3 Draft Budget for 2014
| (a)
(35118)
—
SEC(13) 370
(b)
(35119)
—
SEC(13) 370
(c)
(35120)
—
SEC(13) 370
(d)
(35121)
—
SEC(13) 370
|
Statement of estimates of the Commission for 2014 (Preparation of the 2014 Draft Budget): Document I: Political Presentation
Statement of estimates of the Commission for 2014 (Preparation of the 2014 Draft Budget): Document II: Financial programming 2014-2020 (Provisional figures)
Statement of estimates of the Commission for 2014 (Preparation of the 2014 Draft Budget): Document III: Figures by MFF heading, section and budget line
Statement of estimates of the Commission for 2014 (Preparation of the 2014 Draft Budget): Document IV: Changes in the budgetary remarks and establishment plan staff
|
| Legal base | Article 314 TFEU; co-decision; QMV
|
| Department | HM Treasury
|
| Basis of consideration | Minister's letter of 5 August 2013
|
| Previous Committee Report | HC 83-xii (2013-14), chapter 1 (17 July 2013)
|
| Discussion in Council | 18 July 2013
|
| Committee's assessment | Politically important
|
| Committee's decision | For debate in European Committee B (decision reported 17 July 2013)
|
Background
3.1 The Draft Budget (DB) sets out the Commission's proposals
for EU expenditure in 2014. It is the first stage in the annual
process of establishing the EU's budget for the following year
and provides the basis for negotiations between the two arms of
the Budgetary Authority (the Council and the European Parliament).
We considered the DB for 2014 in July and have recommended it
for debate in European Committee B, although we recognised that
the debate was unlikely to be possible before the ECOFIN Council's
first reading.[8]
The Minister's letter
3.2 The Financial Secretary to the Treasury (Greg Clark) writes
with further information about the DB. He first comments on the
parameters within which the DB is being negotiated, saying that:
- whilst the 2013 budget proposal was constrained
thanks to the actions taken by the Government and likeminded Member
States, it was still set within the far too generous Multiannual
Financial Framework (MFF) ceilings agreed in December 2005 and
thus the Council was able to increase the 2013 budget substantially
in-year through QMV, despite the UK voting against;
- as a result of the new budget deal secured by
the Government earlier this year, from 2014 the EU budget payments
ceilings will be on average around €5 billion (£4.29
billion) less than this year's budget;
- the Commission's proposal for payments in 2014
is a €4.60 billion (£3.94 billion) reduction compared
to the 2013 adopted budget, including accepted Draft Amending
Budgets; and
- in real terms the reduction is even greater.
3.3 The Minister then addresses the relationship
of the DB to growth and competitiveness, saying that:
- whilst the Government is concerned about subdued
growth in the eurozone, it does not believe that competitiveness
will primarily come out of EU spending, but rather from reforms
such as labour market flexibility and forward thinking initiatives
such as the transatlantic free trade agreement;
- the Government's overall objective for the EU
budget continues to be a restrained budget, on par with domestic
fiscal consolidation taking place across Member States;
- overall, the new MFF is a better-framed budget
in terms of growth, jobs and competitiveness;
- research and development and other pro-growth
investment will now account for 13% rather than 9% of the total
budget;
- funding for transport, energy and telecoms infrastructure
has received a considerable increase compared to the current period
through the new Connecting Europe Facility;
- the section of the budget that includes spending
on research, innovation and university funding is up by over a
third compared to the last MFF; and
- to ensure these allocations are spent on
these areas alone, the Government will continue to closely scrutinise
the Commission's spending and ensure rules and regulations are
adhered to.
3.4 Turning to restricting EU expenditure the Minister
comments that whilst the Government's efforts in long-term negotiations
are having an obvious effect in restricting EU spending, it will
need to continue to work closely with likeminded Member States
to fight against any extravagance in the EU budget. He then discusses
various aspects of the budget proposals as follows.
