13 Draft Budget 2007
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| Draft General Budget of the European Communities for the financial year 2007
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| Legal base | Article 272 EC; QMV; the special role of the European Parliament in relation to the adoption of the Budget is set out in Article 272
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| Department | HM Treasury |
| Basis of consideration | Minister's letter of 13 December 2006
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| Previous Committee Report | HC 41-i (2006-07), para 19 (22 November 2006)
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| Discussed in Council | 21 December 2006
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| Committee's assessment | Politically important
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| Committee's decision | Cleared (decision reported 11 October 2006)
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Background
13.1 The Commission's Preliminary Draft Budget (PDB) is the first
stage in the Community's annual budgetary procedure. We reported
on the 2007 PDB in June 2006[39]
and it was debated in European Standing Committee on 11 July 2006.[40]
The second stage is the adoption by the ECOFIN Council of the
Draft Budget (DB). The 2007 DB was adopted on 14 July 2006 and
we reported on it in October 2006.[41]
The 2007 PDB and the 2007 DB form the basis of the 2007 Adopted
Budget. In November 2006 we reported on the European Parliament's
first reading of the 2007 DB.[42]
This stage was to be followed by further consideration by the
Council and conciliation negotiations between the Council and
the European Parliament in November 2006 before adoption of the
2007 General Budget in mid-December 2006.
The Minister's letter
13.2 The Economic Secretary to the Treasury (Ed Balls) writes
now to inform us of the outcome of the Council's further consideration
of the DB and the European Parliament's amendments to it on 21
November 2006 and of the subsequent conciliation negotiations.
The Minister summarises the position after these events thus:
- at its November 2006 meeting the Council agreed to a number
of changes proposed by the Commission in Amending Letters Nos
2 and 3[43] and broadly
returned across most headings to the DB it had agreed in July
2006;
- the exception was Heading 5 (Administration)
as the Presidency withdrew a draft declaration on posts that had
met strong opposition from a blocking minority of Member States;
- a reduction to the PDB for Heading 2 (Preservation
and management of natural resources) of just under €l billion
(£0.69 billion) and an allocation of €100 million (£69.42
million) for Iraq were definitely secured;
- the allocation for Asia was increased by €30
million (£20.82 million) compared to the Council's original
proposal and payment levels for Structural Funds were set at more
reasonable levels — but the European Parliament was to have
the final say in these areas in its second reading of the DB on
14 and 15 December 2006; and
- during conciliation the Council and the European
Parliament agreed the overall limit on payment appropriations
be set at €115.50 billion (£80.18 billion), that is
just under 1% of EC GNI — thus superseding the total set
by the Council at its November 2006 meeting.
13.3 As for the numbers set by the Council at that
meeting the Minister encloses with his letter annexes, which we
reproduce, helpfully setting out the euro and sterling figures
for the six budget categories proposed by the European Parliament
and the changes proposed by the Council. The main changes described
by the Minister are set out in the following paragraphs.
THE TOTALS
13.4 The Council reduced commitment appropriations
by €1.75 billion (£1.21 billion) to €125.59 billion
(£87.18 billion) and payment appropriations by €7.69
billion (£5.34 billion) to €114.33 billion (£79.37
billion). As noted above the latter figured was increased again
in conciliation.
INDIVIDUAL EXPENDITURE HEADINGS
Heading 1a: Competitiveness for growth and employment
13.5 The Council returned to the DB, cutting commitment
appropriations by €55 million (£38.18 million) to €8.78
billion (£6.10 billion) and payments by €2.77 billion
(£1.92 billion) to €6.77 billion (£4.70 billion)
compared to the European Parliament's first reading.
Heading 1b: Cohesion for growth and employment
13.6 The Council returned to the DB, cutting commitment
appropriations by €0.23 million (£0.16 million) to €45.49
billion (£31.58 billion) and payment appropriations by €2.53
billion (£1.76 billion) to €37.37 billion (£25.95
billion).
