9 General Budget 2011
| (a)
(32443)
5330/11
COM(11) 9
(b)
(32444)
5331/11
COM(11) 10
|
Draft amending budget No. 1 to the general budget 2011: Statement of expenditure by section: Section iii: Commission
Draft Decision on the mobilisation of the EU Solidarity Fund
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| Legal base | Article 314 TFEU; co-decision; QMV
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| Documents originated | 14 January 2011
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| Deposited in Parliament | 18 January 2011
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| Department | HM Treasury
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| Basis of consideration | EM of 1 February 2011
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| Previous Committee Report | None
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| Discussion 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
9.1 During the course of a financial year the Commission presents
to the Council and European Parliament Draft Amending Budgets
(DABs) proposing increases or reductions for revenue and expenditure
in the current EU Budget — there are about ten DABs each
year.
9.2 In 2002 a European Union Solidarity Fund
(EUSF) was established to assist financially Member States or
candidate countries affected by a "major natural disaster
with serious repercussions on living conditions, the natural environment
or the economy". The criteria for financial assistance are
contained in Council Regulation (EC) No 2012/2002 and the 2006
Inter-Institutional Agreement on budgetary matters provides that
the EUSF may be "mobilised" within an annual ceiling
of €1 billion (£0.861 billion), over and above the relevant
headings of the Financial Framework. The Commission's view is
that solidarity aid should be progressive — the allocation
of funding should be 2.5% of the total direct damage below the
threshold for mobilising the EUSF (0.6% of GNI or €3 billion
(£2.6 billion) in 2002 prices, whichever is the lower amount)
and 6% of the total direct damage above it.
The documents
9.3 Draft Amending Budget (DAB) No. 1/2011, document
(a), would amend the 2011 General Budget to implement the EUSF
Decision proposed in document (b). The draft Decision, document
(b), would mobilise the EUSF to give budgetary assistance to alleviate
the impact of severe flooding in May, June and July 2010:
- of €105.6 million (£90.9
million), 2.5 % of estimated damages under the fund threshold
(of €2,124.9 million (£1,829.1 million)) and 6% of estimated
damages above the threshold, to Poland;
- of €20.4 million (£17.6 million), 2.5
% of estimated damages under the fund threshold (of €378.2
million (£325.6 million)), to Slovakia;
- of €22.5 million (£19.4 million), 2.5
% of estimated damages under the fund threshold (of €590.7
million (£508.5 million)), to Hungary;
- of €5.1 million (£4.4 million), 2.5
% of estimated damages under the fund threshold (of €824.0
million (£709.3 million)), to the Czech Republic;
- of €3.8 million (£3.3 million), 2.5
% of estimated damages under the fund threshold (of €275.8
million (£237.4 million)), to Croatia; and
- of €25.0 million (£21.5 million), 2.5
% of estimated damages under the fund threshold (of €787.9
million (£678.2 million)), to Romania.
9.4 For the Polish case the Commission notes
that:
- the application relates to
two consecutive flood waves that affected a large part of Poland's
territory, causing significant damage to the farming sector, to
infrastructure, transport networks and to cultural heritage sites;
- the Polish authorities estimate the total direct
damage at €3 billion (£2.6 billion), representing around
0.8468% of Poland's GNI and exceeding the normal threshold for
mobilising the EUSF of €2.124 billion (£1.83 billion),
that is. 0.6% of GNI based on 2008 data;
- the methods used by the Polish authorities for
estimating the different categories of damage are very plausible;
- the application outlines that only two of sixteen
provinces have escaped flooding — of these, three provinces
in southern Poland were severely hit;
- it was reported that twenty people lost their
lives and 66,000 families were affected by the floods, with 14,563
families evacuated;
- over 55.6 km of railway lines were found to need
immediate repairs and 1,300 km of flood prevention works await
reconstruction; and
- there were serious and lasting repercussions
on living conditions, the natural environment and the economy.
9.5 For the Slovak case the Commission notes
that:
- the application relates to
record heavy rainfall causing severe damage to infrastructure,
transport networks, agriculture and business;
- the Slovak authorities estimate the total direct
damage at €561 million (£482.9 million), representing
around 0.8902% of Slovakia's GNI and exceeding the normal threshold
for mobilising the EUSF of €378.2 million (£322.6 million),
that is 0.6% of GNI based on 2008 data;
- the methods used by the Slovak authorities for
estimating the different categories of damage are very plausible;
- the application outlines that the floods and
landslides occurred mainly in central and eastern Slovak regions
which are considered to be less economically developed;
- in these regions 306 houses were affected by
landslides, 45,894 households were affected by floods and 150
residential premises were damaged or destroyed; and
- several public buildings were damaged, people
lost their lives and there was substantial damage to the transport
infrastructure and agricultural terrain.
9.6 For the Hungarian case the Commission notes
that:
- the application relates to
heavy rainfall causing severe damage to infrastructure, transport
networks, agriculture and residential property;
- the Hungarian authorities estimate the total
direct damage at €719.3 million (619.2 million), representing
around 0.7307% of Hungary's GNI and exceeding the normal threshold
for mobilising the EUSF of €590.7 million (£508.5 million),
that is 0.6% of GNI based on 2008 data;
- the application outlines the extraordinary weather
that occurred in May and June 2010 and the effect it had in 11
out of 19 counties;
- the two major rivers in Hungary, the Danube and
the Tisza, overflowed and the highest level of alertness had to
be ordered along a total reach of 3,088 km;
- 5,259 people were forced to leave their homes
and about half a million people were in direct danger;
- there was damage to homes, residential buildings,
settlements, railway infrastructure and educational institutions;
and
- most damage occurred in the field of agriculture.
