20 Preliminary Draft Budget 2005
| (25793)
11062/04
COM(04)402
| Draft Decision on mobilisation of the flexibility instrument in favour of the rehabilitation and reconstruction of Iraq according to point 24 of the Inter-Institutional Agreement of 6 May 1999
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| Legal base | The Inter-Institutional Agreement has no legal force; the base for the budget itself is Article 272EC; the special budgetary role of the European Parliament is set out in Article 272; QMV
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| Document originated | 18 June 2004
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| Deposited in Parliament | 6 July 2004
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| Department | HM Treasury |
| Basis of consideration | EM of 8 July 2004
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| Previous Committee Report | None; but see (25654) —: HC 42-xxi (2003-04), para 3 (26 May 2004)
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| To be discussed in Council | 16 July 2004
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
20.1 The Commission's Preliminary Draft Budget (PDB) for 2005,
which we considered on 26 May 2004 and which was debated in European
Standing Committee B on 30 June 2004,[54]
proposed commitment appropriations for budget heading 4, External
Actions, exceeding the Financial Perspective ceiling for this
heading by €115 million (£76.5 million). The Commission
said the original financial programming for 2005 did not foresee
any assistance to Iraq, for which it now suggested a commitment
of €200 million (£133 million), and proposed to cover
the shortfall by using the Flexibility Instrument.[55]
The document
20.2 This draft Decision would approve the use of the Flexibility
Instrument as suggested by the Commission in its PDB, so regularising
the breach of the Financial Perspective.
The Government's view
20.3 When we were considering the Commission's PDB, the Financial
Secretary to the Treasury (Ruth Kelly) told us in her Explanatory
Memorandum of 11 May 2004 that "Key priorities for the Government
in 2004 include Heading 4 (External Actions), where the focus
will be on ensuring that spending is consistent with budget discipline
and delivers genuine value for money, as well as achieving an
appropriate balance between long-term assistance and emerging
priorities (such as Iraq and CFSP)".
20.4 In her present Explanatory Memorandum the Minister
is more specific saying:
"The Government fully supports the Commission's
proposal to allocate €200 million for Iraq reconstruction
in 2005, which represents a 25% increase over the 2004 contribution.
However, the Government believes that a more rigorous approach
to reallocation within heading 4 would enable this contribution
to be financed within the Financial Perspective ceilings. The
Government will work with other Member States throughout the 2005
budget process to ensure that budget discipline is maintained
and the flexibility instrument is used only as a measure of last
resort, as foreseen in the IIA."
Conclusion
20.5 We applaud the Government's continued drive
for budgetary discipline and clear the document.
54 See headnote and Stg Co Deb, European Standing
Committee B, cols 3-26. Back
55
The Flexibility Instrument is a special provision under the Inter-
Institutional Agreement governing budgetary matters, which allows
up to €200 million (£140.94 million) in extraordinary
expenditure above the Financial Perspective ceilings in a given
budget year. Mobilisation of the Flexibility Instrument requires
the consent of both arms of the Budgetary Authority (the Council
and the European Parliament). Back
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