1 EU General Budget 2015
Committee's assessment
| Politically important |
Committee's decision | Not cleared from scrutiny; further information requested
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Document details | Revised Draft Budget for 2015
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Legal base | Article 314 TFEU; co-decision; QMV
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Department | HM Treasury
(36567), , COM(14) 723
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Summary and Committee's conclusions
1.1 The Council and the European Parliament have
failed to reach agreement on the Commission's original Draft Budget
for 2015. Consequently the Commission has presented this revised
Draft Budget.
1.2 In the new Draft Budget the Commission proposes
commitment appropriations of 145,226.3 million (£115,498.5
million), which represents 1.05% of EU Gross National Income (GNI).
For payment appropriations it proposes 141,337.3 million
(£112,405.6 million), or 1.02% of EU GNI. It states that
this represents an increase in commitments of 2,536.0 million
(£2,016.9 million) or 1.8% compared to 2014 levels, and an
increase of 968.1 million (£769.9 million) or 0.7%
in payments compared to the 2014 EU General Budget.
1.3 We have been told by the Government, on 9 December,
that it:
· welcomes the fact that the revised Draft
Budget represents a 800 million (£636.2 million) cut
compared to the Commission's original proposal;
· continues to think, however, that there
should be a significant margin between the agreed budget and the
annual Multiannual Financial Framework ceiling for the purpose
of sound budgetary management; and
· notes that the EU budget is agreed by
QMV, and that it will need to work closely with like-minded budget
disciplinarian Member States to deliver the best deal possible
for the UK.
1.4 We have learnt separately that, also on 9 December,
the Council's Committee of Permanent Representatives agreed a
position on the Draft Budget, which appears to be acceptable to
the European Parliament and to be a done deal, which the Council
will merely formally adopt on 12 December,
1.5 We note the content of the revised Draft Budget,
the Government's brief comment on it and that it has apparently
been, in effect, adopted by the Council. But we observe also we
have little information about how agreement on the 2015 EU General
Budget relates to resolution of the disagreement between the Council
and the European Parliament on a number of Draft Amending Budgets
for the 2014 EU General Budget.
1.6 So before considering this document again
we wish to have a full explanation from the Government of developments
on all these budgetary matters. We also wish to have an explanation
of the scrutiny breaches in relation to these issues, particularly
the failure to deposit the revised Draft Budget, published on
27 November, until 10 December.
1.7 When we have this information, on both the
substantive and procedural issues, we will consider whether we
need to seek further information from a Minister in an evidence
session. Meanwhile the document remains under scrutiny.
Full details of the documents:
Draft General Budget of the European Union for the financial year
2015: General Introduction: (36567), , COM(14) 723.
Background
1.8 Each year a Draft Budget (DB) sets out the Commission's
proposals for EU expenditure in the following year. 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 Compensations.
1.9 The DB is the first stage in the annual process
of establishing the EU's budget for that 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 would then be forwarded to the
European Parliament. The European Parliament would 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 proposed 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 next year's General Budget. This would be subject
to separate approval by both the Council and the European Parliament,
after which the EU's General Budget would be deemed to have been
adopted.
1.10 If, however, the Conciliation Committee does
not reach agreement within the 21 days, the DB falls and the Commission
is required to present a new DB. If that revised proposal is not
adopted before 31 December, then monthly budgetary expenditure
in the new year is based on no more than one twelfth of the preceding
year's budget (provisional twelfths), until agreement is reached
on a budget for formal adoption.
1.11 During the course of a financial year the Commission
presents to the Budgetary Authority Draft Amending Budgets (DABs)
proposing increases or reductions for revenue and expenditure
in the current EU General Budget.
1.12 In June the Commission the Commission presented
its DB for 2015.[1] The
negotiation of that DB became linked directly or indirectly with
the negotiation of several DABs for the 2014 EU General Budget.[2]
1.13 The Conciliation Committee failed to reach agreement
on the Commission's DB for 2015 by the 17 November deadline. So
the Commission was automatically obliged to present a revised
DB.
The document
1.14 On 27 November the Commission presented this
revised DB, which sets out its new proposal for EU expenditure
for 2015.
OVERVIEW
1.15 The Commission's General Introduction to its
revised DB is broken down into five sections. Section 1 sets out
why the need for the Commission to submit a revised DB has arisen
and its priorities for the revision. These priorities are then
placed within the context of the MFF in Section 2. Section 3 breaks
down the key aspects of the DB on a heading-by-heading basis.
Section 4 has the Commission's Concluding Remarks. Section 5 is
a three page table setting out the DB under the MFF headings and
at the 'main programme' level.
