12 Draft Budget 2011
| (a)
(31644)
—
SEC(10) 473
(b)
(32145)
14828/10
SEC (10) 1199
(c)
(32146)
15251/10
COM (10) 601
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Statement of estimates of the European Commission for the financial year 2011 (Preparation of the 2011 Draft Budget)
Amending Letter No 2 to the draft General Budget 2011
Amending Letter No 3 to the draft General Budget 2011
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| Legal base | Article 314 TFEU; co-decision; QMV
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| Documents originated | (b) 11 October 2010
(c) 20 October 2010
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| Deposited in Parliament | (b) and (c) 8 November 2010
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| Department | HM Treasury
|
| Basis of consideration | Minister's letter of 2 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) and HC Deb, 13 October 2010, cols 409-459
(b) and (c) None
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| Discussion in Council | 15 July 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) and (c) Cleared
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Background
12.1 The Commission's Draft Budget (DB) is the first stage
in the annual process of establishing the EU's budget for the
following year. The 2011 DB sets out the Commission's proposals
for EU expenditure in 2011, together with bids for the other institutions,
such as the European Parliament. It provides the basis for negotiations
between the two arms of the Budgetary Authority (the Council and
the European Parliament), which will result in the adoption of
the General Budget by the end of 2010.
12.2 The 2011 Budget will be the first to be
adopted according to a new procedure introduced by the Lisbon
Treaty. The Council's first reading position on the DB was adopted
on 12 August 2010 (the TFEU requires the Council to complete this
stage by 1 October), which was then forwarded to the European
Parliament. (The UK and six other Member States voted against
Council's position for a 2.91% increase in the DB, but this fell
just short of a blocking minority.) The European Parliament agreed
its first reading position 20 October 2010. As it proposed further
amendments to those made by the Council, a conciliation committee
has to be convened, with the aim of reaching agreement on the
2011 Budget. This will be subject to separate approval by both
the Council and the European Parliament, after which the EU's
Budget for 2011 will be deemed to have been adopted. Between the
Commission's presentation of the DB and its final adoption it
issues a number of Amending Letters, most of which propose technical
adjustments, often arising from updated financial data.
12.3 The context for the DB is determined by
the multi-annual Financial Framework, which sets out annual ceilings
for the five permanent and one temporary headings of budget expenditure:
sustainable growth, preservation and management of natural resources,
citizenship, freedom, security and justice, the EU as a global
player, administration and compensation (temporary measures for
Bulgaria and Romania in their first years of accession, which
no longer apply). The DB for 2011 is the fifth of the 2007-2013
Financial Framework.
12.4 It is customary for the Government to supplement
its Explanatory Memorandum on the DB with reports on the significant
further stages of the negotiation of the Budget. Such reports
cover any Amending Letters that have issued, unless they are sufficiently
important to warrant a separate Explanatory Memorandum.
12.5 We first considered the DB for 2011 on 8
September 2010, when we recommended it for debate on the Floor
of the House. We reported the Council's adoption of the DB on
13 October 2010 and the debate took place on the same day.[25]
The Minister's letter
12.6 The Economic Secretary to the Treasury (Justine
Greening), before detailing the European Parliament's support,
on 20 October 2010, for a 6% increase in payment appropriations
in the 2011 Budget, stresses that the Government remains determined
to oppose this increase. The Minister then tells us of the Government's
efforts in this regard, saying that:
- on 14 October 2010 she put
the case strongly to European Parliamentarians, the Belgian Presidency
and the Commission that such a proposal was profoundly out of
step with the fiscal consolidation efforts being made in Member
States and that it risked damaging the credibility of EU institutions
with the taxpayers whom they exist to support;
- the usual dynamic of the annual budget negotiation
would mean that the final discussions would focus on trying to
reach agreement between the Council's and the European Parliament's
positions;
- the Government was determined that this should
not be the case this year;
- the Prime Minister therefore led efforts to build
an alliance among Member States before and at the European Council
on 28-29 October 2010 to block any increase above that already
agreed by the Council;
- as a result, 13 Heads of Government issued a
joint letter on 29 October, stating that a 6% budget increase
is "especially unacceptable at a time when we are having
to take difficult decisions at national level to control public
expenditure" and that those Heads of Government "are
clear that they cannot accept" any more than the Council's
proposed increase; and
- this means that, either the Council and the European
Parliament will have to agree to this level of increase or no
agreement will be reached, in which case the 2010 Budget (adjusted
for inflation) will be rolled over into 2011 unless and until
a final budget for 2011 can be agreed.
