9 Preparation of the 2013 EU Budget
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SEC(12) 270
(b)
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15222/12
COM(12) 624
(c)
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15272/12
COM(12) 632
(d)
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COM(12) 716
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Statements of estimates of the Commission for 2013 (Preparation of the 2013 Draft Budget)
Document I: Political Presentation
Document II: Figures by budget line and overall presentation of the changes in the nomenclature between the Budget 2012 and the 2013 Draft Budget
Document III: Changes in budgetary remarks and establishment plan staff
Amending letter No 1 to the draft general budget 2013: Statement of expenditure by section: Section III: Commission
Draft amending budget No 6 to the draft general budget 2012: General statement of revenue: Statement of expenditure by section: Section III: Commission
Draft General Budget of the European Union for the financial year 2013: General Introduction
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| Legal base | Article 314 TFEU; co-decision; QMV
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| Documents originated | (b) 19 October 2012
(c) 23 October 2012
(d) 23 November 2012
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| Deposited in Parliament |
(b) 24 October 2012
(c) 26 October 2012
(d) 5 December 2012
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| Department | HM Treasury
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| Basis of consideration |
Three EMs of 11 December 2012 |
| Previous Committee Report |
(a) HC 86-iv (2012-13), chapter 4 (14 June 2012)
(b)-(d) None
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| Discussion in Council |
6-7 December 2012 |
| Committee's assessment |
Politically important |
| Committee's decision | (a) Cleared by debate on 12 July 2012
(b)-(d) Not cleared; further information requested
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Background
9.1 The Draft Budget (DB) sets out the Commission's proposals
for EU expenditure in the following year. It is the first stage
in the annual process of establishing the EU's budget and provides
the basis for negotiations between the two arms of the Budgetary
Authority (the Council and the European Parliament). The ECOFIN
Council normally negotiates and agrees its first reading position
on the DB in July (the TFEU requires the Council to complete this
stage by 1 October), which is then forwarded to the European Parliament.
The European Parliament in turn discusses and agrees its first
reading position by late October (the TFEU deadline is 42 days
after the Council adopts its position). If it proposes further
amendments to those made by the Council, a conciliation committee
would be convened to meet over 21 days, in late October or early
November, with the aim of reaching agreement. If conciliation
fails the Commission is required to produce a new DB for a further
round of negotiation. If that negotiation is not concluded by
the end of the year, the budget for the following year is based
on the "twelfths" formula, that is the budget for each
programme, for each month the actual budget remains unagreed,
is one-twelfth of the previous year's budget.
9.2 The context for the DB is determined by the Multi-annual
Financial Framework (MFF), which sets out annual ceilings for
the six headings of budget expenditure:
- Sustainable growth;
- Preservation and management of natural resources;
- Citizenship, freedom, security and justice;
- EU as a global player;
- Administration; and
- Compensation (temporary measures for Bulgaria
and Romania in their first years of accession, no longer applicable
after 2009).
9.3 With the DB for 2013, document (a), the Commission
proposed commitment appropriations[30]
of €150,932 million (£122,708 million). This
is 1.13% of EU Gross National Income (GNI) and an increase of
€3,031 million (£2,464 million) or 2.0% above 2012 levels.
For payment appropriations,[31]
the Commission proposed €137,924 million (£112,132 million)
or 1.03% of EU GNI. This represents an increase of €8,818
million (£7,169 million) or 6.8% compared to the 2012 budget.
The margin[32] under
the MFF ceiling was €2,420 million (£1,967 million)
for commitment appropriations and €6,182 million (£5,026
million) for payment appropriations.
9.4 When we considered this document in June we heard
that:
- the Government was very clear
that, at a time of ongoing economic fragility in the EU, with
countries across the area taking difficult decisions to reduce
public spending, a 6.8% increase in EU spending in 2013 is unacceptable;
and
- its key objective was to limit the size of the
2013 EU Budget.
9.5 We commented that the EU Budget had significant
financial and policy implications and the Government had a substantial
interest and role in scrutinising the DB, not least because of
the large sums involved and the UK's position as a large net contributor
— it was in the UK's interest to restrict budget growth
and ensure efficient use of resources. As is customary, we recommended
that the DB be debated. The debate took place on 12 July on the
Floor of the House.[33]
9.6 During the course of negotiation of a DB the
Commission presents Amending Letters to update forecasts and estimates
in the DB. During the course of a financial year the Commission
presents to the Budgetary Authority Draft Amending Budgets (DABs)
proposing increases or reductions for revenue and expenditure
in the current Budget.
