Select Committee on European Scrutiny Forty-First Report

18. BUDGET 2003




Letter of Amendment No. 2 to the 2003 Preliminary Draft Budget.

Legal base:Article 272 EC; the special role of the European Parliament as set out in the Article; qualified majority voting
Document originated:18 September 2002
Deposited in Parliament:7 October 2002
Department:HM Treasury
Basis of consideration:EM of 22 October 2002
Previous Committee Report:None; but see (23621) — : HC 152-xxxvi (2001-02), paragraph 2 (10 July 2002) and (23676) 11056/02, (23717) 11287/02 and (23844) — : HC-xxxviii (2001-02), paragraph 10 (16 October 2002)
Committee's assessment:Politically important
Committee's decision:Cleared

The document

  18.1  The Commission's Letter of Amendment No 2 to its Preliminary Draft Budget (PDB) for 2003 sets out three changes to Section III of the Community Budget.

  18.2  The first change establishes a new budgetary structure to accommodate three Commission administrative offices: a Paymaster Office, an Infrastructure & Logistics Office in Brussels and a Infrastructure & Logistics Office in Luxembourg. In order to fulfil Article 172 of the new Financial Regulation, these new offices will be delegated separate administrative budgets.

  18.3  The Commission proposed this change as part of its wider aim of establishing a balance between its tasks and its resources. In this case, the Directorate General for Personnel & Administration considered delegating administrative and implementing tasks to specialised public/private-sector bodies and decided it should focus on core activities (personnel policy, health and safety, information and communication technology) whilst day-to-day management should be delegated to these new autonomous bodies.

  18.4  The second change is the insertion of two new budget lines which, if required, would accommodate appropriations for the proposed European Solidarity Fund for disaster relief. The budget lines would carry token entries and would be endowed by means of an amending budget, in the event that the fund was mobilised. We scrutinised and cleared the proposal for the European Solidarity Fund last month.[29]

  18.5  The third change involves a restructuring of revenue and expenditure lines to reflect the requirements of the new Financial Regulation, which we cleared last April.[30] It reduces the number of cases where there can be virement. This accords with the principle of "universality"(i.e. not spending more than previously authorised) and will increase transparency in the Budget.

The Government's view

  18.6  The Financial Secretary to the Treasury (Ruth Kelly) tells us that the Government supports these changes to the Budget structure and that there are no implications for UK public expenditure. She says also:

"There are no financial implications from this proposal. The first change (creation of new administrative offices) is budget-neutral and in the medium/ longer-term, should create budgetary savings (through the use of new contract agents and inter-institutional co-operation). The second change (creation of new budget-lines) will only require appropriations in the event that the proposed EU Solidarity Fund is mobilised. The third change (replacement of 're-use' with 'assigned' revenue) is budget-neutral and improves the transparency of the budget framework. There are no implications for UK public expenditure."


  18.7  We note the Government's support for these changes and the Minister's assurance that they have no implications for UK expenditure. We are content to clear the document.

29   (23780) 11685/02, (23786) - SEC(02)960 and (23787) - COM(02)514; see HC 152-xxxviii (2001-02), paragraph 29 (16 October 2002). Back

30   (23151) 5017/02; see HC 152-xxiii (2001-02), paragraph 13 (10 April 2002). Back

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