European Communities (Finance) Bill

My Lords, I beg to move that this Bill be now read a second time. The purpose of the legislation is to enable the United Kingdom to give effect to the new own resources decision agreed by the Council of Ministers on 7 June 2007. This own resources decision reflects the December 2005 agreement on the financial perspective from 2007-13 which had three complementary and inseparable elements: expenditure, revenue and budget review. That agreement was good for Europe and good for Britain. The own resources decision contains the detail of the revenue element of that financial perspective agreement. It amends the arrangements for financing the budget of the European communities for the period 2007-13. Clause 1 allows the own resources decision to be put into effect by providing for it to be added to the list of community treaties in Section 1(2) of the European Communities Act 1972. This means that payments made by the United Kingdom as a result of the decision can be charged directly onto the consolidated fund under Section 2(3) of the European Communities Act 1972. Clause 2 simply cites this Act as the European Communities (Finance) Act 2008 and repeals the European Communities (Finance) Act 2001, which it supersedes. The new decision has a number of effects. Appropriations ceilings will be frozen at the levels set for the 2000-06 budget period. The ceiling on annual appropriations for payments is 1.24 per cent of EU GNI and for appropriations for commitments it is 1.31 per cent of EU GNI. Appropriations for commitments are forecast to fall below 1 per cent of EU GNI during the course of the current budget period. The current arrangements for VAT-based contributions will be amended by reducing the maximum call-up rate to 0.3 per cent, increasing member states’ residual contributions based on GNI. This is to be welcomed and further develops the trend towards fair and transparent contributions. Between 2007 and 2013 only, the maximum rate of call on VAT-based contributions will be further reduced for Austria, Germany, the Netherlands and Sweden: 0.1 per cent for the Netherlands and Sweden; 0.15 per cent for Germany; and 0.225 per cent for Austria. For the same period, 2007-13 only, gross reductions in GNI contributions are introduced for the Netherlands of €605 million per annum and for Sweden of €150 million per annum. Both of these amounts are in 2004 prices. The new decision also retains a correction mechanism in favour of the United Kingdom—the abatement—along with the reduced financing of the correction benefiting Germany, Austria, Sweden and the Netherlands. However, after a phasing-in period between 2009 and 2011, the UK will participate fully in the financing of the costs of enlargement by disapplying all non-agricultural expenditure—that is, money in support of economic development—in the new member states from the abatement. Finally, the additional UK contribution resulting from the reduction in allocated expenditure is limited to €10.5 billion in 2004 prices over the period 2007-13. In summary, the UK’s abatement remains intact on all agricultural expenditure across the EU and on all expenditure in the EU 15. So the rebate is preserved and will rise in value. Along with the fact that the ceilings on budget expenditure are retained and that budget expenditure will fall to less than 1 per cent of EU GNI during this budget period, that makes this a good deal for the taxpayer. At the same time, we will, along with the other net contributors to the EC budget, pay our fair share of the costs of enlargement. The UK supports enlargement, which we know will be good for Britain, creating new trading opportunities and new jobs. So the December 2005 agreement is right for the taxpayer and for Britain’s economic interests. It is good for Britain and Europe. I commend the Bill to the House. Moved, That the Bill be now read a second time.—(Lord Davies of Oldham.)