European Communities (Finance) Bill

Madam Speaker

I have selected the amendment standing in the name of the Leader of the Opposition. Because of the interest in this debate, I have had to limit speeches to 10 minutes between the hours of 6 pm and 8 pm. I ask other hon. Members who speak outside that time to be courteous to their colleagues by restricting the length of their speeches.

The Chancellor of the Exchequer (Mr. Kenneth Clarke)

I beg to move, That the Bill be now read a Second time.

The Bill will ratify the highly successful deal negotiated by my right hon. Friend the Prime Minister and my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont), the then Chancellor of the Exchequer, at Edinburgh in 1992. The new financial decision that emerged from Edinburgh will add about £75 million a year to our net contributions to the European Union in the next financial year, and that sum will increase to about £250 million a year by 1999.

That increase in the contribution is an increase in the price that we pay for the undoubted benefits of membership of the European Union. Our economic well-being is dependent in huge part on our membership of the single market. We pay for a seat at the table to enable us to influence the political and commercial character of that market. We use our membership of the European Union to increase our influence in the world and to give added clout to our worldwide foreign policy.

The Edinburgh deal paid a fair price for those benefits and it also achieved other things in the financial area. It took the United Kingdom down the league table of contributors to the European budget. As a result of the Edinburgh deal, not only Germany, which has always paid more than us, but the Netherlands, France, Sweden, Austria and—if it joins—Norway, will all in the future make a bigger net contribution per head to the Community than do we in the United Kingdom. The deal will also continue to reduce the proportion of the total budget devoted to the common agricultural policy as a result of the mechanism of so-called agricultural guidelines.

Mr. Tony Marlow (Northampton, North)

Will my right hon. and learned Friend give way?

Mr. Clarke

I shall in a second.

The Edinburgh deal also preserved the British rebate. So far, that has been worth £16 billion to us, and that rebate has been preserved until the end of the century.

Mr. Marlow

When the right hon. Lady, the then Prime Minister, came back with the rebate on 27 June 1984, she said: this system can be changed only by a unanimous decision by all member Governments and ratified by their Parliaments. The benefits 933 for the United Kingdom will continue unless and until we ourselves agree to change it."—[0fficial Report, 27 June 1984; Vol. 62, c. 993.] Was she right or was she talking nonsense?

Mr. Clarke

She was perfectly right. If my hon. Friend will restrain himself at this stage, the rebate was negotiated at Fontainebleau in 1984 and unanimity is required to change it but, as I shall explain in a moment, usually a large number of issues are on the table at Councils to revisit those financial deals; countries pursue a variety of objectives; and each country puts into issues the subjects that it wishes to reopen.

I can assure my hon. Friend that the subject of the British rebate is reopened by our partners at every possible opportunity and it was on the table at Edinburgh, but my right hon. Friend the Prime Minister stuck to his guns and insisted that the British rebate should remain part of the financial arrangements. As a result of the Edinburgh deal, it is now preserved at least until the end of the present century.

Before I discuss the Edinburgh deal in detail, we must first be sure about the present level of our contributions to the European Union. Last week, it was plain that there is still, in spite of the copious document that I produced, a certain lack of clarity. The contributions that we are paying this year are based on the framework that was agreed by the then Prime Minister, Margaret Thatcher, in 1988 at the Brussels summit, the last time that a financial framework was negotiated before 1992.

Margaret Thatcher had a tough time at Brussels in 1988, and it is worth remembering what the financial picture then was. The Commission and most of the other member states wanted the ceiling to go up to 1.4 per cent. of Community gross national product. Eventually, they revised their proposals downwards and she was asked to accept 1.3 per cent. of GNP as the ceiling. She still said, on behalf of the British Government, that that was too high. Jacques Delors then proposed 1.2 per cent. Chancellor Helmut Kohl was alarmed by the effect that that might have on German farmers. Chancellor Kohl wanted to go to 1.3 per cent., but Margaret Thatcher stuck to her guns and she settled at the Jacques Delors compromise of 1.2 per cent.

Five years later, at Edinburgh, when the matter had to be reopened, my right hon. Friend the Prime Minister was still, in the end, not taken anywhere near the figures that Chancellor Kohl and others had been demanding five years earlier. Not by the end of the century will we reach the figures that others were demanding of the British Government in 1988. The Edinburgh settlement will move our contribution to 1.21 per cent. in 1995–96, and to 1.27 per cent. by 1998–99.

What of today's figures, which result from the Margaret Thatcher settlement and the 1.2 per cent. of gross national product to which the Edinburgh deal will be added? What about the billions of pounds whose payment, and forecasts of which, now appear to cause some of my right hon. and hon. Friends such concern? Since 1988, there has been a history of very erratic figures. The highest net public sector contribution that we have made so far is the £2.4 billion paid in 1989–90; the lowest is the £943 million paid in 1991–92. There is a genuine reason for that: technical factors make the figures veer about unpredictably from year to year. The timing of our receipts and payments is unpredictable, and difficulties are involved in calculating the rebate.

934 The legal basis of the payments is certain, settled by the financial framework, but the timing in any British financial year from April to April is notoriously difficult, given that the rest of Europe and the Union work on a calendar year. There has always been uncertainty: if right hon. and hon. Members look back, they will see that forecasting has been difficult under every Government of every complexion in every year of our membership of the Community and, subsequently, the Union. One thing we do know is that the figures tend to rise in cash terms over the years; that is the inevitable effect of inflation and the overall growth of our GNP, and that is why we have reached the £3 billion figure that has been debated in the past week.

As people continue to be alarmed by such figures, let me make it clear that there is nothing new about them. We have always known that our net contribution would eventually exceed £3 billion: we have always said that it would do so in the end as a result of the Margaret Thatcher Brussels summit deal, if it had never been altered.

Let us take the current year—the year over which there was so much fuss last week when I produced the figures a week earlier than I would normally produce the latest forecast so that we should be better informed today and, I hoped, engage in an intelligent discussion about the cost to the country of the European Union. The first forecast for 1994–95 was made in the Treasury's 1991 autumn statement, and amounted to £3.3 billion. I do not recall the slightest fuss being made at the time. In the 1992 autumn statement, the forecast amounted to £3.1 billion; again, no one raised a murmur. Last year, the autumn statement forecast had come down, because—trying to predict our payments and receipts—we expected this to be a particularly low year: we made a forecast of £1.7 billion. Last week, I announced our latest forecast of £2.4 billion.

Those forecasts show the difficulty of forecasting, which no one has ever claimed to be an exact science. They show either a rise of £700 million or a fall of £900 million over the past few years, according to taste. What matters about the figures—

Mr. William Cash (Stafford)

Will my right hon. and learned Friend give way?

Mr. Clarke

I can think of no other hon. Member to whom I should make this point more clearly than my hon. Friend the Member for Stafford (Mr. Cash)—the man who has chosen not only to show the uncertainty of the figures, but to suggest that there is some untruthfulness or deceit behind them. He has rejected my allegations that he was talking alarmist nonsense, as indeed he was, a fortnight ago. Those figures have nothing whatever to do with the Edinburgh deal, or with the Bill.

Mr. Cash

Does my right hon. and learned Friend accept that, when he came to the House last week and produced the revised figures, he was obliged to do so? What I said was not rubbish, as he said on a radio programme the other day. I said that there had been a serious omission of enormous proportions from the letter that he sent round, and that that was unacceptable.

