural expenditure, the situation has been transformed over the last 12 months. In the context of today's debate, I draw particular attention to the financial guideline and to the new provisions for stock depreciation. The guideline limit relating to expenditure on agricultural market support is legally binding. The limit will grow each year at no more than 74 per cent. of the rate of growth of Community GNP, which is likely to mean a real increase of around 2 per cent. a year, compared with 10 per cent. a year between 1984 and 1987. Happily, expenditure in both 1988 and 1989 is set to grow even more slowly than this. I shall come back to this point later on. As regards stocks, provision has been made to ensure systematic depreciation in the year of purchase, and special funds have been earmarked to pay for the disposal of existing stocks. This should ensure that the overhanging expenditure commitments on intervention stocks are eliminated by 1992 at the latest.
The second aspect of the new budget discipline arrangements which I want to touch on is the interinstitutional agreement. Under this, the Council, the European Parliament and the Commission have bound themselves to respect a procedural and financial framework designed to implement the budgetary conclusions of the Brussels European Council. An integral part of the IIA is a financial perspective which establishes ceilings for each of the main categories of Community expenditure between 1988 and 1992.
The Council has undertaken to apply the IIA in accordance with paragraph 14 of the Brussels conclusions. This paragraph introduced a jargon-ridden but operationally important distinction between so-called "privileged" and "non-privileged" non-obligatory expenditure. Privileged expenditure includes the structural funds, the research and development framework programme and the integrated Mediterranean programmes. The growth of this 122 category of expenditure between 1988 and 1992 has been pre-ordained by decisions taken at, or before, the Brussels Council. However, for the remainder of DNO—the non-privileged element—the Council has agreed to respect the maximum rate of increase calculated by the Commission at the start of each year's budget procedure within the framework of article 203(9) of the treaty. The calculated maximum rate for the 1989 budget is 5.8 per cent.
The final aspect of the new arrangements to which I should refer is improved budget management, including, in particular, the new regime to reinforce annuality, which is designed to make the carry-forward of appropriations from one year to the next the exception rather than the rule.
I apologise if the next section of my speech is something of a ball-by-ball commentary on the 1989 budget procedure, but I am sure the House would expect me to say something about each of the documents referred to in the motion.
§ Mr. Teddy Taylor (Southend, East)
The Minister has referred to those exciting new provisions which will prevent overspending in the future and has made several recommendations. Does he recall that, when almost identical assurances were given in 1984, the EEC got round all those restrictions by calling for extra expenditure in advance, thus ensuring that we had a year which was basically one of 10 months? Will he give us a cast-iron assurance that advance payments will not be permitted as a means of getting round budgetary controls?
§ Mr. Brooke
My hon. Friend is vigilant and persistent in these matters. I would be hesitant to give him cast-iron assurances on anything and he would be the first to acknowledge that I would be rash to do so, given the history. However, the principles of annuality that we have built into the arrangements, in terms of the new regulations, should provide a better defence than we have historically had. My hon. Friend knows that the arrangements to which he refers were addressed to a particular problem, but did not lead to excess expenditure in the budget in question.
The commentary begins with the preliminary draft budget—PDB—which the Commission presented in June and which is dealt with in documents Nos. 7271/88 and 7758/88. There were two especially noteworthy aspects of the PDB. First, it included provision of almost 3.25 billion ecu for the depreciation of agricultural stocks. including 1.4 billion ecu in respect of existing stocks. Secondly, the PDB proposed an increase in DNO as a whole of around 20 per cent. in terms of commitment appropriations. Much of that, of course, was for the preordained expansion of the structural funds to which I referred earlier. The figure for non-privilaged DNO alone was some 12 per cent., more than double the calculated maximum rate of 5.8 per cent.
Overall, the PDB was about 450 million ecu within the ceiling in the financial perspective. The Commission noted, with some justification, that its proposals marked a start in the process of restoring a balance between agricultural and non-agricultural expenditure.
The Budget Council considered the PDB in July. The main issue was the level of non-privileged DNO That was procedurally important, because of the rules laid down in paragraph 14 of the Brussels conclusions. The Council 123 decided by a large majority to stick rigidly to the letter of the Brussels conclusions and to confine the growth of non-privileged DNO in the draft budget to half the calculated maximum rate—that is, to 2.9 per cent. That involved cutting the Commission's proposals by 365 mecu in commitments and 356 mecu in payments.
At the July Council, I urged the Commission to keep the prospective level of agricultural expenditure in 1989 under close review, especially in the light of the American drought. I asked it to submit an amending letter to the 1989 budget, if necessary.
The amending letter was eventually tabled in October —document No. 8996/88. Its overall effect, compared with the PDB, was to reduce by almost 3.5 billion ecu the own resources which member states would have to contribute to the Community in 1989. That reduction, amounting to more than 7 per cent. of the PDB, is largely the product of two things—first, a cut of almost 1.4 billion ecu in the provision for agricultural market support in 1989 and, secondly, an expected revenue surplus of more than 2 billion ecu in respect of the 1988 Budget.
The reduction is largely fortuitous. Part of it reflects higher world prices caused by the American drought and a further part reflects higher than expected revenue from Customs duties, which in turn reflects faster than expected economic growth. It is extremely encouraging that a reduction in next year's agricultural appropriations has already been made. The principle has been established that surplus provision needs to be stripped out of the budget as soon as it is identified. No less encouraging is the fact that the amending letter provides for an increase of 50 mecu —to a total of more the 1,780 mecu—in the United Kingdom's Fontainebleau abatement for 1988. That is the first occasion on which the abatement has been increased during the course of the budget year to which it relates. Finally, on the amending letter, it is worth noting that the 1988 surplus stems, in part, from unused appropriations that have been cancelled as a result of the new budget management regime.
The Parliament gave its first reading to the draft budget in October. It voted to take on board the reduced agricultural provision in the amending letter by means of a broadly corresponding modification to the draft budget. The details of that modification, and of the Parliament's other proposed changes, are given in document No. 9286/88. Most of the other changes were in respect of non-privileged DNO. In summary, the Parliament voted to restore most of the reductions in that type of expenditure that the Council had made in July. That was, however, no more than the Parliament was entitled to do under the treaty and it did not involve any breach of the ceilings for individual categories of expenditure in the IIA.
I come now to the final overs of the ball-by-ball commentary, which were bowled, so to speak, at the second Budget Council on 22 November. The Council's task was somewhat complicated as it involved giving a First Reading to the amending letter at the same time as giving a Second Reading to the draft budget and considering the Parliament's amendments and modifications. Despite that, the revised draft budget that the Council established was coherent and disciplined.