12.7 Turning to the European Parliament position
on the DB the Minister says that:
- it proposes a total of €143.1
billion (£124.3 billion) in commitment appropriations and
€130.6 billion (£113.4 billion) in payment appropriations;
- this represents increases for commitment appropriations
of €1.3 billion (£1.1 billion), or 0.9%, and €4
billion (£3.5 billion), or 3.2%, for payment appropriations
above the level of the Council's position on the DB; and
- the amount of commitment appropriations in the
European Parliament's proposal corresponds to 1.14% of EU GNI,
and the level of payment appropriations to 1.04%.
The Minister then gives us some of the details of
the increases proposed for each of the budget headings. We annex
the Minister's tables summarising the present position.[26]
Sub-Heading 1a (Competitiveness for growth and
employment)
12.8 Here the European Parliament increased commitment
appropriations by €95 million (£82.5 million) and payment
appropriations by €909 million (£790 million), compared
with the Council's position, giving a total of €13.5 billion
(£11.7 billion) in commitment appropriations and €12.1
billion (£10.5 billion) in payment appropriations. This left
a margin of €1.4 million (£1.2 million) under the Financial
Framework ceiling for commitment appropriations. The increases
in large part reverse the Council's reductions to the DB and exceed
DB levels for some budget lines including:
- an increase of €18 million
(£15.6 million) in both commitment and payment appropriations
for the Lifelong Learning Programme;
- an increase of €10 million (£8.7 million)
in both commitment and payment appropriations for the People programme;
- in the energy field an increase of €10 million
(£8.7 million) in both commitment and payment appropriations
for research related to energy and an increase of €10 million
(£8.7 million) in commitment appropriations for the Intelligent
Energy-Europe Programme under the Competitiveness and Innovation
Framework Programme; and
- an increase of €10 million (£8.7 million)
in commitment appropriations for the Entrepreneurship and Innovation
Programme under the Competitiveness and Innovation Framework Programme;
12.9 The European Parliament also decreased commitment
and payment appropriations by €47 million (£40.8 million)
for the ITER nuclear fusion project.
Sub-Heading 1b (Cohesion for growth and employment),
12.10 Compared with the Council's position, the
European Parliament increased commitment appropriations by €10.5
million (£9.1 million) and payment appropriations by €1.1
billion (£1 billion), to €51 billion (£44.3 billion)
and €42.6 billion (£37 billion) respectively. This left
a margin of €6.4 million (£5.6 million) under the Financial
Framework ceiling for commitment appropriations. The amendments
restored appropriations throughout the sub-heading to the level
proposed in the DB and made increases above this in two areas:
- €2.5 million (£2.2
million) in both commitment and payment appropriations for a new
budget line "Technical assistance and dissemination of information
on the EU Strategy for the Baltic Sea Region and an improved knowledge
of macro-regions strategy"; and
- €8 million (£6.9 million) in both commitment
and payment appropriations for several new preparatory actions
and pilot projects.
Heading 2 (Preservation and management of natural
resources)
12.11 The European Parliament proposed a total
commitment appropriations level of €59.9 billion (£52
billion) and a payment appropriations level of €58.5 billion
(£50.8 billion), leaving a margin of €462 million (£401
million) under the Financial Framework ceiling for commitment
appropriations. This represented increases above the Council's
position of €864 million (£750 million) and €1.2
billion (£1.0 billion) in commitment and payment appropriations
respectively. The European Parliament proposed increases in some
areas above the level of the DB, including:
- €300 million (£261
million) in both commitment and payment appropriations for a new
dairy fund, to provide support in particular to milk producers;
- €25 million (£22 million) in both commitment
and payment appropriations for the Programme for Deprived Persons;
- €10 million (£8.7 million) in both
commitment and payment appropriations for the school milk and
school fruit programmes; and
- €8 million (£6.9 million) in both commitment
and payment appropriations for specific aid for bee-keeping.