Mr. Clarke

I most definitely was not obliged to produce those figures last week. My hon. Friend was utterly amazed that I did so last week. He would have produced his figures and carried on making mischief with them if I had not produced my figures last week. Those 935 figures would normally have been produced at the time of the Budget tomorrow. Had I produced them tomorrow, I predict that we should have had the same nonsense surrounding them as last week. As my hon. Friend knows, my letter set out accurately and clearly the financial consequences of the Edinburgh summit and the financial consequences of the Bill. That has been incontrovertible throughout. The forecast that I gave last week of this year's contribution, which has nothing to do with Edinburgh, is lower than some forecasts that we have given and higher than other forecasts that we have given. I think that the outturn will show this year to be a fairly normal year.

Mr. Gordon Brown (Dunfermline, East)

Will the Chancellor of the Exchequer clear up this matter once and for all? Given what we know of the European Community—that it thought that the figure was higher than £1.7 billion since January—when did the Treasury first calculate that the figure would be higher than £1.7 billion? Was it last week or was it a few months ago?

Mr. Clarke

As far as I am aware, the European Union does not calculate in advance the net contribution from particular countries. It knows what the legal obligation is. For our public spending purposes, we produce forecasts of receipts and expenditure. We produce net contribution figures and we produce them annually. We are for ever altering the forecast. We produce the figures at the time of the Budget. As far as I am aware, no Chancellor of the Exchequer has produced the latest forecasts a week ahead of the Budget. I did so in order that the debate should be better informed. I thought that it was a useful exercise in open government, but not everyone is ready for open government in this country yet.

Mr. Nicholas Budgen (Wolverhampton, South-West)

Does my right hon. and learned Friend agree that the issue is not really whether there are different assumptions and different ways of calculating, although there certainly are and all hon. Members can honourably and in a friendly way disagree about them? The difficulty is this. When the measure was first proposed, it was presented as being for £75 million. At a later stage, it appeared that the first year's contribution might be a lot larger. Some of my right hon. and hon. Friends say that, of course, it was first of all presented as being a little measure. Then, when it became necessary to bash it through with a quite unnecessary element of confidence added to it, and the country began to ask, "Why are you blackmailing your Back Benchers over £75 million?" it became necessary to say that the measure was for a larger sum.

Mr. Clarke

My hon. Friend and I have conducted this debate, or variants of it, with respect and in a friendly spirit for many years. He appreciates what the issue is, although I was not sure about that from his intervention. The reason why I produced the figures last week, ahead of when I had to, was to demonstrate the latest forecasts of the underlying pre-Edinburgh contribution. As he knows, there is a legitimate issue of what the consequences are of moving from a ceiling based on 1.20 per cent. of our GNP, in steady steps to 1.27 per cent. of our GNP by 1999. The figure that I first put forward—the figure in the letter that I sent to every Member of Parliament in an attempt to make the debate better informed than I feared 936 it might otherwise be—remains accurate. The consequences of going from 1.20 per cent. to 1.21 per cent. are about £75 million next year—a sum on which Parliament must obviously vote and approve or not approve. Similarly, going to 1.27 per cent. by 1999 will have a £250 million consequence. That is the issue before us. To be fair to my hon. Friend, he has never traduced my efforts to make that clear.

I should not seek to blackmail my hon. Friend, but I wish to persuade him of the merits of the deal—to which I shall return when I resume my speech—and that his conscience, lifelong commitment to the Conservative party, sense of proportion and of his country's duty of keeping its word when it enters into commitments with our partners in the European Union, should lead him to support the Bill tonight, with no question of having his arm twisted.

Mr. Gordon Brown

Will the Chancellor answer my question? Did he know of the Treasury forecast revising the contribution upwards from £1.7 billion when he wrote his letter to Members of Parliament?

Mr. Clarke

I honestly cannot remember. [Laughter.] My letter to Members of Parliament was based on the consequences of the Edinburgh summit. When one prepares a Budget, forecasts and tables flow through the Treasury, normally to be produced on the day of the Budget in the Red Book. I do not normally trail in advance tables that are to appear in the Red Book or any part of them. I prepared a letter about the Bill containing the figures that I gave a moment ago. Only when confusion arose about the figures and a date was set for this debate did I decide that one line of those figures—the forecast of our EU contributions—should be abstracted and given to the House.

The hon. Member for Dunfermline, East (Mr. Brown) supports the Edinburgh deal, so he must find it difficult to know which issues to raise in this debate. He can only trawl about, joining some of my hon. Friends in trying to obscure the real issue behind the Bill. I fear that he is somewhat scraping the barrel.

Mr. John Wilkinson (Ruislip-Northwood)

Is my right hon. and learned Friend telling the House that he cannot remember the advice of his Treasury officials when he took the most unusual step of writing a round-robin to 651 Members of Parliament in advance of this debate? That letter conveniently referred to the extra amount that would be paid over and above the sum predicted, rather than to the net contributions that our people will have to pay.

Mr. Clarke

I wrote about the Bill's financial consequences and the amount of money riding on this evening's vote. I did not write about the forecast contribution that would arise this year from the 1988 settlement long ago ratified by the House and now utterly beyond its control. I wrote about the issue before us tonight. The attempt to make a great issue about the forecast of this year's contribution, which is £900 million lower than that which we made two years ago but 937 admittedly £700 million higher than the one that we made 12 months ago, is an attempt—with the greatest respect to my hon. Friend—to introduce a complete irrelevance.

Mrs. Teresa Gorman (Billericay)

rose—

Sir Teddy Taylor (Southend, East)

rose—

Mr. Clarke

I shall give way to both my hon. Friends, but as I am sure that they both want to speak, perhaps they will allow me to make a little progress first.

Around £75 million is therefore the correct figure for the effect of the Bill next year. The issue that we should address is why it was necessary, given that large underlying net contribution to which we were already committed, to agree to give anything more at the Edinburgh summit. That is a serious question.

Mr. Barry Porter (Wirral, South)

Will my right hon. and learned Friend give way?

Mr. Clarke

No, because that would be unfair to my other hon. Friends.

Why was it necessary to add anything to the £2 billion to £3 billion, which I have just been talking about, and which flowed from the Brussels summit in 1988? The first thing to understand—it is rarely understood by anybody discussing European Councils of any kind—is that we were pursuing a package of aims at the extremely important Edinburgh Council. We had to help the Danes to obtain Maastricht opt-outs similar to our own to keep them in the Union as our decentralising and anti-federalist allies. We had to secure the completion of the single market as we wanted it to be. We had to turn subsidiarity into a more concrete form to get something to flow from it, and we had to secure agreement to enlargement so that Austria and the Scandinavians might join.

It was a very tough agenda, and it explains the context in which the decision was reached, which the House is being asked to endorse two years later. We had all those highly important political aims. The danger for my right hon. Friend the Prime Minister, as anyone who has been to any Council of Ministers will readily understand, was that he had to pursue those four political objectives. The danger was that the high spenders in the Union would demand in return too high a price in the new financial arrangements in exchange for our British objectives. The danger of not agreeing any of those things and not having a settlement at the Edinburgh Council would have been that it would all have passed on to the next presidency—it was out of our hands in the British presidency—which might have been less sympathetic.

At Edinburgh, my right hon. Friend succeeded in every one of the political objectives that I have set out: he secured the Danish opt-outs and the completion of the single market, subsidiarity was turned to concrete form, and there was the agreement to enlargement, which is now taking effect—and still at a modest cost, which kept the British abatement intact.

