3 EU General Budget 2015: Draft Budget
| Committee's assessment
| Politically important
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| Committee's decision
| For debate in European Committee B
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| Document details
| (a) Draft Decision about the EU Solidarity Fund
(b) Draft Decision about the budgetary Flexibility Instrument
(c)-(f) Statement of estimates of the Commission for 2015, Parts I-IV: political presentation, financial programming 2016-2020 (provisional figures), figures by Multiannual Financial Framework heading, section and budget line and changes in the budgetary remarks and establishment plan staff
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| Legal base
| (a)-(b) Article 295 TFEU; co-decision; QMV
(c)-(f) Article 314; co-decision; QMV
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| Department
| HM Treasury
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Summary and Committee's conclusions
3.1 The Draft Budget (DB), documents
(c)-(f), sets out the Commission's proposals for EU expenditure
in 2015. 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). The context for the
DB is determined by the Multi-annual Financial Framework (MFF)
for the period 2014-20, which sets out annual ceilings for the
six headings of budget expenditure.
3.2 In the DB for 2015 the Commission
proposes commitment appropriations of €145,999.3
million (£118,386.8 million), which represents 1.04% of EU
Gross National Income (GNI). For payment appropriations, the Commission
proposes €142,137.2 million (£115,571.8 million), or
1.02% of EU GNI.
3.3 When comparing any figures from
the DB to the 2014 Budget, the Commission includes all of Amending
Budget No. 1/2014 and Draft Amending Budgets Nos. 2/2014 and 3/2014,
(DAB 2/2014) and (DAB 3/2014), neither of which is yet adopted.
This corresponds to a total 2014 Budget size of €140,242.7
million (£114,031.3 million) in payment appropriations. As
such, the Commission says that the DB represents an increase in
commitment appropriations of €2,959.2 million (£2,406.1
million) or 2.1% compared to 2014 levels and an increase of €1,894.6
million (£1,540.5 million) or 1.4% in payment appropriations
compared to the 2014 Budget.
3.4 The margin under the MFF ceiling
is €1,478.9 million (£1,202.5 million) for commitment
appropriations. There is no margin for payment appropriations.
3.5 The Interinstitutional Agreement
on budgetary matters provides the possibility of finance for ("mobilisation
of") the EU Solidarity Fund, which releases emergency financial
aid following a major disaster in a Member State or candidate
country, and the Flexibility Instrument, which provides funding
in a given financial year for clearly identified expenses which
could not be covered by one or more budget headings without exceeding
their expenditure ceilings. The draft Decisions, documents (a)-(b)
would mobilise the EU Solidarity Fund and the Flexibility Instrument
for sums included in the DB.
3.6 The Government emphasises to us
again its commitment to budgetary restraint and discipline, notes
particularly the misleading basis of the Commission's comparisons
with the 2014 EU Budget and says that, given that these budgetary
matters are decided by QMV, it will need to work closely with
like-minded budget disciplinarian Member States to deliver the
best deal possible for the UK
3.7 It is our custom, and that of
our predecessors, to recommend the Draft Budget for debate before
the Council concludes its first reading. Given the late adoption
of the 2015 Draft Budget by the Commission and the forthcoming
recess, that timing is unlikely to be possible this year. Nevertheless,
we recommend that the 2015 Draft Budget be debated in European
Committee B as soon as practically possible, and certainly before
the European Parliament's first reading.
3.8 We suggest that amongst the matters
Members might explore during the debate are:
· the degree of support
the Government is receiving from other Member States for a disciplined
approach to next year's EU Budget;
· the significance for budgetary
discipline of the proposed mobilisation of the EU Solidarity Fund
and the Flexibility Instrument; and
· the consequences of the
DB for budget lines from which the UK particularly benefits.
Full details of the documents:
(a) Draft Decision on the mobilisation of the EU Solidarity Fund:
(36133), 10946/14, COM(14) 348; (b) Draft Decision on the mobilisation
of the Flexibility Instrument: (36134), 10947/14, COM(14) 349;
(c) Statement of estimates of the Commission for 2015 (Preparation
of the 2015 Draft Budget), Document I, Political presentation:
(36139), —, SEC(14) 357; (d) Statement of estimates of the
Commission for 2015 (Preparation of the 2015 Draft Budget), Document
II, Financial programming 2016-2020 (provisional figures): (36140),
—, SEC(14) 357; (e) Statement of estimates of the Commission
for 2015 (Preparation of the 2015 Draft Budget), Document III,
Figures by MFF heading, section and budget line: (36141), —,
SEC(14) 357; (f) Statement of estimates of the Commission for
2015 (Preparation of the 2015 Draft Budget, Document IV, Changes
in the budgetary remarks and establishment plan staff: (36142),
—, SEC(14) 357.
