16 GENERAL BUDGET 2005
(26286)
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| Adopted General Budget 2005
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| Legal base | Article 272 EC; the special role of the European Parliament in relation to the adoption of the Budget is set out in Article 272; QMV
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| Deposited in Parliament |
18 January 2005 |
| Department | HM Treasury
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| Basis of consideration |
Minister's letter of 11 January 2005 |
| Previous Committee Report |
None; but see (25920) —: HC 38-iii (2004-05), para 34 (12 January 2005)
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| Discussed in Council | 25 November 2004
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
16.1 The 2005 general budget of the European Union was adopted
following the European Parliament's second reading on 16 December
2004. This marked the close of the 2005 budget exercise. We have
reported regularly to the House on our scrutiny of the various
stages of development of the budget, most recently on 12 January.[46]
The Minister's letter
16.2 The adopted budget has not been formally published yet, but
the Financial Secretary to the Treasury (Mr Stephen Timms) helpfully
writes now to give us an account of the final outcome on the budget
and the Government's view of it. We annex two tables the
Minister has given us
usefully setting out the broad budget numbers, in both euros and
sterling, and showing the differences between the Council's second
reading Draft Budget and the budget adopted by the European Parliament.
THE BUDGET OVERALL
16.3 The Minister tells us the final outcome was
in line with the conciliation agreement reached between the Council
and European Parliament on 25 November 2004. Total commitment
appropriations were set at €116.55 billion (£77.69 billion)
— €5.14 billion (£3.43 billion) or 4.6% higher
than in 2004. Total payment appropriations were set at €106.30
billion (£70.86 billion) — €5.99 billion (£3.99
billion) or 6.0% higher than in 2004.
INDIVIDUAL EXPENDITURE HEADINGS
16.4 Heading 1 (Agriculture). This category
was already agreed at the Council's second reading, as the Council
has the final say over this part of the Community budget. Commitment
appropriations and payment appropriations were therefore unchanged
from the Council's second reading at €49.68 billion (£33.11
billion) and €49.12 billion (£32.74 billion) respectively,
leaving a margin of €1,763 million (£1,175 million)
below the Financial Perspective (FP) ceiling.[47]
16.5 Heading 2 (Structural Operations). Commitment
and payment appropriations were left at €42.42 billion (£28.28
billion) and €32.40 billion (£21.59 billion) respectively.
As agreed, the European Parliament used a €45 million
(£30 million) mobilisation of the Flexibility Instrument[48]
to finance in part the PEACE II programme for Northern Ireland
in 2005. This left a margin of €63 million (£42 million)
below the FP ceiling.
16.6 Heading 3 (Internal Policies). The
European Parliament maintained its first reading position, increasing
commitment appropriations to €9.05 billion (£6.03 billion)
and payment appropriations to €7.92 billion (£5.28 billion).
As agreed €40 million (£26.663 million) was mobilised
from the Flexibility Instrument to cover the extra commitments
above the FP ceiling.
16.7 Heading 4 (External Actions). Commitment
appropriations were increased to €5.22 billion (£3.48
billion) and payment appropriations were increased €5.48
billion (£3.65 billion). This was €100 million (£66.66
million) above the FP ceiling and was financed, as agreed, by
the Flexibility Instrument in order to ensure €190 million
(£126.65 million) for reconstruction in Iraq.
16.8 Heading 5 (Administration). The European
Parliament maintained its first reading position (taking into
account the effect of Amending Letter to the PDB No. 2/2005)[49]
with the net effect of increasing non-differentiated appropriations
for the Heading to €6.35 billion (£4.23 billion).
16.9 Heading 7 (Pre-Accession). The European
Parliament accepted the Council's second reading total for commitment
appropriations of €2.08 billion (£1.39 billion) but
increased payment appropriations to €3.29 billion (£2.19
billion).
The Government's view
16.10 The Minister tells us:
"Overall, the Government believes the adopted
Budget meets its key objectives. In particular, budget discipline
has been maintained by ensuring the budget is consistent with
the Berlin ceilings, and by ensuring a sensible level of payments
at just 1% [of] EU GNI.[50]
Limited deployment of the Flexibility Instrument (€185 million)
compared to the EP's first reading proposals (€244 million)
was necessary to secure funding of the PEACE II extension and
reconstruction in Iraq (both key UK priorities). But in return
we were able to secure a two-year deal for PEACE II and adequate
funding for the Union's Common Foreign and Security Policy (CFSP).
The Government played a key role in securing a positive outcome
working closely with the Dutch Presidency and the new Budget Commissioner
Dalia Grybauskaité."
Conclusion
16.11 We are grateful to the Minister for this
early account, in advance of formal publication, of the 2005 General
Budget as adopted. We clear the document.
46 See headnote. Back
47
There is a global FP ceiling for payments, but this is not sub-divided
for individual categories. So individual category margins are
available only for commitments. Back
48
The flexibility instrument is a budgetary instrument established
in the Inter-Institutional Agreement which provides for additional
financing, for a given year and up to the amount of €200
million, of clearly identified expenditure which could not be
financed within the limits of the ceilings available for one or
more spending categories. Back
49
See headnote. Back
50
Gross National Income. Back
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