Why, after all that had been secured, was there an unavoidable need for any increase in the new financial arrangements? That is the only key question. Why, even when he pursued and got those four key British objectives, did my right hon. Friend the Prime Minister have to concede any more money? That, in my opinion, is about the only sensible question to have been raised in the debate in the past week.

938 More money had to go into the structural and cohesion funds to provide the less-developed regions of the Union with the infrastructure and other investment that they required to accept the single market, and certainly to accept enlargement. There are hon. Members who welcome the objective 1 status that the highlands and islands, Liverpool and Merseyside, as well as Northern Ireland, now have. Principally, the money was needed by Spain, Greece and Portugal to accept what we wanted: that they would compete with German, British and French industry in open trading conditions.

In 1992 we also needed money to give European aid to countries in central and eastern Europe, for example, Poland, Hungary, Czechoslovakia and Russia. I still debate, in the Council of Finance Ministers, the aid that we give to those countries—countries in which we need to see liberal, democratic government and free market economies and whose stability is vital to European security. More money was inevitable because those were new developments. The question was how much. When one looks at that alongside the political achievements, it is my opinion that the Prime Minister returned to the House with a considerable triumph.

Mrs. Gorman

I thank my right hon. and learned Friend for giving way. Does not he agree that most people in this country are concerned about the money that we are already giving, which, as he just pointed out, amounts to 31/2p in the pound on the basic rate of income tax? The constituents whom I represent do not worry too much about putting money into roads in Portugal or into massive irrigation schemes in Spain. They are at a loss to understand why our Government should give priority to the needs of our European partners while neglecting the increase that the taxpayer in this country will have to contribute, which is not a small sum, but which almost amounts to the equivalent that we are trying to raise on VAT?

Mr. Clarke

The case that I have tried to make so far is that we have, under the existing arrangements, been paying between £2 billion and £3 billion a year to bring the undoubted benefits of the single market and of the European Union to this country. Whatever views people have on Europe, very few have demanded that we leave the Union. That level of net contribution has prevailed for years and years, and has not been debated in the House because it has not been a serious issue since the 1988 settlement arose.

Another £75 million will be added to that amount next year and I have given two of the reasons why it needs to be added. That £75 million, for the reasons that I have just given, was a virtually unavoidable increase because there were commitments that had not been there before. That was a very, very good settlement given that the main things that people were concerned about at that Council were the opt-out for Denmark, the enlargement to Sweden, Finland, Austria and Norway, turning subsidiarity into something other than a phrase in the Maastricht treaty and the other benefits that I have just described my right hon. Friend the Prime Minister coming back with from the British summit.

Mr. Barry Porter

I largely accept my right hon. and learned Friend's argument. I represent myself, totally unelected, as somebody from the centrist tendency. We are not much bothered about the odd percentage here and 939 there of gross national product. What we are bothered about, I think—and I am sure that my right hon. and learned Friend will come to this point—is that he should satisfy us that the Government have some policy under which something will be done about the fraud and corruption that have been brought to our attention, not for the first time this year, but in years before. Thereafter, let us get the woods from the trees. We can go forward with this matter perfectly happily, as other hon. Members on both sides of the House can.

Mr. Clarke

My hon. Friend the Member for Wirral, South (Mr. Porter), not for the first time, speaks for the voice of common sense. I certainly intend in due course to deal with the extremely important question of how we stop fraud and how we stop the misuse of this money. If I have time, I should like to go on to the far more important question of how we get better value for the money that we spend, which is an important issue highlighted by the Bill. I shall deal with those questions and try to explain why I believe that the present situation is not the same as the past. Very much more is being done, although I believe that we must ensure that more is achieved to get a grip on the issue.

Dr. Robert Spink (Castle Point)

rose—

Mr. Clarke

I will not give way yet, if my hon. Friend will forgive me.

As the Bill is concerned with these figures and as we are voting on our increased contribution, I shall conclude my arguments about why I think that the Bill, in terms of the figures, represents a good bargain that the House should approve. I shall then turn to how we can be sure in future that we get much better value out of what we are already paying, as well as the addition that we are talking about this evening.

Sir Teddy Taylor

Before the end of this debate, shall we have an idea of when the Chancellor of the Exchequer first became aware that the estimate of £1,714 million was an underestimate of about £730 million? More importantly, on the accuracy of the £75 million, as the Chancellor has said, that depends on all the guidelines being met. Does not it worry him that, as my photocopy shows, the 1995 budget of the EC states clearly and precisely that in agricultural spending, the budget will be exceeded by £1 billion? That will be done by accountancy devices in exactly the same way as happened when, unfortunately, Lady Thatcher got agricultural guidelines and they were broken through by having a metric year. How can we stop such a thing, when the figures are written clearly and precisely?

Mr. Clarke

Throughout the public spending round, various estimates of expenditure are produced; quite a lot are negotiated. I assure my hon. Friend the Member for Southend, East (Sir T. Taylor) that European contributions remain a pretty uncertain feature throughout most of a public spending round until, eventually, the Treasury experts go nap on the best figure they can do for the coming year on the forecast then coming in. Those forecasts emerge in the Red Book at the time of the Budget, so at the time of writing the Budget, one becomes 940 aware of them. I should not normally look at them in close detail until we were finalising the arithmetic in the last week or two.

Those figures were not in my mind at the time of the letter; they had nothing to do with the letter. A complete red herring has been raised in seizing on the changed estimate—changed from when I produced it last year. Hon. Members know that the figures that I gave in my letter were precise, accurate and unchallengeable, yet some of them have chosen to go off on to another field.

Mr. Peter Shore (Bethnal Green and Stepney)

Will the Chancellor of the Exchequer give way?

Mr. Clarke

I shall conclude my point and then I shall give way to the right hon. Gentleman.

I shall conclude the judgment of the deal at the Edinburgh summit. I have described the political background. This judgment is what, two years later, has given rise to this so-called "crisis debate". [Interruption.] Good heavens. Sudden noise reminds me that some members of the Labour party are here. I do not know why they have come to this debate as their participation in supporting the Edinburgh deal is somewhat difficult to understand. Let me—[Interruption.] Let me just give some objective judgments of the deal at the Edinburgh summit. It was described in the following terms by my right hon. Friend the Member for Kingston upon Thames, the then Chancellor: I think it has been an outstandingly successful sutnmit, I can't remember one that has been so successful for many years. I think this is very much due to the negotiating style, the quiet determined diplomacy of John Major, he absolutely excels in this sort of forum and he has delivered a very good deal for Britain on almost every issue. [HON. MEMBERS: "Hear, hear."] I do not say this to embarrass my right hon. Friend the Member for Kingston upon Thames. He has supported the deal throughout, but he keeps being prayed in aid by those who do not.

My right hon. Friend went on to say: The overall financing agreement is one that is affordable and is much more modest than the highly ambitious plans the Commission put forward which have been scaled back. He even said: Everybody had to make some compromises, but at the end of the day, by making switches from one item of the Budget here to another item there we achieved a result which actually goes ahead for seven years on the future finances, it takes us right up to 1999. That's why it was very good news that we succeeded in preserving our rebate, because that is now guaranteed into the next century. Now that is excellent news. That is what my right hon. Friend said and I agree with it—[Interruption.]—and there were others.