The new documents
9.7 Amending Letter No. 1 to the Draft General Budget
for 2013, document (b), proposes minor downward revisions to the
Commission's forecasts for spending needs in 2013 on Common Agricultural
Policy and Fisheries. The net budgetary impact is a €25.1
million (£20.2 million) reduction in both commitment and
payment appropriations in the Commission's DB, document (a).
9.8 Draft Amending Budget 6 to the 2012 Budget (DAB
6/2012), document (c), covers:
- an update in the forecast of
revenue for 2012;
- a request to increase the level of payment appropriations
in 2012 by around €9 billion (£7 billion); and
- a request to reduce the level of commitment appropriations
in 2012 by €133 million (£108 million).
Forecast of revenue for 2012
9.9 The Commission has revised the forecasts for
own resources and other revenue — budgeting of value added
tax (VAT) and gross national income (GNI) balances for earlier
years is increased by €497 million (£401 million), Traditional
Own Resources (TOR) is reduced by €950 million (£766
million) and other revenue (mainly fines and penalties and interest
on these) is increased by €3.53 billion (£2.85 billion).
The Commission notes that these calculations for Member States'
balances are still provisional because of the on-going verification
of VAT and GNI data. It says that it may make further revisions
to the figures in the course of the procedure for this DAB.
Payment appropriations in 2012
9.10 The proposed increase in payment appropriations
includes:
- Sub-Heading 1a (competitiveness
for growth and employment), an increase of €625 million (£506
million) across 11 budget lines;
- Sub-Heading 1b (cohesion for growth and employment),
an increase of €7.17 billion (£5.81 billion) across
14 budget lines;
- Heading 2 (preservation and management of natural
resources), an increase of €1.17 billion (£949 million)
across three budget lines;
- Sub-Heading 3a (freedom, security, and justice),
an increase of €10 million (£8 million), for one budget
line; and
- Heading 4 (EU as a global player), an increase
of €67 million (£54 million) across four budget lines.
Commitment appropriations in 2012
9.11 The Commission identifies a number of budget
items for which it says part of the available commitment appropriations
will not be used by the end of the year.
9.12 In terms of expenditure, the net impact of DAB
6/2012 is to decrease the level of commitment appropriations by
€1334 million (£108.2 million) and increase payment
appropriations by €9 billion (£7 billion). The net
impact of DAB 6/2012 on additional Member State contributions
(increased expenditure minus increased revenue) is therefore €5.9
billion (£4.76 billion).
9.13 The Council and the European Parliament did
not, despite an attempt at conciliation between 24 October and
13 November, agree on the Commission's DB for 2013, document (a).
Consequently the Commission produced, as required a revised DB,
document (d). The new DB reflects, for commitment appropriations,
the elements of a compromise that were circulated at the Conciliation
Committee. For payment appropriations, it is based on the Commission's
original DB, as amended by Amending Letter No.1, and assumes that
the DAB 6/2012 is agreed in full.
9.14 With the new DB the Commission proposes commitment
appropriations of €151,058 million (£122,477 million).
This is 1.13% of GNI and an increase of €2,621 million (£2,125
million) or 1.8% over 2012. This would leave a margin of €2,294
million (£2,829 million under the ceiling of the MFF. For
payment appropriations, the Commission proposes €137,798
million (£117,126 million), corresponding to 1.03% of GNI.
According to the Commission this is a decrease of €955 million
(£774 million) or 0.7% compared to payment appropriations
in the 2012 Budget (given the assumption that DAB 6/2012 is accepted
in full). This leaves a margin of €6,309million (£5,115million)
under the ceiling of the MFF.
9.15 Key elements of the new proposal are:
- Sub-Heading 1a: a number of
amendments have been made, resulting in an increase in commitment
appropriations to €16,105 million (£13,057 million),
an increase of 4.6% on the 2012 budget. Payment appropriations
increase by 12% to €13,558 million (£10,992 million)
when including DAB 6/2012;
- Heading 1b: commitment appropriations are set
at the level proposed in the original DB, with the exception of
the budget line for technical assistance and dissemination of
information on the EU strategy for the Baltic Sea Region and an
improved knowledge of the macro-regions strategy, for which an
amount of €2.5 million (£2.0 million) in commitment
appropriations is proposed;
- Heading 2: commitment appropriations are set
at the level proposed in the original DB, as amended by Amending
Letter No.1/2013;
- Heading 3a: commitment appropriations are set
at the level proposed in the original DB;
- Heading 3b (Citizenship): commitment appropriations
are set at the level proposed by the European Parliament;
- Heading 4: commitment appropriations are set
at the level proposed by the European Parliament; and
- Heading 5 (Administration): the position of
the European Parliament is proposed for the level of appropriations
of all Institutions. The appropriations related to the 2011 salary
adjustment are placed in the reserve.