1.16 The Commission first explains the budget making
process so far, saying that:
· on 2 September the Council completed its
reading of the Commission's original DB and on 22 October the
European Parliament voted its reading;
· as the European Parliament adopted amendments
to the DB, which could not be accepted by the Council, a Conciliation
Committee was convened, in accordance with the TFEU;
· the Conciliation Committee worked over
a period of 21 days, between 28 October and 17 November;
· the positions of the European Parliament
and Council could not be reconciled within the 21 day time period
allowed;
· this prevented an agreement being reached
on the 2015 budget, as well as on the DABs No. 2/2014, No. 3/2014,
No. 4/2014, No. 5/2014 and No. 7/2014;[3]
· in the absence of agreement in the Conciliation
Committee, the Commission now submits a new DB for 2015, in accordance
with the TFEU;
· it is seeking to reconcile the positions
of the two arms of the Budgetary Authority in this proposal for
a new DB, without recourse to a further period of conciliation;
and
· the consequences of non-agreement on the
budget would be recourse to provisional twelfths in 2015.
1.17 The Commission then describes how its revised
DB is focused on supporting, in particular, those policies in
favour of competitiveness and economic convergence, thus contributing
to growth and jobs, as well as those budget lines which allow
the EU to address crises especially in its neighbourhood.
1.18 In the DB the Commission proposes commitment
appropriations[4] of 145,226.3
million (£115,498.5 million), which represents 1.05% of EU
Gross National Income (GNI).[5]
For payment appropriations[6]
it proposes 141,337.3 million (£112,405.6 million),
or 1.02% of EU GNI. When comparing any figures from the revised
DB the 2014 EU General Budget, the Commission includes DAB No.
1/2014[7] and DABs No.
3/2014 to DAB No. 8/2014.[8]
(DAB No. 3/2014 to DAB No. 8/2014 have not been adopted yet.)
This corresponds to a total EU General Budget 2014 size of 140,369.2
million (£111,635.6 million) in payments. The Commission
states that this DB represents an increase in commitments of 2,536.0
million (£2,016.9 million) or 1.8% compared to 2014 levels,
and an increase of 968.1 million (£769.9 million) or
0.7% in payments compared to the 2014 EU General Budget.
1.19 The Commission state that the margin[9]
under the MFF ceiling is 1,855.3 million (£1475.5 million)
for commitments and 800.0 million (£636.2 million)
for payments.
1.20 The Commission's proposal includes, in its calculation
of the total commitments, total payments expenditure and the margin
in DB:
· 83.3 million (£66.2 million)
in commitments and 11.3 million (£9.0 million) in payments
for 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;
· 515.4 million (£409.9 million)
in commitments for 'other Special Instruments', that is 303
million (£241.0 million) for the Emergency Aid Reserve (EAR),
162.4 million (£129.2 million) for the European Globalisation
Adjustment Fund (EGF) and 50 million (£39.8 million)
for the European Union Solidarity Fund (EUSF); and
· 225 million (£178.9 million)
in payments for these instruments, that is 150 million (£119.3
million) for the EAR, 25 million (£19.9 million) for
the EGF and 50 million (£39.8 million) for the EUSF.
DETAIL OF PROPOSED EXPENDITURE BY HEADING
1.21 Sub-Heading 1a: Competitiveness for growth and
jobs:
· total commitments in 2015 of 17,488.5
million (£13,908.6 million), representing an increase of
6.1% compared to 2014;
· total payments of 15,833.3 million
(£12,592.2 million), representing an increase of 31.6% compared
to 2014; and
· a margin of 177.5 million (£141.2
million) beneath the commitments ceiling for the sub-heading.
1.22 Sub-Heading 1b: Economic, social and territorial
cohesion:
· total commitments in 2015 of 49,230.3
million (£39,152.9 million), representing an increase of
3.6% compared to 2014;
· total payments of 51,067.4 million
(£40,613.9 million), representing a decrease of 6% compared
to 2014; and
· no margin beneath the commitments ceiling
for the sub-heading.
1.23 Heading 2: Sustainable growth: natural resources:
· total commitments in 2014 of 58,808.6
million (£46,770.5 million), representing a 0.6% cut on 2014;
· total payments of 56,231.1 million
(£44,720.6 million), representing a 0.6% cut on 2014; and
· a margin of 790.4 million (£628.6
million) beneath the commitments ceiling for the heading.
1.24 Heading 3: Security and Citizenship:
· total commitments in 2015 of 2,146.7
million (£1707.3 million), representing a decrease of 1.2%
compared to 2014;
· total payments of 1,884.3 million
(£1,498.6 million), representing an increase of 12.4% compared
to 2014; and
· a margin of 99.3 million (£79.0
million) beneath the commitments ceiling for the heading.