My hon. Friend the Member for Stafford rose to ask a question during the statement after my right hon. Friend the Prime Minister had returned from the Edinburgh summit. At column 29 of Hansard on 14 December 1992, he asked about the Danish opt-out. At that time, my hon. Friend did not utter one word of complaint about the own resources deal. My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) rose to his feet immediately after the Prime Minister had said that the Edinburgh summit had decided that it was not 941 appropriate to increase expenditure by a substantial amount, even over the coming years. My right hon. Friend the Prime Minister had just reminded the House that At present, the United Kingdom's net contribution is about £2 billion a year. It would be £4 billion but for the rebate, which remains and—lest there be any doubt—is extended to cover the fresh areas of expenditure that were agreed at Maastricht. In the case of the cohesion fund, for example, that means that we would pay only 5 per cent. of the total cost. My hon. Friend the Member for Wolverhampton South-West rose shortly after that. At column 32 of Hansard he did not demur from a word of that. He asked a question about the need for any future ratification of the treaty.

My hon. Friend the Member for Holland with Boston (Sir R. Body) intervened, as did my hon. Friend the Member for Reigate (Sir G. Gardiner). Neither raised the slightest murmur about the financial deal. My hon. Friend the Member for Tayside, North (Mr. Walker) intervened at column 39.

Mr. Bill Walker (Tayside, North)

rose—

Hon. Members

Hooray!

Mr. Clarke

I shall give way to my hon. Friend, who had the courtesy to rise and to congratulate my right hon. Friend the Prime Minister on his negotiating skill.

Mr. Walker

I meant what I said, as my right hon. and learned Friend believes, and I said what I meant at the time. [Interruption.] Yes, I still mean it and my right hon. Friend the Prime Minister knows that. May I draw the attention of my right hon. and learned Friend the Chancellor to paragraph 5 of the explanatory and financial memorandum? It says: The new Decision has to be approved by all member states in accordance with their national procedures before it can enter into force. It will take effect as from 1st January 1995. What we are doing in the House is pursuing our normal procedures. Since 1992, there have been changes as a result of our economic difficulties, 17.5 per cent. VAT on fuel and many other aspects. Exposed Community fraud, as a result of what my right hon. Friend the Prime Minister achieved, has been demonstrated. People such as my constituents and I are concerned about what we shall do about the fraud. That is why they are taking a stand. We are following our normal procedures.

Mr. Clarke

With respect to my hon. Friend, that really will not do. When the Government of this country enter into political commitments with their allies in such Councils, it is known that the Government will come back and follow our normal parliamentary procedures and seek approval from the House. That is how our parliamentary democracy works. The normal procedure for an hon. Member who supports the Government is to support a settlement upon which he congratulated the Prime Minister at the time he brought it back.

Mr. Andrew Rowe (Mid-Kent)

Will my right hon. and learned Friend give way?

Mr. Clarke

I shall give way in a moment after I have referred to one more of my colleagues.

One Euro-sceptic Member of Parliament queried the cost. Only one Member of Parliament in the entire House cast any question on the financial deal at the time. That 942 person was my hon. Friend the Member for Billericay (Mrs. Gorman). She was the only person to complain about what she called the massive increase in taxation … which will be necessary to pay for that money".—[Official Report, 14 December 1992; Vol. 216, c. 31–35.] She complained at the time, so it is to her, the only person to see anything wrong at the time, to whom I turn to continue to explain what I hope are her last doubts about the £75 million next year that she objects to paying.

Mr. Shore

rose—

Mr. Budgen

Will my right hon. and learned Friend give way?

Mr. Clarke

I shall give way to my hon. Friend in a second. I give way to the right hon. Member for Bethnal Green and Stepney (Mr. Shore) first.

Mr. Shore

The right hon. and learned Gentleman will realise that the arithmetic in this matter is pretty important and his credentials in this matter are not exactly improved by the correction of £732 million that he had to make to.this year's estimate. However, whatever the right hon. and learned Gentleman may argue and reason in claiming that this year's additional expenditure is likely to be only £75 million, what assumptions has he made that lead him to the derisory figure of £250 million in six years' time? What assumptions has he made, crucially, about United Kingdom and Community growth rates during that period? The whole own resource ceiling is based entirely on the percentage of achieved gross domestic product.

Mr. Clarke

The right hon. Gentleman was in government long enough to know that when we look back at the history of predictions of net contributions to the European Community, it is clear that they veer about, year in and year out in the Red Book, as I have described. That is not usually put down to the individual Chancellor of the Exchequer having changed the figures. In fact, the estimates that I produced last week are lower than the estimates that we gave in 1991 and in 1992, as I have already described.

I agree with the right hon. Member for Bethnal Green and Stepney that the arithmetic matters. The certainty is that the ceiling will move in steady stages from its present 1.20 per cent. of gross national product to 1.27 per cent. of GNP by 1999. The assumptions that we have made in trying to put a cash figure on that, to make it cornparable with other public spending figures, are 21/2 per cent. inflation and 21/2 per cent. growth in GNP. At the moment, we are becoming more prosperous more rapidly than any of our partners in the European Union. As our GNP goes up, that has the effect of putting up our contributions.

Mr. Budgen

Does my right hon. and learned Friend appreciate how much we enjoyed his knock-about performance on the announcement at the Edinburgh summit? Does he appreciate that he has already demonstrated that the figures are very complex and that there are a number of different assumptions about them? It was silly for some people to greet them with sycophantic approval. It would also have been silly to greet them with open disapproval without knowing what they were. Surely, on reflection, my right hon. and learned Friend will agree that it was better simply to wait until the full figures emerged and to hope at least that the rights of 943 Members of Parliament would be respected when Members of Parliament were trying carefully and sensibly to analyse what was done and what was asked for.

Mr. Clarke

I really must put it to my hon. Friend that we have got into the debate now, and so far, it seems to me, no one has challenged my figure of around £75 million for next year. It remains absolutely incontrovertible. My hon. Friend at least, I certainly agree, understands the Red Book when the Chancellor produces it, so he would understand the figures when they are produced. He really is being disingenuous in saying that we would have avoided this confusion if I had saved them until tomorrow as opposed to producing them last week. My hon. Friend knows perfectly well that, had I produced them tomorrow, he and his hon. Friends would have gone straight to them and again done what they did last week—tried to pretend that a totally different figure about a totally different estimate casts doubt upon my wholly accurate figure of £75 million for next year.

Mr. Geoffrey Hoon (Ashfield)

Should we add the name of the right hon. Member for Thanet, South (Mr. Aitken) to the list of Conservative dissidents? In 1988, when a very similar Bill was before the House, the right hon. Gentleman tabled a series of wrecking amendments. The right hon. Gentleman is now a member of the Cabinet. Is he a member of the Cabinet because his views on European finance have changed, or is he a member of the Cabinet because his views on European finance have not changed?

Mr. Clarke

In 1988, we had a different Bill and a much more expensive deal; a much more significant increase in the British contribution than the one in 1992 that we are now facing. I say to the hon. Member for Ashfield (Mr. Hoon), as I say to most members of the Labour party, that I continue to wonder what irrelevances they are going to introduce to intervene in the debate. The truth is that they are cynically listening to a debate on a Bill which they support, and whose objectives they have never demurred from, but which they intend to vote against, presumably because they have tabled a wholly wrecking amendment at the request of whichever of my hon. Friends they can get to vote against it.