3.5 The Minister says that:
- within Heading 1b (Economic, social and territorial
cohesion), Structural and Cohesion Funding should be targeted
to achieve greater discernible impact on the key drivers of economic
growth and on employment and must support national and local
investment priorities in order to achieve 'better spending';
- in negotiating new rules for EU funding streams
under the Common Strategic Framework, the Government has supported
efforts to simplify and harmonise the regulatory requirements
where possible, to increase the combined impact of the funds and
reduce administrative burdens on Member States;
- for example, within England, the Government announced
alongside the Spending Review how €6.20 billion (£5.31
billion) of EU Structural and Investment Funds for 2014-20 will
be allocated to Local Enterprise Partnerships (LEPs) across the
country;
- this will be in the form of a single "Growth
Programme", with the Government simplifying how the funds
work together and support LEP plans to drive growth;
- the UK has supported efforts to target the funds
more effectively on key drivers of growth across the EU with the
introduction of a requirement for thematic concentration in programmes
from 2014 and for preconditions to be put in place that improve
the effectiveness of spend;
- the 2014 budget marks a transition point for
Structural and Cohesion Fund programmes with 2007-13 programmes
nearing the end of their full commitments and 2014-20 programmes
not yet fully up and running; and
- the Government believes that the Commission needs
to ensure that payment appropriations are set at the minimum necessary
to fund programme implementation and are based on realistic implementation
rates taking account of the transitional phase in which programmes
find themselves, as well as estimates of Member States' absorption
capacity.
3.6 In relation to Heading 2 (Sustainable growth:
natural resources), the Minister says that:
- the UK's position is that most of the Common
Agricultural Policy (CAP) is poor value for money;
- overall spending in 2014-20 on the CAP will,
however, fall by 13% compared with the last seven-year budget;
- this is roughly equal to the annual level of
spending on the CAP budget and better than a real freeze;
- the Commission's proposals for Heading 2 in 2014
— €56,533 million (£48,460 million), of which
€43,777 million (£37,526 million) is for the European
Agricultural Guarantee Fund (EAGF) — indicate a reduction
in the overall budget from 2013;
- the bulk of this consists of direct aids and
is not discretionary as the financial ceilings for them are already
set in the legislation, leaving little scope to negotiate further
in this budget;
- the proposed budgetary changes for direct aids
reflect past political agreements, notably the agreed phasing-in
of direct aids in the new Member States and the accession of Croatia;
and
- the Commission has activated the financial discipline
mechanism to keep within the EAGF sub-ceiling and the adjusted
amounts for direct aids in the 2014 DB reflect this and the creation
of the crisis reserve.
3.7 On Heading 4 (Global Europe), the Minister says
that:
- the EU external budget should draw on the EU's
collective weight to deliver poverty reduction and sustainable
development, address humanitarian crises, further the EU's goals
in the neighbourhood and on accession to the Union, build security
and stability and ensure strong, sustainable and balanced growth
and prosperity;
- to ensure the EU's money is focused on areas
of most value added, the Government will continue to press for
a substantial reduction to the budget for the Instrument for Nuclear
Safety — while this has done valuable work, there are now
a number of international agencies providing assistance in the
field of nuclear safety;
- it will also continue to press for total cuts,
or at the very least substantial reductions to the budgets of,
the Instrument for Macro Financial Assistance (MFA) and the European
Voluntary Humanitarian Aid Corps (EVHAC);
- it believes that MFA support should not be financed
from grants from Heading 4, but should primarily consist of loans
which are not funded from that Heading;
- with regard to EVHAC, there is no evidence of
need; and
- during negotiations on the DB proposal in the
Council's Budget Committee, the Government pressed the Commission
on these points.
