4 General Budget 2011
| (a)
(32631)
8243/11
COM(11) 154
(b)
(32632)
8244/11
COM(11) 155
|
Draft amending budget No. 2 to the general budget 2011: Statement of expenditure by section: Section III: Commission
Draft Decision on the mobilisation of the EU Solidarity Fund
|
| Legal base | Article 314 TFEU; co-decision; QMV
|
| Documents originated | 25 March 2011
|
| Deposited in Parliament | 30 March 2011
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| Department | HM Treasury
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| Basis of consideration | EM of 2 April 2011
|
| Previous Committee Report | None
|
| Discussion in Council | Not known
|
| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
|
Background
4.1 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.
4.2 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 (£0.85 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
in 2002 prices, equivalent to €3.54 billion (£3.13 billion)
in 2011 prices, whichever is the lower amount) and 6% of the total
direct damage above it.
The documents
4.3 Draft Amending Budget (DAB) No. 2/2011, 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 August and September 2010:
- of €7.46 million (£6.59
million), 2.5% of estimated damages under the fund threshold (of
€217.67 million (£192.35 million)) and 6% of estimated
damages above the threshold, to Slovenia;
- of €1.18 million (£1.04 million), under
the "neighbouring country [Slovenia] criterion", as
the damage was under the threshold (of €275.80 million (£243.72
million)), to Croatia; and
- of €10.91 million (£9.64 million),
under the "extraordinary regional disasters criteria",
as the damage was under the threshold (of €824.03 million
(£728.20 million)), to the Czech Republic.
4.4 For the Slovenian case the Commission notes
that:
- the application relates to
damage caused by flooding following heavy rainfall from 17-20
September 2010;
- the Slovenian authorities estimate that total
direct damage caused by the disaster at €251.30 million (£222.07
million), which exceeds 0.6% of Slovenian GNI according to 2008
data; and
- they have indicated that there is no insurance
coverage of the eligible costs and that no other sources of EU
funding are intended to be used to deal with the consequences
of the flood.
4.5 For the Croatian case the Commission notes
that:
- the application relates to
damage caused by flooding from 17-22 September 2010;
- the Croatian authorities estimate total direct
damage caused by flooding at €47.00 million (£41.53
million); and
- this is below both thresholds for accessing the
EUSF.
The Commission, however, argues that Croatia's application
satisfies the condition that a country affected by the same major
disaster as a neighbouring country (in this case, Slovenia) may
exceptionally benefit from EUSF aid.
4.6 For the Czech case the Commission notes that:
- the application relates to
damage caused by rivers bursting their banks during heavy rainfall
in early August 2010;
- the Czech authorities estimate the total direct
damage caused by this event at €436.48 million (£385.72
million); and
- this is below both thresholds for accessing the
EUSF.
The Commission, however, says that it has examined
the application using criteria for "extraordinary regional
disasters" and that:
- the Czech Republic's application
provides evidence of large scale impacts on large proportions
of population in affected areas, which the Commission deems plausible
and acceptable;
- the Czech authorities report that economic output
dropped by 15% in Liberec, the affected region, after the floods;
and
- a full return to normal economic conditions is
expected to take several years.
The Government's view
4.7 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 and assistance from the
fund therefore carries real EU added value;
- given the impact on infrastructure, residential
and commercial building and agriculture in the regions of Slovenia
Croatia and the Czech Republic affected by the floods the Government
is content that these applications meet the relevant criteria
for assistance 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 ongoing fiscal consolidation domestically
and 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 proposal would increase the budget further,
which the Government believes is unacceptable;
- furthermore, the Government does not consider
it necessary — appropriations required to mobilise the EUSF
should be allocated by reprioritising existing resources from
areas of the budget that routinely underspend; and
- the Government will make this case firmly to
other Member States and to the Commission.
4.8 The Minister says that:
- although the EUSF has an annual
ceiling of €1 billion (£0.85 billion), appropriations
are only allocated to its budget line following a successful application;
- DAB No. 2/11 would increase the adopted EU budget
for 2011 by €19.55 million (£17.28 million), to which
the UK's abatement would not apply;
- although obliged to examine the scope for reallocation
of appropriations, the Commission has not proposed reallocating
existing appropriations to fund EUSF aid; and
- agreeing to release €19.56 million (£17.28
million) of EUSF funds with no reallocation would cost the UK
approximately £2.43 million.
Conclusion
4.9 Whilst we have no problem about the principle
of the EU providing EUSF assistance in these three 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. And we note that this is the second attempt by
the Commission to breach the 2.91% limit for otherwise unexceptionable
use of the EUSF.[14]
4.10 So, before considering these proposals
further, we should like to hear about progress in again persuading
other Member States and the Commission of the need to avoid this
— an outcome we think exceedingly important. Meanwhile the
documents remain under scrutiny.
14 (32443) 5330/11 (32444) 5331/11: see HC 428-xvi
(2010-11), chapter 9 (9 February 2011), HC 428-xviii (2010-11),
chapter 4 (2 March 2011), HC 428-xix (2010-11), chapter 4 (9 March
2011) and HC 428-xxii (2010-11), chapter 11 (30 March 2011). Back
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