6 Draft Budget 2011
| (a)
(31644)
—
SEC(10) 473
(b)
(32214)
—
—
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Statement of estimates of the European Commission for the financial year 2011 (Preparation of the 2011 Draft Budget)
Revised 2011 Draft Budget
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| Legal base | Article 314 TFEU; co-decision; QMV
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| Department | HM Treasury
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| Basis of consideration | Minister's letter of 23 November 2010
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| Previous Committee Report | (a) HC 428-i (2010-11), chapter 5 (8 September 2010), HC 428-iii (2010-11), chapter 6 (13 October 2010), HC 428-vii (2010-11), chapter 12 (10 November 2010) and HC Deb, 13 October 2010, cols 409-459
(b) None
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| To be discussed in Council | 10 December 2010
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| Committee's assessment | Politically important
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| Committee's decision | (a) Cleared (Debate on the Floor of the House on 13 October 2010)
(b) Not cleared; further information awaited
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Background
6.1 The Lisbon Treaty has established a new procedure for considering
and adopting the EU's annual General Budget. In simplified outline
the process is:
- the Commission submits to the Council and the European Parliament
a Draft Budget (DB) for the following financial year no later
than 1 September;
- the Council adopts and forwards to the European
Parliament its position on the DB (commonly referred to as its
first reading position) by 1 October;
- within 42 days the European Parliament adopts
its position on the DB (also commonly referred to as its first
reading position);
- if that position is the same as the Council's
the DB is adopted as the General Budget;
- if that position is different from the Council's
a Conciliation Committee is convened;
- if the Conciliation Committee agrees within 21
days on a reconciliation of the two positions the Council and
the European Parliament have 14 days to adopt the joint text as
the General Budget;
- if either rejects the joint text the Commission
prepares a new DB and the process begins again;
- if the Conciliation Committee fails to agree
a reconciliation within 21 days the Commission prepares a new
DB and the process begins again; and
- if the General Budget is not adopted by 1 January
EU activity is financed by "provisional twelfths" —
that is one-twelfth of each budget appropriation for the previous
year may be spent each month until a General Budget is adopted.
6.2 The Commission presented the 2011 DB in May
2010. We have reported three times on this DB and it has been
debated on the Floor of the House. Earlier this month we reported
that the European Parliament's first reading position, adopted
on 24 October 2010, differed from that of the Council and that
the conciliation process was under way.[15]
The Minister's letter
6.3 The Economic Secretary to the Treasury (Justine
Greening) writes now to report the outcome of the conciliation
process and the next steps, first recapitulating how the Council
going into that conciliation was standing firm on a limit to the
overall increase of the 2011 General Budget of 2.91%, as opposed
to the European Parliament's wish for a 6% increase. The Minister
then tells us that:
- at Budget ECOFIN meetings on
11 and 15 November 2010 the Council position was very clear and
firm — that no further increase beyond the level of 2.91%
could be agreed;
- the European Parliament side also said that,
in principle, it could accept this budget level;
- she therefore believes that agreement could have
been reached at these meetings on this budget level;
- however, the European Parliament set certain
conditions for its agreement — it requested a Council-European
Parliament political declaration giving the latter an increased
role in future decisions on the next Multi-Annual Financial Framework
and the EU's Own Resources;
- it also, late in proceedings on 15 November 2010,
stated that there must be agreement too on flexibility to increase
the Multi-Annual Financial Framework in future;
- the Government was not prepared to agree to these
demands as the price for securing the EU budget in 2011 —
it had already demonstrated flexibility in showing willingness
to accept a budget increase of 2.91%;
- its view was that the European Parliament had
introduced into the negotiation longer-term, strategic issues
that had no place in discussions on the 2011 budget and that did
not need to be decided alongside those budget discussions;
- nor could the Government accept any proposal
to alter the institutional roles enshrined in the Lisbon Treaty;
- a number of other Member States shared the Government's
concerns, including France, Germany, the Netherlands, Sweden and
Denmark — these represent nearly half the population of
the EU and contribute more than half of all financing of the EU
budget;
- talks ended at midnight on 15 November 2010,
with the European Parliament declaring that time had run out on
the conciliation process — it was also the European Parliament
side that ended discussions at the 11 November 2010 ministerial
level conciliation meeting.
6.4 The Minister comments that:
- in these circumstances, the
Government believes it was better not to reach agreement during
the conciliation process at all, rather than making a bad agreement
which was counter to the interests of UK taxpayers; and
- it Government is continuing
to engage constructively in further negotiations aimed at securing
agreement to a 2011 EU budget — at the level that all sides
have already said they can accept.