The Government's view
9.16 On Amending Letter No. 1/2013, document (b),
the Financial Secretary to the Treasury (Greg Clark) says that:
- the Government notes the revision
to the commitment and payment appropriations requested;
- the net budgetary impact is a €25.1 million
(£20.2 million) reduction in both commitment and payment
appropriations in the Commission's DB; and
- the letter will be discussed as part of the negotiations
of the 2013 EU Budget.
9.17 In relation to DAB 6/2012, document (c), the
Minister says that:
- the Government has been clear
that there should be real budgetary restraint in the EU, in order
to avoid unaffordably high costs to the UK and to UK taxpayers;
- to deliver this goal, it will work with like-minded
Member States and is committed to continue to work hard to limit
EU spending, reduce waste and inefficiency and ensure that where
EU funds are spent they deliver the best possible value for money
for taxpayers;
- it recalls that it voted against the 2.02% increase
in payment appropriations in the 2012 Budget last December;
- the Council has rejected this Commission proposal;
- the Government, consistent with its earlier position
on the 2012 and 2013 Budgets, voted with the Netherlands, Sweden
and Denmark, against the new Council position of €6 billion
(£4.9 billion);
- as the proposal is subject to QMV it was approved
by the Council, despite the UK voting against;
- if adopted unaltered, this proposal would cost
the UK an additional €860 million (£718 million) in
2012 based on the UK's share of in EU GNI (14.60%);
- although some of the increased contribution would
be returned to the UK through the abatement in 2013, it is not
possible to calculate this amount yet, as it depends on actual
implementation and UK's receipts in 2012; and
- DAB 6/2012 would mean that the 2012 EU Budget
for commitment appropriations would increase to €148.44 billion
(£119.71 billion) and for payment appropriations would increase
to €138.75 billion (£111.9 billion).
9.18 In his Explanatory Memorandum on the revised
DB, document (d), the Minister first reiterates the Government's
overall approach to EU budgetary matters. He then says that:
- the Government recalls that
it voted against the original Council position of 2.79% increase
in payment appropriations in the 2013 Budget;
- the Council has rejected this Commission proposal;
- the Government, consistent with its earlier position
on the 2012 and 2013 Budgets, voted with the Netherlands, Sweden
and Denmark, against the Council's new proposed position of 2.9%;
- as the proposal is subject to QMV it was approved
by the Council, despite the UK voting against;
- the Commission's provisional estimate of the
total post-abatement UK contribution to the EU budget is around
12%;
- the actual net financial cost to the UK of the
2013 EU budget is contingent on both the size of the final budget
and the distribution of spending across programmes within the
budget; and
- these factors determine the level of UK receipts
and also affect the size of the UK's abatement in the following
year.
9.19 The Minister tells us that the final deal on
the 2013 EU Budget was not concluded when he wrote his Explanatory
Memoranda.
Conclusion
9.20 We are grateful to the Minister for this
information about developments in negotiation of the EU Budget
for 2013. However, he points out that a final deal was not concluded
when he wrote his Explanatory Memoranda. So we should like to
have an account of the final deal, accompanied by tables, in euro
and sterling, showing by budget Heading the commitment and payment
appropriations for the 2012 Budget, for the Commission's original
Draft Budget for 2013, document (a), for its revised Draft Budget
for 2013 and for the adopted Budget for 2013, together with percentage
changes. Meanwhile documents (b) to (d) remain under scrutiny.
30 Commitment appropriations set the limit of legal
obligations that can be made in the budget year for activities
that will lead to payments in the current and/or future budget
years. Back
31
Payment appropriations are the amounts of funds available to be
spent during the budget year, arising from commitments in the
budget for the current or preceding years. Back
32
Here, "the margin" refers to the difference between
total commitment or payment appropriations in the DB and total
commitment or payment appropriations provided for in the MFF. Back
33
See headnote and HC Debs, 12 July 2012, cols. 515-538. Back
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