Very briefly, the Council did two things. First, it agreed all the main elements of the amending letter. In the 124 process, it rejected the Parliament's modification to agricultural provision, because it had become technically redundant. Secondly, the Council rejected around two thirds of the Parliament's amendments to non-privileged DNO, thereby bringing the growth of such expenditure back within the calculated maximum rate of 5.8 per cent. So, just as it did at its First Reading, the Council followed the letter of the procedure agreed in February.
Therefore, we have a draft budget for 1989 in which commitments are around 2.3 billion ecu below the overall ceiling in the financial perspective; in which provision for agricultural market support is around 1.8 billion ecu below the guideline limit; and in which the own resources call-up rate is 1.02 per cent. of GNP, compared with the annual sub-ceiling for 1989 of 1.17 per cent.
In line with the shuttlecock diplomacy which characterises the budget procedure, the action now shifts to Strasbourg, where the Parliament will have its Second Reading debate in the week beginning 12 December. The Parliament can be expected to amend the provision for DNO in the draft budget to some degree, but the amount which it can add within the relevant ceilings in the financial perspective is relatively small.
For its part, the Council has agreed the basis on which it will enter into a formal process of co-decision with the Parliament, under article 203(9) of the treaty, in order to agree the overall growth of DNO for the 1988 budget. That overall growth will substantially exceed the calculated maximum rate as an inevitable consequence of the increase in structural fund appropriations agreed at the Brussels Council.
It is gratifying to note that the new procedures and parameters that were put in place after the Brussels Council have had a benign and moderating influence on both the level of the 1989 budget and the atmosphere in which negotiations have been conducted thus far. The Council has respected in an exemplary way the Brussels conclusions on budgetary discipline.
§ 11.1 pm
§ Mr. Stuart Holland (Vauxhall)
Opposition Members are grateful to the Paymaster General for taking us ball by ball, as he said, through the commentary. He did not actually say anything about how well we are playing in the matter of the EEC budget, other than on the rebate. There are certain issues arising from the budget which Opposition Members would like to address and a number of specific questions which we would like to put to him. For example, it is already very clear, as he has said, that one of the reasons why the budget is in better shape this year is the overall situation of the world food market, and especially the rise in food prices because of the drought in the United States.
There is an underlying issue on which we would like to know the Government's view and also what the Government have been doing in the preparation for the budget and what position they took. For example, granted that the Government, and not least the Prime Minister, are especially concerned about public expenditure, what is the Minister's view of the current meetings between the United States and the European Economic Community in negotiations in the framework of GATT for the reduction of food subsidies?
As has been recognised many times by hon. Members on both sides of the House, we still have a very high price 125 food support system in the European Community. The fact that we now have stabilisers with only 74 per cent. growth of GNP being reflected in a diminished share—let us trust that it is indeed finally a diminished share—of agricultural spending and total spending none the less leaves us in a situation where, on average, about two thirds to three quarters of the total Community budget over the last decade has been allocated to agricultural subsidies.
What is the Minister's view on the fact that the OECD, for example, estimates that overall, on a global basis, about $220 billion or £118 billion, a year is being spent by developed countries in subsidising agriculture? What representations have Her Majesty's Government made in the framework of the GATT session, through the European Community or directly in response to the United States proposals as, for example, reported by Bailey Morris in today's edition of The Times, for a major reduction of protection in agricultural products? That is the sort of move for which the Government deserve the support from both sides, unlike the simple trimming of expenditure, which continues to swamp the Community budget.
I do not wish to detain the House at length on this, but it also relates to the availability of expenditure for the structural funds and especially the regional fund. The recent doubling of the regional fund looks dramatic, but as the regional fund amounts to a minor fraction of I per cent. of Community GDP and only about 10 per cent. of that results in net transfers between member states, other than the special category of the integrated Mediterranean programmes, we are not talking about a major shift from agricultural to regional spending.
In that respect, if Le Monde today was accurate in reporting the Prime Minister at the Rhodes summit as saying that the structural funds are already more than the Marshall plan, she should retract that. It is arrant nonsense. The Marshall plan was equivalent to a transfer of between 3 and 4 per cent. of United States' GDP to Europe each year for four years from 1948. The whole Community budget is not scheduled to exceed 1.4 per cent. of GDP. Therefore, the whole Community budget is only one third of the contribution made under the Marshall plan to Western Europe after the war and the structural funds are only a minor fraction of 1 per cent. of Community GDP.
The Paymaster General may not be able to respond directly, but perhaps as the allegation that the structural funds amount to more than the Marshall plan is circulating in Whitehall, he is familiar with the statement and the Prime Minister intended to say that. If so, I hope that he will recognise that it is an unfounded and wholly misleading statement. It gives the impression that the structural and regional funds are far greater than they are.
Document 7908/88 budget 16 provides interesting figures on agricultural levies. Page 17 estimates revenue under the draft budget. Agricultural levies for the 1989 draft are estimated at 1.33 billion ecu—I shall not trouble with the succeeding range of decimal points—and sugar-isoglucose levies are estimated at 1.35 billion ecu. Granted that levies on sugar militate against the exports from some lesser developed countries, not least Caribbean countries, why do the Government tolerate that? Why are we not pushing for a reduction of those levies and allowing for a higher volume of imports of sugar from developing countries?
126 We appreciate that not everyone is making supernormal profits from beet sugar in the Community and that many small and medium-sized farmers' average income may not be in excess of the average industrial wage in this country and may be considerably less than that of their own country. We are not saying that marginal farmers' incomes should be wiped out by no Community agricultural policy whatever, but sugar is a special case.
We should be glad to know whether in the preparation of the draft budget the Government have been fighting to ensure that there is a reduction of those levies.
If one puts the 1.33 million ecu from the agricultural levies or the 1.35 million ecu on sugar-isoglucose levies against page 76 of the same document, which refers to an absolutely parsimonious 2 million ecu in food aid, one sees that that is out line—despite the considerable degree of self-congratulation with which, with unaccustomed modesty, the Paymaster General entered into his exposition.
Some hon. Members might be prepared to say that food aid should not be a priority of the Community and that there should be food development programmes. Depending on the relative balance and scale of food aid programmes, one could well agree with hon. Members making such a point, were any on their feet to do so. However, I do not encourage them to rise to their feet, although it might at least interrupt the monologue from this Dispatch Box.
Expenditure on IFAD—the International Fund for Agricultural Development—is precisely related to developing food production in the less-developed countries. If I recollect the figures, during the last major famine in Ethiopia, IFAD could gain a year's production of grain on a farm in the highlands of Ethiopia for something like a tenth of the cost of one week's drop of food aid to the area, so why on page 81 of the budget is there no commitment for 1989 whatsoever under IFAD? Why have those commitments not been made? The United Kingdom's contribution to IFAD is low. Why can we not get the Community to make that kind of commitment to IFAD, which would mean that, with its cost-effective programmes in agricultural development, it could assist the developing countries?
