30 European Agricultural Guidance and
Guarantee Fund: Guarantee Section
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13081/06
+ ADD 1
COM(06) 512
| Thirty-fifth Financial Report on the European Agricultural Guidance and Guarantee Fund (EAGGF), Guarantee Section — 2005
financial year
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| Legal base | — |
| Document originated | 20 September 2006
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| Deposited in Parliament | 28 September 2006
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| Department | Environment, Food and Rural Affairs
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| Basis of consideration | EM of 8 October 2006
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| Previous Committee Report | None
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| To be discussed in Council | No date set
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
30.1 Council Regulation (EEC) No. 1258/99[74]
on the financing of the Common Agricultural Policy requires the
Commission to submit each year a financial report on the administration
of the Guarantee Section of the European Guidance and Guarantee
Fund (EAGGF) during the preceding financial year. This is the
thirty-fifth such report, and covers the 2005 financial year,
which ran from 16 October 2004 to 15 October 2005.
The Commission report
30.2 Like the most recent reports, it comprises a short written
summary, together with certain key tables. More detailed material
— which, prior to the 1995 report, had also been included
— is now contained in a separate Commission working document.
30.3 The work of the EAGGF is described under the
following seven main headings:
i) Budget procedure;
ii) Management of appropriations;
iii) Implementation of the budget;
iv) Control measures;
v) Clearance of accounts;
vi) Relationship with the European Parliament
and the European Court of Auditors; and
vii) Basic rules governing the Guarantee Section,
and amendments made in 2004.
30.4 On budget procedure, the report details the
various steps following the drawing up of the preliminary draft
budget for 2005 by the Commission in May 2004. As a consequence
of the enlargement of the Community the previous year, this proposed
appropriations for the Guarantee Section of the EAGGF totalled
€50,675 million, with €43,534 million for traditional
market expenditure under sub-head (a) and €6,841 million
for sub-head (b) covering rural development expenditure. The report
also notes that, after interventions by the Council and then the
European Parliament, and the letter of amendment adopted by the
Commission itself, the appropriations (including a carry-over
from 2004) in final adopted budget in December 2004 for the Guarantee
Section totalled €49,725 million, comprising €42,835
million for sub-head (a) and €6,890 million for sub-head
(b). However, the first of these figures was subsequently decreased
to €42,185 million (and the total to €49,075 million).
30.5 On the management of appropriations, the report
notes that there was a non-automatic carry-over from 2004 to 2005
of €49 million. The Commission also applied a correction
of €28.8 million to Member States due to late payment of
aid to recipients.
30.6 The Commission's analysis of budget implementation
shows that total market expenditure under the Guarantee Section
in 2005 was €42,101 million, representing an under-spend
of €735 million of the initial appropriations available,
with an over-spend on plant products, but shortfalls on milk,
pigmeat, audit, and policy strategy and coordination. There was
also a shortfall on rural development and accompanying measures,
where expenditure totalled €6,845 million, €44 million
below the available appropriations. As in recent years, the major
item of expenditure arose on direct aid for arable products (€17,146
million), with other important areas being beef at €8,176
million, milk at €2,755 million, and olive oil at €2,311
million.
30.7 In the section dealing with control measures,
the report refers briefly to the work carried out in connection
with the Integrated Administration and Control System (IACS),
olive oil agencies, and the part-financing of tighter controls
by Member States.
30.8 The Report notes that, during the 2005 financial
year, the Commission adopted three clearance of accounts decisions,
resulting in the exclusion of €635 million from Community
financing. It also notes that, although the 2003 accounts of all
six paying agencies in the UK[75]
had been disjoined[76]
because the Commission had reservations about the audit sampling
methodology employed by the National Audit Office (NAO), the accounts
of four of those agencies[77]
were subsequently cleared following further discussion, and that
the Commission has since confirmed that it is now content with
those of the remaining two agencies[78]
(though formal clearance has yet to be given). The accounts of
all six UK paying agencies for 2004 have been cleared.
30.9 On relations with the European Parliament and
the Court of Auditors, the report notes that, together with the
Council, the Parliament forms the Community's budgetary authority,
and is one of the Commission's most important partners, whilst
the Court's purpose is to audit the Community accounts. It also
notes that the Court produced during 2005 an annual report for
the 2004 financial year, and three special reports relating to
various aspects of CAP expenditure.[79]
30.10 On the basic rules governing the EAGGF Guarantee
Section, the report lists all the base regulations.
The Government's view
30.11 In his Explanatory Memorandum of 8 October
2006, the Minister for Sustainable Farming and Food at the Department
of Environment, Food and Rural Affairs (Lord Rooker) refers to
the process whereby the previous problems over the clearance of
the accounts of the UK paying agencies had been resolved, but
says that, as this is a retrospective report, there were no other
policy implications.
Conclusion
30.12 Since the document is an essentially factual
report on earlier expenditure, produced for the information of
the Council, we are clearing it. Nevertheless, it does touch upon
a number of important issues, and — as in previous years
— we therefore think it right to draw it to the attention
of the House.
74 OJ No. L 160, 26.6.99, p.103. Back
75
Rural Payments Agency (RPA), Scottish Executive Environment and
Rural Affairs Department (SEERAD), Forestry Commission (FC), Countryside
Council for Wales (CCW), Department of Agriculture and Rural Development
in Northern Ireland DARD) and National Assembly for Wales (NAW). Back
76
Not cleared. Back
77
RPA, SEERAD, FC and CCW. Back
78
DARD and NAW. Back
79
These were on forestry measures within rural development policy,
the management of the European Anti-Fraud Office (OLAF), and the
verification of agri-environment expenditure on rural development. Back
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