Sub-Heading 3a (Freedom, security and justice)
12.12 Under this sub-heading the European Parliament
proposed an increase in commitment appropriations of €4 million
(£3.5 million), to a total of €1,139 million (£989
million), and a decrease in payment appropriations of €4
million (£3.5 million), to a total of €848 million (£737
million), compared with the DB. This left a margin of €67
million (£58 million) under the Financial Framework ceiling
for commitment appropriations. This represented increases above
the Council's position of €15 million (£13 million)
in commitment appropriations and €46m (£40m) in payment
appropriations. Compared with the DB the most significant changes
proposed were:
- an increase of €2.4 million
(£2.1 million) in both commitment and payment appropriations
for the DAPHNE fight against violence programme;
- increases of €1 million (£0.9 million)
in both commitment and payment appropriations for the drugs and
crime prevention programmes;
- an increase of €4.5 million (£3.9 million)
in both commitment and payment appropriations for preparatory
actions and pilot projects;
- a decrease of €5.2 million (£4.5 million)
in both commitment and payment appropriations for the agency for
the operational management of large-scale IT systems in the area
of freedom, security and justice;
- a decrease of €4.3 million (£3.7 million)
in payment appropriations for the crime prevention programme;
and
- decreases of €2 million (£1.7 million)
in payment appropriations for the criminal and civil justice programmes.
Sub-Heading 3b (Citizenship)
12.13 Here the European Parliament proposed an
increase in commitment appropriations of €15 million (£13
million), to €683 million (£593 million), and in payment
appropriations of €9.9 million (£8.6 million), to €649
million (£564 million), compared with the DB. This left a
margin under the Financial Framework ceiling for commitment appropriations
of €0.1 million (£0.09 million). It represented an increase
above the Council's position of €15 million (£13 million)
in commitment appropriations and €29 million (£25 million)
in payment appropriations. By and large the European Parliament
restored the levels of the DB, but with significant increases
for:
- "annual events" —
an increase of €4 million (£3.5 million) in both commitment
and payment appropriations, particularly to co-finance organisation
of the World Special Olympics Summer Games in Athens next year;
and
- the Youth in Action programme — an increase
of €3 million (£2.6 million) in both commitment and
payment appropriations.
Heading 4 (EU as a global player)
12.14 Under this heading the European Parliament
increased commitment appropriations by €69 million (£60
million), to a total of €8,683 million (£7,542 million),
and payment appropriations by €45 million (£39 million),
to a total of €7,646 million (£6,641 million), compared
to the DB. This left a margin of €1.3 million (£1.1
million) under the Financial Framework ceiling for commitment
appropriations and represented increases above the Council's position
of €163 million (£142 million) and €635 million
(£552 million) in commitment and payment appropriations respectively.
The European Parliament restored some of the levels of funding
of the DB, the most significant exceptions being:
- an increase of €100 million
(£87 million) in both commitment and payment appropriations
for financial assistance to the Palestinian Authority, the peace
process and the UN Relief and Works Agency;
- an increase of €32 million (£28 million)
in commitment appropriations and €8 million (£6.9 million)
in payment appropriations for cooperation with developing countries
in Asia;
- an increase of €20 million (£17m) in
commitment appropriations and €6 million (£5.2 million)
in payment appropriations for cooperation with developing countries
in Latin America;
- a decrease of €45.7 million (£40 million)
in both commitment and payment appropriations for the Common Foreign
and Security Policy, as well as some regrouping of the budget
lines;
- a decrease of €18 million (£16 million)
in commitment appropriations and €5 million (£4.3 million)
in payment appropriations for the Bananas Accompanying Measures;
and
- a decrease of €17 million (£14.8 million)
in commitment appropriations and €2.8 million (£2.4
million) in payment appropriations for cooperation activities
other than Overseas Development Assistance.