Background
3.9 The Draft Budget (DB) sets out the
Commission's proposals for EU expenditure in 2015. 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). The ECOFIN Council hopes to negotiate and agree its
first reading position on the DB by the end of July (the TFEU
requires the Council to complete this stage by 1 October), which
will then be forwarded to the European Parliament. The European
Parliament will in turn discuss and agree 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, largely in late October and early November,
with the aim of reaching agreement on the 2015 General Budget.
This will be subject to separate approval by both the Council
and the European Parliament, after which the EU's General Budget
for 2015 will be deemed to have been adopted.
3.10 The context for the DB is determined
by the Multi-annual Financial Framework (MFF) for the period 2014-20,
which sets out annual ceilings for the six headings of budget
expenditure:
· Smart and inclusive growth;
· Sustainable Growth: natural
resources;
· Security and Citizenship;
· Global Europe;
· Administration; and
· Compensation (temporary measures
previously connected to the accession of Croatia).
The Commission's Draft Budget
3.11 The DB for 2015 is the second of
the 2014-20 MFF. As well as programme expenditure, it includes
draft estimates of required appropriations for the EU Institutions
— the European Parliament, the Council, the Office of the
President of the Council (the latter two being treated as one
institution for the purpose of establishing the budget), the Commission,
the European Court of Justice, the European Court of Auditors,
the Economic and Social Committee, the Committee of the Regions,
the European Ombudsman and the European Data Protection Supervisor
and the European External Action Service.
3.12 The DB is presented in several
documents, the principal four being a political presentation including
information on objectives and spending levels for each major EU
programme, details of the financial programming over the MFF but
in provisional figures, a document providing line-by-line information
on EU spending under different programmes and details of changes
in budgetary remarks and establishment plan.
3.13 The tripartite Interinstitutional
Agreement (IIA) of December 2013 on budgetary discipline, on cooperation
in budgetary matters and on sound financial management provides
the possibility of finance for ("mobilisation of") the
EU Solidarity Fund, which releases emergency financial aid following
a major disaster in a Member State or candidate country, and the
Flexibility Instrument, which provides funding in a given financial
year for clearly identified expenses which could not be covered
by one or more budget headings without exceeding their expenditure
ceilings.
3.14 The Explanatory Memorandum of 25
June provided to us by the Financial Secretary to the Treasury
(Nicky Morgan) focuses on the political presentation of the DB
for 2015, document (c), but also touches on the EU Solidarity
Fund and Flexibility Instrument draft Decisions, documents (a)
and (b).
THE COMMISSION'S POLITICAL PRESENTATION
3.15 The political presentation is broken
down into four sections and six annexes — the sections are:
· Commission priorities for
the 2015 DB;
· the MFF and the 2015 DB;
· key aspects of the 2015 DB
by Financial Framework Headings; and
· horizontal issues.
3.16 Details of cross-cutting issues
presented in Section 4 (Horizontal issues) and in the relevant
annexes include:
· the request for payment appropriations
— Annex III, broken down by programming period and main
programmes;
· the contribution that the
EU Budget makes to the financing of the Europe 2020 Strategy —
Annex IV, presented by flagship initiatives;
· the contribution that the
EU Budget makes to the financing of the mainstreaming of climate
action and biodiversity — Annex V, presented in two separate
tables; and
· in Annex VI an overview of
human and financial resources requested for the agencies.
OVERVIEW
3.17 The Commission explains that the
key objective of the DB is to use the EU Budget to "make
a tangible difference to European citizens' lives by targeting
support to employment, businesses, education and research".
3.18 The Commission proposes commitment
appropriations[6]
of €145,999.3 million (£118,386.8 million), which
represents 1.04% of EU Gross National Income (GNI). For payment
appropriations,[7] the
Commission proposes €142,137.2 million (£115,571.8 million),
or 1.02% of EU GNI.
