4 Future European Union Finances
| (a)
(27269)
5973/06
COM(06) 36
(b)
(27302)
6426/06
COM(06) 75
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Commission working document: Revised proposal for renewal of the Inter-Institutional Agreement on budgetary discipline and improvement of the budgetary procedure
Commission contribution to the inter-institutional negotiations on the proposal for renewal of the Inter-Institutional Agreement on budgetary discipline and improvement of the budgetary procedure
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| Legal base | — |
| Department | Foreign and Commonwealth Office
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| Basis of consideration | Minister's letter 13 April 2006
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| Previous Committee Report | HC 34-xxi (2005-06), para 2 (8 March 2006)
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| To be discussed in Council | Continuing discussion, next meeting not known
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| Committee's assessment | Politically important
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| Committee's decision | For debate on the Floor of the House (decision reported on 8 March 2006)
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Background
4.1 The Inter-Institutional Agreement (IIA) of 6 May 1999, between
the Commission, the Council and the European Parliament, is a
politically and legally binding agreement which clarifies the
EU's budgetary procedure. It was designed to reinforce budgetary
discipline and improve the budgetary procedure. The first part
of the IIA establishes a Financial Perspective (FP) — that
is, annual budgetary ceilings — and implementing provisions
for the period 2000-06.[9]
The second part of the IIA relates to improvement of inter-institutional
collaboration during the budgetary procedure. The IIA requires,
during consideration of FP ceilings, adherence to the ceilings
in the Own Resources Decision (ORD). In accordance with Article
269 EC, the ORD sets out sources of revenue for the EU (known
as "own resources") and includes provisions on the UK
budgetary rebate.
4.2 In February 2004 the Commission published its
preliminary ideas about financing the EU during the period 2007-13.
In July 2004 the Commission published its proposal for renewal,
with amendments, of the IIA. In December 2005 the Member States
agreed in the European Council a package on future EU finances
including an FP for the period 2007-13 and changes to the UK budgetary
rebate. The Council (in its General Affairs and External Relations,
GAERC, formation) and the European Parliament are charged with
negotiating the implementation of this package, through a revised
IIA (in discussion also with the Commission) and a new ORD (on
which the Council is required only to consult the European Parliament).
4.3 The present documents set out in February 2006
the Commission's proposed revisions to its original draft IIA
to take account of the European Council agreement. It did not
include spending ceilings for the new FP. When we considered this
document in February 2006 we recommended it for debate on the
Floor of the House. In making this recommendation we suggested
that:
- this debate should not take
place until the spending ceilings for the new FP to be included
in the revised IAA were available;
- ideally, the debate should also cover the draft
ORD; but
- it should take place before final conclusion
of the IAA even if the draft ORD was not available, since Members
would have the opportunity to examine the substance of the Decision
when a Bill to ratify it is considered.[10]
The Minister's letter
4.4 The Minister of State for Europe, Foreign and
Commonwealth Office (Mr Douglas Alexander) writes now to tell
us that during the Easter Recess Member States accepted a revised
text of the draft IIA, which included spending ceilings for the
new FP. The Minister sends us a copy of this text, which was produced
by the Austrian Presidency on the basis of a framework it had
agreed with the Commission and the European Parliament in tripartite
negotiation. It is expected that the text will be formally adopted
by the Council on 15 May 2006 and by the European Parliament at
its mid-May 2006 Plenary Session.
4.5 The Minister highlights four elements:
- an overall FP ceiling of €864.30 billion (£601.88 billion), €2.00 billion (£1.39
billion) more than the agreement reached by the European Council.
We annex two tables showing the numbers agreed at the European
Council and the new numbers. A further €2.00 billion (£1.39
billion) of expenditure will be possible outside the FP —
including €1.50 billion (£1.04 billion) in the Emergency
Aid Reserve to be called up from Member States if needed;
- no change to the existing amounts allocated to
flexibility mechanisms, including the European Union Solidarity
Fund, the annual flexibility instrument and the Emergency Aid
Reserve, to the existing decision making procedures to activate
these instruments and to the 5% margin on the reference amounts
governing multi-annual programmes. In addition, the Globalisation
Adjustment Fund is established;
- inclusion of a Part III on various issues, including
the Financial Regulation governing financial management, the creation
of EU agencies, certification of Member State spending and financial
programming; and
- a separate declaration on the 2008/9 review of
the budget.
4.6 The Minister says that the Government joined
the consensus in favour of the revised draft IIA as the "text
maintains the essential elements of the agreement reached by the
European Council". Additionally the Minister tells us that
none of the text of Part III changes the fundamental institutional
balance between the arms of the Budgetary Authority, that is the
Council and the European Parliament, and that some of it, such
as that on certification, should lead to an improvement in the
Community's financial management.
Conclusion
4.7 It is regrettable that it was not possible
to have the debate we recommended on this issue before matters
had progressed so far on the new Inter-Institutional Agreement.
Nevertheless, we still think a debate on the Floor of the House
worthwhile. This is particularly so as the draft Own Resources
Decision is, as we examine separately in this report, now available
for debate.[11]
4.8 So we renew our recommendation that the draft
Inter-Institutional Agreement be debated on the Floor of the House.