6.5 Turning to the next steps and reminding us that
the Commission must now present a new DB proposal for 2011 as
a basis for further negotiations and that, if agreement cannot
be reached on a final budget by the end of this year, the "provisional
twelfths" system will come into play, the Minister says that:
- the Commission and Presidency
are pushing to ensure that agreement can finally be reached on
the 2011 budget by the end of this year;
- the European Parliament is scheduling an exceptional
plenary session on 21 December 2010 to that end;
- the Government expects the Commission to publish
its new DB proposal (which would be document (b)) on 1 December
2010, setting out the detail of a budget increase of 2.91% that
has garnered consensus so far;
- as this would be based on the Council's own adopted
position from the summer, the Presidency is hoping to be given
a mandate by the Council to negotiate with the European Parliament
on it almost immediately;
- the Government understands that there is a budgetary
trilogue scheduled between the Council and the European Parliament
on 6 December 2010 for that purpose;
- if both sides can agree, the Presidency intends
that the Council would adopt its position on the DB formally on
10 December 2010 (as an "A" point at the Competitiveness
Council); and
- if the European Parliament then approves the
Council's position, the budget will be adopted.
6.6 The Minister also tells us that:
- at the same time the Presidency
is taking forward negotiations on the Multi-Annual Financial Framework,
including the 'contingency margin' provision we have reported
previously;[16]
- this would move, into the appropriate negotiating
process, the European Parliament's demand for discussion of flexibility
to increase the Financial Framework in future;
- this negotiation would also encompass agreement
on the €1.4 billion funding shortfall for the ITER nuclear
fusion project — this is inextricably linked to the draft
Multi-Annual Financial Framework Regulation, as the Commission's
proposal to transfer available budget margins from 2010 to 2012
and 2013 for ITER would take effect through the Regulation itself;[17]
and
- the Government's goals for these negotiations
remain as we reported previously.
6.7 The Minister then addresses a parliamentary scrutiny
problem arising from the next steps she describes, saying that:
- the Presidency's proposed timeline
is obviously very compressed and ambitious;
- insofar as it is a theoretically feasible option
for securing agreement to the 2011 budget by the end of this year,
the Government will continue to engage constructively on it;
- the Government is keenly aware, however, that
this timeline allows hardly any time for national parliamentary
scrutiny of the Commission's proposed DB;
- the Presidency has suggested that it will propose
that the Council should decide that, in these exceptional and
pressing circumstances, the normal TFEU eight-week scrutiny period
for national parliaments will not apply;
- the Government considers parliamentary scrutiny
to be a very important part of the process of making EU policy
and on an issue such as the EU's annual budget, in the current
economic and financial climate, this is particularly true;
- the Presidency's proposal for a Council decision
on the scrutiny period is not acceptable and the Government will
not support it; and
- nevertheless it is likely to be adopted by a
qualified majority.
6.8 The Minister comments that she appreciates that
the Committee will be concerned by this and the prospect that
this may set a very unwelcome precedent. She believes, however,
that it will not — the circumstances are extremely unusual
and she hopes will not be repeated in future. Finally the Minister
undertakes to let us have an Explanatory Memorandum on the Commission's
new DB by 3 December 2010 and she will endeavour to answer any
questions we might have before the proposed Council adoption of
its position on 10 December 2010.
Conclusion
6.9 We are grateful to the Minister for this account
of how matters stand on negotiating the EU General Budget for
2011. We are, however, very concerned at the apparent Presidency
intention to override the national parliamentary rights of adequate
time for scrutiny enshrined in Protocol 1 of the TFEU. We recognise
that the Government's opposition to this may prove futile. But
we wish the Government to make it very plain to the Council that
this approach to legitimate national parliament involvement in
EU business sends out a very bad message.
6.10 As for the revised DB, document (b), we shall
of course scrutinise it once it and the Government's Explanatory
Memorandum are with us. Meanwhile it remains uncleared from scrutiny.
15 See headnote.
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16
(31400) 7182/10: see HC 5-xiv (2009-10), chapter 6 (17 March 2010)
and HC 428-vii (2010-11), chapter 5 (10 November 2010). Back
17
(31839) 12614/10: see HC 428-ii (2010-11), chapter 9 (15 September
2010), HC 428-iv (2010-11), chapter 2 (20 October 2010) and HC
428-vii (2010-11), chapter 5 (10 November 2010).
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