20 Draft Budget 2006
| (a)
(26795)
—
—
(b)
(27023)
13543/05
SEC(05) 1269
(c)
(27024)
13940/05
SEC(05) 1379
|
Draft General Budget for the European Communities for the financial year 2006
Amending Letter No. 1 to the Preliminary Draft Budget for 2006: General statement of revenue: Statement of revenue and expenditure by Section: Section III — Commission
Amending Letter No. 2 to the Preliminary Draft Budget for 2006: General statement of revenue: Statement of revenue and expenditure by Section: Section III — Commission
|
| 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
|
| Documents originated | (b) 19 October 2005
(c) 26 October 2005
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| Deposited in Parliament | (b) and (c) 22 October 2005
|
| Department | HM Treasury |
| Basis of consideration | Minister's letter of 14 November 2005
|
| Previous Committee Report | (a) HC 34-v (2005-06), para 7 (12 October 2005)
(b) and (c) None
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| To be discussed in Council | 24 November 2005
|
| Committee's assessment | Politically important
|
| Committee's decision | (a) Cleared (after a debate in European Standing Committee, see Stg Co Debs, European Standing Committee, 1 November 2005, cols 3-42)
(b) and (c) Cleared
|
Background
20.1 The Commission's Preliminary Draft Budget (PDB) is the first
stage in the Community's annual budgetary procedure. We considered
the PDB for 2006 in July 2005.[45]
The second stage is the adoption by the Council of the Draft Budget
(DB). The 2006 DB was adopted in July 2005 and we considered it
in October 2005. Both documents were debated earlier this month.[46]
The 2006 PDB and the 2006 DB lead to the 2006 Adopted Budget,
which is expected to be agreed on 15 December 2005 by the European
Parliament, after first reading consideration by the European
Parliament, further consideration by the Council, negotiations
between the Council and the European Parliament and definitive
adoption by the Council of compulsory expenditure on 24 November
2005.[47]
The Minister's letter
20.2 The Economic Secretary to the Treasury (Mr Ivan Lewis) writes
now with an account of the changes to the DB as a result of the
European Parliament's first reading. He also tells us about two
Commission proposals for amendments to its original PDB (documents
(b) and (c)). With his letter the Minister encloses annexes, which
we reproduce, helpfully setting out the euro and sterling figures
for the eight budget categories and the changes in these in relation
to the Council's DB, a summary of the European Parliament's amendments
and a table showing the effect of the Commission's two amendments.
20.3 The Minister tells us that the main changes
to the DB by the European Parliament are:
- The totals.
The DB as altered by the European Parliament now has €121.81
billion in commitment appropriations and €116.23
billion in payment appropriations. This is an increase of €1.00
billion for commitments and €4.81 billion for payments compared
to the Council's DB. These figures are within the ceilings set
by the multi-annual Financial Perspective (FP), leaving margins
of €1.89 billion for commitments and €3.07 billion for
payments. The payment figures correspond to 1.05% of GNI compared
to the ceiling of 1.24% set by the Own Resources Decision;
- Heading 1 (Agriculture).
The European Parliament has reinstated the Council's across-the-board
cut of €150 million in both commitment and payment appropriations.
Additionally it has proposed increases of a further €38 million
for commitments and payments for specific priorities including
programmes for energy crops and deprived persons. It has also
reversed a reduction of €5.15 million proposed for tobacco-growing
premiums. But no amendments were made to Sub-Heading 1B (Rural
Development). This
brings total commitment and payment appropriations for Sub-Heading
1A to €43.68 billion, leaving an overall FP margin of €1.17
billion for commitment appropriations;[48]
- Heading 2 (Structural Operations).
The European Parliament has reversed the Council's €150 million
cut to payments, and has increased them further by €3.59
billion, bringing total payment appropriations for this heading
to €39.23 billion — a total increase over the 2005
Adopted Budget of 21.1%. The Minister says that despite falling
implementation rates, the European Parliament continues to believe
that further provision is needed, whereas in reality the likely
outcome would be another end-of-year budget surplus. The European
Parliament has also increased commitment appropriations by €12
million for the European Social Fund and the European Regional
Development Fund and has made release of €12 million required
to complete the PEACE II programme for Northern Ireland conditional
upon deployment of the Flexibility Instrument;[49]
- Heading 3 (Internal Policies).