Again in the context of developing countries, page 73 contains a series of statements of co-operation with developing and non-member countries. Page 75 reiterates —Opposition Members are well aware of this—that the European development fund is not included in the budget. Therefore, chapters 90 and 91 on the European development fund and co-operation with the African, Caribbean and Pacific states and on co-operation with the overseas countries and territories associated with the Community have been deleted from the budget. Perhaps the Minister will give us his view on why that is the case. We appreciate that that has been the convention for some time, but why can the House not scrutinise those budgets within the framework of the overall budget of the Community? What, in practice and in terms of the specific allocations are the subtitles of the allocations in the Community budget, and why can those not be published in the budget? I refer, for example, to page 73, item 93, headed,Co-operation with Latin American and Asian developing countries".127 Lumping Latin America and Asia together in that category gives an almost meaningless figure. Why can we not have a breakdown and why are the Government not pushing for a breakdown of such figures?
Perhaps the Minister will be a little more forthcoming on some of the items in the Community's draft general budget and in the document with the amendments and proposed modifications from the European Parliament. I shall still refer to the pages of the documents as that is simpler than giving multi-digit references for each item. I refer to page 1, which the Paymaster General did not mention, which calls for the Parliament to promote the interests of women. What was the Government's attitude to that in the preparation of the draft budget?
On page 5 there is a programme to promote information for local and regionally elected representatives on Community activities in preparation for 1992. I happen to know that that is taken seriously by national Governments in the rest of Europe. What is the Government's attitude to that?
On page 178-9 of the European Parliament document there is an item on the harmonisation and amelioration of working conditions in the Community. What representations did the Government make on that, other than the purely negative comment that they are not interested in a social dimension to Europe? What of the European Parliament's proposals for disabled people set out on page 180? What about page 195 and the proposals for the protection of the environment? We would certainly like answers from the Government to those questions.
What is the Government's attitude to the proposal on page 398 to combat world hunger? Why has the European Community pledged only 5.6 milion ecu to combat hunger in the developing countries?
I can see one reason for a report in Le Monde today about the harmonisation of taxes on savings and the different responses that we are getting from the Prime Minister and the EC. According to Le Monde, the Prime Minister said that we should be concentrating on those areas where consensus already exists. In that respect it seems that the Prime Minister does not believe that the harmonisation of tax on savings is a priority.
There are several reasons for saying that there should not be a harmonisation of taxes where they do not necessarily impede capital flow within the Community. The capital flow which really counts within the Community and which is overwhelmingly important is that which relates to the Eurodollar and Eurobond markets where such fiscal barriers hardly impede the functioning of markets which, overall, handle trillions of dollars on a global scale each year. Therefore, we would not consider that the harmonisation of taxation on capital flows was a priority. Far more important is whether or not the Community will have an industrial strategy.
At the end of the century, will there be sectors within the EC that will have regenerated themselves and are capable of facing the competitive challenge from Japan or will many of such sectors—for example the electronic consumer goods industry—simply have disappeared? That is the real challenge on savings—the translation of savings into investment in a competitive, offensive, go-getting, long—term industrial strategy. The Community budget has not addressed the need for such a strategy, despite the 128 proposals in the Esprit programme for the translation of technical progress into innovation in individual countries. There is no attitude towards a joint, common industrial policy in the Community.
Such a policy does not imply federalism—it does not have to be formally confederal. It could be an effective, pragmatic joint approach to industrial strategy. We suspect—we would be glad to hear the Minister's views on this—that the Government are not pushing for such a strategy and that they will leave 1992 to market forces. We have already stressed that if it is left to market forces, the big business will benefit and the small business will go to the wall. We shall be glad to know whether the Government accept that that is the likely outcome of 1992, and whether the Government pressed for the question of Europe's industrial competitiveness to be addressed in the whole approach to and debate on these budget issues in the Council of Ministers.
§ Mr. Teddy Taylor (Southend, East)
These debates are pointless, because we have masses of paper, our views do not count one bit and whatever we say and however we vote it will not make the slightest difference. Nevertheless, it is reassuring to come along to these debates every year and to hear a Treasury Minister express the view that, happily, matters have been resolved, spending is under control and we can look forward to the future with more confidence than we did last year. Bearing in mind that the last time we debated this we discovered that our net contribution for 1987—88, which was originally £500 million, had been stepped up gradually to a record £1,698 million, I hope that the Minister is right. It would be helpful if we could start the debate with the Minister's opening bid in terms of what he thinks that the net contribution will be in 1989.
Why can we not have in the budget separate amounts for the levies on goods which are being imposed by the Council of Ministers and the Commission? The Minister will be aware that it is a blinkered form of protectionism. The Common Market is imposing levies on many imported goods, up to a rate of 33 per cent. Those levies bring in large amounts of money which go direct to the EC.
The Minister said that we have a new spirit of careful, cautious consideration of spending, so there will be no money wasted and no silly spending. Have the Government agreed to the proposal to spend more than 1 million ecu celebrating the French revolution? That is at page 66 of the budget. From all that I have heard about the French revolution, I believe that it was a thoroughly nasty business during which things were done of which the Government would not approve in any respect. My constituents in Southend would like to know whether the Government supported the proposal to spend all the money celebrating the French revolution. How will that benefit the Community and my constituents?
Did the Government agree to the massive increase in expenditure proposed as a grant to the European Movement? We know that the Government give a great deal of money to the European Movement, but this is said to be extra money necessary to encourage a higher percentage poll in the so-called European elections to the so-called European Parliament. I have never known an occasion when a Government have spent money on a 129 device to encourage more people to vote in elections. High polls or low polls can often be advantageous to one party or another. Sometimes Members from strange parties are returned in by-elections on the basis of low polls. Those things happen from time to time. Did the Government say that our taxpayers' money should go to the European Movement for the sole purpose of encouraging more people to vote in these silly Euro-elections, which everyone knows have no effect? If the European Parliament disappeared tomorrow, no one would notice.
Thirdly, did the Minister vote for the donation of a substantial sum to support rehabilitation centres for torture victims? Which torture victims did he have in mind, and what will the money be used for? Do the Government support a substantial increase in the amount of money going to something called the European Migrants Forum? That has the specific job of trying to deal with the increase of Fascism and racism in Europe. I am not sure whether the Government have had a clear indication of how Fascism is rising in Europe, but I should be grateful if my hon. Friend the Minister could say whether he thinks that the Common Market is the best body to deal with this and whether our taxpayers' funds should be used in this way.
§ Mr. Brian Wilson (Cunninghame, North)
Despite all the profligacy of the EEC and the millions of pounds spent on storing and destroying food, the item on which the hon. Gentleman chooses to pour scorn is the tiny amount of money to be used to fight racism in Europe—racism which is, in part at least, a product of the EEC and the drawing of migrant labour into EEC countries.