3.8 The Minister says that the results on Heading
5 (Administration) are disappointing, explaining that:
- during the negotiations on the Commission's proposal,
the UK called for significant reductions in this heading in particular;
- unfortunately, the Government is very limited
in its ability to reduce Heading 5 spending as 70% of it comes
from Staff Regulations, where it is limited in its ability to
affect change;
- the Staff Regulation proposals put forward by
the Commission in December 2011 were very disappointing;[9]
- the UK and other likeminded Member States argued
for much more ambitious reforms that would have seen real
savings and better prepared the EU Institutions for the 21st century;
- whilst the Staff Regulations have yet to be agreed
by the Council, a Presidency compromise was endorsed by COREPER
(without UK support), which sees very limited savings —
this was deeply disappointing;
- despite this, it is absolutely necessary to ensure
that what limited savings are going to be achieved, including
a two-year pay freeze and a 5% reduction in staff numbers, are
fully implemented;
- at the end of the MFF in 2020, the Institutions
must have 5% fewer staff than are currently present;
- anything less will be unacceptable to the UK
and to many other Member States;
- to this end, the Government and other Member
States have requested benchmark figures from the Commission in
order to judge progress on the 5% reduction;
- whilst the Commission has provided some detail
in the 2014 budget documents, the Government does not have a fully
accurate global staff figure against which to judge the mandatory
reduction;
- whilst it anticipates a certain degree of flexibility
on how the reduction is shared among the Institutions, the Government
is adamant that this 5% reduction must be achieved, in full, over
the next five years;
- outside of the Staff Regulations, reaching Council
agreement to reductions has been challenging;
- the Government will, however, continue to push
for savings in this remaining 30%, which covers areas such as
building works and rent; and
- it remains committed to finding these savings
wherever possible.
3.9 Finally, the Minister reports developments in
the annual budget negotiations, saying that:
- the Presidency circulated its first proposal
for a Council position on 8 July;
- this proposal saw a cut of €183 million
(£156.87 million) in commitment appropriations and €720
million (£617.18 million) in payment appropriations from
the Commission's DB, giving overall figures of €141.80 billion
(£121.55 billion) in commitment appropriations and €135.10
billion (£115.81 billion) in payment appropriations in current
prices;
- this proposal was the stepping stone for a series
of discussions in the Budget Committee from 9 to 15 July, with
coordinated pressure from the budget disciplinarian Member States
on the size of the Presidency proposal;
- the final Presidency proposal,[10]
which was taken to COREPER on 18 July, was endorsed as a Council
position that reduces the Commission's proposed budget for 2014
by €240 million (£205.73 million) in commitment appropriations
and just over a €1billion (£0.85 billion) in payment
appropriations;
- this results in a proposal of €141.80 billion
(£121.55 billion) in commitment appropriations and €134.80
billion (£115.55 billion) in payment appropriations;
- all but three Member States voted in favour of
the Council position — as noted in the Government's Explanatory
Memorandum of 15 July, the Government welcomed that this proposal
for the first budget of the new MFF period respects the deal agreed
by the European Council in February and is within the agreed 2014
ceiling, but the UK abstained on national parliamentary scrutiny
grounds, Denmark welcomed the Council position, but also abstained
while national parliamentary scrutiny is completed and Belgium
abstained as it thought that reductions to payment appropriations
went too far;
- as in previous years, formal agreement by the
Council would be reached through a written procedure by 2 September;
- due to the timing of Parliamentary Recess, the
Government would continue to abstain on scrutiny grounds;
- the Council position forms the basis of negotiations
with the European Parliament in the autumn with the aim of reaching
a final agreement during conciliation in November; and
- he looks forward to discussing the 2014 DB in
the Committee debate, which we have recommended and which he will
asking to have organised for as soon as is practically possible
once Parliament returns from Recess.
Conclusion
- We are grateful to the Minister
for this further information which will be relevant to the debate
we have recommended. We remind the Minister that we wish that
debate to take place before the European Parliament completes
its first reading.
8 See headnote. Back
9
(33552) 18638/11: see HC 428-liii (2010-12), chapter 4 (7 March
2012), HC 86-xii (2012-13), chapter 3 (12 September 2012) and
HC 83-iv (2013-14), chapter 11 (5 June 2013). Back
10
Council document 12222/13: see http://register.consilium.europa.eu/pdf/en/13/st12/st12222.en13.pdf
, - we annex three illustrative tables from this paper. Back
|
