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Select Committee on European Legislation First Report


1997 BUDGET (2)

4.   We consider that the following raises questions of political importance, and recommend its further consideration by European Standing Committee B, together with the draft General Budget for 1997 (17484) 9372/96:--

H M TREASURY

(17511)
SEC(96)1677
Final		    Letter of Amendment No 1 to the Preliminary Draft Budget for 1997.
Legal base:    Article 203; qualified majority voting; the special role of the European
   Parliament is described in Article 203.

        Background

        4.1  The main purpose of this Letter of Amendment, which makes changes to the Commission's proposal for a Preliminary Draft Budget for 1997, is to make provision for an emergency action plan for the beef sector, details of which are not yet decided.

        4.2  The Letter of Amendment also amends the Preliminary Draft Budget to reflect the 1 billion ECU (£804 million) margin created beneath the Agricultural Guideline in the Council's Draft Budget for 1997 which was adopted in July[6].

        The proposed amendments

        4.3  The Letter of Amendment proposes the following increases to the 1997 Budget:

          Fruit and vegetable sector: an increase of 117 million ECU (£94 million) caused by the early impact of agreed reforms;

          Prices and related measures: an increase of 2 million ECU (£1.6 million) following the Council's decision on prices;

          Olive oil: an increase of 127 million ECU (£102 million) following an increase in production forecasts;

          Beef and veal: it is estimated that the cost of emergency measures to deal with the decline in the beef and veal market will cost an additional 1,381 million ECU (£1,110 million) in 1997.

        4.4  The Letter of Amendment also proposes reducing budgeted expenditure by 1,338 million ECU (£1076 million) by delaying payment by a few months of the advance on "per hectare" aid for oilseeds and by using up the temporary reserve of 505 million ECU (£406 million) created in the Preliminary Draft Budget for BSE related measures.

        4.5  The Draft Budget approved by the Council in July reduces spending in the agriculture heading of the 1997 Budget by an overall 1 billion ECU (£804 million) beneath that proposed in the Commission's Preliminary Draft Budget. The present proposal reflects that decision by applying a pro rata reduction to all agriculture guarantee budget lines except beef.

        The Government's view

        4.6  The Economic Secretary to the Treasury (Mrs Knight) says in her Explanatory Memorandum dated 11 October that:

          "The Government broadly supports this proposal, which respects the 1 billion ECU (£804 million) margin beneath the Agricultural Guideline (the ceiling on CAP expenditure) established by the Council in the Draft Budget for 1997 it adopted in July. The Government would have preferred to maintain a reserve to cover any further unforeseen expenditure arising from BSE, but the Commission's proposal is acceptable on the basis that additional expenditure is met as far as possible by redeployment from elsewhere in the Agriculture budget."

        4.7  The Minister notes that the final level of the UK's contribution to the 1997 Budget will be determined when the European Parliament adopts the Budget for 1997 in December. In a letter accompanying her Memorandum the Minister advised us that for what she describes as unavoidable operational reasons the Government would agree to this proposal at the latest at a meeting of the Council on 15 October.

        Conclusion

        4.8  These are important proposals resulting from the need to find additional funds to meet the increasing costs of the compensatory measures for the beef and veal sector and from the Council's decision, in its Draft General Budget, to reduce budgeted agricultural expenditure overall for 1997 by 1 billion ECU. The Letter of Amendment clearly raises matters of political importance which we think should be debated, at the same time as the debate which we have recommended (see paragraph 3 above) on the Council's Draft General Budget for 1997. The debate will provide an opportunity to discuss both the proposed or expected expenditure on compensation in the beef and veal sector, and the adjustments which are proposed to other parts of the agricultural budget. We point out that a substantial part of the proposed saving is to be achieved by deferring rather than reducing expenditure and an important question to be addressed must be what effect this will have on the Budget for 1998.

6.  See paragraph 3 of this Report.  Back

 

© Parliamentary copyright 1996
Prepared 12th November 1996