§ Mr. Taylor
I am astonished at the hon. Gentleman. Surely he recognises the blatant scandal of the terrible misery and degradation that we are heaping on the Third world by the traditional policy, which is raised time and again, of spending £200 million per week on dumping and destroying food. We all know that that is in the budget and that the people who are starving and who are hit most of all are people in the Third world. They are not getting a decent price for their food products, so they cannot buy machinery or pay their debts. That comes up time and again and every time the Government say that the amount will be reduced it increases. It is sad to think of Bob Geldof sweating his guts out to raise £100 million for the world's poor, only to find that the same amount was being spent by the Common Market every three days on dumping or destroying food. I accept what the hon. Member for Cunninghame, North (Mr. Wilson) says about that—it is an almighty scandal, but nothing is being done about it and nothing can be done about it.
§ Mr. Sillars
Does the hon. Gentleman not understand that in the Mediterranean area, for example, there is a long history of the transfer of people from north Africa to places such as Marseilles, and there has been a considerable problem of racism to the point that people have been murdered for no other reason than that they come from the Arab race? Is he not also aware that over the next 20 years there will be an enormous shortage of labour in every European Community country? That shortage will be made good only by bringing in people from places such as Turkey, Morocco and Tunisia. If we 130 do not tackle racism now, on an all-Community level, it will not be tackled and will become a major problem. Would it not be better for the hon. Gentleman to address major problems such as that rather than nit-picking his way through as he is doing?
§ Mr. Taylor
I find the hon. Gentleman's intervention staggering. Of course there are major problems in the EEC —I have mentioned some of them—but if the hon. Gentleman's experience of the Common Market is such that he regards it as the appropriate body to deal with the problems that he has outlined, he is living in a dream world. Does he not accept that the Common Market is a most profligate, wasteful and useless organisation? Of the things that it has tried to tackle, the common agricultural policy is a perfect example. If we give money to that organisation to deal with a problem, we are wasting our money. If the hon. Gentleman has any doubt, he should read the budget statement—especially page 60—to see how we are to fight Fascism and racism. I hope that my hon. Friend the Member for Harrow, East (Mr. Dykes) will also read this. It says that we are toimprove the coordination and distribution of administrative measures".That is how we are to deal with Fascism and racism. I do not know what that means, but my hon. Friend is an enthusiast and will know exactly what it means.
§ Mr. Hugh Dykes (Harrow, East)
My hon. Friend says that the EC is a profligate, wasteful, useless organisation. When does he want to leave the European Community and why does he not say so? Would it not be better if he said so honestly and straightforwardly?
§ Mr. Taylor
My hon. Friend is trying to make me prolong my speech, but I shall not do so because this is a short debate. He knows that there is no way in which we can leave the Common Market, that we are in it and can do nothing about that. The only country ever to leave the Common Market is Greenland and it got out only because every member state passed a Bill allowing it out. There is no way in which we can legally withdraw from the Common Market. I am trying to stop the scandalous waste of public money that my hon. Friend knows is going on day in, day out, and I wish that he would do the same.
Does my hon. Friend the Minister think it appropriate for the British taxpayer to pay for the teaching of German to 200,000 people who have come from Russia and Poland to the West German Republic? I do not know whether this is actually happening, or why, but is it an appropriate use for EEC cash?
I hope that hon. Members will appreciate that the Community is far from spending money carefully and wisely. Our Ministers, who have many problems in dealing with the expense of our health and social services, and in paying for our pensions, will be outraged when they see the amount of money in this budget being poured into dumping food and celebrating the French revolution.
§ Mr. Alex Carlile (Montgomery)
When he opened the debate, the Paymaster General, with his characteristic modesty, said that he was simply giving a ball-by-ball commentary. In this limited over match, he was batting as well; in due course, he will be bowling at the end of the match. 131 The cricketing analogy highlights what I agree with the hon. Member for Southend, East (Mr. Taylor) is the futility of these debates. We are trying to debate 3 in—or should I say 7 cm—of paper in an hour and half. These debates do nothing to increase the country's understanding of the European Community, though of course they provide opportunities for the virtuosity that we have heard from the Labour Front Bench spokesman, the hon. Member for Vauxhall (Mr. Holland), and from the hon. Member for Southend, East. If he were to admit that he wants us out of Europe, it would spoil his fun; there would be nothing left for him to talk about.
It would be far better if, unlike the hon. Member for Southend, East, we did something to increase the credibility of the European Parliament. The budget should be and is debated in detail in the European Parliament; but that can happen effectively only in a European Parliament that is truly accountable and that commands the respect of the nation. I applaud the payment of grants to the European Movement if those grants are to be used to achieve some greater understanding among the public at large of the role and purpose of the European Parliament, a Parliament that, in the budget that we are debating, has played a more important and greater role than in past years.
I broadly welcome the budget for four reasons. First, it provides considerable impetus towards the completion of the internal market by 1992. Secondly, it provides for greater economic and, dare I say it, social cohesion between member states. The hon. Member for Southend, East, if he will forgive me for saying this, is a little older than me, and therefore has a longer memory than I. One of the greatest ends that can be served in a European community is social cohesion, and the removal of the divisions that were such a detriment to Europe in the earlier years of this century.
Thirdly, this budget speeds up the production of a common policy on research and development. If European manufacturing industry is to be successful in the decades to come—and the work done by the Commission has shown that European manufacturing industry, and particularly ours, should do extremely well after 1992—we must have a policy of research and development so that we can compete in real economic terms with the Japanese and the United States and other parts of the world where economic development is happening quickly.
Fourthly, I welcome the budget because it is at least a start in tackling the enormous problems of environmental policy that we must tackle if we are not to face natural disaster, affecting the whole world, but to a great extent caused by our manufacturing activities in the manufacturing countries in the European Community. It seems that the budget begins at least to tackle all these issues and is to be welcomed for that reason.
The key to the acceptability and utility of the Community within member states is the way in which the structural funds are applied. I represent a Welsh constituency, and I and others in Wales can see both the success and the failure of the funds. Successes have been produced in south Wales, and the Wrexham area of north Wales, by the spending of European regional development fund moneys on the building of factories and the creation of new industries and infrastructure, alongside the work of 132 the Welsh Development Agency. The funds can be and have been applied to regenerate areas which were on their economic last legs.
