Eighteenth Report of Session 2013-14 - European Scrutiny Committee Contents


16   Multiannual Financial Framework, 2014-2020

(35383)

11791/13

Draft Council Regulation laying down the Multiannual Financial Framework for the years 2014-2020

Legal baseArticle 312 TFEU and Article 106a EURATOM; consent; unanimity
Deposited in Parliament16 October 2013
DepartmentHM Treasury
Basis of considerationEM of 15 October 2013
Previous Committee ReportNone
Discussion in CouncilPossibly November 2013
Committee's assessmentPolitically important
Committee's decisionCleared

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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