1.25 Heading 4: Global Europe:
· total commitments in 2015 of 8,356.4
million (£6,645.8 million), representing an increase of 1.2%
compared to 2014;
· total payments of 7,428.0 million
(£5,907.5 million), representing an increase of 9.6% compared
to 2014; and
· a margin of 392.2 million (£311.9
million) beneath the commitments ceiling for the heading.
1.26 Heading 5: Administration:
· total commitments in 2015 of 8,680.5
million (£6,903.6 million), representing an increase of 2.4%
compared to 2014;
· total payments of 8,668.1 million
(£6,893.7 million), representing an increase of 2.4% compared
to 2014; and
· a margin of 395.5 million (£314.5
million) beneath the commitments ceiling for the heading.
1.27 Heading 6: Compensations: there are no commitments
in 2015, compared to 28.6 million (£23.5 million) in
2014 and no payments compared to 28.6 million (£23.5
million) in 2014.
The Government's view
1.28 In his Explanatory Memorandum of 9 December
the Financial Secretary to the Treasury (Mr David Gauke) says,
in familiar 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.
1.29 The Minister comments substantively that:
· the Commission proposal does not make
a comparison between the revised proposal and the original DB;
· the Government's analysis suggests that
the revised DB represents a 373 million (£296.6 million)
decrease in commitments and a 800 million (£636.2 million)
decrease in payments compared to the original DB (for which total
commitments were 145,599.3 million and total payments were
142,137.3 million);
· the Government welcomes that the revised
DB represents a 800 million (£636.2 million) cut compared
to Commission's original proposal;
· however, the Government continues to think
that there should be a significant margin between the agreed budget
and annual ceiling for the purpose of sound budgetary management;
· the Government also notes that the budget
is agreed by QMV, and that 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 the amount will depend
on actual budgetary outturns.
1.30 The Minister also says that:
· the revised DB will be subject to negotiations
and separate approval by both Council and the European Parliament,
after which the EU General Budget 2015 will be deemed to have
been adopted;
· the indicative timetable for adoption
envisions agreement of the Council position on the revised DB
on 12 December and adoption of the Council's position at the European
Parliament Plenary on 17/18 December, thus reaching an agreement
on EU General Budget 2015.
Council consideration of the revised Draft Budget
1.31 A Council Secretariat press notice[10]
suggests that a COREPER decision on the DB on 9 December effectively
commits the Council to an agreement with the European Parliament,
requiring only formal adoption by the council on 12 December.
Previous Committee Reports
None.
1 (36139)-(36142): see Fifth Report HC 219-v (2014-15),
chapter 3 (2 July 2014), Eighteenth Report HC 219-xvii (2014-15),
chapter 3 (5 November 2014) and Gen Co Debs, European Committee
B, 15 October 2014, cols. 3-26. Back
2
(35970), 9017/14 (36067) 10340/14 (36215), 11775/14 (36318), 12954/14
(36427), 14442/14: see First Report HC 219-i (2014-15), chapter 33
(4 June 2014), Fourth Report HC 219-iv (2014-15), chapter 5 (25
June 2014), Ninth Report HC 219-ix (2014-15), chapter 4 (3 September
2014), Twelfth Report HC 219-xii (2014-15), chapter 3 (10 September
2014), Thirteenth Report HC 219-xiii (2014-15), chapter 22 (15
October 2014), Eighteenth Report HC 219-xvii (2014-15), chapter 3
(5 November 2014), Nineteenth Report HC 219-xviii (2014-15), chapter 1
(5 November 2014), Twenty-second Report HC 219-xxi (2014-15),
chapter 1 (26 November 2014) and Gen Co Debs, European
Committee B, 15 October 2014, cols. 3-26. Back
3
Ibid. Back
4
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
5
The DB is based on the forecast of GNI issued after the Advisory
Committee on Own Resources meeting held on 19 May. Back
6
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
7
(35803) 6096/14: see Thirty-eighth Report HC 83-xxxv (2013-14),
chapter 19 (5 March 2014). Back
8
DABs No. 3/2014 to No. 6/2014, op cit; DAB No. 7/2014:
(36429), 14444/14: see Eighteenth Report HC 219-xvii (2014-15),
chapter 4 (5 November 2014); DAB No. 8/2014: (36547), 16210/14,
on which we have yet to report. Back
9
The 'margin' refers to the difference between total commitments/payments
in the DB and total commitments/payments provided for in the MFF. Back
10
See Council Secretariat press notice. Back
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