In my constituency and the surrounding area there is a declining agriculture industry. It has not had the benefit of significant support from the structural funds. I accept, however, that the common agricultural policy has been the lifeblood of the industry for many years. The Government, in considering the way in which the funds are used in future, and their size, in the development of new industries must not lose sight of the decline of old industries. To put the issue in a more homely way, if there are not sheep on the hills in mid Wales, there will not be anyone living at the bottom of the hills. If that happens, our communities will decline and we shall again face depopulation and the wholesale takeover of rural communities by those who wish to move in from elsewhere. The de-Cymricisation of rural Wales could be the direct result of a reduction of CAP funds. The farmers and everyone else in mid Wales understand that the CAP has been too expensive, but the Government must ensure that the targeting of its funds is not so narrow that agricultural areas in my constituency, for example, are unable to survive.
At the Rhodes summit, the Prime Minister's criticism of the Belgian Government was justified. There was blatant political interference by the Belgian Cabinet in the due legal process of the Belgian courts. I hope that that would not happen in the United Kingdom. However, the perhaps over-strident criticism that has been directed at Mr. Martens, especially on the occasion of the European summit, has tended to distract attention from the real issues. It seems that the major decision of those who attended the summit was to defer some of the most important real decisions that have to be made for 1992, whether on border controls or harmonisation of taxes. I understand fully the Prime Minister's concern about the way in which the Ryan affair was handled, especially in Belgium, but I hope that that will not be used as an excuse for reducing the effectiveness of the Community, including the way in which its budget is applied.
§ Mr. David Curry (Skipton and Ripon)
It would be a shame if the debate were to pass without someone giving two cheers for the budget, which marks a number of firsts. It is the first budget to be based upon the new financial arrangements which were agreed by the Heads of Government at the February summit, including the fourth resource. There are 3.5 billion ecu of fourth resource in the budget. Secondly, it bears the imprint of the agriculture guidelines. The preliminary budget proposed only a 7 per cent. increase in farm spending, and that will be substantially underspent in 1989, as it has been in 1988. It also reflects the increase in the structural funds following the Brussels decision.
The structural funds should be judged much more on the efficiency with which they are spending money and less on the sheer volumes that are being devoted to them. There is a tendency to judge them purely in terms of quantity. The great problem with the structural funds over the years has been the inefficiency of the spend in terms of the targeting. The relationship between the Commission and the national organisations which have been applying for funds has meant that a large amount of money has fallen 133 out in the process. If the new regulation tightens the procedure and ensures that that money is targeted effectively, it will do quite a considerable service.
The budget has been drawn up in the light of the institutional agreement, that rather ungainly offspring of the three institutions between the Parliament, the Commission and the Council. It is worth noting that, touch wood, until now the budget has passed without that habitual frontier warfare which characterises relations between the Parliament and the Council. I hope that the Parliament, having remained in its margin until now, will see the budget home and dry in a little over a week's time.
When we talk about the effective spend, we are talking about 1 per cent. of GNP rather than 1.15 per cent. in the preliminary budget. What characterises this budget, and what to some extent characterised the 1988 budget, is the emergence of the new cash mountain in Brussels. The savings in the 1989 budget will be realised thanks to what has happened in 1988 and the shortfall in the 1988 harvest. The harvest in 1988 will be exported in the spring of 1989.
That reduced call on own resources is due, as my right hon. Friend the Paymaster General has said, largely to FEOGA savings which depend upon the world price and the American harvest, but not simply the American harvest. Many other major countries have had a poor harvest, including the Soviet Union. We must all regard Mr. Gorbachev's plans to reform Soviet agriculture with the greatest alarm. The day he succeeds in producing two good crops in succession, we are all down the drain in terms of financing agriculture.
The reduced call on own resources is also due to the boost in receipts which has transferred unspent appropriations. It is also due to a number of cancellations in the structural funds and the increased buoyancy of the customs revenues. However, it would be unfair to ignore some of the real improvements due to the depreciation of stock, the cuts in farm prices consequent to the operation of stabilisers and to a series of zero-price increases in farm prices. It is also due to the disposal of stocks, although no one would deny that that has been achieved at immensely heavy costs to the taxpayer.
However, much of the saving is fortuitous and it would be equally wrong to overlook the fortuitousness of what has happened. The FEOGA figure has been reduced by about 1.37 billion ecu. Had we been talking in July, we might have been considering a saving of some 2.5 billion to 3 billion ecu. That was because of the dollar factor. At its peak, the dollar was trading at about 0.9 ecu and now, after only a few weeks of decline, it is trading at 0.83 ecu. Almost all those factors are outside the control of the European Community. Farm spending in terms of the amount that it costs the taxpayer is very largely outside the control of the Finance Ministers or even the Heads of State of the Community.
The budgetary discipline rules insist that the Commission must take the average ecu dollar rate over the first three months of the preceding year. That dollar rate, which is a notional rate for the 1989 budget, was 0.81 ecu to the dollar. In other words, we are now within a fraction of getting back to the notional rate. That shows the extent to which we are at the mercy of exchange rate fluctuations that are not directly under our control. That saving of 1.37 billion ecu, which at one stage looked to be remarkably over-modest, may now be too modest only to the tune of 150 million or 200 million ecu.
134 Therefore, it is right that we should bring great caution to bear on the budget. It is particularly important that we do not allow to happen what happened in 1984 and blow the agricultural savings in farm price increases. It is important that the farm price review, which the new Commissioner for Agriculture will bring forward early next year, should continue the policy of rigorousness in relation to the general level of farm price increases. We must not forget that new pressures are around the corner because the United States has increased its plantings substantially this year in response to its own drought, and in a couple of years there will be a substantially increased American grain harvest on the world market.
As my right hon. Friend the Paymaster General said, one particularly positive feature of the budget is the four-year stock depreciation programme of 1.4 billion ecu a year agreed by Heads of Government. By the end of 1989 that will have seen the total depreciation of existing stocks. Therefore, looming on the horizon is a saving in the two subsequent years of that money which has been provided already. The practice of depreciation on entry is crucial for getting some honesty and sanity into the budget.
There has been a very real increase in structural funds because it reflects the decisions taken in Brussels. The problem remains that we are looking at an underspend in the regional fund of between 150 million and 400 million ecu and an underspend of 320 million ecu in the social fund. That is because of cutting the funds in a linear way if they are oversubscribed. Therefore, those who ask for the funds tend to ask for too much in order not to be cut back and are then unable to spend the money that is allocated to them. That is the sort of technical problem that lies in the interface between the Commission and the national institutions which are managing these issues. The new funds should assist in that.
The budget deserves a careful welcome, and should be the first of what I hope will be a new breed of much more rigorously managed budgets. My hon. Friend the Member for Southend, East (Mr. Taylor) described the debate as a completely wasted occasion, which would have no influence on anybody. He then described the European Parliament as a completely wasted institution. If this House is useless in so far as it is debating the Community budget and if the European Parliament is useless in so far as it is debating the European Community budget, who is accountable on behalf of the people for whom the decisions are taken? The denigration of both institutions will not get my hon. Friend very far, and he would be better advised to concentrate his energies on devising how the two institutions can share the burden of accountability so that, in the name of the electorate that we both claim to represent, we can be seen to be doing our job.
