Select Committee on European Legislation Seventh Report


1997 BUDGET

2.   We have given further consideration to the following on the basis of further information from the Government. We maintain our opinion that it raises questions of political importance, and confirm our recommendation for its further consideration by European Standing Committee B, together with the Draft Budget for 1997 (17484) 9372/96[6], 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)-- --	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.

2.1  We considered this proposal on 20 November, and recommended it for debate in European Standing Committee B, together with a number of other documents relating to the draft General Budget for 1997.
2.2  The Exchequer Secretary to the Treasury (Mr Oppenheim) wrote to us on 26 November to say that he had authorised the UK Permanent Representative giving agreement to the proposal at the Budget Council on 19 November ahead of Scrutiny. We considered this letter on 4 December, when we asked the Minister why he had been unable to inform us of his decision before the Council, and to advise him that he should inform the House as a whole of his decision as the document had been recommended for debate. The exchange of correspondence is printed below.
2.3  We have now received a further letter dated 10 December (also printed below). The Minister says that the Government only became aware a few days before the Council on 19 November that a decision would be sought, and that he understood that a letter after the event would be adequate. He also says that as agreement had come before our recommendation, he had believed that a letter to us would be sufficient.

  Conclusion

2.4  We note the Minister's reasons for not advising us until 26 November that the Government had given agreement to this proposal on 19 November. We make two observations:
that the requirement of the 1990 Resolution is to inform us as soon as possible after the decision has been taken to agree to a proposal ahead of Scrutiny, and that the Minister's letter should therefore have been sent before 26 November;
and that there would be no need for him to advise the House of his decision directly if he had told us before we had reported, because at that time we had indeed not recommended debate.
2.5  We do not change our recommendation for a debate: even though it has been agreed, the document remains of political importance.
Letter from the Exchequer Secretary to the Chairman of the Committee
Letter of Amendment No. 2 to the Preliminary Draft Budget for 1997
Last week I provided you with an Explanatory Memorandum on the Commission's proposal for a second Letter of Amendment to the 1997 EU budget (official text not yet received).

I am writing to inform you that I authorised the UK's Permanent Representative (who was representing the UK in my unavoidable absence) to waive the UK's scrutiny reserve on this document at the Budget Council held on 19 November. I did this very reluctantly, mindful of the interest your Committee has shown in the budget this year, and in particular of your decision to recommend the Draft Budget and first Letter of Amendment (which this letter replaced) for debate in Standing Committee. I understand that your Committee has since recommended that the second letter be attached to the other documents for this debate. However, I took the view that it was in the wider national interest that the UK's reserve should be waived and the letter agreed.

The November Budget Council gave a second reading to the draft budget for 1997 which maintained the "zero growth" strategy established at the July Budget Council. This means that, provided the European Parliament agrees, the budget for payments in 1997 should be the same in cash terms as that for this year. The draft budget now goes to the European Parliament for its second reading and adoption.

In order to encourage the European Parliament to co-operate with the Council and to adopt a "zero growth" budget, the Council discussed a package of concessions to meet Parliament concerns about certain aspects of the budget. Because the European Parliament had indicated that it would agree the second Letter of Amendment rapidly and without amendment as part of an overall deal on the budget for next year, the Letter formed an integral part of this package.

I was persuaded to authorise the Permanent Representative to waive the reserve for the following reasons:
i.  Without our agreement, Council support for the package of concessions could have begun to unravel -- we were not the only Member State to have difficulties with elements of the overall deal. This would have seriously damaged the prospect of persuading the Parliament to sign up to a "zero growth" budget;

ii.    We had no objection to the substance of the Letter, the main purpose of which is to create budgetary provision for a package of support for the beef and veal sector already agreed elsewhere;

iii.    As already noted, the Parliament had indicated that it would process the letter rapidly and without amendment, in marked contrast to its unhelpful refusal even to consider the first letter. I did not want to jeopardise this pledge. If the EP refused again to consider the letter, the changes would have to be made through a Supplementary and Amending Budget next year, which would give the EP scope not only to modify the specific provision for the beef sector but to make more wide-ranging changes to the budget as a whole.

I hope you agree that the balance of interests pointed to securing a low overall budget deal and making provision for support for the beef and veal sector, and therefore understand why I decided to waive our scrutiny reserve.

26 November 1996


Letter from the Chairman of the Committee to the Exchequer Secretary
Letter of Amendment No. 2 to the Preliminary Draft Budget for 1997

Thank you for your letter of 26 November in which you explained your reasons for authorising the United Kingdom's Permanent Representative to give his agreement, on your behalf, to this proposal at the Budget Council held on 19 November. We took note of your letter at our meeting today, and decided not to change our recommendation for a debate on the Letter of Amendment and the Draft Budget itself.

Two points arising from your letter concerned us. First, you gave authority for the waiving of the UK's scrutiny reserve at the Council meeting on 19 November, but your letter was dated 26 November and did not reach us until 27 November. I would be grateful if you would let us know why it was not possible for you to tell us of your decision before the Budget Council took place.

Second, as a debate on this document is outstanding you should, under section 4(ii) of the Resolution of the House of 24 October 1990, have informed the House of your decision at the first opportunity after giving agreement. The "first opportunity" has now passed, but to comply with the Resolution a statement should be made, perhaps through a written answer. You should also explain your reasons for authorising agreement of the Letter of Amendment in advance of scrutiny clearance to European Standing Committee B when the debate takes place.

We are intending to report on your letter next week, and so we would appreciate your reply by noon on Monday.

4 December 1996

Letter from the Exchequer Secretary to the Chairman of the Committee
Letter of Amendment No. 2 to the Preliminary Draft Budget for 1997

Thank you for your letter of 4 December. I am sorry that this letter arrives a little later than you wished. However your letter reached my office only this morning.

As you know, the Government tries whenever possible to inform the Scrutiny Committees ahead of the relevant Council of the decision to waive scrutiny reserves. This is something I regard as an essential courtesy to the House. However, in this instance it was not clear until a few days before the Council that we might need to waive our scrutiny reserve, and I had hoped to be able to avoid having to do so. Officials in the Treasury sought advice as to what should be done in cases where the Government was not sure whether it would have to lift a reserve, and were advised that a letter after the event would be adequate.

You mention also the requirement to inform the House of decisions to agree proposals before scrutiny has been completed when the proposal has been recommended for debate. At the time the Letter of Amendment was agreed by the Council, it had not in fact been recommended for debate and I took the view that a letter to your Committee explaining the decision would be sufficient to meet the Government's obligations under the 24 October 1990 declaration. The House was of course also informed of the Council's decision to agree the letter in a written answer (Official Report, 5 December 1996, cols 744-746). However I acknowledge that these circumstances are unusual (the recommendation for debate following so quickly on from the decision to waive the scrutiny reserve) and I will inform the House of the reasons for my decision by way of a further written answer.

10 December 1996

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6.(17484) 9372/96; see HC 36-i (1996-97), paragraph 3 (30 October 1996); 917511) 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

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Prepared 19th December 1996