Mr. Rowe

Will my right hon. and learned Friend give way?

Mr. Clarke

Let me proceed a little.

Let me refer to the doubts that have been raised by some of my hon. Friends about, perhaps, agriculture and, perhaps, fraud and poor value for money, which, certainly, it is sensible for the House to address at a time when we have the chance of considering the overall cost by way of net contribution of our membership of the Union. Agricultural spending is referred to in the Opposition's amendment, although, as far as I can see, with no proposals for reform put forward by them.

Agricultural spending still covers about 50 per cent. of all European spending, but, since 1988, it has been declining. We have a so-called agricultural guideline, which certainly should not be broken. I agree with my hon. Friends who say, "Well, we wait to see what happens." [Interruption,] Spending is.in the control of Finance Ministers. I assure my hon. Friend the Member 944 for Southend, East that Finance Ministers are keen on the Edinburgh ceilings and keen on the agricultural guideline. That guideline has already ensured that agriculture is taking a steadily declining share of the total. It took 70 per cent. of the total in 1988, it takes 50 per cent. now, and that proportion will fall, making room for the structural funds and the third-country payments to which I have already referred.

The proposition on the table about agriculture at the 1992 Edinburgh summit, and again under discussion during 1993, was that the agricultural guideline should actually be increased by 1.5 billion ecu. That proposition was rejected by my right hon. Friend the Prime Minister and was successfully fought off by him. Because of GATT and the reforms of the common agricultural policy in 1992, agricultural policy will be less dependent on export subsidies and storage costs. Those are the sectors that have been notoriously vulnerable to fraud, and the future shape of agricultural policy should lessen itself to fraud. However, fraud is an extremely important and serious matter.

Mr. George Stevenson (Stoke-on-Trent, South)

Will the right hon. and learned Gentleman give way?

Mr. Clarke

I give way to the hon. Member for Stoke-on-Trent, South (Mr. Stevenson), because he is usually critical of the common agricultural policy and its expenditure. So am I and so are the Government. We had an important reform in 1992. We are now seeing a decline in the agricultural budget, and we are shall tighten up on fraud in that budget, as I shall explain in a moment.

Mr. Stevenson

I am grateful to the Chancellor for giving way. In that context, will he confirm that between 1992 and 1995 common agricultural policy expenditure under his Government has increased from £21 billion to almost £27 billion—an increase of 25 per cent?

Mr. Clarke

That is part of the 1992 reforms, which reduced the surpluses and the costs to consumers and, I agree, certainly gave rise to some compensatory costs for farmers. I must confess that I have no idea what the Labour party's policy on common agricultural policy reform is, but I assume that Labour's spokesperson in 1992, whoever it was, accepted that the very substantial reforms which my right hon. Friend, now the Secretary of State for the Environment, took through during our presidency were a considerable net economic benefit to this country. We must continue to go down that road, and the present guidelines reduce the proportion of the total that is likely to go on agriculture.

Mr. Rowe

Will my right hon. and learned Friend confirm that in the last year for which we were solely responsible for agricultural support, the cost was about 1.2 per cent. of our gross national product, and it is now well under 0.5 per cent.? Is not it also true that we are having so much difficulty with the figures now because the enormous potential increase in our contribution stems exactly from the very success of the club for which this is the subscription?

Mr. Clarke

I agree with my hon. Friend on his second point and I am grateful to him for the figures that he gave, which I shall check. He is certainly correct.

Some of the recent publicity about the so-called cost of the European Union has included calculations that assume that we should not have any system of agricultural support 945 if we were not a member of the European Union. My hon. Friend and I are just about old enough to remember that we had a very bad and expensive form of agricultural support before we joined the European Union. He and I both represent farmers in our constituencies and we are committed to a continuing element of agricultural support in the future. I have described how that support has been reformed and improved and how it is now reducing as a proportion of total expenditure.

I shall move on to the subject of fraud after one more intervention.

Mr. Alex Salmond (Banff and Buchan): If the Chancellor is so confident about the case that he is putting about the Edinburgh summit, why did the Government feel obliged to make this an issue of confidence? It was the Chancellor who raised the stakes in the debate in a quite spectacular manner—of course, no doubt in a totally loyal fashion. If there is a separate vote next week about VAT on fuel, will that also be an issue of confidence and if not, why not?

Mr. Clarke

I shall come to the question of confidence and the stakes of this bet, which it is a certainty we shall win, in a few moments. If I have to address the hon. Gentleman about the British constitution and our perfectly commonsense interpretation of it, I shall do so in due course.

I shall deal first with the question of fraud that my right hon. and hon. Friends have raised. We have been giving the highest priority to tackling fraud and getting better value for money—an even bigger problem— over the past year or two, and we have made substantial progress.

Mr. Gordon Brown

Will the right hon. and learned Gentleman give way?

Mr. Clarke

I shall give way when I have explained our current position. The House must understand that we are not the only member state concerned about fraud. The fact is that our Danish, Dutch and German colleagues, to name but a few, are equally aroused about it. It is as important to their political debate as it is to ours, as I know from the frequent discussions that we have on the subject when I attend the Council of Finance Ministers.

But it is the British Government who have made most.of the running in recent years and it is the British Government who have contributed the most tangible changes that will produce an improvement inside the Union. A great deal has been done, but there is a great deal more to do.

Any fraud is unacceptable when public or any other money is involved. The present level of fraud is excessive, but I say again to the House that it does not improve public debate or the appreciation of what can be done to whip up the debate on the subject by way of the grotesque exaggeration that we have heard in the past week. The ridiculous figure of £6 billion worth of fraud is bandied about in the BBC and sections of the press, and by some of my hon. Friends. As far as I am aware, it has not the slightest factual basis.

There was once a German academic who tried to produce the figure as a result of a study that he had done of the beef regime. It does not stand up to the slightest examination. I trust that when we debate the matter today, people will not exaggerate the extent of fraud by at least 10 times.

946 As I said, no fraud is acceptable. All fraud is serious. So let me refer to what has been done in the past two years or so since the ratification of the Maastricht treaty. The Maastricht treaty has so far made the biggest changes.

Mr. Wilkinson

Will my right hon. and learned Friend give way?

Mr. Clarke

My hon. Friend was not the most famous supporter of that treaty, but I shall give way to him.

Mr. Wilkinson

Will my right hon. and learned Friend tell the House why he allowed the Italians to get away with the milk quota scam, which cost £500 million? They grossly exceeded their milk quotas deliberately and then blackmailed the Community, saying that they would not implement the Edinburgh summit proposals unless we gave in. Why, if my right hon. and learned Friend and Her Majesty's Government are so keen on eliminating fraud within the Community, did they give in in that way?

Mr. Clarke

It is untrue that I gave in. I shall deal with Italian milk quotas, in which suddenly everyone has taken a great interest in the past fortnight. Most of the people who talk about milk quotas have not the first idea what they are talking about. I shall deal with the Italian milk quota settlement before I sit down because I have had enough of the allegations made about it both by my hon. Friends and by the press. The allegation that I backed down on that matter is as untrue as the ridiculous £6 billion figure for fraud that I have just described.

I shall first deal with the Maastricht treaty changes and what is happening now. The treaty gives the Court of Auditors greatly increased status and powers compared with those that the body previously had. The irony is that the new, stronger Court of Auditors, which produced last week's report on the 1993 budget, gave the opportunity to every enemy of the European Union suddenly to claim that it was corrupt to the core because at last they had the material, which they then grossly exaggerated. That gave rise to the allegations.

