1997 BUDGET
2. 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[3], the Letter of
Amendment No. 1 to the Preliminary Draft Budget for 1997 (17511) SEC(96)1677, and the European
Parliament's proposed amendments to the Draft General Budget for 1997 (17594) PE252.724, already
so recommended:--
H M Treasury
(17598)
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Letter of Amendment No. 2 to the Preliminary Draft Budget 1997.
| | Legal base: |
Article 203; qualified majority voting; the special role of the European Parliament is described
in Article 203. |
Background
2.1 On 30 October 1996 we reported[4] on Letter
of Amendment No. 1 to the Commission's Preliminary Draft Budget. The present proposal replaces
Letter of Amendment No. 1, which the European Parliament refused to consider.
The revised proposal
2.2 The revised proposal (for which the official text is not yet available), is
described in an Explanatory Memorandum dated 15 November submitted by the Exchequer Secretary to
the Treasury (Mr Oppenheim), who tells us:
"Letters of Amendment to the Preliminary Draft Budget make changes to the Commission's
proposal for a Preliminary Draft Budget (PDB) to reflect information which was not available at the
time the PDB was prepared.
"The main purpose of the Letter of Amendment No. 2 is to make provision for the
emergency measures agreed at the 30 October Agriculture Council to support the beef and veal sector
in the light of BSE. The Letter also amends the PDB to reflect the 1 billion ECU (£782
million) margin created beneath the Agricultural Guideline in the Draft Budget for 1997[5] adopted at the 25 July Budget Council.
"The letter replaces the Letter of Amendment No. 1 (SEC(96) 1677 final), which the
European Parliament failed to take account of in its first reading of the Draft Budget for
1997."
Expenditure increases
"The additional expenditure foreseen in the Letter of Amendment is as follows:
(i) The fruit and vegetable sector: expenditure in this sector will be
117 million ECU (£91 million) higher than that anticipated in the PDB because the reforms to
this sector agreed by the Council will impact more quickly than was expected. These reforms also
necessitate some technical changes to budget nomenclature;
(ii) Prices and related measures: the Council's decision on prices and
related measures entails an additional cost of 6 million ECU (£4.7 million) on the Commission's
budget proposals;
(iii) The olive oil sector: legislation now adopted for olive oil aids
is based on a production of 1,417,200 tonnes in place of a forecast 1,273, 000 tonnes. This
increases the budget by 127 million ECU (£99.3 million);
(iv) Emergency measures proposed in the beef/veal sector: the cost of the
emergency measures proposed to deal with the decline in the beef and veal market will cost an extra
1,823 million ECU (£1,426 million) in 1997.
Expenditure cuts
"The rectifying letter also reduces proposed expenditure in other areas to offset these
extra costs and to implement the cuts in the agriculture budget agreed at the 25 July Budget
Council.
"In order to cover the cost of the additional expenditure detailed . . . above, the
Commission propose to delay payment of the advance on per hectare aid for oilseeds for a few months,
which will create savings of 1,338 million ECU (£1,046 million), to use up the temporary
reserve of 505 million ECU (£395 million) created in the PDB for BSE-related measures, and to
bring forward 230 million ECU (£180 million) of payment of beef/veal premiums to 1996.
"The 25 July Budget Council adopted a Draft Budget in which provision for agricultural
expenditure was set at 1 billion ECU (£782 million) beneath that proposed in the Commission's
PDB. The Letter of Amendment respects this decision and maintains a margin of 1 billion ECU beneath
the Agricultural Guideline (the ceiling on CAP expenditure) by applying a pro rata reduction to
provision to all budget lines except those relating to beef, which, together with the savings
mentioned in paragraph 5, will create the necessary margin."
2.3 The effect of these changes is summarised in the tables reproduced below.
The Government's view
2.4 In his Explanatory Memorandum the Minister tells us that the Government supports
this proposal, which reduces the Commission's Preliminary Draft Budget by 1 billion ECU (£782
million). The final level of the United Kingdom's contribution cannot be determined before the
European Parliament adopts the Budget for 1997 in December.
Conclusions
2.5 This proposal replaces the earlier proposed Letter of Amendment No. 1 which,
we said, raised matters of political importance which should be debated at the same time as the
Council's Draft Budget for 1997 in order to provide an opportunity to discuss both the expenditure
on compensation in the beef and veal sector and the adjustments proposed to other parts of the
agricultural budget.
2.6 We note that the proposed additional expenditure on beef and veal has been
increased from 1,381 million ECU (£1,110 million at the exchange rate then prevailing) in
letter of Amendment No. 1 to 1,823 million ECU (£1,426 million) in the present proposal.
Increases resulting from the Council's decision on prices and related matters have risen from 2
million ECU (£1.6 million) in the earlier proposal to 6 million ECU (£4.7 million). The
basis for these projections will no doubt be considered in the debate which we now recommend on this
document in European Standing Committee B, together with the Draft Budget, which we have already
recommended for debate.
TABLE A
Proposed CAP spending for 1997 in millions of ECU
| PDB proposal for CAP spending (equal to the Guideline ceiling on CAP
spending) | 41,805 |
| Agricultural prices | +6 |
| Fruit and vegetable reform | +117 |
| Olive oil | +127 |
| Emergency beef/veal measures | +1,823 |
| Postponement of oil seed aid payments | -1,338 |
| Deletion of the BSE reserve | -505 |
| Beef/veal premia brought forward to 1996 | -230 |
| Total adjusted appropriations | 41,805 |
| Margin beneath guideline after these adjustments | 0 |
| Additional measures to maintain margin beneath the guideline created by Budget
Council | -1,000 |
| Overall CAP spending after Letter of Amendment No. 2 | 40,805 |
| Margin beneath guideline after Letter of Amendment | 1,000
|
TABLE B
Proposed CAP spending for 1997 in £ million
| PDB proposal for CAP spending (equal to the Guideline ceiling on CAP spending) | 32,698
|
| Agricultural prices | +4.7 |
| Fruit and vegetable reform | +91 |
| Olive oil | +99.3 |
| Emergency beef/veal measures | +1,426 |
| Postponement of oil seed aid payments | -1.046 |
| Deletion of the BSE reserve | -395 |
| Beef/veal premia brought forward to 1996 | -180 |
| Total adjusted appropriations | 32,698 |
| Margin beneath guideline after these adjustments | 0 |
| Additional measures to maintain margin beneath the guideline created by Budget
Council | -782 |
| Overall CAP spending after Letter of Amendment | 31,916 |
| Margin beneath guideline after Letter of Amendment | 782
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3. (17484) 9372/96; see HC 36-i (1996-97), paragraph 3 (30 October 1996); (17511)
SEC(96)1677; see HC 36-i (1996-97), paragraph 4 (30 October 1996); and (17594) PE 252.724; see HC
36-iii (1996-97), paragraph 2 (13 November 1996). Back
4. (17511)--; see HC 36-i (1996-97), paragraph 4 (30 October 1996). Back
5. We reported on the Draft Budget on 30 October as (17484) 9372/96; see HC 36-i
(1996-97), paragraph 3. Back
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