Select Committee on European Scrutiny First Report


10299/00 and
10299/00 ADD I

Draft general budget of the European Communities for the year 2001.

Department: HM Treasury
Basis of consideration: Minister's letter of 5 December 2000
Previous Committee Report: HC 23-xxx (1999-2000), paragraph 17 (22 November 2000)
Discussed in Council: 23 November 2000
Committee's assessment: Politically important
Committee's decision: Cleared (decision reported on 22 November 2000)


  13.1  On 22 November 2000, we reported on the amendments and proposals made by the European Parliament in respect of the Council's Draft Budget for 2001. We invited the Minister to write to us again after the Budget Council on 23 November at which the European Parliament's proposals and amendments were due to be considered, along with the Commission's Letter of Amendment No. 2 to its Preliminary Draft Budget (PDB) for 2001, relating to provision for agriculture and fisheries.

  13.2  In our report of 22 November, we noted that the main area of contention between the Council and the European Parliament related to expenditure in the external actions category. The Council had reduced commitments to the Mediterranean countries (the MEDA Programme) in order to make increased provision for the Western Balkans whilst staying within the financial perspective ceiling for that category. The European Parliament wished to increase provisions for the Western Balkans, including assistance to Serbia to aid democratisation, but it opposed cuts in the MEDA Programme.

The Minister's letter

  13.3  In her letter of 5 December, the Economic Secretary to the Treasury (Miss Melanie Johnson) says that:

    "At its second reading of the Budget, the Council agreed to mobilise the flexibility instrument (maximum 200 million euros) for Serbia[26]. Total commitments of 839 million euros were agreed for the Western Balkans in 2001, including 240 million euros for Serbia (of which 200 million euros is from the flexibility instrument), and 175 million euros for Kosovo. This is consistent with what was agreed at the General Affairs Council on 20 November regarding the CARDS and MEDA multi-annual programmes, where financial envelopes were agreed of 5.35 billion euros for MEDA and 4.65 billion euros for CARDS for the period 2000-2006"[27].

  13.4  The Commission's Letter of Amendment No. 2 to its PDB for 2001 updates the figures underlying the estimates of agricultural expenditure in the PDB as regards the market organisations and related measures. The Minister explains that requirements are expected to be 932.5 million euros lower than initially forecast in the PDB. The Minister goes on to explain that:

    "The Commission also proposed to correct the levels and breakdown of appropriations for the international fisheries agreements. The overall effect is a reduction of 2.7 million euros in commitments and 0.7 million euros in payments for [these] agreements compared with the PDB. This also translates into an increase of 4 million euros as earlier estimates in the Draft Budget were 7 million euros lower than the PDB. ...Council accepted Letter of Amendment No. 2 in full, although it agreed to increased spending for fruit and vegetables and 60 million euros were set in reserve for rapid testing for BSE".

  13.5  In respect of the internal policies category of the Draft Budget the Minister says that:

    "... Council and Parliament also agreed to the financing of a new multi-annual Employment Initiative (2001-2005) at the level of 450 million euros. 100 million euros are to be committed in 2001".

  13.6  The Minister notes that the European Parliament will meet on 12 December to debate its second reading of the 2001 Budget and will take a vote on 14 December, when it is expected the Budget will be adopted.


  13.7  We thank the Minister for her letter. We will in due course report again on the Draft Budget, as amended at the November Budget Council, when that document is deposited and we have an Explanatory Memorandum from the Minister. Meanwhile, we are glad that it now seems likely that the European Parliament will adopt a Budget reflecting, on the key points, the outcomes reported in the Minister's letter. We note that the Council has not increased its provision for external aid to the Mediterranean countries (MEDA), notwithstanding pressure from the European Parliament. However, it remains possible that the European Parliament will make some increase for MEDA, within the financial perspective ceiling for external action, when it adopts the Budget in December.

  13.8  We note also that, for the second year running, it has not been possible to make all the desired provision for the Western Balkans without drawing on the flexibility instrument. Without that instrument, either the desired provision could not have been made available or the financial perspective for external action would have had to be increased. We recognise that the Government and the Council strongly oppose any increase in the financial perspectives, as agreed in the Agenda 2000 negotiations last year. However, it is evident that the pressures in the external action category are, and are likely to remain, very strong.

26  The financial instrument allows up to 200 million euros to be provided, exceptionally, for a specific purpose, without it counting against the financial perspective ceiling for the category of expenditure in question. Back

27  CARDS is the acronym for the multi-annual Balkans programme. Back

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Prepared 29 December 2000