The Court of Auditors now has the power to take the Commission or other institutions of the Union to the.European Court of Justice if it needs to do so to get action taken on its reports. The Council of Ministers and the European Parliament have also been given extra powers to hold the Commission to account for the defects disclosed by the Court of Auditors reports. The Council of Ministers and the European Parliament are now doing that for the 1992 budget.

The British took the lead at a Council of Finance Ministers, which demanded that, in the light of the 1992 report, in future we should have prior approval of projects, target setting for results in terms of value for money, monitoring and evaluation of spending. That put in place the type of procedures that accompany good government in this country. The European Parliament is demanding action on milk quotas, tobacco and the use of anti-fraud staff. It is also getting a response.

Since 1992 there has been a Commissioner personally responsible for action against fraud. It is at present a German Commissioner and is soon to be a Swedish Commissioner. Both come from countries as keen to cut fraud in parts of the Union as we are in the British Parliament. There is now a unit that deals with fraud— 947 the so-called flying squad—currently headed by a Dane. That so far is good enough, but the British Government wish and intend to go further.

Both the British Government and the Commission have made further proposals for Community-wide action and stronger criminal penalties for those who are guilty of fraud involving Community funds. My right hon. and learned Friend the Home Secretary has put forward the British proposal that member states should tighten penalties for Community fraud and that it should be a criminal, imprisonable and extraditable offence. The Commission has responded with, if anything, even stronger suggestions of its own. I know that my right hon. and learned Friend or another Home Office Minister will discuss the matter at the Council of Interior Ministers later this week and that proposals will soon be put in place.

Fraud is a serious matter. That is not anything that divides any Members in the House one from another. At last—especially since 1992, Maastricht and Edinburgh—we have in place the necessary structures to tackle fraud. The British Government will remain among the most determined to ensure that the structures are acted on and produce results.

More proposals will be put forward at the next European summit in Essen. For example, we might propose independent inspection of the vetting of claims by some national agencies because some member states are not good at vetting the claims that they put forward.

I hope that when we make those proposals and when we strengthen what we have done in the past two years, no Members of the House will say that we are allowing European interference in this country, appointing Euro-snoopers and making Euro-laws. We are strengthening the action that can been taken against fraud because it is absolutely essential that we get value for money out of the budget.

Mr. Cash

I must ask my right hon. and learned Friend, in a friendly spirit, whether he intends to make a statement on the proposal in my amendment, which has not been selected, that the Public Accounts Committee could take a greater interest in the issue, given the fact that, under the Maastricht arrangements and previously, it was stated that Conservative Members wanted greater enhancement of the powers of national Parliaments.

Mr. Clarke

I am not sure whether the Public Accounts Committee and the Comptroller and Auditor General have access to information that the Court of Auditors, the Commission and member states receive. The PAC does a very good job, but I am dubious about how much information it would have about the Yugoslav maize scam, which was detected in Greece some time ago. A serious point lies behind my hon. Friend's amendment—how we tackle fraud.

I was describing the way in which we are putting into place in.Europe—largely at Britain's behest, as was the case when we negotiated Maastricht—the sort of arrangements that British politicians would recognise as likely to detect fraud at member state level, or when there is carelessness at Commission level.

Several hon. Members

rose—

Mr. Clarke

May I keep my promise to return to the subject of the Italian milk quotas? The basis on which the 948 own resources decisions proceeded was finally unlocked at the Council of Finance Ministers, when I settled a series of actions that turned around the Italian and Spanish milk quotas from 1988 onwards. The British Government had participated in those court actions precisely to ensure that people were not allowed to escape with the underpayment of penalties, which might otherwise have occurred.

The Italians and Spanish had exceeded their milk quotas for a number of years and had not collected the penalties from their farmers, as other members, such as the Germans, Belgians and British, had done. When the matter finally came to a head, the Commission purported to backdate the quotas to those member states, because many Agriculture Ministers agreed that mistakes had been made in calculating the exact milk production of those countries. The Commission calculated how much Italy and Spain should pay to the Union and tried to backdate the increased quotas. I have put those facts on the record because some factual description of the saga is required.

What did the various court actions lead to? The Commission proposed to sort out the problem by making the Italians and Spanish repay 2.1 becu—£1.6 billion—as a penalty. They said no, went to court and said that they should not have to pay anything as it had all been a mistake and they were not liable for £1.6 billion. The British went to court to argue that the Commission should not backdate the quota and that the two countries should pay more penalties.

When we discussed the matter, the first question was who would win in court. I have been involved in enough court actions to know that no one can be certain of that, least of all in the European Court of Justice. Had we gone to court and won the point of principle, we should still have left the Commission to calculate the penalties. There was no reason at all to believe that had we won the action, the Commission would have assessed the penalties at anything more than the 2.1 becu, or £1.6 billion, which it was already happy to take. The settlement that we got obliged the payment of penalties of 3.2 becu, an increase above the Commission's statement of 1.1 becu. The British action in court and our position at the Council of Finance Ministers increased the penalties by £860 million, over and above anything that would otherwise have been achieved.

We took that action because we insisted that the penalties should not be waived by the Commission in those circumstances. My Italian and Spanish colleagues had to go back to their Parliaments and explain why, between the two of them, £860 million had been added to the penalties imposed upon them for failing to enforce milk quotas. That £860 million was a cost imposed by the British Government for their seeking to evade the operation of milk quotas that other people had.

That action, which gave rise to the biggest penalties in the history of agriculture in the European Union, is typical of the action that the Government will take on fraud in the future. That is why I suggest to the House that the addition to our net contributions is a triumph of negotiation. It is a contribution that we should pay on top of our existing contributions to continue to get benefits from the Union.

949 I have been asked why that is a matter of confidence in Her Majesty's Government.

Sir Teddy Taylor

Will my right hon. and learned Friend give way?

Mr. Clarke

No, with the greatest respect to my hon. Friend. I am now about to conclude. It is time for us to find out what the Labour party is here for.

On the question of confidence, I repeat to the House what I said when I was giving a press conference about the figures that I produced last week. It seems to me to be plain and obvious that any Government who give a solemn undertaking in international negotiations, enter into political commitments and require money to support those commitments, must come back and ask the House to endorse that. If the House will not vote in favour of that money, the Government will have lost the confidence of Parliament. [Interruption.] It is not a ploy, nor a policy decision. It is plain and obvious common sense.

The role of this Parliament will be diminished if a new rule is invented for the short-term and expedient reasons given by some Opposition Members that the Government can be defeated on a major international obligation and then carry on with a reshuffle as if nothing had happened. It is precisely the power of Parliament that if Parliament will not vote in favour of the money and will not enable the Government to honour their solemn international commitments, the Government will have lost the confidence of the House and they must fall. That seems to be obvious, and to take any other course would undermine parliamentary democracy and not improve it.

That is the only issue which has moved the Labour party and the Liberal Democrat party to want to vote against the own resources decision.

Several hon. Members

rose—

Mr. Clarke

Hon. Members must now wait for their speeches to make their points.

The deal was not only not criticised by anybody at the time—apart from my hon. Friend the Member for Billericay—fbut it has been supported in full by the Labour party and by the Liberal Democrat party ever since it was entered into. If we are talking about parliamentary procedure, and if hon. Members are to raise points of order about respect for Parliament as a result of newspaper reports that they have read at the weekend, what respect for Parliament is created by the official Opposition and the third-biggest party standing on their heads and voting against every principle and statement that they have ever propounded on Edinburgh at the request of some of my right hon and hon. Friends?