§ Sir Richard Body (Holland with Boston)
My hon. Friend the Member for Skipton and Ripon (Mr. Curry) is being a little less than fair. We have had debate after debate, year after year, on these budgets. I have attended most of them, and we have made a number of constructive suggestions. We have made various criticisms. some of them substantial and some of them more trivial, but important contributions have been made from both sides of the House about the budgets of the past. Looking back, one must recall that they have had very little effect. I would 135 say that they have had virtually no effect, so the criticism made by my hon. Friend the Member for Southend, East (Mr. Taylor) is right.
The hon. and learned Member for Montgomery (Mr. Carlile) was the only hon. Member to refer to that part of the budget which deals with environmental matters. That is a fresh page to turn, but he went a little too far in suggesting that it would enable us to deal with all the environmental issues in Europe. In my judgment, what is wrong with the European Community is that it is too small, and so long as it is constituted in its present form it will remain too small to deal with any of the major environmental issues which will afflict the continent of Europe in the 1990s. That is why some of us who are critical of the constitution of the European Community wish for something far wider and looser which will enable all countries in Europe to take part in decisions in which their interests are affected.
One example that affects my constituents very considerably is the North sea. The European Community discussed cleaning up the North sea, but it is powerless to do so because only half the countries causing the pollution or affected by it are members of the Community. Until we have an organisation that will embrace all the countries which border the North sea or contribute to the pollution of the North sea we shall not be able to cope with that problem.
§ Mr. Holland
I have one minor point. The hon. and learned Member for Montgomery (Mr. Carlile) was not the only Member to refer to the environment. The hon. Gentleman will agree that there is already an institution which concerns the whole of Europe—the Regional Economic Commission for Europe. Even if he does not think that that institution is ideal for addressing environmental issues, it includes all the eastern and western European countries. Should not such an institution play a role in environmental issues?
§ Sir Richard Body
The hon. Gentleman knows my views. We have stood shoulder to shoulder on a previous occasion on this subject. The Council of Europe can do much, but the European Community as at present constituted sadly cannot.
I congratulate my right hon. Friend the Paymaster General on the way in which he has grasped the complexities of the budget, but I am less sanguine than he about agricultural expenditure. When we speak of surpluses and their disposal, we think mainly of grain, dairy products and sometimes sugar, but in future the largest surpluses may be from southern Europe—olives, citrus fruit, tobacco, paddy rice and wine. An attempt may have been made to curb those surpluses, but anyone who has visited those parts and spoken to farmers who are poised to expand production considerably can have no faith in a policing system for arrangements to curb production. I ask my right hon. Friend to consider this problem carefully and to comment on it when he replies.
How can we curb production in southern Europe, which does not have marketing boards or producer co-operatives as well organised as those in northern Europe? It will be almost impossible to monitor the 136 production of commodities in southern Europe. Producers are acquiring the technical skills to expand production and I see no prospect of curbing agricultural expenditure there.
My hon. Friend the Member for Southend, East referred to the little item of expenditure on the European Movement. I have heard my right hon. Friend the Paymaster General say that he is opposed to federalism. So am I, but often one receives invitations to speak at universities, chambers of commerce and elsewhere about federal Europe. On every occasion when I have done so, my opponent in the debate has been paid by the European Movement. My hon. Friend the Member for Harrow, East (Mr. Dykes) has opposed me on some occasions, but obviously he was not paid by the European Movement. However, it is a small point of principle. The sort of Europe about which my right hon. Friend the Prime Minister spoke in Bruges is not being promoted by the European Movement at present. Will my right hon. Friend the Minister say how this little item of expenditure crept into the budget? Why did we allow it to be slipped in? Surely it cannot be the Government's view that we should progress towards a federal Europe. Perhaps my right hon. Friend will ensure that such expenditure is not repeated in the next budget.
§ Mr. Hugh Dykes (Harrow, East)
The motion, in the form of a "take note", is a departure from recent motions taking note and expressing an opinion, and that is appropriate. As hon. Members have said, elaboration of the budget has taken place within a disciplined framework. That is welcomed by the member states, including this country. It has taken place also in a much calmer atmosphere—perhaps the one produces the other. In recent years, the budget was the product of highly charged and extremely emotional interchanges between representatives of member states and institutions, especially the European Parliament. That is not so in this case.
My hon. Friend the Member for Skipton and Ripon (Mr. Curry) gave an expert analysis of the European budget. We remember his work in the European Parliament as budget rapporteur at least once and as an important agricultural spokesman for the European Democratic Group. He acquired a knowledge of his subject that is second to none, and I agree with all his points.
An increasingly fascinating subject is the accumulation of the financial surplus in the Community, emanating mainly from agriculture. Between now and 1992 is a short period in which to go through this painful, but welcome, process. I have some sympathy for my hon. Friend the Member for Southend, East (Mr. Taylor) because, when this is achieved, he will not have so much to grumble about. I am sure, however, that with his characteristic ingenuity and creativity he will find a raft of new points to which to object. We could do the same with the United Kingdom domestic Budget. We could look at subheadings and sub-sub-headings and find nitpicking examples of mysterious territories on which the national Government propose to expend money. We could say, "What a terrible thing—we do not approve of that."
§ Mr. Wilson
This is just a minor point. Does the hon. Gentleman agree that the fact that the Government are spending £1 million on propaganda to promote the poll 137 tax is at least as offensive as the European Movement spending a few bob on promoting voting in European elections?
§ Mr. Dykes
It is tempting to go down that path, but I shall not. A classic technique in debates if one wants to indulge in nitpicking is to produce a few funny examples like that. People who want to think in that limited way say, "Yes, isn't that awful and ghastly?" To do that is to go away from the main points.
Because of the acceptance of the control mechanisms suggested and exerted by central Government and others and in recent years the change in emphasis on budgetary matters, there is a much better atmosphere, although the functioning if the new constitutional arrangements and the Single European Act is not involved in these measures. The European Parliament always had an enhanced power over the elaboration of the various stages of the budget and particular responsibilities for non-compulsory expenditure. The two come together in a constitutional political nexus and give the European Parliament a much stronger role. I am sure that my right hon. Friend the Paymaster General would be the first to admit that the European Parliament has played a constructive role. That is particularly true of members of the United Kingdom delegation, including some members of the Labour delegation.
