7 Financial Management
| (30280)
17606/1/08
COM(08) 859
| Commission Communication concerning the revision of the Multiannual Financial Framework (2007-2013)
Draft Decision amending the Interinstitutional Agreement of 17 May 2006 on budgetary discipline and sound financial management as regards the Multiannual Financial Framework
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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 12 February 2009
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| Previous Committee Report | HC 19-iii (2008-09), chapter 6 (14 January 2009)
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| To be discussed in Council | Not known
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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
7.1 In the context of the Commission's Communication, A European
Economic Recovery Plan,[27]
the Government told us that:
- the Commission proposes revising the 2007-2013 Financial Framework[28]
(which sets overall expenditure ceilings for the budget) for the
purposes of mobilising €5.00 billion (£4.10 billion)
for trans-European energy interconnections and broadband infrastructure;
and
- it should be noted that the ECOFIN Council comments
for the European Council of 11-12 December 2008 specifically referred
to considering the Commission's plan "within the existing"
ceilings and headings of the Financial Framework.[29]
7.2 In December 2008 the Commission proposed in this
document the revision of the 2007-2013 Financial Framework to
which we had been alerted. The revision was to be achieved by
amendment to the Inter-Institutional Agreement of 17 May 2006
on budgetary discipline and sound financial management, which
set the current Financial Framework.[30]
The draft Decision would allow a €5.00 billion (£4.10
billion) increase to the Heading 1a (Competitiveness for Growth
and Employment) ceiling for 2009 and 2010, with a corresponding
€5.00 billion (£4.10 billion) reduction to the Heading
2 (Preservation and Management of Natural Resources) ceiling for
2008 and 2009.
7.3 When we considered this document, in January
2009, we:
- noted that the Government was
keen, as a strong believer and advocate of budget discipline and
sound financial management, to avoid any further revision of the
2007-2013 Financial Framework, an important tool for budget discipline;
- noted that it would work with like-minded Member
States to ensure that the Commission explored all other possibilities
for additional resources to be met from within the existing Financial
Framework through, in the first instance, appropriate redeployment,
reprioritisation, and re-profiling; and
- asked to hear about progress in securing that
objective.
Meanwhile the document remained under scrutiny.
The Minister's letter
7.4 The Economic Secretary to the Treasury (Ian Pearson)
writes now to tell us that:
- the Netherlands, Germany, Sweden,
Denmark, Austria and France have expressed concerns with the proposal
to revise the Financial Framework;
- as well as calling on the Commission to propose
reprioritisation and redeployment of existing resources within
both Heading 1a (Competitiveness for Growth and Employment) and
Heading 2 (Preservation and Management of Natural Resources),
the Government and the like-minded Member States are opposed to
use of the 2008 unallocated budget margin and to any increase
in the overall Financial Framework ceiling;
- in the light of this the Commission has revised
its proposal, limiting the overall increase of commitment appropriations
under Heading 1a to €3.50 billion (£2.91 billion), but
proposing an additional €1.50 billion (£1.25 billion)
of expenditure for infrastructure projects under Heading 2, to
make the total up to €5.00 billion (£4.15 billion);
- the Government objects to this revised proposal
as it still draws on the 2008 margin to finance the package; and
- it will continue to take a proactive part in
discussions with the Commission and other Member States.
Conclusion
7.5 We are grateful to the Minister for his account
of where matters stand on this proposal. We applaud the Government's
continued efforts to ensure recourse to revision of the Financial
Framework is avoided. Before considering the matter again we should
like to hear about further progress to that end. Meanwhile the
document remains under scrutiny.
27 (30213) 16097/08: see HC 19-i (2008-09), chapter
4 (10 December 2008) and HC Deb, 20 January 2009, cols.
626-53. Back
28
In previous budgetary periods the Financial Framework was known
as the Financial Perspective and is still often referred to as
such. Back
29
(30213) 16097/08: op. cit. Back
30
See http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2006:139:0001:0017:EN:PDF. Back
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