I ask the Opposition to go away. They have no part to play in the debate. We know their views. My hon. Friend the Member for Stafford will tell them when to come back and which way to vote. He will tell them whether they are needed or not.

The Opposition are following a totally dishonourable course in seeking to wreck a deal that was a superb negotiating triumph at the time. When the House returns to common sense, it will ratify that deal when it gives the Bill a Second Reading tonight.

Mr. Gordon Brown (Dunfermline, East)

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: this House believes that the European Communities (Finance) Bill is not an acceptable measure as it increases United Kingdom contributions to the European Union without action by Her Majesty's Government to cut fraud and waste in Europe or to reduce expenditure on the Common Agricultural Policy. The case for the amendment has been enhanced by the muddle created by the Chancellor this afternoon over the figures which he has produced, and by his failure to convince and explain them adequately to the House. We know that the Chancellor did not read the Maastricht treaty. Now we know that he cannot remember when he read what were perhaps the most controversial estimates of his public expenditure statement. It does the Chancellor no credit to respond to his own failure by spending a good deal of his speech attacking many Conservative Back Benchers.

In the recent history of the House, there have been many votes of confidence called by Prime Ministers to determine the fate of their Government. In every one of them, the Prime Minister of the day has come to the House, stood at the Dispatch Box and spoken in defence of his Ministers, Cabinet and Government. That is until today.

The Prime Minister tells us that he attaches vital importance to the debate. He has told the House that, for him, it is a matter of confidence and that every clause is a vote of confidence. He has told the country that it is a matter on which not just he, but the whole Government would resign. No compromise, no last-minute shuffling of leaders—it is all or nothing. But the man who has asked for that vote of confidence from the House has not the confidence to stand up in the House to ask for that vote.

The House has seen many historic votes of confidence. But when the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) faced a vote of confidence over Europe, he did not delegate that matter to Anthony Barber. When Macmillan faced a vote of confidence after sacking half his Cabinet—some said the wrong half—he did not sit it out and simply call on Selwyn-Lloyd to stand at the Dispatch Box. I ask the House; would Lady Thatcher, in similar circumstances to today's, have sent along Sir Geoffrey Howe to defend her?

The Prime Minister has chosen to exercise his right to silence in the debate, and we all know the inference from insisting on one's right to silence which the Home Secretary would encourage us to draw. It is rather as if the grand old Duke of York had marched his men up to the top of hill, made his excuses and left. If I may recall a previous European encounter in which a leader sought to summon up the spirits of his country, it is as if the Prime Minister had said, "Once more into the breach, dear friends. But I am sorry, I will not be leading you myself."

We have an unprecedented vote of confidence called the day before the Budget on every clause and every detail of the Bill. There has been panic, and the ultimatum of the confidence vote. The scale of the threat and this bizarre sequence of events can be explained by one thing and one thing only; not by any reference to the national interest and not by looking at the needs of the British economy and the British people, but by the fact that it is in accordance with the imperatives exercised by the bitter 951 feuding inside the Conservative party. The divisions, as we see this afternoon, are rapidly becoming irreconcilable and are now fracturing a once-great party.

Just as the imperatives arising from that disunity have forced the Prime Minister to adopt an absurd stand over the confidence vote, the Prime Minister has allowed himself to be forced into making every clause in the Bill a matter of confidence. This must be a no-change Bill; a Bill that the Prime Minister tells us is somehow beyond improvement. What a ridiculous position the Prime Minister has put himself in. He asks us to adopt a test which, if applied to the European Communities (Amendment) Bill—which the House chose to amend eight times during 12 months—would have, under the new Prime Ministerial diktat, occasioned general election after general election during the past year. If such a test were to be applied—as the Prime Minister says—to every Finance Bill, it would have meant last year alone, with three amendments to the Finance Bill accepted, three dissolutions of Parliament.

The Prime Minister should reconsider his absurd view that strength and authority would come from an unchanged Bill. The best evidence of strength and authority would be a better Bill, because I believe that a majority in the House want new measures to be included in the Bill to tackle waste, fraud and the cost of the CAP. Not only is a majority in the House in favour of that, but, as the custodian of public finance, the House has a duty to demand action as a result of the report by the president of the Court of Auditors, which was published since the Edinburgh summit.

On Thursday, the Chancellor gave the House revised figures relating to our contributions to the European Community. Last week, an extra £700 million was added to our budget contributions—not to the contributions made in 1988 or 1989, nor to contributions forecast long into the future, but to our contributions this year. Surely we deserve a better explanation than we have had from the Chancellor this afternoon, especially when we were told 18 months ago that our contributions were to be £2.6 billion, but then that they were to be halved to £1.3 billion. That reduction represented savings as vast as one third of the public spending cuts that the Chancellor announced in the Budget. Why were we not told earlier that the contribution had been revised from £1.7 billion to £2.4 billion?

I must tell the Chancellor that this is not a technical matter. It goes right to the heart of the debate about our contributions to the European Community. We are talking about the bottom line in terms of Britain's payments to the Community. It is not a technical matter, because the failure to answer our questions and the fact that £700 million more is to be paid raises questions about what the Government are doing about waste, fraud, the expenditure on the CAP and costs that continue to rise.

Mr. James Clappison (Hertsmere)

Talking about the bottom line, can the hon. Gentleman confirm that if he had his way, the one thing that we could be sure of is that our contributions would be far higher because of the massive spending demands of the Labour party? Whatever 952 the contributions made by a Labour Government, they would be infinitely higher than the figure given by the Chancellor.

Mr. Brown

We have never supported the increasing costs of the CAP, which have risen under the Government. The hon. Gentleman will have a difficult job explaining to his constituents that he opposed an amendment that called for further action on waste, fraud and the costs of the CAP. He has told his constituents that combating such fraud and waste is exactly what he would do in the House, but tonight he will vote against a proposal designed to do just that.

Mr. Ray Whitney (Wycombe)

If the hon. Gentleman is right when he says that the Labour party has always supported improvements to the CAP, can he explain why his party either abstained on or opposed such important reforms, and did not support them, when they were introduced in December 1991?

Mr. Brown

The hon. Gentleman does not seem to know whether we abstained or opposed, but the fact is that we have been consistent opponents of the CAP.

When the former Minister of Agriculture, Fisheries and Food returned to the House after the debates on the MacSharry proposals, he commended them to the House as the proposals of the British Government. Even then, however, we were calling for continual major reform of the CAP. If Conservative Members think that the CAP, which is costing ordinary people £20 more in their food bills—it is a tax on food, unfair to the development of eastern Europe and unfair to the third world—is in any way still defensible, they should listen to their constituents, who would tell them the exact opposite.

It is important to consider the waste and fraud in the Community budget and the recent report of the president of the Court of Auditors. That report is a sorry catalogue of abuse and lack of accountability which cries out for action. However, today, yet again, the Prime Minister has set himself against any amendment that would give the House greater powers of accountability to consider such waste.

Mr. John Butterfill (Bournemouth, West)

Does the hon. Gentleman agree that there is a lack of manpower resources in the Commission to investigate such fraud? Does he agree that the effect of his amendment, if passed, would be to wreck the Bill and deny those resources to tackle fraud?