Heading 2: Preservation and management of natural
resources
13.7 The Council agreed to cut commitment appropriations
by €1.37 billion (£0.95 billion) to €56.23 billion
(£39.04 billion) and payment appropriations by €1.49
billion (£1.03 billion) to €54.66 billion (£37.95
billion) compared to the European Parliament's first reading.
The Minister comments that :
- this overall reduction could
not be amended by the European Parliament in its second reading;
- the Council did accept some of the European Parliament's
amendments so that meant compared to the DB commitment payment
appropriations were increased by €232.50 million (£161.40
million) — this was necessary for agreement in Council to
be reached and the much more significant overall reductions secured;
and
- a pilot project on biofuels was also agreed as
part of conciliation with the European Parliament.
Heading 3a: Freedom, security and justice
13.8 All of the European Parliament's amendments
were rejected. — the Council reduced commitment appropriations
by €57.50 million (£39.92 million) to €562 million
(£390 million) and payment appropriations by €76.90
million (£53.38 million) to €400 million (£278
million) compared to the European Parliament's first reading.
Heading 3b: Citizenship
13.9 The Council returned to the DB, with one exception.
It accepted the European Parliament's amendment for Special Annual
Events, increasing the budget line by €1.50 million (£1.04
million). Overall, this meant commitment appropriations were reduced
by €27 million (£18.74 million) to €589 million
(£409 million) and payment appropriations by €58.62
million (£40.69 million) to €650 million (£451
million) compared to the European Parliament's first reading.
Heading 4: The EU as a global partner
13.10 The Council reduced commitment appropriations
by €133.10 million (£92.40 million) to €6.64 billion
(£4.61 billion) and payment appropriations by €654.50
million (£45.44 million) to €7.18 billion (£4.98
billion) compared to the European Parliament's first reading.
The Minister says noteworthy changes include:
- restoration of the Common Foreign
and Security Policy budget line to DB levels — €159.20
million (£110.52 million) commitment appropriations and €120.40
million (£83.58 million) payment appropriations;
- an increase to the Asia budget line of €30
million (£20.83 million); and
- a return to the DB's €162 million (£112.46
million) in commitment appropriations for Transitional Sugar Assistance.
The Minister adds that an €100 million (£69.42
million) allocation to Iraq in commitment appropriations agreed
in the European Parliament's first reading remained unchanged.
Heading 5: Administration
13.11 The Council returned to the DB on most budget
lines reducing commitment and payment appropriations by €106.80
million (£74.14 million) to €6.85 billion (£4.76
billion). The Minister comments that:
- because of an agreement that
exists between the European Parliament and the Council, the Council
accepted the European Parliament's amendments to the latter's
own administrative budget; and
- the Council agreed to erase a declaration on
posts which proved unacceptable to a blocking minority of Member
States.
Heading 6 Compensation
13.12 Commitment and payment appropriations of €444.50
million (£308.57 million) remained unchanged.
The Government's view
13.13 The Minister says that overall the Government
believes the Council's further consideration of the DB goes a
long way to meeting its key objectives. He comments that in general,
budget discipline and flexibility have been maintained. And he
particularly notes agreement to limit total payment appropriations,
preservation of the Financial Perspective ceilings and secured
funding for Iraq, for Asia, for the Common Foreign and Security
Policy and for Transitional Sugar Assistance.
Conclusion
13.14 We are grateful to the Minister for this
further report on progress in setting the 2007 Budget. We note
the gains the Government highlights and look forward to hearing
about the outcome of the final stages of setting the 2007 General
Budget.
39 (27511); see HC 34-xxxi (2005-2006), para 2 (14
June 2006). Back
40
Stg Co Deb, European Standing Committee, cols 3-26. Back
41
See HC 34-xxxvii (2005-06), para 57 (11 October 2006). Back
42
See headnote. Back
43
(28049) 13288/06 (28050) 14613/06; see HC 41-i (2006-07), para
19 (22 November 2006). Back
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