5 EU General Budget 2014
| Committee's assessment
| Politically important
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| Committee's decision
| Not cleared from scrutiny; further information requested
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| Document details
| (a) Draft Amending Budget for 2014
(b) Draft Decision concerning finance for the Draft Amending Budget
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| Legal base
| Article 314 TFEU and Article 106a EURATOM; co-decision; QMV
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| Department
| HM Treasury
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Summary and Committee's conclusions
5.1 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 General Budget.
The Contingency Margin is a mechanism set out in the Multiannual
Financial Framework (MFF) Regulation, which allows for mobilisation
of 0.03% of Gross National Income for all Member States to react,
as a last resort, to unforeseen circumstances.
5.2 With document (a), DAB No. 3/2014,
the Commission asks for an increase in payment appropriations
of €4,738 million (£3,853 million) in 2014. These appropriations
are requested through two routes. First is a mobilisation of the
Contingency Margin by the draft Decision, document (b). The request
for mobilisation of the Contingency Margin is for the full potential
amount available, calculated by the Commission as €4,026
million (£3,274 million). The Commission proposes that the
remainder of the payment appropriations in this DAB come from
the unallocated in-year margin between the agreed budget for 2014
and the annual payment ceiling set out in the MFF for 2014-20.
The Commission specifies this margin as €711 million (£578
million).
5.3 The Government comments in well-worn
terms that it wants real budgetary restraint in the coming years,
as well as the longer term, that it will continue to work towards
limiting EU spending, reducing waste and inefficiency and ensuring
the best possible value for money and that the Commission should
always look first to reallocate funds from within existing agreed
budgets.
5.4 The Government only comments
in a very general way on the Commission's proposals. So before
considering these documents again we should like to hear from
the Government which of these significant proposed increases
of expenditure, if any, it thinks justified, to what extent, if
at all, the Commission's case meets the Contingency Margin requirement
of use only as a last resort in reaction to unforeseen circumstances
and whether it intends to oppose the proposals as a whole, or
only in part. Meanwhile the documents remain under scrutiny.
Full details of the
documents: (a)
Draft Amending Budget No. 3 to the General Budget 2014: General
statement of revenue — Statement of expenditure by section:
Section III — Commission, Section VII — Committee
of the Regions and Section IX — European Data Protection
Supervisor: (36067), 10340/14, COM(14) 329; (b) Draft Decision
on the mobilisation of the Contingency Margin in 2014: (36068),
10341/14, COM(14) 328.
Background
5.5 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 General Budget —
there are normally about ten DABs each year.
5.6 The Contingency Margin is a mechanism
set out in Article 13 of the Multiannual Financial Framework (MFF)
Regulation. It allows for mobilisation of 0.03% of Gross National
Income for all Member States to react, as a last resort, to unforeseen
circumstances.
The documents
5.7 With document (a), DAB No. 3/2014,
the Commission asks for an increase in payment appropriations
of €4,738 million (£3,853 million) in 2014. These appropriations
are requested through two routes: a mobilisation of the Contingency
Margin by the draft Decision, document (b), and from the remaining
"in year margin" between the agreed annual budget and
the 2014 ceiling set out in the MFF for 2014-20.
5.8 The request for mobilisation of
the Contingency Margin is for the full potential amount available,
calculated by the Commission as €4,026 million (£3,274
million). The bulk of the funds requested, €3,395 million
(£2,760 million), would go towards payments made under Heading
1b of the budget (Economic, Social and Territorial Cohesion).
This sum is being requested to meet payments flowing from a higher-than-expected
value of payment claims from Member States in 2013 from the European
Regional Development Fund, bar a small proportion, €99 million
(£80 million) which is directed at the Fund for European
Aid to the Most Deprived. The letter was created in March this
year by Regulation 223/2014 and had been the subject of a Reasoned
Opinion by the House. The Commission's rationale for the request
now is that these claims amounted to an approximately €10
billion (£8 billion) increase compared with 2012 and that
this could not have been foreseen, especially as many of the claims
were made in the final two months of 2013.