3.19 When comparing any figures from
the DB to the 2014 Budget, the Commission includes all of Amending
Budget No. 1/2014 and Draft Amending Budgets Nos. 2/2014 and 3/2014,
(DAB 2/2014)[8] and (DAB
3/2014),[9] neither of
which is yet adopted. This corresponds to a total 2014 Budget
size of €140,242.7 million (£114,031.3 million) in payment
appropriations. As such, the Commission says that the DB represents
an increase in commitment appropriations of €2,959.2 million
(£2,406.1 million) or 2.1% compared to 2014 levels and an
increase of €1,894.6 million (£1,540.5 million) or 1.4%
in payment appropriations compared to the 2014 Budget.
3.20 The margin[10]
under the MFF ceiling is €1,478.9 million (£1,202.5
million) for commitment appropriations. There is no margin for
payment appropriations. Tables summarising the key figures of
the DB in both euros and sterling, provided in the Minister's
Explanatory Memorandum, are annexed.
3.21 The Commission's proposed DB also
includes €79.8 million (£64.9 million) in commitment
appropriations and €11.3 million (£9.2 million) in payment
appropriations for the Flexibility Instrument and €515.4
million (£419.1 million) in commitment appropriations and
€225 million (£182.9 million) in payment appropriations
for other Special Instruments: €303 million (£246.4
million) in commitment appropriations and €150 million (£129
million) in payment appropriations for the Emergency Aid Reserve,
€162.4 million (£132 million) in commitment appropriations
and €25 million (£20.3 million) for the European Globalisation
Adjustment Fund and €50 million (£40.7 million) in commitment
and payment appropriations for the EU Solidarity Fund.
DETAIL OF PROPOSED EXPENDITURE BY HEADING
Heading 1 — Smart and Inclusive Growth
Sub-Heading 1a: Competitiveness
for growth and jobs
3.22 The Commission proposes total commitment
appropriations of €17,447.4 million (£14,186.5 million),
representing an increase of 5.8% compared to 2014, and total payment
appropriations of €15,582.6 million (£12,670.2 million),
representing an increase of 29.5% compared to 2014. This leaves
a margin of €218.6 million (£177.7 million) beneath
the commitment appropriations ceiling. The main changes under
this sub-heading include:
· an increase in payment appropriations
for the Connecting Europe Facility of €630.2 million (£553.1
million) or 76.7% and the Common Strategic Framework Research
of €2,823.8 million (£2,296 million) or 43.5%; and
· a decrease in payment appropriations
for pilot projects and preparatory actions of €12.8 million
(£10.4 million) or 45.3% and for Erasmus+ of €34.2 million
(£27.8 million) or 2.4%.
Sub-Heading 1b: Economic, social and territorial
cohesion
3.23 The Commission proposes total commitment
appropriations of €49,226.8 million (£40,026.3 million),
representing an increase of 3.6% compared to 2014, and total payment
appropriations of €51,601.9 million (£41,964 million),
representing a decrease of 5% compared to 2014. This leaves no
margin beneath the commitment appropriations ceiling. The main
changes under this sub-heading include:
· an increase in payment appropriations
for transition regions of €654.8 million (£532.4 million)
or 237.1%, for the Cohesion Fund of €1,918.5 million (£1,559.9
million) or 17.3%, for outermost and sparsely populated regions
€25.9 million (£21.1 million) or 199.2% and for the
Connecting Europe Facility Cohesion Fund contribution €410.4
million (£333.7 million) or 100%; and
· a decrease in payment appropriations
for Regional Convergence of €4,398 million (£3,576 million)
or 13.7%, for Competitiveness €1,002.7 million (£815.3
million) or 12.7% and for European territorial cooperation of
€506 million (£411.4 million) or 29.7%.
Heading 2: Sustainable growth: natural resources
3.24 The Commission proposes total commitment
appropriations of €59,253.7 million (£48,179.2 million),
representing a freeze on 2014, and total payment appropriations
of €56,907.3 million (£46,271.3 million), representing
an increase of 0.6% compared to 2014. This leaves a margin of
€345.5 million (£280.9 million) beneath the commitment
appropriations ceiling. The main changes under this heading include:
· an increase in payment appropriations
for the European Agricultural Guarantee Fund of €120 million
(€97.6 million) or 0.3% and for the European Maritime and
Fisheries Fund, Regional Fisheries Management Organisations and
Sustainable Fisheries Agreements of €218 million (£177.3
million) or 29.4%; and
· a decrease in payment appropriations
for the European Agriculture Fund for Rural Development of €58.4
million (£47.5 million) or 0.5%.
