6 Financial management
| (a)
(31399)
7180/10
COM(10) 71
(b)
(31400)
7182/10
COM(10) 72
(c)
(31401)
7183/10
COM(10) 73
|
Draft Regulation amending Council Regulation (EC, Euratom) No. 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities
Draft Council Regulation laying down the multi-annual financial framework for the years 2007-2013
Draft Inter-Institutional Agreement between the European Parliament, the Council and the Commission on cooperation in budgetary matters
|
| Legal base | (a) Article 322(1) TFEU; co-decision; QMV
(b) Article 312(2) TFEU; consent; unanimity
(c) Article 295 TFEU; —; QMV
|
| Documents originated | 3 March 2010
|
| Deposited in Parliament | 9 March 2010
|
| Department | HM Treasury
|
| Basis of consideration | EM of 11 March 2010
|
| Previous Committee Report | None
|
| To be discussed in Council | Not known
|
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
6.1 To date, the Financial Framework, which sets out a budgetary
framework for the period 2007-2013, has been laid down in the
Inter-Institutional Agreement of 17 May 2006 on budgetary discipline
and sound financial management.[24]
The current agreement also contains instruments, such as the European
Solidarity Fund, outside the Financial Framework and rules for:
· operation
of the Financial Framework and the case where a Financial Framework
has not been agreed;
· the
annual budgetary procedure;
· cooperation
between the Council, the European Parliament and the Commission
in budgetary matters; and
· sound
financial management.
The TFEU requires Member States in the Council to
adopt a Regulation, laying down the Financial Framework.
6.2 Rules governing the operation and management
of the EU's annual budget are laid down in Council Regulation
(EC, Euratom) No. 1605/2002, known as the Financial Regulation,
and accompanying Implementing Rules.[25]
The documents
6.3 The Commission is proposing, with document (b),
to incorporate the existing 2007-2013 Financial Framework into
a new Regulation, referred to as the Multiannual Financial Framework
Regulation. With document (a) the Commission proposes an amendment
to the Financial Regulation to reflect some of the changes introduced
by the TFEU. (New provisions related to the control and audit
obligations of Member States in implementing the budget required
by the Article 317 TFEU and changes related to setting up the
European External Action Service will be covered by separate proposals.)
The Commission proposes incorporation of some provisions of the
current Inter-Institutional Agreement into the Multiannual Financial
Framework Regulation and others into the amended Financial Regulation
or its Implementing Rules. The draft Inter-Institutional Agreement
on cooperation in budgetary matters, document (c), is proposed
for those provisions that the Commission considers do not fit
into either the Multiannual Financial Framework Regulation or
the Financial Regulation and that are not rendered obsolete by
the TFEU.
6.4 In the proposed Multiannual Financial Framework
Regulation, document (b):
· Article
1 refers to the 2007-2013 Financial Framework, contained in the
Annex of the present agreement;
· Article
2 reproduces text from the current agreement updated to remove
obsolete text and includes a provision for commitment appropriations
to be entered into the budget over and above the relevant ceilings,
where necessary, to allow mobilisation of the Emergency Aid Reserve,
the European Globalisation Adjustment Fund, the Flexibility Instrument,
and the European Solidarity Fund;
· Articles
3 to 10 reproduce text from the current agreement relating to
adjustments to, or revisions of, the Financial Framework, with
technical updates to the language to reflect the change in legal
base;
· the
decision-making procedure for Articles 6 and 3, which relate to
adjustments connected to budget implementation and ensuring the
Own Resources ceilings are not exceeded, is updated to bring it
into line with the procedure for adoption of the Regulation itself;
· Article
8 maintains the current practice of allowing revisions to the
Financial Framework of below 0.03% of EU Gross National Income
to be agreed by a joint decision of the Council and the European
Parliament, with the Council acting by a qualified majority;
· Article
11 lays down general principles for cooperation between the Council,
the European Parliament and the Commission, in accordance with
the requirement in the TFEU that the Financial Framework shall
'lay down any other provisions required for the annual budgetary
procedure to run smoothly';
· Article
12 incorporates text from the present agreement updated to reflect
the expectation that the role of the Council or its presidency,
in drawing up forecasts of Common Foreign and Security Policy
expenditure needs, will be undertaken by the High Representative
for Foreign Affairs and Security Policy (High Representative);
and
· Article
13 incorporates text from the current agreement relating to the
consequences of the absence to agree a new Financial Framework,
updated to reflect the wording of Article 312(4) TFEU.