Heading 5 (Administration)
12.15 The European Parliament decreased both
commitment and payment appropriations from the level of the Draft
Budget under this heading by €32 million (£28 million),
to a total of €8,223 million (£7,142 million) in commitment
appropriations and €8,224 million (£7,143 million) in
payment appropriations. This left a margin of €193 million
(£168 million) under the Financial Framework ceiling for
commitment appropriations and represented an increase above the
Council's position of €130 million (£113 million) in
both commitment and payment appropriations. Compared with the
DB the most significant decreases proposed by the European Parliament
were, in both commitment and payment appropriations:
- €9 million (£7.8
million) from the European Economic and Social Committee;
- supporting the Council's own reduction of €8
million (£6.9 million) in its own budget; and
- €6 million (£5.2 million) from the
budgets of the Committee of the Regions and the European Parliament
itself.
12.16 The European Parliament proposed, in addition,
creation in Headings 1a, 2, 3a and 4 a generic budget line "Lisbon
mid-term review needs" in each area. These are not provisioned
with funds at this stage but each line is accompanied by the same
set of stipulations from the European Parliament, namely that
it and the Council agree, amongst other things on:
- providing the EU with a sufficient
level of spending "Lisbonisation of the budget" and
focusing on EU added value;
- starting a mid-term review of the Financial Framework
through the 2011 budget;
- "proper involvement" of the European
Parliament in the process of agreeing the Financial Framework;
- opening of negotiations on Own Resources; and
- agreeing "appropriate legislative and budgetary
instruments" related to the European Financial Stabilisation
Mechanism.
12.17 Turning to the Amending Letters the Minister
first, in relation to Amending Letter No 2, document (b), says
that it proposes three amendments:
- an increase of financing for
Europol of €552,000 (£479,467) and of its human resources
by four extra staff posts. This is to enable Europol to implement
the EU/US Terrorist Financing Tracking Program, following the
European Parliament's and the Council's consent to concluding
the EU/US agreement on the processing and transfer of financial
messaging data for this purpose;
- increases in financing for the three new European
Supervisory Authorities, reflecting the proposal to give the European
Securities and Markets Authority responsibility for the authorisation
and supervision of credit rating agencies and the decision to
assign new tasks to it, the European Banking Authority and the
European Insurance and Occupational Pensions Authority. No contribution
will be needed from 2012 onwards to cover the cost of supervision
of credit rating agencies by the European Securities and Markets
Authority, but in the transitional year of 2011 the EU budget
is envisaged to supply 40% of the costs, with Member States' contributions
providing the remaining 60% — €2.5 million (£2.2
million) is needed in additional funding for 2011 and the Amending
Letter proposes EU budget funding of 40% of this, that is €1
million (£0.9 million). The additional tasks for the authorities
result in the need for an additional €1.7 million (£1.5
million). However, this is offset by a decrease in their budgets
of €1.1 million (£1 million), resulting from updated
estimates for some costs in their original budget proposals. The
net increase required due to the additional tasks is therefore
€560,000 (£486,416), of which it is proposed the EU
budget to contribute 40%, or €224,000 (£194,566); and
- creation of a new item on the expenditure side
of the budget, and a corresponding article on the revenue side,
to provide the budget structure required to make operational the
European Financial Stabilisation Mechanism. The Mechanism was
agreed on 11 May 2010, after publication of the Commission's DB
for 2011. The EU budget would only be required to provide funding,
and be subsequently reimbursed, in the event of default on a loan
under the Mechanism. The Amending Letter does not therefore propose
that these budget lines be provisioned with funds at this stage.
12.18 The Minister, noting that the net effect
of this Amending Letter is an increase of €1.8 million (£1.6
million) in both commitment and payment appropriations to the
Commission's DB, comments that:
- the Government strongly supports
implementation of the EU/US Terrorist Financing Tracking Program;
- it believes it essential that the new European
Supervisory Authorities have the necessary resources to fulfil
their mandates effectively;
- it believes, however, that the funding required
could and should be found through reprioritisation of existing
programmed resources in the relevant budget headings and that
the proposed increase in the EU budget is therefore neither necessary
nor appropriate; and
- for this reason, the UK did not support adoption
of Amending Letter No 2 at the Council's budget committee on 22
October 2010 — all other 26 Member States voted in favour.
