Preliminary Draft Budget 2009

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Kitty Ussher: I thank the hon. Member for Taunton for his advice on negotiating. I am not sure that I should take it on board, given that I would like at least to speak to the French during the negotiations. However, he has given me food for thought.
I shall speak only briefly, as we have had a useful debate. I remind the Committee exactly where we are in the process. The preliminary draft budget goes before the Council for the first time during the next couple of weeks. Today, I am doing the same as Ministers throughout the EU and seeking a mandate for the negotiations that will be pursued. It would be entirely wrong to think that the numbers in the papers before the Committee will be the same as those that will emerge at the end of the process. The Committee will be able to haul me back at the end of the year, once the process is completed, and I shall then be able to say where we ended up and why, and explain the view that the EU Government took and the extent to which we were successful in our negotiations.
Mr. Gauke: The EU Government?
Kitty Ussher: I apologise. I meant the UK Government. It has been a rather long afternoon.
I turn to what can be taken from the last hour and a bit. It has been a useful conversation. The Committee believes that we should continue to focus on admin expenditure and value for money, but there remain serious questions on how the Galileo project will be managed and financed. The Committee also suggests that we should probe how aid spending is implemented throughout the EU. There is huge consensus in the UK that we need fundamental reform of the EU budget; indeed, there is cross-party unity on that question. As I said, we need to keep real pressure on the Galileo project. The fact that the European Court of Auditors has been unable to discharge the accounts for so many years is a huge concern to people in the UK, and I will continue to make that point on their behalf and that of the Committee. It is useful that I and the UK delegation will be able to say what concerns parliamentarians. I thank the Committee for that.
Other issues were raised that were unhelpful. I have said it before and I shall say it again. There is nothing in the preliminary draft budget for 2009 that presumes that the Lisbon treaty has been implemented. It is important to make that 100 per cent. clear.
I shall do my best to respond to the hon. Member for Altrincham and Sale, West. If I do not complete the answer, I shall follow with correspondence. He said that preparatory actions do not require the same legal basis as other budget lines. Preparatory actions are funding for small trial schemes; they are measures taken to test, trial or prepare future programmes. They include, for example, preparatory actions for victims of terrorist acts. In the financial programming documentation, €8.6 million has been allocated to preparatory actions under headings 1a, 2, 3 and 4. It is not possible to say definitely that the spending all falls within the scope provided in the financial regulation to which the preliminary draft budget and the hon. Gentleman refer, but it represents an upper limit. We can delve into the detail in a different way if necessary.
Mr. Brady: Again, I understand the constraints under which the Minister operates. However, paragraph 2.4 has five areas within which expenditure can be made without legal base. One is pilot schemes, one is preparatory actions, and another is preparatory measures in the field under article 5 of the treaty. I would be grateful, therefore, if the Minister could go into a little more detail—perhaps in correspondence later—about what exactly that expenditure is and how it breaks down between each of those five areas.
Kitty Ussher: Of course, but the documents make it clear that the Commission has a working report on that area, which is about to be published—if it has not been already. I shall ensure that the hon. Gentleman has a copy of the report along with any necessary commentary.
The hon. Gentleman also raised a point about the seventh framework programme and the level of UK receipts derived from that. I cannot provide him with a precise answer, because seventh framework funds are open to a competitive bidding and procurement process happening in real time. The main thing for us is to ensure that the process is open and transparent, so that UK companies can obtain contracts purely on merit, rather than on the basis of behind-the-scenes lobbying. Galileo produced some success in that regard, and we will continue to push that. However, across heading 1a, which includes the seventh framework programme, UK receipts are about 10 per cent.
A question was asked about how exchange rates affect the UK contribution. As I have said, they obviously affect the net position of our national budgets, which we publish routinely. A variety of factors can impact on all member states’ share of finance in the annual budget. Exchange rate movement impacts on the UK gross national income and VAT basis when converted into euros and affects traditional resources, including customs and VAT. Furthermore, member states’ contributions might fluctuate from year to year because of the level and timing of payments received and receipts to and from the EC budget. Exchange rates affect our contribution on an ongoing basis, which is why we always ensure that the budget lines are clear within our own accounts, so that they can be analysed afterwards.
Mr. Brady: I realise that this is a very complex aspect, and that there are all sorts of different interactions. However, I think that the Minister is broadly confirming that, if sterling falls against the euro, our net contribution will be bigger.
Kitty Ussher: I am not sure—I guess that that would be logical. However, a number of other factors would have an impact as well. Perhaps I should write to the hon. Gentleman setting out exactly how it works in practice, because it would depend hugely on when payments are received across the board. It is extremely complicated. Of course, it flows the other way as well, because we would be collecting VAT receipts, for example.
The hon. Gentleman also asked what the €1.5 billion for information, society and media is spent on. He asked, so I shall answer. A number of activities are funded under that part of the budget: electronic communications policy to promote competition, investment and innovation in the electronic communications sector; the promotion of safer internet usage, particularly among children, and the fight against illegal content at an EU level; the 2010 co-operation programme, which aims to support research and innovation in the EU in the field of information and communication technologies, and the capacity to research infrastructure programmes, including the MEDIA 2007 programme, many of which are designed to benefit all member states collectively through enabling co-operation and cross-EU investment. There is no evidence that Ireland’s receipts would be disproportionate in that field of the budget.
Mr. Brady: The Minister has been very helpful, but I want to pursue this a little further. She has confirmed my misunderstanding of the figures—I thought that it was €150 million, not €1.5 billion. I shall probably be struck off the Treasury Committee now. I am also grateful that she responded to my specific question about expenditure in the Republic of Ireland by saying that there was no evidence of disproportionate expenditure. Is there evidence of what the expenditure is and therefore whether it is proportionate, or is it simply that there have been no reports, as yet, of disproportionate expenditure?
Kitty Ussher: There is no evidence that Ireland’s receipts would be disproportionate in that field of the budget. The Committee might be entering the area of diminishing returns, and I foresee a long and detailed correspondence with the hon. Gentleman, which of course I look forward to.
In conclusion, this has been a useful debate in highlighting the areas on which parliamentarians wish the UK Government to focus. There is huge agreement, and we shall continue to fight to ensure the best possible value for money for the UK taxpayer. I look forward to our continuing debates over the course of this year.
Question put and agreed to.
That the Committee takes note of the unnumbered Explanatory Memorandum from HM Treasury dated 2nd June 2008 relating to the Preliminary Draft Budget of the European Communities for the year 2009; and supports the Government's efforts to maintain budget discipline in relation to the budget for the European Communities.
Committee rose at ten minutes to Six o’clock.
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