2 Growth and Stability Pact: statistical
data
| (31339)
6559/10
COM(10) 53
| Draft Council Regulation (EU) No … amending Regulation (EC) No. 479/2009 as regards the quality of statistical data in the context of the excessive deficit procedure
|
| Legal base | Article 126(14) TFEU; consultation; unanimity
|
| Document originated | 15 February 2010
|
| Deposited in Parliament | 25 February 2010
|
| Department | HM Treasury
|
| Basis of consideration | EM of 10 March 2010
|
| Previous Committee Report | None
|
| To be discussed in Council | Not known
|
| Committee's assessment | Politically important
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| Committee's decision | Not cleared, further information requested
|
Background
2.1 The Stability and Growth Pact adopted by the Amsterdam European
Council in June 1997 emphasised the obligation of Member States
to avoid excessive government deficits, defined as the ratio of
a planned or actual deficit to gross domestic product (GDP) at
market prices in excess of a "reference value" of 3%.[5]
Each year the Council of Economic and Finance Ministers (ECOFIN)
issues an Opinion on the updated stability or convergence programme
of each Member State.[6]
These Opinions, which are not binding on Member States, are based
on a recommendation from the Commission. The economic content
of the programmes is assessed with reference to the Commission's
current economic forecasts. If a Member State's programme is found
wanting, it may be invited by ECOFIN, in a Recommendation, to
make adjustments to its economic policies, though such Recommendations
are likewise not binding on Member States. This whole procedure
is essentially the Pact's preventative arm.
2.2 On the other hand, the Pact also endorsed a dissuasive
or corrective arm involving action in cases of an excessive government
deficit — the excessive deficit procedure provided for in
Article 126 TFEU and the relevant Protocol. This procedure consists
of Commission reports followed by a stepped series of Council
Recommendations (the final two steps do not apply to non-members
of the eurozone). Failure to comply with the final stage of Recommendations
allows ECOFIN to require publication of additional information
by the Member State concerned before issuing bonds and securities,
to invite the European Investment Bank to reconsider its lending
policy for the Member State concerned, to require a non-interest-bearing
deposit from the Member State concerned whilst its deficit remains
uncorrected, or to impose appropriate fines on the Member State
concerned.
2.3 The Commission's economic forecasts and recommendations,
and therefore the Council's subsequent decisions, related to the
Pact depend on economic and financial statistics from the Member
States. In January 2010 the Commission published a report about
Greek Government deficit and debt statistics. The report was broadly
factual but delivered highly critical assessments of the Greek
statistical system. It identified two main problems which have
had effects on debt and deficit reporting over the past few years,
most notably in the context of the excessive deficit procedure:
· statistical
weaknesses and unsatisfactory technical procedures in the Greek
statistical institute, the NSSG, and in the several other services
that provide data and information to the NSSG, including the General
Accounting Office and the Ministry of Finance; and
· inappropriate
governance — poor cooperation and lack of clear responsibilities
between institutions, diffuse personal responsibilities and ambiguous
empowerment of officials and absence of written instruction and
documentation.
This poor practice had led to severe irregularities
in the reporting of debt and deficit statistics under the excessive
deficit procedure.
2.4 The Commission's overall assessment was that
the current set-up of the Greek statistical system "does
not guarantee the independence, integrity and accountability of
the national statistical authorities" and it outlined a list
of broad goals which Greece should aim to achieve:
· clarifying
and "personalising" the responsibilities of the different
statistical entities involved;
· respecting
the European Statistics Code of Practice;[7]
and
· making
the NSSG independent, through the revision of the current law
on statistics.
However, it did not outline any explicit next steps.[8]
2.5 The generality of statistical production in the
EU is governed by the Statistics Regulation, Regulation (EC) No.
223/2009, which provides guidelines on the quality of EU statistics.
However production of statistics in relation to the excessive
deficit procedure is governed by a narrower provision, Regulation
(EC) No. 479/2009.
The document
2.6 The Commission proposes this draft Regulation
to amend Regulation (EC) No. 479/2009 to give power to Eurostat
to undertake a monitoring visit to a national statistical authority
or finance ministry in cases where there appear to be problems
with the quality of that Member State's statistical data relating
to government debt or deficit figures.