5.9 A further €282 million (£229
million) of the appropriations requested relates to Heading 1a
of the budget (Competitiveness for Growth and Jobs). The Commission
says that the main driver for this request is to meet previous
political commitments to "frontload" the delivery of
various projects covered by this heading (Horizon 2020, Erasmus+,
COSME) earlier into the MFF period. Heading 4 (Global Europe)
accounts for €250 million (£203 million) of the proposal
and relates to the previously agreed financial package announced
by the Commission for the Ukraine. This sum is specifically to
cover the first €250 million (£203 million) instalment
of a "state building contract" to be paid through the
European Neighbourhood Instrument. The Commission says that additional
funds are required as the disbursement schedule for these funds
is faster than traditional assistance provided under the instrument.
Finally, the residual €100 million (£81 million) is
requested to meet payment needs under Heading 2 (Sustainable Growth:
National Resources), specifically rural development and the European
Fisheries Fund. The Commission says that additional funds are
required to meet previous commitments to increase co-financing
rates for Member States threatened with serious difficulties with
respect to financial stability.
5.10 Article 13 of the MFF Regulation
requires that amounts made available through the mobilisation
of the Contingency Margin be fully offset against the margins
for current or future financial years. This is to say that the
mobilisation of the Contingency Margin and the related offsetting
measures have to respect the total payment ceiling for the 2014-20
MFF period, €1,024 billion (£833 billion) in current
prices, €908 billion (£739 billion) in 2011 prices.
Consequently, the Commission proposes reducing the payment ceilings
in the years 2018, 2019 and 2020 by three equal amounts totalling
the size of the Contingency Margin being requested now.
5.11 The Commission proposes that the
remainder of the payment appropriations in this DAB come from
the unallocated in-year margin between the agreed budget for 2014
and the annual payment ceiling set out in the MFF. The Commission
specifies this margin as €711 million (£578 million).
As with the Contingency Margin, the Commission is requesting these
funds to cover a range of requirements. The bulk of the payments
from the in-year margin, €401 million (£326 million)
are proposed to go to heading 4 (Global Europe). Of these, €250
million (£203 million) would be used to meet payment needs
for humanitarian aid resulting from commitments made to cover
disasters and crises in 2013 and previous years. Another €100
million (£81 million) would be used to replenish other lines
of expenditure which have been redeployed by the Commission to
meet these humanitarian aid pressures. The final €51 million
(£41 million) relates to a separate shortfall in the Instrument
contributing to Stability and Peace. The remainder of the
payments from the in-year margin, €310 million (£252
million), would go to Heading 1a (Competitiveness for Growth and
Jobs), with the exception of a small payment of €6 million
(£5 million) to Heading 2 (Sustainable Growth: Natural Resources).
This would cover a range of programmes grouped under Heading 1a,
including the development of the Galileo satellite-based navigation
infrastructure, research programmes under Horizon 2020, the Erasmus+
education and training programme and energy projects under the
European Economic Recovery Plan.
5.12 This DAB also provides an update
on various issues relating to revenue flows. The Commission reports
an increase in the forecast of revenues, stemming from fines and
interest, amounting to €1,417 million (£1,152 million).
It also sets out an increase in the forecast from repayments and
revenue paid pack to the Facility for Euro-Mediterranean Investment
and Partnership of €150 million (£122 million).
The Government's view
5.13 In her Explanatory Memorandum of
16 June 2014 the Financial Secretary to the Treasury (Nicky Morgan)
says that:
- the Government has been clear that
it wants to see real budgetary restraint in the EU over the coming
years, as well as the longer term, in order to avoid unaffordable
high costs to the UK and to UK taxpayers;
- to deliver this goal, the Government
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;
and
- the Government's view is that the
Commission should always look first to reallocate funds from within
existing agreed budgets to meet emerging in-year pressures, rather
than coming to Member States with requests for additional money.
5.14 The Minister adds that the UK's
post-abatement financing share of EU expenditure will be approximately
11%, but it is not possible to calculate the exact amounts yet,
as the amount will depend on actual budgetary outturns.
Previous Committee Reports
None.
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