Heading 3: Security and Citizenship
3.25 The Commission proposes total commitment
appropriations of €2,130.7 million (£1732.5 million),
representing a decrease of 1.9% compared to 2014, and total payment
appropriations of €1,881.2 million (£1,529.6 million),
representing an increase of 12.2% compared to 2014. This leaves
a margin of €115.3 million (£93.8 million) beneath the
commitment appropriations ceiling. The main changes under this
heading include:
· an increase in payment appropriations
for the Asylum, Migration and Integration Fund of €204.6
million (£166.4 million) or 139.8%, for IT systems of €13.1
million (£10.7 million) or 132.5% and for health of €14.5
million (£11.8 million) or 32.3%; and
· a decrease in payment appropriations
for Europe for Citizens of €8.8 million (£7.2 million)
or 31.7% and for pilot projects and preparatory actions €8
million (£6.5 million) or 43.9%.
Heading 4: Global Europe
3.26 The Commission proposes total
commitment appropriations of €8,413.1 million (£6,840.7
million), representing an increase of 1.1% compared to 2014, and
total payment appropriations of €7,327 million (£5,957.6
million), representing an increase of 7.1% compared to 2014. This
leaves a margin of €335.9 million (£273.1 million) beneath
the commitment appropriations ceiling. The main changes under
this heading include:
· an increase in payment appropriations
for the Development Cooperation Instrument of €305 million
(£248 million) or 17.2%, for the Partnership Instrument for
Cooperation with third countries of €57.7 million (€46.9
million) or 153.7%, for the Guarantee Fund for External Actions
of €86 million (£69.9 million) or 147.1% and for the
Common Foreign and Security Policy of €33.7 million (£27.4
million) or 14.4%; and
· a decrease in payment appropriations
for the European Neighbourhood Instrument of €83.9 million
(£68.2 million) or 5.1% and for humanitarian aid of €116.6
million (£94.8 million) or 11.3%.
Heading 5: Administration
3.27 The Commission proposes total commitment
appropriations of €8,612.2 million (£7,002.6 million),
representing an increase of 2.5% compared to 2014, and total payment
appropriations of €8,612.4 million (£7,002.6 million),
representing an increase of 2.5% compared to 2014. This leaves
a margin of €463.8 million (£377.1 million) beneath
the commitment appropriations ceiling. The main changes under
this heading include:
· an increase in payment appropriations
for pensions of €102.1 million (£82.9 million) or 7%,
for the Commission (with Croatia) of 36.4 million (€29.6
million) or 1.1% and for the European Parliament of €39.3
million (€32 million) or 2.2%; and
· a decrease of €5.7 million
(£4.6 million) or 3.5% in payment appropriations for the
European Schools.
Heading 6: Compensations
3.28 The Commission proposes neither
commitment or payment appropriations, compared to €28.6 million
(£23.3 million) in 2014 for both commitment and payment appropriations.
MOBILISATION OF THE EU SOLIDARITY FUND
3.29 With the draft Decision, document
(a), the Commission proposes that the EU Solidarity Fund be mobilised
to provide €50 million (£40.7 million) in commitment
and payment appropriations in the 2015 EU Budget. The Commission
notes that it has included these amounts in the DB.
MOBILISATION OF THE FLEXIBILITY INSTRUMENT
3.30 With the draft Decision, document
(b), the Commission proposes that the Flexibility Instrument be
mobilised to provide additional allocations to the Cypriot Structural
Funds programme — €79.8 million (£64.9 million)
in commitment appropriations and €11.3 million (£9.2
million) in payment appropriations in the 2015 EU Budget. The
Commission notes that it has included these amounts in the DB.
It says also that:
· for the financial year 2014,
the European Parliament and the Council have already mobilised
the Flexibility Instrument for financing the Cypriot Structural
Funds programmes for an amount of €89.3 million (£72.6
million) in commitment appropriations,
· as a consequence of the mobilisation
of the Flexibility Instrument in 2014 and 2015, payment appropriations
for financing the Cypriot Structural Funds would be €157.8
million (£128.3 million) for the period 2016-2018; and
· the exact annual amount of
payment appropriations would be defined in the relevant DBs.