Mr. Brown

I agree with the hon. Gentleman that not enough work is done in the Community to combat fraud, which undoubtedly exists. Let me remind him that on 1 September 1993 a Treasury Minister said: It is correct that the UK does not take up all the money that the Commission allocates us for anti-fraud work. The hon. Gentleman may wish to allocate responsibility to the European Commission, but mistakes made by the Treasury have prevented us from taking up the money available to deal with fraud.

The intervention from the hon. Member for Bournemouth, West (Mr. Butterfill) is extremely helpful, because, yesterday, I was given figures about the take-up of money by Britain for anti-fraud work relating to the CAP. In 1991, the European Community made available to Britain 1.5 million ecu for anti-fraud work, but the British Government took up not a penny; in 1992, 1.4 million ecu 953 were available, but 80 per cent. of that sum was not taken up; in 1993, 92 per cent. of the available money was not taken up. In total, just 11 per cent. of the amount available to deal with anti-fraud was—

Mr. David Shaw (Dover)

We are more honest than others in the Community.

Mr. Brown

The hon. Gentleman has raised another issue, but I have already pointed out that we do not take up the money available for anti-fraud work. The hon. Gentleman should criticise the Chancellor for that. I accept that Britain is not the worst when it comes to fraud, but perhaps the hon. Gentleman has not read the Court of Auditors report, because the president was not entirely pleased with what was happening here. He noted that mechanisms were not in place for dealing with both the audit and the monitoring of customs fraud. The hon. Gentleman may wish to direct some of his questions to the Chancellor concerning the failures of the Government, as reported by the president of the Court of Auditors.

Let us be clear about the waste and the fraud and why the Government should be criticised for failing to act. We know about the celebrated incident of the £1 billion wasted on digging up vineyards, only to find that, at the end of it, the output of wine in the Community had increased by 20 per cent. The Court of Auditors also reported that one department had been giving grants to dig up the vineyards while another had given grants to replant them. We also know that grants were made to start projects that had already been completed; that grants intended for redundant workers went to people whose jobs were not at risk; and companies which were given other grants for a particular job were then given a grant for auditing their own accounts. I believe that the majority of hon. Members would want more done to combat such fraud.

When the Foreign Secretary praised the Court of Auditors for the report, perhaps he already knew about the high standards of hospitality offered by its president at its launch. Journalists and officials discussed the waste and corruption in the Euro gravy train while they were served caviar, smoked salmon, canapes and pâté de foie gras washed down with champagne. No doubt each and every guest was determined to do as much as possible in the time available to diminish the salmon mountain and the champagne lake.

Is not it absurd that a reasonable amendment, which gives the House more power to monitor such abuses—something that Conservative Members believe is necessary in principle—will not be accepted by the Prime Minister because he has made a test of strength not out of getting the best Bill, not out of answering the real needs in relation to the European Community, but out of getting the Bill through unchanged, no matter the opinion of the House?

Mr. Kenneth Clarke

The hon. Gentleman is giving the impression that his amendment is merely designed to cut down on the quantity of canapes consumed and to cut agricultural spending a bit. I trust that he will accept that his amendment would wreck the Second Reading of the Bill; stop it from proceeding and prevent us from being able to endorse the Edinburgh deal. That would put us in breach of our treaty obligations to other members of the 954 European Union. Why is he putting forward an amendment that does that when he supports the deal that we have done?

Mr. Brown

Of course the Government could bring the Bill back with the amendment that we put forward, but it is the Prime Minister who has made this evening's vote a vote of confidence. It is the Prime Minister who is trying to dragoon his troops into the Lobby. It is the Prime Minister who is responsible for the issue becoming more controversial than it need be. However, if he is seeking to pass an unchanged Bill through the House, he does not understand the feelings of the country about waste and fraud, and about what is happening to the common agricultural policy.

Mr. Nigel Spearing (Newham, South)

Has my hon. Friend noted that the Chancellor has just claimed that failure to pass the Second Reading tonight would be a breach of treaty commitment? Does he share with me the impression that the Chancellor admitted that he has not read it, because is it not a fact that article 201 of the union treaty gives this Parliament an explicit right to agree or disagree with the provisional agreement made in Edinburgh two years ago?

Mr. Brown

I am grateful to my hon. Friend, whose erudition in those matters is well known. I heard the Chief Secretary to the Treasury yesterday repeating the words that the Chancellor said today: that we had to honour obligations that were made internationally and we could not be put off by a minority of dissidents in the House. The very Chief Secretary who says that this year was the person who voted against an analogous Bill as recently as a few years ago. [Interruption.] He does not seem to understand that that was also a negotiated treaty that he was asking the House to vote against.

What about the role of the House?

Mr. Quentin Davies (Stamford and Spalding)

rose—

Mr. Brown

Mr. Deputy Speaker, I do not know on which side of the debate the hon. Gentleman is, but I will give way to him because of his well-known interest in agriculture.

Mr. Davies

Is it not a fact that neither the hon. Gentleman nor his party said a word against the Edinburgh agreement when it was concluded? Is it not amazingly cynical to come to the House with an amendment designed to prevent the Government front implementing an international obligation to which the hon. Gentleman never objected at the time? Will not that be regarded as utterly cynical throughout Europe?

Mr. Brown

But if I may say so in language that 1 think that the hon. Gentleman would understand, we have always called for a fundamental reform of the common agricultural policy. I think that the hon. Gentleman, with his specialist knowledge, understands that. [Interruption.]

Mr. Davies

Will the hon. Gentleman give way? [Interruption.]

Mr. Brown

Mr. Deputy Speaker, I have made it clear from the opposition Benches that amendments that deal with the problems of waste and fraud in the European Community can,I believe, command a majority throughout the House and that it is ridiculous for the Prime Minister to demand an unchanged Bill when,by 955 debate and discussion and by the House performing its proper duties supervising the finances of the Government, we can obtain a better Bill. We not only—

Sir Terence Higgins (Worthing)

Will the hon. Gentleman give way?

Mr. Brown

I will give way because of seniority.

Sir Terence Higgins

I am grateful to the hon. Gentleman. Will he make it absolutely clear to the House that, if his amendment is carried, he believes that the Bill will have obtained a Second Reading? Secondly, since he argues for amendments, can we understand that he proposes to table amendments in Committee, both on agriculture and on fraud, which would have any effect in reality on those two problems?

Mr. Brown

The Government could accept our amendment now and let us deal with the questions of waste, fraud and the common agricultural policy. [Interruption.] Mr. Deputy Speaker, the Government can accept our amendment. They could bring back the Bill after they had debated it this evening. It is not I but the Prime Minister who has made it an issue of confidence to be dealt with at 10 o'clock this evening.

Mr. Kenneth Clarke

It is important that the hon. Gentleman knows what he is voting about. His amendment would delete everything after the word "That" and would deny the Bill a Second Reading. It would substitute for it his form of words about fraud and agriculture, but the Bill would be defeated. It would not be possible for the Government to bring back the Bill in the same Session of Parliament. The hon. Gentleman is voting to defeat a Bill whose objectives he supports, and he does not even seem to realise that that is what he is doing.

Mr. Brown

I repeat, it is the Prime Minister who has made that an issue of confidence this evening. The Government could bring back the Bill, with the changes that we are recommending in it, if they chose to do so, but it is the Prime Minister who has chosen to make it an issue