The European Parliament has reversed €43.41 million of the
Council's cuts to the PDB commitment appropriations and €516.02
million cuts to payment appropriations. The European Parliament
has also voted further increases so that commitment appropriations
increased by €264.79 million to €9.44 billion, converting
the Council's FP margin of €210.05 million into a negative
one of €54.74 million. And payment appropriations rose by
€491.31 million to €8.81 billion. The main increases
were to policy areas most commonly associated with the Lisbon
Strategy, for instance education and culture (€69.35 million
commitment appropriations and €73.42 million payment appropriations),
research (€57.65 million and €135.80 million) and enterprise
(€36.85 million and €40.34 million). But the Minister
says that some of the European Parliament's proposed increases
exceed co-decided multi-annual reference amounts and must therefore
be agreed with the Council and that in order to give its consent
the Council will have to be convinced that genuine and durable
needs exist in these areas;
- Heading 4 (External Actions).
The European Parliament has increased commitment appropriations
by a total of €457 million to €5.68 billion and payment
commitments by €252.36 million to €5.53 billion. This
changes the Council's FP margin of €210.05 million to a negative
one of €415.34 million. The European Parliament has proposed
increases in commitment appropriations, to be financed by recourse
to the Flexibility Instrument, of €200 million for Iraqi
reconstruction, €180 million for post-tsunami reconstruction
and €40 million for ACP sugar assistance. Other significant
increases in commitment appropriations include spending on development
cooperation policy (€136.09 million), the Euro-Mediterranean
Partnership's MEDA programme (€56.14 million) and relations
with Latin America (€36.74 million). The Common Foreign and
Security Policy budget was cut by €1.5 million of commitment
appropriations;
- Heading 5 (Administration).
The European Parliament has reversed €77.48 million of the
€119.87 million cut made by the Council to both commitment
and payment appropriations. The Minister says that, although the
European Parliament increased the Commission's administration
budget by €89.77 million, reinstating all the posts proposed
in the PDB, it also reduced proposals for its own administration
budget by €20 million; and
- Heading 7 (Pre-Accession
Strategy). The European Parliament has
reversed €54.95 million of the Council's €127.25 million
cut to payment appropriations bringing the total to €3.08
billion. The amendments were split almost equally between the
SAPARD (Special Accession Programme for Agriculture and Rural
Development) instrument and pre-accession aid. Commitment appropriations
were left unchanged.
20.4 There are no changes the Headings for Reserves
and Compensation.
20.5 The Minister says Amending Letter No. 1 in document
(b) affects Heading 4 (External Actions) of the 2006 Budget. It
concerns extra commitment appropriations of €40 million and
payment appropriations of €21.20 million required to finance
assistance for ACP countries affected by reform of the sugar regime.
He continues that Heading 4 expenditure in the PDB included a
negative FP margin of €123.50 million for commitment appropriations,
which would on the basis of the amending letter increase to €183.50
million. The changes to Heading 4 in the DB allowed a margin of
€41.88 million in order to accommodate the anticipated implications
of sugar reform. Instead the European Parliament proposes to finance
this by use of the Flexibility Instrument.
20.6 The Minister tells us that Amending Letter No.
2 in document (c) is a technical revision of Heading 1 (Agriculture).
It takes account of new legislative decisions, the latest market
data and fluctuations in the €/US $ exchange rate and therefore
contains more up-to-date information than the PDB. The overall
effect of the amending letter is to reduce both commitment and
payment appropriations under Sub-Heading 1A of the 2006 Budget
by €361 million (Sub-Heading 1B is not affected).
The Government's view
20.7 The Minister tells us:
"The Government's overarching priority for the
forthcoming Council discussions will be to steer discussions towards
an outcome which preserves Budget discipline by respecting Financial
Perspective ceilings and setting payments at reasonable levels
in line with likely implementation rates, as well as ensuring
that a principled stance is taken on Administration spending."
20.8 In relation to the amending letters the Minister
says the Government is a strong supporter of the sugar regime
reform and welcomes Amending Letter No. 1. But he adds that the
Council will strive to ensure that the ceilings for all Budget
Headings are respected during negotiation with the European Parliament.
The Minister says the Government welcomes Amending Letter No.
2.
Conclusion
20.9 We are grateful to the Minister for this
report on progress on setting the 2006 Budget. We look forward
to hearing of a successful outcome of efforts to maintain budgetary
discipline. We clear the new documents.
