Reading ConservativeHome over the past few days, it has been very reassuring to see that our Conservative Members of Parliament are taking such a keen interest in keeping the EU's budget for 2011 at least frozen at 2010 levels, or even reducing it. But Conservative MEPs have also been actively attempting to keep the budget down at our end as well.
Our general position throughout the discussions, and that of our ECR group, has been to freeze the budget, and to seek savings in the administrative budget of the European Parliament in particular. Amendments that we have tabled in committee (and will table again in the full plenary vote next week) will see the parliament's vehicles budget halved, its entertainment budget cut significantly, the expenses of staff for 'missions' reduced and the publications budget cut by 2.5 million Euros. We will also be asking for a review of the costs of running the EU's external offices and we will be requesting a clear report on how the EU spends money on NGOs – a rather murky arrangement that needs to be made more transparent.
In the budgets committee, it was clear that there was a rather large coalition (principally involving the EPP and Socialists) in favour of increasing the budget. That is no great surprise. Traditionally, the parliament has sought to achieve a larger budget for the EU than that proposed by national governments. Once the parliament has voted there will begin a 'conciliation' procedure between the two institutions and that is where our own Government's strong negotiating position will need to be maintained in order to force MEPs to live up to the reality of today's world.
The ECR has managed to form a centre-right coalition in a number of areas that are of importance to us and we are winning many arguments. But we knew that, at least for the moment, we would be in a minority when it came to the budget. Yet we still live in hope that other MEPs will realise that the European Parliament itself must cut back on its spending lines, and that all UK MEPs can back the ECR amendments that would do just that.
This is why our ECR group is an important addition to the landscape. We can and do work with other groups to win the arguments on areas of importance such as the Single Market, free trade and the environment, but on issues such as the budget, we can put across a different point of view – one that better reflects the views of the European governments and voters. Before the formation of the ECR, there would have been no credible group in the parliament arguing the case for a freeze.
We will also seek to carry out as much damage limitation and we hope that, as has been the case in the past, we can swing some of the budget votes in our favour. Our position will send the Council of Ministers a clear message that the parliament is far from unanimous in seeking to increase the budget. That will provide them with some extra ammunition as they begin the conciliation process. And I think that so far we can be proud of how the Coalition Government has made this point forcefully at every opportunity in Brussels – including Vince Cable when he visited a fortnight ago.
Our lead members on the budget negotiations – James Elles for the Conservative delegation and Lajos Bokros for the ECR group – have made forceful arguments in favour of a budgetary freeze. I would also like to pay tribute to my colleague Ashley Fox who is leading a cross-party campaign next week to reduce the absolutely ludicrous waste associated with the monthly relocation of the parliament from Brussels to Strasbourg. MEPs will be voting on our calendar of sittings for 2012 and he has tabled an amendment that would merge two sittings into one, thus immediately saving around £15 million whilst still fulfilling our unfortunate Treaty obligation of meeting in Strasbourg twelve times per year. If his amendment is passed, it will send a powerful signal about our willingness to end this utterly profligate nonsense.
The debate over the EU budget for 2011 is however only part of an upcoming, much bigger debate on how the EU raises and spends money. To date, other than moderately small contributions from cross border VAT, the EU budget has been wholly financed by contributions from the 27 National Governments and most importantly the EU is not permitted to run a deficit or borrow money. Now the European Commission is encouraging the Parliament to consider allowing the EU to have its own sources of funds. The buzzwords "innovative financing" rebound across Brussels.
Commissioners have suggested giving the EU tax raising powers – suggesting EU level carbon taxes and EU level financial transaction taxes or bank levies as possible first steps. Whilst there is often agreement that taxing cross border activities needs to be taken in a co-ordinated manner, the concept that European Institutions could charge taxes directly on its citizens or businesses would be a material change – a change that members of the ECR Group instinctively reject.
Commissioners, backed by the European Investment Bank, have suggested that the EU could "leverage" its budget by issuing "project bonds" for infrastructure (possibly similar to PFI type projects in the UK). This is not a simple issue. Enabling private money to work alongside public money in infrastructure investments can appear an attractive vision, especially when public money for investment is in short supply – but as we know from the UK the devil is in the detail. Resulting contingent or "off balance sheet" liabilities can result in significant long term obligations for tax payers and even the European Central Bank has voiced concerns over the potential "moral hazard" implications of many different countries jointly guaranteeing such projects. The EU, and national governments need to tread very carefully in these areas and the ECR will continue to argue against them.
Ultimately, we must never forget who is responsible for the UK's increasing EU contribution: Tony Blair. The dodgy deal that he did in 2005 on the EU's seven-year budget framework for 2007-13 saw him surrendering £7 billion of Margaret Thatcher's rebate in exchange for weasel words regarding CAP reform. Of course, we paid the cash and the reform never really happened. But worse still, the manner in which the deal was set out meant that the loss of the rebate was 'back-loaded'. Rather than being spread evenly over the seven year budget cycle at around £1 billion a year, the effect would actually be felt far more acutely towards the end of the cycle.
So we will continue to do all that we can in Brussels to swim against the tide. However, now that we finally have a government in Westminster that is eager to engage and make Britain's case forcefully in Brussels, rather than spin a line at home and vacillate abroad, that tide no longer seems quite so strong.