In addition to the matters we have already suggested might be
covered, such a debate could examine:
- the increase in the Financial
Perspective ceilings now agreed — in his Explanatory Memorandum
of 21 February 2006 the Minister told us that the Government would
strongly oppose any proposals to increase the overall expenditure
ceiling agreed by the European Council;
- the reasons for any re-allocation of spending
between different expenditure headings — in that Explanatory
Memorandum the Minister told us that the Government, given the
delicate nature of the European Council compromise, did not see
scope for any re-allocation; and
- to what extent the Government is content with
the provisions of Part III of the draft Inter-Institutional Agreement
— in his Explanatory Memorandum of 3 March 2006 the Minister
said that, whilst such provisions were needed, it wished to be
sure they were consistent with the European Council agreement
and with the decision making processes in the Treaty.[12]
ANNEX 1 OVERVIEW OF THE FINANCIAL PERSPECTIVE
2007-13 (DECEMBER 2005)
All figures are shown in 2004 prices, EUR Billion
| Commitments Appropriations
| 2007 | 2008
| 2009 | 2010
| 2011 | 2012
| 2013 | Total 2007-2013
|
| 1. Sustainable Growth
1a Competitiveness for Growth and Employment
1b Cohesion for Growth and Employment
| 51,090
8,250
42,840 | 52,148
8,860
43,288
| 53,330
9,510
43,820 | 54,001
10,200
43,801
| 54,945
10,950
43,995 | 56,384
11,750
44,634
| 57,841
12,600
45,241 | 379,739
72,120
307,619
|
| 2. Preservation and Management of Natural Resources
of which: market related expenditure and direct payments
| 54,972
43,120 | 54,308
42,697
| 53,652
42,279 | 53,021
41,864
| 52,386
41,453 | 51,761
41,047
| 51,145
40,645 | 371,244
293,105
|
| 3. Citizenship, freedom, security and justice
3a Freedom, Security and Justice
3b Citizenship
| 1,120
600
520 | 1,210
690
520
| 1,310
790
520 | 1,430
910
520
| 1,570
1,050
520 | 1,720
1,200
520
| 1,910
1,390
520 | 10,270
6,630
3,640
|
| 4. EU as a global player
| 6,280 | 6,550 |
6,830 | 7,120 | 7,420
| 7,740 | 8,070 |
50,010 |
| 5. Administration |
6,720 | 6,900 | 7,050
| 7,180 | 7,320 |
7,450 | 7,680 | 50,300
|
| 6. Compensations |
419 | 191 | 190
| | | |
| 800 |
| Total appropriations for commitments
as a percentage of GNI
| 120,601
1.10% | 121,307
1.08%
| 122,362
1.06% | 122,752
1.04%
| 123,641
1.03% | 125,055
1.02%
| 126,646
1.00% | 862,363
1.045%
|
|
| |
| |
| |
| |
| Total appropriations for payments
as a percentage of GNI
| 116,650
1.06% | 119,535
1.06%
| 111,830
0.97% | 118,080
1.00%
| 115,595
0.96% | 119,070
0.97%
| 118,620
0.94% | 819,380
0.99%
|
| Margin available
Own Resources Ceiling as a Percentage of GNI
| 0.18%
1.24% | 0.18%
1.24%
| 0.27%
1.24% | 0.24%
1.24%
| 0.28%
1.24% | 0.27%
1.24%
| 0.30%
1.24% | 0.25%
1.24%
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ANNEX 2 FINANCIAL FRAMEWORK 2007-13 (APRIL 2006)
All figures are shown in 2004 prices, EUR Billion
| Commitments Appropriations
| 2007 | 2008
| 2009 | 2010
| 2011 | 2012
| 2013 | Total 2007-2013
|
| 1. Sustainable Growth
1a Competitiveness for Growth and Employment
1b Cohesion for Growth and Employment
| 51,267
8,404
42,863 | 52,415
9,097
43,318
| 53,616
9,754
43,862 | 54,294
10,434
43,860
| 55,368
11,295
44,073 | 56,876
12,153
44,723
| 58,303
12,961
45,342 | 382,139
74,098
308,041
|
| 2. Preservation and Management of Natural Resources
of which: market related expenditure and direct payments
| 54,985
43,120 | 54,322
42,697
| 53,666
42,279 | 53,035
41,864
| 52,400
41,453 | 51,775
41,047
| 51,161
40,645 | 371,344
293,105
|
| 3. Citizenship, freedom, security and justice
3a Freedom, Security and Justice
3b Citizenship
| 1,199
600
599 | 1,258
690
568
| 1,380
790
590 | 1,503
910
593
| 1,645
1,050
595 | 1,797
1,200
597
| 1,988
1,390
598 | 10,770
6,630
4,140
|
| 4. EU as a global player
| 6,199 | 6,469 |
6,739 | 7,009 | 7,339
| 7,679 | 8,029 |
49,463 |
| 5. Administration(1)
| 6,633 | 6,818 |
6,973 | 7,111 | 7,255
| 7,400 | 7,610 |
49,800 |
| 6. Compensations |
419 | 191 | 190
| | | |
| 800 |
| Total appropriations for commitments
as a percentage of GNI
| 120,702
1.10% | 121,473
1.08%
| 122,564
1.07% | 122,952
1.04%
| 124,007
1.03% | 125,527
1.02%
| 127,091
1.01% | 864,316
1.048%
|
| |
| | | |
| | |
| Total appropriations for payments
as a percentage of GNI
| 116,650
1.06% | 119,620
1.06%
| 111,990
0.97% | 118,280
1.00%
| 115,860
0.96% | 119,410
0.97%
| 118,970
0.94% | 820,780
1.00%
|
| Margin available
Own Resources Ceiling as a Percentage of GNI
| 0.18%
1.24% | 0.18%
1.24%
| 0.27%
1.24% | 0.24%
1.24%
| 0.28%
1.24% | 0.27%
1.24%
| 0.30%
1.24% | 0.24%
1.24%
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(1) The expenditure on pensions included under
the ceiling for this heading is calculated net of the staff contributions
to the relevant scheme, within the limit of €500 million
at 2004 prices for the period 2007-13.
9 The FP numbers were amended in the final stages of
negotiation of the 2004 enlargement. Back
10
See headnote. Back
11
See paragraph 5 in this Report. Back
12
See headnote. Back
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