Annex 1
Summary of amendments adopted by the European
Parliament[50]
(EUR million)
| Heading 1 - Agriculture
| CA
| PA
|
| 05 — Agriculture and rural development
| 188.1 | 188.1
|
| Programmes for deprived persons
| 15.2 | 15.2
|
| Total direct aids
| 124.6 | 124.6
|
| COP area payments
| 40.4 | 40.4
|
| Olive oil production aid
| 12.5 | 12.5
|
| Tobacco premiums
| 5.1 | 5.1
|
| Aid for energy crops
| 24.3 | 24.3
|
| TOTAL
| +188.1 | +188.1
|
| Heading 2 — Structural Actions
| CA
| PA
|
| 04 — Employment and social affairs
| 6.0 | 895.2
|
| 05 — Agriculture and rural development
| | 586.5
|
| 11 — Fisheries
| | 3.0
|
| 13 — Regional Policy
| 6.0 | 2,255.9
|
| Subtotal Structural Funds
| 12.0 | 3,101.5
|
| Objective 1
| | 2,197.9
|
| Objective 2
| | 356.7
|
| Objective 3
| | 239.2
|
| Community initiatives
| 0.5 | 295.9
|
| Innovative measures and technical assistance
| 11.5 | 11.8
|
| Subtotal Cohesion Fund
| | 639.2
|
| TOTAL
| +12.0 | +3,740.7
|
| Heading 3 — Internal Policies
| CA
| PA
|
| 01 — Economic and financial affairs
| 31.0 | 35.7
|
| 02 — Enterprise
| 36.9 | 40.3
|
| 04 — Employment and social affairs
| 4.1 | 1.0
|
| 05 — Agriculture and rural development
| | 1.5
|
| 06 — Energy and transport
| 18.2 | 23.2
|
| 07 — Environment
| 16.7 | 14.1
|
| 08 — Research
| 57.7 | 135.8
|
| 09 — Information Society
| 2.0 | 133.7
|
| 11 — Fisheries
| | 0.9
|
| 12 — Internal market
| 1.1 | 2.0
|
| 14 — Taxation and customs union
| 0.4 | 0.4
|
| 15 — Education and culture
| 69.4 | 73.4
|
| 16 — Press and communication
| 17.1 | 9.6
|
| 17 — Health and consumer protection
| 7.0 | 7.0
|
| 18 — Area of freedom, security and justice
| 1.4 | 10.7
|
| 19 — External relations
| 1.0 | 11.0
|
| 22 — Enlargement
| 1.0 | 1.0
|
| TOTAL
| +264.8 | +491.3
|
| Research framework programme
| 71.7 | 279.0
|
| Heading 4 — External Actions
| CA
| PA
|
| 05 — Agriculture and rural development
| 0.2 | 0.1
|
| 07 — Environment
| 0.3 | 0.2
|
| 11 — Fisheries
| 7.8 | 3.9
|
| 15 — Education and culture
| 0.1 | >0.1
|
| 19 — External relations
| 205.8 | 92.3
|
| Common foreign and security policy
| -1.5 | -7.0
|
| Democracy and human rights
| 29.6 | 30.1
|
| MEDA
| 50.8 | 25.0
|
| Latin America
| 36.7 | 8.4
|
| Afghanistan
| -15.2 | 1.6
|
| Asia
| 56.4 | 15.3
|
| 20 — Trade
| 0.4 | 0.2
|
| 21 — Development and relations with ACP countries
| 177.4 | 108.8
|
| 22 — Enlargement
| 33.8 | 25.4
|
| Relations with the western Balkans
| 33.8 | 25.4
|
| 23 — Humanitarian aid
| 31.1 | 21.4
|
| TOTAL
| +457.0 | +252.4
|
| Heading 5 — Administration
| CA
| PA
|
| Commission (excluding pensions)
| 89.8 | 89.8
|
| European Parliament
| -20.0 | -20.0
|
| Court of Justice
| 3.4 | 3.4
|
| Court of Auditors
| 1.6 | 1.6
|
| Economic and Social Committee
| 1.2 | 1.2
|
| Committee of the Regions
| 1.3 | 1.3
|
| European Ombudsman
| 0.2 | 0.2
|
| European Data Protection Supervisor
| 0.1 | 0.1
|
| TOTAL
| +77.5 | +77.5
|
| Heading 7 — Pre-accession instruments
| CA
| PA
|
| 05 — Agriculture and rural development
| | 26.5
|
| SAPARD
| | 26.5
|
| 22 — Enlargement
| | 28.5
|
| Pre-accession assistance for CEEC
| | 28.5
|
| TOTAL
| | +55.0
|
Figures may not add up exactly due to rounding.
