4 Stability and Convergence Programmes
(27377)
7384/06
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| Council Opinion on the updated convergence programme of the United Kingdom
|
| Legal base | Articles 99(4) and 104 EC; — ; QMV
|
| Department | HM Treasury |
| Basis of consideration | Minister's letter of 26 June 2006
|
| Previous Committee Report | HC 34-xxv (2005-06), para 6 (19 April 2006)
|
| Discussed in Council | Adopted by ECOFIN 14 March 2006
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared. Further information requested
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Background
4.1 The Council of Economic and Finance Ministers (ECOFIN) issues
an Opinion each year on the stability or convergence programme
of each Member State.[18]
These Opinions, which are not binding on Member States, are based
on a recommendation from the Commission. The economic content
of the programmes is assessed with reference to the Commission's
current economic forecasts. If a Member State's programme is found
wanting, it may be invited by ECOFIN, in a Recommendation, to
make adjustments to its economic policies, though such Recommendations
are likewise not binding on Member States.
4.2 Earlier this year we considered the Council's
Opinions on the stability or convergence programmes of all Member
States, which were assessed in relation to the Commission's Autumn
2005 economic forecasts. We cleared the other documents. But in
relation to Opinion on the UK's programme, which suggested dissatisfaction
about data provided by the Government, we asked to hear about:
- the significance of the omissions
in the data, particularly compulsory data, presented;
- the reasons for some data being aggregated differently
from the harmonised measure;
- the reason for presenting UMTS[19]
licence income in a way contrary to the Eurostat view of how it
should be shown; and
- which data gaps the Government have been able
to agree to fill and which not.[20]
The Minister's letter
4.3 The Economic Secretary to the Treasury (Ed Balls)
now makes three points in response. First, he tells us that the
relevant code of conduct, containing "Guidelines on the format
and content of Stability and Convergence Programme" and which
was endorsed by the ECOFIN Council in October 2005, says that
it should be considered as "a code of good practice".
But it acknowledged that "the programmes are the responsibility
of national authorities and that possibilities and practices differ
across countries".
4.4 Secondly, the Minister tells us that:
- the content of the UK's convergence
programme is closely aligned with that of the Pre-Budget Report
(PBR);
- the data provided in the PBR is selected to illustrate
the major trends and features of the UK economy and public finances;
- all the data included in the convergence programme
is sourced from the PBR; and
- the large quantity of data provided in the convergence
programme enables a full analysis of the UK economy, the UK public
finances and the Government's policy position to be carried out.
4.5 Thirdly, the Minister says the Government's treatment
of UMTS licences follows the practice of the Office for National
Statistics, based on that department's interpretation of the European
System of Accounts ESA95 guidelines. This means the cash receipts
paid to the Government by mobile phone companies in 2000 are treated
in the UK National Accounts as pre-payments of rent over the life
of the licences. But Eurostat assumed it was the sale of an asset
and credited the whole amount in 2000. The Minister says the Eurostat
treatment would be consistent with the spectrum being sold rather
than being leased to the mobile phone companies.
Conclusion
4.6 We are grateful to the Minister for drawing
our attention to the code of conduct and to the connection between
the data in the Pre-Budget Report and that in the UK's convergence
programme. However, the Minister addresses directly only one of
the points we raised previously, that related to UMTS licences.
We should be grateful if he would now tell us:
- the significance of the
omissions in the data, particularly compulsory data, presented
in the UK's Convergence Programme;
- the reasons for some data being aggregated
differently from the harmonised measure; and
- which data gaps the Government have been able
to agree to fill and which not.
Only with this information can we consider what
to make of the implied dissatisfaction with the presentation of
the UK programme in the Council Opinion — an Opinion with
which the Minister's predecessor has told us the Government agrees.
4.7 Meanwhile this document remains uncleared.
18 The 12 Member States that have adopted the euro
have Stability Programmes, whereas the other 13 Member States
(UK, Denmark and Sweden and the ten new Member States) produce
Convergence Programmes. Back
19
Universal mobile technology systems for delivering broadband information
through third generation (G3) mobile communications technology. Back
20
See (27280) 6323/06 (27281) 6324/06 (26282) 6325/06 (27283) 6326/06
(27284) 6327/06 (27285) 6328/06: HC 34-xxii (2005-06), para 13
(15 March 2006), (27224) 5612/06 (27225) 5613/06 (27226) 5614/06
(27227) 5615/06 (27228) 5616/06 (27229) 5617/07: HC 34-xxiii,
para 23 (23 March 2006) and headnote. Back
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