9.7 For the Czech case the Commission notes that:
- the application relates to
the territory of the Czech Republic being hit by severe rainfall
during May and June 2010 resulting in two interconnected waves
of floods causing damage to residential properties and businesses,
to the road network and other infrastructure;
- the Czech authorities estimate the total direct
damage at €204.5 million (£170 million);
- as this amount is below the normal threshold
for mobilising the EUSF, that is €824 million (£709.3
million) or 0.6% of GNI based on 2008 data, the disaster does
not qualify as a "major natural disaster" under the
terms of the Council Regulation;
- the Czech Republic was, however, affected by
the same flooding that led to the major disaster in Poland and
Slovakia;
- therefore, the condition in the Regulation, whereby
a country affected by the same major disaster as a neighbouring
country may exceptionally benefit from the EUSF, was found to
be met;
- the area worst hit was the North-East part of
the Czech Republic and includes four regions that are bordering
Poland, Slovakia and Austria; and
- as a consequence of the flood, five people lost
their lives, hundreds of homes were flooded and destroyed, public
transport networks were damaged and economic production was stalled,
affecting these economically weak localities.
9.8 For the Croatian case the Commission notes
that:
- the application from Croatia
outlines heavy rainfall during the month of June 2010 which resulted
in severe floods that struck eastern and central parts of the
country, causing significant damage to the agricultural sector,
public and private property and transport infrastructure;
- the Croatian authorities estimate the total direct
damage at €153 million (£131.7 million);
- as this amount is below the normal threshold
for mobilising the EUSF, that is €275.8 million (£237.4
million) or. 0.6% of GNI based on 2008 data, the disaster does
not qualify as a "major natural disaster" under the
terms of the Council Regulation;
- Croatia was, however, affected by the same flooding
disaster which led to the major disaster in Hungary;
- therefore, the condition in the Regulation, whereby
a country affected by the same major disaster as a neighbouring
country may exceptionally benefit from the EUSF, was found to
be met;
- 427 houses were flooded, 682 houses were damaged
and over one hundred families had to be evacuated; and
- significant damage was caused to road infrastructure,
affecting road traffic and increasing the difficulty of urgent
action; and
- most damage, however, was caused to the farming
sector.
9.9 For the Romanian case the Commission notes
that:
- the application from Romania
covers the effects of heavy flooding and landslides on infrastructure,
on the agricultural sector and on private and public property;
- the Romanian authorities estimate the total direct
damage at €875.8 million (£753.9 million), representing
around 0.67% of Romania's GNI and exceeding the normal threshold
for mobilising the Solidarity Fund of €787.9 million (£678.2
million), that is 0.6% of GNI based on 2008 data;
- the severe flooding caused significant damage
in thirty-seven out of forty-one counties with over 6.7 million
inhabitants affected;
- 15,000 people needed evacuation, 3,073 homes
were damaged and 863 completely destroyed;
- 35 dams and 5,257 km of infrastructure as well
as bridges, footbridges and culverts were damaged; and
- the most important damages were registered in
the field of agriculture.
9.10 In relation to the applications the Commission
says that:
- all were received within the
deadline of ten weeks after the first damage was recorded;
- all the disasters were of natural origin and
therefore fall within the field of the application; and
- all applications should be accepted, mobilising
the EUSF in each case.
9.11 Under DAB01/11, document (a), additional
EUSF commitment and payment appropriations, required to mobilise
the fund, would be added to the 2011 budget. As EUSF mobilisations
sit over and above the relevant Financial Framework ceilings DAB01/11
has no impact on the margins under the 2011 Financial Framework
ceilings for commitment appropriations.
The Government's view
9.12 The Economic Secretary to the Treasury (Justine
Greening) says that:
- the Government supports the
broad objectives of the EUSF in providing financial assistance
to Member States and countries engaged in accession negotiations
in the event of major natural disasters, where the country concerned
cannot alone handle the repercussions;
- assistance from the fund therefore carries real
EU added value;
- given the impact on the agricultural sector,
infrastructure, residential and commercial buildings of the Polish,
Slovak, Hungarian and Romanian regions affected by heavy rainfall,
the Government is content that these applications meet the "extraordinary
regional disaster" criterion;
- the Government is satisfied that the Czech and
Croatian applications meet the condition whereby a country affected
by the same major disaster as a neighbouring country may exceptionally
benefit from the EUSF;
- the Government therefore supports the proposed
mobilisation of the EUSF;
- it does not, however, support the proposed method
of financing this mobilisation through an overall increase to
the 2011 EU budget;
- at a time of deep fiscal consolidation across
the EU, the Government worked hard last year to limit the 2011
EU budget to an increase of just 2.91% from 2010;
- this is the level that the majority of Member
States supported at the Council's first reading position in the
summer of 2010 and that was adopted in December 2010;
- the proposal now to increase the budget from
that level is completely unacceptable;
- furthermore, the Government does not consider
it necessary — appropriations required to mobilise the EUSF
for the six applications could and should be allocated by reprioritising
existing resources from areas of the budget that routinely underspend;
and
- the Government has already begun making this
case to other Member States and the Commission.
The Minister adds that, if adopted, DAB 01/11 would
increase EU budget commitments and payments in 2011 by €182.4
million (£157 million). Since additional EU spending is met
by Member States according to their GNI-contribution share, of
which the UK's is currently around 14%, this proposal would increase
the UK's contribution to the EU budget in 2011 by €25.5 million
(£22 million).
Conclusion
9.13 Whilst we have no problem about the principle
of the EU providing EUSF assistance in these six cases, we are
concerned, like the Government, about the possibility of such
assistance breaching the agreed 2.91% increase over 2010 for the
2011 EU Budget. So, before considering these proposals further,
we should like to hear about progress in persuading other Member
States and the Commission of need to avoid this. Meanwhile the
documents remain under scrutiny.
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