The Government's view
3.31 The Economic Secretary to the Treasury
(Nicky Morgan) introduces her remarks by recalling in standard
terms 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 reduce costs
to the UK and to UK taxpayers; and
· 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.
3.32 The Minister then comments that:
· in the context of the Commission
leaving no margin under the payment appropriations ceiling, this
level of expenditure is too high;
· the Government also believes
that the EU Budget, including special and flexibility instruments,
should be below the annual ceiling set out in the MFF and that
there should be a significant margin;
· maintaining a significant
margin would therefore represent sound budgetary management;
· the Government would also
like to draw attention to the fact that the figures which the
Commission presents in these documents assume the approval of
the recent DAB 3/2014, which requests €4,738 million (£3,852
million) in payment appropriations in 2014, and consequently that
the 2014 EU Budget would be larger than the actual agreed budget
by this amount;
· this allows the Commission
to suggest the increase from 2014 to the proposed 2015 budget
is 1.4% in cash terms;
· as DAB 3/2014 has not been
approved, it is more accurate to compare this proposed 2015 budget
with the agreed 2014 budget; and
· this indicates that the proposal
for the Commission in fact represents a 4.9% increase in payment
appropriations.
3.33 The Minister continues with a brief
summary of the Government's views on the budget headings, saying
that:
· the Government welcomes how
the DB reflects the new MFF's shift towards the growth, jobs and
competitiveness programmes which Sub-Heading 1a (Competitiveness
for Growth and Jobs) supports;
· the Commission proposes an
increase in the proportion of the overall budget devoted to this
sub-heading 1a to 11% from 8% in the agreed 2014 EU Budget (when
the proposed DAB 3/2014 is not included);
· the Government supports this
use of EU funding, from which UK companies benefit substantially,
and the general reorientation of expenditure to this area of the
budget;
· it is disappointed to see
that the proposed level of payments for Sub-Heading 1b (Economic,
social and territorial cohesion) has increased by 1.3% compared
to allocations in the agreed 2014 EU Budget (when the proposed
DAB 3/2014 is not included);
· payment appropriations should
be set at the minimum necessary to fund programme implementation
and be based on realistic implementation rates and estimates of
Member States' absorption capacity;
· the Government notes that
the Commission proposes that Heading 2 (Sustainable Growth: Natural
Resources) should remain at about 40% of the overall budget and
believes that much of this expenditure, in particular in Pillar
1 of the CAP, represents very poor value for money;
· it welcomes, however, that,
across the 2014-2020 MFF period, overall CAP spending will fall
by 13% compared with the previous MFF period;
· the Government also regrets
that Heading 3 (Security and Citizenship) would see a significant
increase in payment appropriations compared to the agreed 2014
EU Budget (when the proposed DAB 3/2014 is not included);
· within Heading 4 (Global
Europe) the European Neighbourhood Instrument, the Development
Cooperation Instrument, the Instrument for Pre-Accession, the
Partnership Instrument and the Humanitarian Aid Instrument need
to be funded appropriately if the EU is to deliver on its priorities
of poverty reduction, building stability and security in external
countries and increase the prosperity of the EU through stronger
ties with external countries;
· the Government is disappointed
that Heading 5 (Administration) payment appropriations have increased
again in the DB proposed;
· this means that they remain
at around 6% of the total budget;
· greater budgetary restraint
is still needed on administration; and
· in particular, it is important
that cost reductions result from the institutions' commitment
to reduce staff by 5% from 2013-2017.
3.34 Finally the Minister says that:
· the Government notes that
these budgetary matters are agreed by QMV and it will need to
work closely with like-minded budget disciplinarian Member States
to deliver the best deal possible for the UK; and
· 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 they will depend
on actual budgetary outturns.
Previous Committee Reports
None.
6 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
7
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
8
(35970) 9017/14: see First Report HC 219-i (2014-15), chapter 33
(4 June 2014). Back
9
(36067) 10340/14: see Fourth Report HC 219-iv (2014-15), chapter
5 (25 June 2014). Back
10
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
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