The Government's view
2.7 The Economic Secretary to the Treasury (Ian Pearson)
says that the Government supports the objectives of this proposal,
as it seeks to prevent a recurrence of the situation that came
to light in Greece in the autumn of 2009. He reminds us that:
· the
Greek national statistical authorities were discovered to have
produced data of inadequate quality;
· according
to the Eurostat report,[9]
some statistical data had been deliberately misreported to reduce
the size of the national deficit; and
· the
Greek published deficit figure was subsequently revised from 6%
to 12.7%.
2.8 The Minister comments further that:
· the
Government has always supported the Stability and Growth Pact
as a framework for ensuring sound public finances across the EU;
· however,
for the pact to remain a credible monitoring and enforcement mechanism,
it is vital that statistical data provided by Member States is
of high quality and that Member States' debt and deficit figures
are reliable;
· whilst
the general EU statistical regime is sound and, so far, there
have only been problems with national data on deficits in one
Member State (Greece), the Government believes that an EU level
monitoring system has the potential to prevent and identify future
cases of manipulation of statistical data on debts and deficits;
· EU level
assessments of statistical data quality already exist in the form
of peer review of the European Statistics Code of Practice established
under the Statistics Regulation 223/2009;
· however,
this proposal gives Eurostat increased powers to monitor national
statistical authorities' data and processes;
· the
Government supports the proposal that Eurostat should be able
to make a monitoring visit to a Member State's national statistics
authority "where significant risks or problems with the quality
of the data have been clearly identified", as this would
deter manipulation of statistical data and bring to light any
future incidences of inadequate data underpinning government debt
and deficit figures;
· the
Government believes that the proposals are broadly in line with
subsidiarity;
· the
powers proposed for Eurostat will, however, require further definition,
as the current draft does not make clear under which circumstances
Eurostat should and should not make a monitoring visit to a Member
State — it does not define what these "significant
risks or problems" could be, nor does it set out how Eurostat
would identify these risks; and
· the
Government believes that new legislation in this area must be
proportionate to the scale of the problem.
2.9 The Minister then tells us that the Government's
approach to the negotiations will be guided by five aims:
· the
text should confirm the need for national statistical authorities
to operate independently;
· Eurostat
should create a report setting out the justification for a potential
monitoring visit to any Member State;
· there
should be an agreed, clear set of criteria by which the quality
of a Member State's statistical data could be assessed —
this would provide an initial test to determine whether a Eurostat
audit or investigation was necessary;
· the
proposed Regulation should contain clear examples of cases where
monitoring visits to a Member State should be made; and
· Eurostat
should conduct their investigations based on published audited
reports and other records held within the national statistical
authority or finance ministry, where available, rather than direct
access to other bodies.
2.10 On the financial implications of the proposal
the Minister tells us that:
· the
Commission proposes that, in order to implement the measure, twenty
new members of staff would be required;
· whilst
this does not have significant financial implications for the
UK, the Government intends to query the number of full-time staff
proposed to monitor Member States' national statistics, as it
seems rather high; and
· on the
principle of budget neutrality, the Government will propose that
the Commission should assign staff to this work from other areas
of the Commission, rather than creating new posts.
Conclusion
2.11 While the purpose of this draft Regulation
seems unexceptionable, we note that, although the Government supports
the thrust of the proposal, it has a number of issues to deal
with during negotiations, related both to subsidiarity and proportionality
and to staff for Eurostat's new power. Before considering this
proposal further we should like to hear about negotiating progress
on these issues, and we ask for as prompt a response as possible,
given the eight-week timeframe for national parliaments under
the Subsidiarity Protocol. Meanwhile the document remains under
scrutiny.
5 This obligation does not apply to Member States,
including the UK, whilst they remain outside the eurozone, but
they are required to endeavour to avoid excessive deficits. Back
6
The 16 Member States (Austria, Belgium, Cyprus, Germany, Greece,
Finland, France, Ireland, Italy, Luxembourg, Malta, the Netherlands,
Portugal, Slovakia, Slovenia and Spain) that have adopted the
euro have Stability Programmes, whereas the other 11 Member States
(including the UK) produce Convergence Programmes. Back
7
(26595) 9461/05: see HC 34-ii (2005-06), chapter 5 (13 July 2005),
HC 34-viii (2005-06), chapter 18 (2 November 2005) and HC 34-xiv
(2005-06), chapter 20 (11 January 2006). Back
8
(31253) 5175/10 + ADDs 1-6: see HC 5-x (2009-10), chapter 10 (9
February 2010). Back
9
Ibid. Back
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