6.5 With the amended Financial Regulation, document
(a), the Commission is proposing updates to reflect the TFEU and
other technical adaptations, including:
· incorporation
of provisions related to the new annual budgetary procedures provided
by the Treaty and the joint declaration on 'transitional measures
applicable to the budgetary procedure after the entry into force
of the Lisbon Treaty', agreed on 30 November 2009;[26]
· removal
of specific references to 'police and judicial cooperation' on
the grounds that specific financial provisions in this area are
unnecessary now that such cooperation has become an integral part
of other EU policies and internal actions;
· removal
of references to information on the operations of the guarantee
fund for external actions given that this fund is no longer the
subject of a special regime;
· changes
to specify the role of the High Representative in proposing Common
Foreign and Security Policy preparatory measures;
· changes
to accommodate the European Council as an institution sharing
a budget with the Council;
· a new
Article clarifying that the budget ceilings should comply with
the Financial Framework; and
· two
new Articles are also added to incorporate text from the current
Inter-Institutional Agreement, which relate to the requirement
that the EU budget or the Financial Framework be amended or revised
before any act exceeding the appropriations available may be implemented,
to the allocations of commitment appropriations provided for in
the relevant basic acts for structural operations, rural development
and to the European Fund for Fisheries.
6.6 The draft Inter-Institutional Agreement, document
(c), reproduces text from the current agreement with technical
updates, including:
· incorporation
of rules relating to the operation of the new annual budgetary
procedure, including the pragmatic calendar and provisions relating
to amending budgets contained in the joint declaration on transitional
measures, into the rules for collaboration between the Council,
the European Parliament, and the Commission;
· the
requirement that information relating to operations not included
in the EU Budget and the development of the EU's own resources
be presented together with the documents accompanying the Commission's
draft budget, rather than with the technical adjustment of the
Financial Framework, as specified in the current agreement —
it is envisaged that the timing of the presentation of this information
would remain the same (end of April or beginning of May);
· clarification
that three-way meetings or 'trilogues' are only called to consider
proposals to mobilise the Emergency Aid Reserve, the European
Solidarity Fund, the Flexibility Instrument and the European Globalisation
Adjustment Fund in the event of a disagreement between the Council
and the European Parliament, rather than with each proposal as
specified in the current agreement — the objectives, purpose,
amounts and roles of these instruments would remain unchanged;
and
· replacement
of references to the 'Council Presidency' or the 'Council', in
relation to production of a forward-looking document and financial
statement on Common Foreign and Security Policy spending, with
references to the High Representative.
Additionally the requirement in the current agreement
that the Commission report on its application has been removed
from the draft on the grounds that it is obsolete.
The Government's view
6.7 The Economic Secretary to the Treasury (Ian Pearson)
says that the Government's overriding objectives in relation to
EU Budget expenditure are to ensure budget-discipline, value for
money and sound financial management, and comments further that
the Government:
· welcomes
inclusion of the existing 2007-2013 Financial Framework, the key
tool for budget-discipline, into the Commission's proposed Multiannual
Financial Framework Regulation — if agreed this will strengthen
the legal base for the 2007-2013 Financial Framework, enhancing
EU budget-discipline;
· considers
that the changes to the EU Budget legislation required by the
TFEU should be a technical exercise of incorporating the existing
budget rules into new legal instruments, updated as required by
the Treaty; and
· is broadly
content that the Commission's proposals broadly reflect this approach
and intends to work closely with other Member States in the Council
to scrutinise the proposals and question any aspects that deviate
from this approach and could have an impact on the Government's
budgetary objectives.
Conclusion
6.8 We have no questions to ask on these largely
technical, albeit important, proposals. However, in clearing them
we draw the documents to the attention of the House for the information
they give about EU financial management under the new Treaty arrangements.
24 See http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2006:139:0001:0017:EN:PDF.
Back
25
See http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:l:2002:248:0001:0048:en:PDF.
Back
26
See http://register.consilium.europa.eu/pdf/en/09/st16/st16792.en09.pdf.
Back
| 