I object to the excessive use by my hon. Friend the Member for Southend, East of dismissive adjectives such as "useless", "wasteful", "extravagant", and so on. He is a dignified politician, but he demeans his dignity by using overdramatised words to describe a complicated process of co-operation—
§ Mr. Dykes
Perhaps I was going too far, but I think that hon. Members know what I mean. The process of working out the European Community budget is complicated. The amount is small compared with European GDP and European central Government public expenditure. Some of the money is included in local authority budgets and some is not—it depends on the country. I think that I am right in my understanding of the point made by my hon. Friend the Member for Southend, East. I agree that short debates are insufficient, especially on the budget. The hon. Member for Newham, South (Mr. Spearing), who is Chairman of the Select Committee on European Legislation, and I have had many discussions on this matter. We could return to the old idea of European Supply days, with full days of European debate.
The President of the Commission, Mr. Delors, despite some controversial remarks which he apparently made recently and which were taken out of context, said that the West German Parliament and the British House of Commons and House of Lords carry out considerable scrutiny of the budget. Very few other member states do so, apart from an annual debate such as takes place in the National Assembly in Paris.
I approach the matter from a different vantage point from that of my hon. Friend the Member for Southend, East, and other hon. Members who are not so enthusiastic about our membership of the Community; sadly there is still a small but, I hope, diminishing number of them. Both they and I are right, for different reasons, in wanting to see a more substantial debate. There should be a full day's debate on the European Community budget. My hon. 138 Friend the Member for Southend, East will no doubt part company with me when I say that 1 should like to see that coupled with our developing personal, collective and individual relationships with Members of the European Parliament of all parties, both through party committees and House of Commons arrangements.
Then there should be the normative, logical and regular liaison with Members of the European Parliament on that subject which undergoes its most elaborate process in the European Parliament and has the greatest amount of time devoted to it there. I cannot think of any other subject which is debated at such length. The process is divided into three stages and is preceded by a much more elaborate stage in the appropriate committee. If we could do that, we would be equipped to interrogate the Executive in a much more effective way about the European budget. My hon. Friend the Member for Southend, East would probably reject that idea because he does not want the European Parliament to have that role with its associated liaison, access and facilities. When, for example, will we have fax machines for Members of Parliament as well as for visiting Members of the European Parliament? What a reckless expenditure it would be to spend all that money on a fax machine.
§ Mr. Holland
The hon. Gentleman has touched on a sensitive issue. A number of Opposition Members find it amazing, when we are members of the European Community, that we can telephone anywhere in this country at public expense for the public purpose but we cannot telephone the European Community or send any material there. We have to pay our own postage to the European Community. That is a substantive matter. As an Opposition opposing a Government with massive resources, we are not easily able—except at our own expense—to ring our counterparts in other national Parliaments or in the European Assembly to discuss their views on the budget. The Government should face the fact that that should be funded and that Members should have those facilities.
§ Mr. Dykes
Is the hon. Gentleman really willing to give up the masochistic and agonising torture of going through the switchboard and asking Doris to get a number in Brussels? She asks, "Where's Brussels? Is this a private call or is it official? Can I have that in writing please?" It is perhaps rather rash of the hon. Gentleman to suggest that we should give up those time-honoured customs.
I agree with what the hon. Gentleman says. Some people in the Labour party are beginning to talk about proportional representation, and more enthusiastically about Europe. That is an interesting new development. The all-party Europe group, which was formed in July, includes two Labour Front-Bench spokesmen and had a third until her portfolio responsibility was recently removed by the right hon. Member for Islwyn (Mr. Kinnock).
Many hon. Members will agree with what I have said. The hon. Member for Vauxhall (Mr. Holland) and I can phone Edinburgh easily, but although that experience is pleasurable I regret that I rarely need to phone Edinburgh or Glasgow in the course of my political duties. I hope that the hon. Member for Glasgow, Govan (Mr. Sillars) will forgive me for saying that, although as he also speaks on European affairs he, too, will need to phone Brussels. Unlike some members of the British Civil Service, officials 139 in Brussels, including British officials, are much more approachable and amenable and are often delighted to receive calls from politicians of all the member states, in whatever language it may be. Perhaps my right hon. Friend the Paymaster General will respond to that point by saying that he will ensure that either European or national funds will be provided for that purpose, liaising with the House of Commons Commission. That would be a wonderful achievement.
I pay tribute to my right hon. Friend the Paymaster General for having steered us between the Scylla and Charybdis of this budget process. We are now in calmer seas. There is now support for the Government's policy of controlling those matters more effectively, but I should like to see Parliament have a greater say in that control.
§ 12.5 am
§ Mr. John Redwood (Wokingham)
I welcome the slightly enlarged abatement that has been negotiated and also the signs that, in the current year, the budget is below its quite generous ceiling.
I want to raise the question of the opportunity that many hon. Members feel now exists once again to tackle the problem of agriculture. All hon. Members who have spoken have agreed that the most acute problem is agricultural expenditure. While we all welcome the ceiling and the stabilisers, there are reasons—because of Mediterranean products and the possible harvests in two or three years for northern products—why the Government should urge other member nations to return to the drawing board on some aspects of the farm support system.
We have a system that is expensive both to the taxpayer and to the consumer, to say nothing of its impact on Third world countries. The way to cut through that is well known. It is to rediscover the old mechanism of market prices, which has a great impact on balancing supply and demand and which is rightly the centrepiece of industrial strategy in the Community, where many good decisions are taken to strengthen competition and to allow market forces, free of play, to open markets to greater competition between companies and countries both within and outside the Community. If only some of those fine words from the treaty of Rome could be built into the agricultural system in Europe, it would save money and leave more resources in the budget for other purposes.
The aim to reduce the proportion of spending on agriculture within the budget total is worthy, but I urge my right hon. and hon. Friends to try to secure that not so much by increasing other expenditure but by reducing the agricultural expenditure which, it is generally agreed, is wasteful. It would be unfortunate if, through the Community, we rediscovered, supported or allowed to develop some of the spending programmes that we have, with some pain but with much success, chipped away with good results. I think, for example, of certain capital grants to industry within the industrial and regional policies that this country used to follow. There is a notable coincidence between the beginnings of a recovery in some parts of the urban centres and industrial heartlands of the north and west and the termination of capital grants in a bold reappraisal of regional policy. We do not want that policy to be redeveloped through the European Community. It 140 would cost jobs and taxpayers' cash and would cause disruption within the evolving economies of the European Community, rather than helping in their growth and development.
We must beware that, under many of the headings of expenditure in the Community budget, there are items where there are also domestic programmes. I do not want to judge what would be the right body, in any given case, to pursue those programmes. There may well be cases where the programmes can be most sensibly pursued at the European level. I urge my right hon. Friend to ensure that, where we have agreed to a European programme in a particular area, we make corresponding savings or some reappraisal in the domestic programme because we may otherwise find not only duplication but a wasteful overlap of expenditure. That would do no one any good.