12.19 The Minister says that Amending Letter
No 3, document (c), concerns three elements:
- a downwards revision for agriculture
expenditure of €346 million (£301 million) in both commitment
and payment appropriations. This is based on changing market factors,
legislative decisions adopted in the sector since the DB was published,
revised estimates of needs for some direct payments and proposals
that are expected to impact on the budget in the coming year.
The decrease is largely explained by higher than expected assigned
revenue received in 2010 and the favourable situation on agricultural
markets;
- a decrease of €1 million (£0.9 million)
for commitment appropriations for international fisheries agreements.
This is based on the most recent information concerning such agreements;
and
- creation of a new budget line "Energy projects
to aid economic recovery — energy efficiency and renewable
initiatives". This is needed to make operational an amendment
to the energy component of the European Economic Recovery Plan,
due to be adopted by the end of this year, to create a dedicated
financial instrument to support energy efficiency and renewable
initiatives. It is not provisioned with funds at this stage, as
it will be funded through existing allocations for the energy
component of the Recovery Plan.
12.20 The Minister says that the Government:
- is content with the Commission's
updated estimates;
- welcomes reduction of the proposed commitments
and payments levels in the 2011 budget;
- supports the proposed amendment to the energy
component of the European Economic Recovery Plan; and
- can therefore support adoption of this Amending
Letter.
12.21 Finally the Minister informs us about the
next stages of the EU budget procedure, saying that:
- a conciliation committee of
the Council and the European Parliament met for the first time
on 27 October 2010;
- under the Treaty it has 21 days to reach agreement
on a Joint Text of the EU Budget for 2010;
- the Government expects the conciliation committee
also to take decisions on the longer-term financing of the ITER
nuclear fusion project and to adopt the Regulation on the Multi-Annual
Financial Framework and changes to the Financial Regulation and
the Inter-Institutional Agreement, all three of which are required
by the entry into force of the Lisbon Treaty;[27]
and
- the final scheduled ministerial meeting of the
conciliation committee is on 11 November 2010.
Conclusion
12.22 We are grateful to the Minister for
her account of the latest developments on negotiating the EU Budget
for 2011. We applaud the Government's continued push for budget
restraint and look forward to hearing the outcome of the conciliation
process.
12.23 We note the Commission's Amending Letters
Nos. 2 and 3, documents (b) and (c), and the Government's comments
on them. As they will be subsumed in the continuing discussions
of the overall budget, whilst drawing them to the attention of
the House, we clear them from scrutiny.
Annex:
Draft Budget 2011 (€ million)
| Heading
| FF Ceiling1
| Commission Draft Budget 2011
| Council first reading position
| European Parliament first reading position
| Difference between draft budget 2011 — Council first reading
|
|
| CA2
| PA3
| CA
| PA
| CA
| PA
| CA
| PA
|
| 1a. Competitiveness for Growth and Employment
Margin4
1b. Cohesion for Growth and Employment
Margin
| 12,987-
-
50,987
-
| 13,437
50
50,970
17
| 12,110
-
42,541
-
| 13,390
97
50,970
17
| 11,219
-
41,466
-
| 13,486
1.4
50,981
6.4
| 12,128
-
42,551