Annex 2
Table 1: Information provided by the Government
on the European Parliament's changes to the 2006 PDB (€ million)[51]
| Heading
| 2006 DB
| European Parliament First Reading
| Change DB/EP First Reading
|
| CA
| PA |
CA | PA
| CA |
PA |
| 1. AGRICULTURE
| 51,262 | 51,023
| 51,450 | 51,391
| +188 | +188
|
| Margin |
1,356 | |
1,168 | |
| |
| 2. STRUCTURAL OPERATIONS
| 44,555 | 35,490
| 44,567 | 39,231
| +12 | +3,741
|
| Margin |
62 | | 50
| | | |
| 3. INTERNAL POLICIES
| 9,175 | 8,320
| 9,440 | 8,812
| +265 | +492
|
| Margin |
210 | | -55
| | | |
| 4. EXTERNAL ACTIONS
| 5,227 | 5,275
| 5,684 | 5,527
| +457 | +252
|
| Margin |
42 | | -415
| | | |
| 5. ADMINISTRATION
| 6,578 | 6,578
| 6,655 | 6,655
| +77 | +77
|
| Margin |
130 | | 53
| | | |
| 6. RESERVES
| 458 | 458
| 458 | 458
| 0 | 0
|
| Margin |
0 | | 0
| | | |
| 7. PRE-ACCESSION AID
| 2,481 | 3,025
| 2,481 | 3,080
| 0 | +55
|
| Margin |
1,085 | |
1,085 | |
| |
| 8. COMPENSATIONS
| 1,074 | 1,074
| 1,074 | 1,074
| 0 | 0
|
| Margin |
0.5 | | 0.5
| | | |
| TOTAL
| 120,810 | 111,421
| 121,809 | 116,226
| +999 | +4,805
|
| Financial Perspective ceiling
| 123,695 | 119,292
| 123,695 | 119,292
| 123,695 | 119,292
|
| Margin |
2,885 | 7,871
| 1,886 | 3,066
| -999 | -4,805
|
(Note: CA = commitment appropriations,
PA = payment appropriations. Figures in table may not add up exactly
due to rounding)
Table 2: Information provided by the Government
on the European Parliament's changes to the 2006 PDB (£ million)[52]
| Heading
| 2006 DB
| European Parliament First Reading
| Change DB/EP First Reading
|
| CA
| PA |
CA | PA
| CA |
PA |
| 1. AGRICULTURE
| 36,143 | 36,102
| 36,276 | 36,234
| +133 | +133
|
| Margin
| 956 |
| 824 |
| | |
| 2. STRUCTURAL OPERATIONS
| 31,414 | 25,023
| 31,423 | 27,661
| +9 | +2,638
|
| Margin
| 44 |
| 35 |
| | |
| 3. INTERNAL POLICIES
| 6,469 | 5,866
| 6,656 | 6,213
| +187 | +347
|
| Margin
| 148 |
| -39 |
| | |
| 4. EXTERNAL ACTIONS
| 3,685 | 3,719
| 4,008 | 3,897
| +323 | +178
|
| Margin
| 30 |
| -293 |
| | |
| 5. ADMINISTRATION
| 4,638 | 4,638
| 4,692 | 4,692
| +54 | +54
|
| Margin
| 92 |
| 37 |
| | |
| 6. RESERVES
| 323 | 323
| 323 | 323
| 0 | 0
|
| Margin
| 0 |
| 0 |
| | |
| 7. PRE-ACCESSION AID
| 1,749 | 2,133
| 1,749 | 2,172
| 0 | +39
|
| Margin |
765 |
| 765 |
| | |
| 8. COMPENSATIONS
| 757 | 757
| 757 | 757
| 0 | 0
|
| Margin |
0.4 |
| 0.4 |
| | |
| TOTAL
| 85,179 | 78,560
| 85,884 | 81,947
| +705 | +3,388
|
| Financial Perspective ceiling
| 87,214 | 84,109
| 87,214 | 84,109
| 87,214 | 84,109
|
| Margin
| 2,034 | 5,550
| 1,329 | 2,162
| -705 | -3,388
|
(Note: CA = commitment appropriations,
PA = payment appropriations. Figures in table may not add up exactly
due to rounding)
Annex 3
Effect of Amending Letters 1/2006 and 2/2006 to
the 2006 PDB
(EUR million)
| Heading
| AL 1/2006
| AL 2/2006
| TOTAL
|
| CA
| PA
| CA
| PA
| CA
| PA
|
| 1. Agriculture
| | | -361.6
| -361.6 | -361.6
| -361.6 |
| 3. Internal policies
| | | +0.3
| | +0.3
| |
| 4. External actions
| +40.0 | +21.2
| | | +40.0
| +21.2 |
| TOTAL
| +40.0 | +21.2
| -361.3 | -361.6
| -321.3 | -340.4
|
45 See (26588): HC 34-i (2005-06), para 8 (4 July 2005). Back
46
See headnote. Back
47
Compulsory expenditure is that necessarily arising from the Treaty
- mainly agricultural guarantees and pensions, on which the Council
has the final say. The European Parliament has the final say on
the remaining non-compulsory expenditure. Back
48
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
49
The flexibility instrument is a special provision 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
50
Figures relate to expenditure by Title; figures in italics relate
to policy areas of interest. Back
51
Tables do not include the effect of AL 1/2006 or AL 2/2006. Back
52
Converted at a rate of £1 = €1.4183. Back
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