I urge my right hon. and hon. Friends to take the opportunity afforded by the United States overtures on farm subsidies to determine whether the principles of competition and open markets, which we welcome in Europe, can be extended to the very expensive agricultural sector and whether Europe can make a good response to the American offer of multilateral disarmament in agricultural subsidies.
§ 12.9 am
§ Mr. Christopher Gill (Ludlow)
I do not share hon. Members' enthusiasm about structural funds. As they exist at the moment, there is simply not enough cash in any of the funds to make sure that the treatment of projects that are applied for can be dealt with in an even-handed manner. There will inevitably be winners and losers. Some may say that that is fair enough. It is acceptable if one is a winner, but it is totally unacceptable if one is a loser.
My hon. Friend the Member for Skipton and Ripon (Mr. Curry) referred to FEOGA. Nowhere is my argument better demonstrated than in the case of FEOGA funds. A project in my hon. Friend's constituency, which might stand absolutely four-square with a project in my constituency, might be lucky enough to attract funds and the project in my constituency might not. That is palpably unfair. It cuts across what we believe to be fair competition in the market in which we so earnestly believe. Clearly, if one company is advantaged to the extent of FEOGA funds and its competitor is not, that company is in an unfairly disadvantageous position.
There is a smokescreen in terms of the goal and the prizes that are to be won from the market if we concentrate on removing the barriers—whether they be real, imagined, financial, technical or practical—to the free movement of goods and services throughout the Community. That must be our goal. To a greater or lesser extent, the structural funds are a smokescreen and a distraction from the achievement of that most important objective, which, in the long run, is the only one that can deliver benefits and dividends to this country and the other 11 nations.
§ Mr. Brooke
With the leave of the House, may I say that I agree with those hon. Members who spoke warmly about the tone of the debate. I am conscious that I have been asked many questions, and I shall do my best to respond to them in the limited time left in the debate.
At present, my right hon. Friend the Minister of Agriculture, Fisheries and Food is attending the mid-term 141 review of the Uruguay round of the GATT negotiations in Montreal. He will be pursuing the United Kingdom Government's aim of an immediate freeze in support for agriculture, combined with a long-term reduction in agricultural subsidies to free resources for more productive use in the rest of the economy. As I said earlier, at the July Budget Council, the United Kingdom pressed hard for the Community to recognise the scope for savings in agricultural spending at the earliest possible opportunity.
The hon. Member for Vauxhall (Mr. Holland) asked me several questions about individual budget lines and specific amendments made by the Parliament. I will write to him in detail about the position that the November Budget Council adopted on those points.
The same applies to the question asked by my hon. Friend the Member for Southend, East (Mr. Taylor), who asked me about the celebration of the French revolution. I recall the quotation from Burke, which states:It is now sixteen or seventeen years since I saw the Queen of France … the age of chivalry is gone. That of sophisters, economists, and calculators, has succeeded; and the glory of Europe is extinguished for ever.The sophisters and economists appear to have got hold of the celebration of the French revolution.
The hon. Member for Vauxhall asked me about the balance between agriculture and the rest. A shift in the balance of the budget is taking place. Even if expenditure on agricultural market support grows to the full extent allowed by the guideline, the annual rate of increase in real terms would be only about 2 per cent. a year between 1988 and 1992. However, for the budget as a whole, the figure implied by the financial perspective is 4 per cent. What the Prime Minister said about structural funds and Marshall aid was that, in real terms, the value of structural funds in the three years up to 1993 will exceed the value of the Marshall plan in the three years for which it ran.
§ Mr. Holland
We have conventions in the House and I agreed not to conclude for the Opposition. What the Paymaster General said is not the case. It can be true only in nominal terms. The impression given is wholly misleading. Marshall aid was a major programme whereas the structural funds are a minor programme.
§ Mr. Brooke
I stand by what I said and we can both read it again in the morning.
My hon. Friend the Member for Southend, East asked a series of questions. The revenue figures in the budget documents, including the PDB, the draft budget and the amending letter, show the yield from customs duties in detail, but again perhaps we may engage in correspondence. He said that nothing was being done about stocks, but, as my hon. Friend the Member for Skipton and Ripon (Mr. Curry) said, stocks have been reduced substantially in certain areas. Community stocks of butter fell by 85 per 142 cent. between January 1987 and November 1988 and of skimmed milk powder by 99 per cent. over the same period.
My hon. Friend asked for our estimate of the United Kingdom's net payments to the Community institutions in 1989. He and I know from frequent cross-examination of the difficulty of comparing a calendar year for the Community with a fiscal year in which we report our public expenditure. He knows our forecast for public expenditure of £1,970 million in 1989–90 and £1,950 million in 1990–91, and I look forward to his comparison. I stress that the proportion of GDP represented by our net contribution is lower than it was in the late 1970s.
My hon. Friend intervened in my speech to make a point about advances. To have peace between us, advances are a legitimate means of dealing with cash flow problems. They do not facilitate higher spending. On the other hand, delayed payments require a proposal from the Commission. The present drift of the budget is away from delayed payments. Thus we have the substantial provision for stock depreciation.
The hon. and learned Member for Montgomery (Mr. Carlile) made an admirable speech, in part of which he referred to research and development. I hope that he will acknowledge as a result of the British Government's efforts that the difference between good and bad research has emerged. I am making a similar point on his speech to that which my hon. Friend the Member for Skipton and Ripon made about the effectiveness and efficiency in the structural funds.
In response to my hon. Friends the Members for Holland with Boston (Sir R. Body) and for Wokingham (Mr. Redwood), I recognise the Government's responsibility to watch new areas of production carefully. I will investigate the European Movement's alleged support of federalism, but I hope that my hon. Friend the Member for Holland with Boston would always wish to have a worthy opponent when he fought the opposite cause in order to improve his argument.
My hon. Friend the Member for Harrow, East (Mr. Dykes) raised the subject of the European Parliament's role. It has been valuable for agriculture and I shall return to the telephone matter, although without commitment. My hon. Friend the Member for Wokingham added considerably to the tone of the debate on agriculture and my hon. Friend the Member for Ludlow (Mr. Gill) joined in with my hon. Friend the Member for Skipton and Ripon on the subject of the use of the funds.
Finally, I hope that if some of the things which we think might come to pass do come to pass my hon. Friend the Member for Southend, East will have the generosity in due course to acknowledge that they have.
§ Question put and agreed to.
That this House takes note of European Community Documents Nos. 7271/88 and 7758/88 on the preliminary Draft Budget for 1989, 7908/88 on the Draft Budget for 1989, 8996/88 on Letter of Amendment No. 1 to the preliminary Draft Budget for 1989 and 9286/88 on the European Parliament's proposed Amendments and modifications to the Draft Budget for 1989.