-
| 95
11
| 909
1,085
|
| 2. Preservation and Management of Natural Resources
Margin
| 60,338
-
| 59,486
852
| 58,136
-
| 59,011
1,326
| 57,315
-
| 59,876
462
| 58,512
-
| 864 | 1,197
|
| 3a. Freedom, Security and Justice
Margin
3b. Citizenship
Margin
| 1,206
-
683
-
| 1,135
71
668
15
| 853
-
639
-
| 1,124
82
668
15
| 803
-
620
-
| 1,139
67
683
0.1
| 848
-
649
-
| 15
15
| 46
29
|
| 4. European Union as a Global Player
Margin5
| 8,430
-
| 8,614
70
| 7,602
-
| 8,520
164
| 7,011
-
| 8,683
1.3
| 7,646
-
| 163 | 635
|
| 5. Administration
Margin6
| 8,334
-
| 8,255
161
| 8,256
-
| 8,093
323
| 8,094
-
| 8,223
193
| 8,224
-
| 130 | 130
|
| TOTAL
Margin
Appropriations as a percentage of EU GNI
| 142,965 | 142,565
1,236
| 130,136
-
1.04%
| 141,777
2,024
| 126,527
1.01%
| 143,070
731
| 130,559
1.04%
| 1,292 | 4,032
|
Due to rounding,
figures in difference column may not equal column differences,
and sum of rows may not equal total
1 FF = Financial
Framework
2 CA = commitment
appropriations
3 PA = payment
appropriations
4 €500m
appropriations for the European Globalisation Adjustment Fund
are excluded from calculation of the margin
5 €253.9m
appropriations for the Emergency Aid Reserve are excluded from
th4e calculation of the margin
6 For calculating
the margin for Heading 5, account is taken of the footnote (1)
of the Financial Framework 2007-2013 for an amount of £82m
for staff contributions to the pension scheme
Draft Budget 2011 (£ million)
| Heading
| FF Ceiling1
| Commission Draft Budget 2011
| Council first reading position
| European Parliament first reading
| Difference between draft budget 2011 — Council first reading
|
|
| CA2
| PA3
| CA
| PA
| CA
| PA
| CA
| PA
|
| 1a. Competitiveness for Growth and Employment
Margin4
1b. Cohesion for Growth and Employment
Margin
| 11,281
-
44,287
-
| 11,671
43
44,273
15
| 10,519
-
36,951
-
| 11,631
84
44,273
15
| 9,745
-
36,017
-
| 11,714
1.2
44,282
5.6
| 10,534
-
36,960
-
| 83
9.6
| 790
942
|
| 2. Preservation and Management of Natural Resources
Margin
| 52,410
-
| 51,670
740
| 50,497
-
| 51,257
1,152
| 49,784
-
| 52,008
401
| 50,824
-
| 750 | 1,040
|
| 3a. Freedom, Security and Justice
Margin
3b. Citizenship
Margin
| 1,048
-
593
-
| 986
62
580
13
| 741
-
555
-
| 976
71
580
13
| 697
-
539
-
| 989
58
593
0.09
| 737
-
564
-
| 13
13
| 40
25
|
| 4. European Union as a Global Player
Margin5
| 7,322
-
| 7,482
61
| 6,603
-
| 7,400
142
| 6,090
-
| 7,542
1.1
| 6,641
-
| 142 | 552
-
|
| 5. Administration
Margin6
| 7,239
-
| 7,170
140
| 7,171
-
| 7,030
281
| 7,030.
-
| 7,142
168
| 7,143
-
| 113
-
| 113 |
| TOTAL
Margin
Appropriations as a percentage of EU GNI
| 124,179
-
| 123,832
1,0742
| 113,036
1.04%
| 123,148
1,758
| 109,901
1,01%
| 124,271
635
| 113,404
1.04%
| 1,122 | 3,502
|
Due to rounding,
figures in difference column may not equal column differences,
and sum of rows may not equal total
1 FF=Financial Framework
2 CA=Commitment Appropriations
3 PA=Payment Appropriations
4 £434m appropriations
for the European Globalisation Adjustment Fund are exckuded from
calculation of the margin.
5 £221m appropriations
for the Emergency Aid Reserve are excluded from the calculation
of the margin.
6 For calculating
the margin for Heading 5, account is taken of the footnote (1)
of the Financial Framework 2007-2013 for an amount of £71m
for staff contributions to the pension scheme.
25 See headnote. Back
26
See pp 68-69. Back
27
(31399) 7180/10 (31400) 7182/10 (31401) 7183/10 and (31839) 12614/10:
see chapter 5 in this Report. Back
|
