16 Multiannual Financial Framework,
2014-2020
| (35383)
11791/13
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| Draft Council Regulation laying down the Multiannual Financial Framework for the years 2014-2020
|
| Legal base | Article 312 TFEU and Article 106a EURATOM; consent; unanimity
|
| Deposited in Parliament | 16 October 2013
|
| Department | HM Treasury
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| Basis of consideration | EM of 15 October 2013
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| Previous Committee Report | None
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| Discussion in Council | Possibly November 2013
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
16.1 In February the European Council reached agreement on
the Multiannual Financial Framework (MFF) for the period 2014-20.[43]
Since then there have been negotiations with the European Parliament
to secure its consent to the proposals.
16.2 In early July we considered the Irish Presidency's
proposals for a new Council Regulation on the MFF, the Interinstitutional
Agreement (IIA) between the three institutions on the MFF and
budgetary cooperation and a set of accompanying draft declarations.
The draft MFF Regulation covered the key policies agreed at the
February European Council and the draft IIA covered more technical
aspects of the budget. Four draft joint declarations covered own
resources, duration, and improving effectiveness of public spending
in matters subject to EU action and gender-responsive elements.
Two draft declarations by the Commission covered national management
declarations and review and revision. The documents were to be
presented to the June European Council as the probable outcome
of the negotiations with the European Parliament. These documents
were debated in European Committee B on 16 July.
16.3 Subsequent to the debate we heard from the
Government that:
- the Presidency had issued further
versions of the MFF Regulation and accompanying declarations ahead
of the European Council on 27-28 June and the European Parliament
plenary session of 1-4 July;[44]
- a further draft declaration on the Fund for European
Aid to the Most Deprived had also been issued;[45]
- the Interinstitutional Agreement was unchanged;
- the revised documents were very similar to the
earlier versions deposited;
- the main changes to the draft MFF Regulation
were related to the flexibilities in annual payment and commitment
ceiling totals;
- these had been extended from the previous versions
of the documents, but remain within the seven-year commitment
and payment ceilings agreed by the European Council in February;
- this flexibility now also included an increase
in the amount to be drawn forward to 2014 and 2015 for youth employment
agreed to at the European Council;
- the other notable change in the draft MFF Regulation
was introduction of text asking the institutions to consider the
most suitable duration for the MFF from 2021;
- the declaration on the duration of the MFF after
2021 had now been moved to the MFF Regulation and a Commission
declaration on this point had been included in the package; and
- the new draft declaration on the Fund for European
Aid to the Most Deprived said that Member States "may decide
to increase their allocations spent on this programme by up to
€1 billion on a voluntary basis".
16.4 We noted this information and looked forward
to scrutinising the final texts of the MFF package.[46]
The document
16.5 This document is the final version of the
draft MFF Regulation, sent to the European Parliament for its
consent before adoption by Council. It covers the key policies
agreed at February European Council, including the expenditure
ceilings, expenditure instruments outside the MFF and rules for
the functioning of the expenditure side of the budget. It also
covers additional areas of agreement between the Council and the
European Parliament. The draft Regulation has now been through
legal examination and translation and there are very few substantive
changes from the previous version of this document, around the
terms of flexibilities between headings and years within the framework
that the Member States have agreed, which was cleared from scrutiny
following the debate of 16 July.
The Government's view
16.6 The Economic Secretary to the Treasury (Nicky
Morgan) elaborates that:
- the budget ceilings set out
in the draft MFF Regulation correspond to the ceilings agreed
at the February European Council;
- the ceiling for commitment appropriations totals
€960 billion (£803 billion) and the ceiling for payment
appropriations totals €908 billion (£760 billion) (at
2011 prices);
- after the February European Council the Prime
Minister noted the Government's position on these ceilings —
the payment limit is €80 billion lower than the original
Commission proposal and €35 billion lower than the current
MFF agreed in December 2005;
- the draft MFF Regulation also sets out the limits
for instruments outside the MFF — 'off-budget' instruments;
- these are: the European Union Solidarity Fund,
€500 million (£418 million) per annum, the Flexibility
Instrument, €471 million (£394 million), the Emergency
Aid Reserve, €280 million (£234 million), the European
Globalisation Adjustment Fund, €150 million (£125 million)
and the Contingency Margin (representing up to 0.03% of EU Gross
National Income);
- the total of instruments outside the MFF in the
2014-20 period is lower than that agreed for 2007-13;
- the draft MFF Regulation includes maximum amounts
for expenditure on large scale projects within the budget;
- these are: the European Satellite Navigation
Programmes (EGNOS and Galileo), €6.3 billion (£5.3 billion),
the International Thermonuclear Experimental Reactor Project (ITER),
€2.7 billion (£2.3 billion) and the European Earth Monitoring
Programme, Copernicus, €3.8 billion (£3.2billion);
- the draft MFF Regulation has rules for the status
of the Own Resources ceiling, the rules for the annual inflationary
technical adjustment to the ceilings (as set out in the Treaty)
and rules relating to adjustment of the framework, including for
the case of Treaty revision, enlargement, Cypriot reunification
and review of cohesion policy envelopes;
- the draft MFF Regulation includes rules for flexibilities
between years and headings — the February European Council
indicated that the final deal on the MFF legal texts should include
some flexibilities on how spending is divided between different
budget years and different areas of spending and the rules set
out in Articles 5 and 14 of the draft MFF Regulation ensure that
any flexibility of payments or commitments will be within the
framework that the Member States have agreed; and
- Article 2 of the draft MFF Regulation provides
that the Commission will conduct a mid-term review of the framework
by the end of 2016, which could be followed if appropriate by
proposals from the Commission for revision of the MFF —
any decision to revise the 2014-20 MFF would be by unanimity,
in accordance with the Treaty.
16.7 On the financial implications the Minister
says that:
- the UK contribution to the
MFF is provisionally estimated to be 14.5% pre-abatement and 11.5%
post-abatement;
- the actual financial cost to the UK of the 2014-20
MFF is contingent on the level of actual spending agreed through
the annual budget process, implementation of the budgets and
the distribution of spending across Member States and programmes
within the MFF;
- these factors determine the level of UK receipts
and also affect the size of the UK's abatement;
- while the actual amount that the UK contributes
depends on these factors, as well as economic performance and
exchange rates, as a result of this deal, the Government expects
that the UK's contribution to the EU will fall as a share of Gross
National Income; and
- the estimated impact of the February European
Council agreement on the UK's contribution was reflected in the
Office of Budget Responsibility's March 2013 forecast.
Conclusion
16.8 As this document is essentially the same
as that debated in July, we clear it from scrutiny.
43 See the European Council Conclusions: http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/135344.pdf. Back
44
See http://register.consilium.europa.eu/pdf/en/13/st11/st11655.en13.pdf
and http://register.consilium.europa.eu/pdf/en/13/st11/st11658.en13.pdf. Back
45
See http://register.consilium.europa.eu/pdf/en/13/st11/st11698.en13.pdf. Back
46
(35096) 11295/13 (35097) 11298/13 (35098) 11307/13: see HC 83-viii
(2013-14), chapter 3 (3 July 2013), HC 83-xiii (2013-14), chapter
52 (4 September 2013) and Gen Co Debs, European Committee
B, cols. 3-26. Back
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