Select Committee on European Union Thirty-Third Report

The Government's priorities for the 2004 Budget

External Action (category 4)

49.  The Committee agrees with the Government that spending on external action should be a priority for the 2004 Budget. We are encouraged to hear that the Government is proposing a larger margin to deal with foreseeable, but as yet uncosted, spending in Iraq and the Middle East. We urge the Government to do everything in its power to ensure best use of EC spending on external action. The Committee supports the Government's initiative to develop a greater poverty focus for EC external action spending over the next few years, but this focus should not deflect from the EU's other objective of working towards stability in regions such as the Middle East and the Balkans. We would welcome greater clarity on how far the Government considers that the EU can take on ambitious plans for greater external action involvement without substantial increases in spending under category 4 of the EC Budget (paragraph 30).

Administration (category 5)

50.  While emphasising its support for sufficient resources to deal with enlargement, the Government says that it is keen to see strict conditions for value for money applied to these institutional increases. The Committee fully supports the Government in this approach. We also wish to see efficient use being made of these increases in administrative costs through the application of modern management practices and techniques (paragraph 32).

51.  On a related institutional matter, we would urge the Government, in the forthcoming Inter-Governmental Conference, to continue with attempts to reform the European Court of Auditors. We produced a report on the European Court of Auditors in April 2001, and our view on the subject remains unchanged. In particular, we consider that the European Court of Auditors would be most effective in an enlarged Union if it had a highly-qualified chief executive who was appointed impartially. The chief executive would be supported by a large team of audit staff who would report to a part-time, non-executive board of representatives from each of the Members States. We will return to this issue as part of our work on the forthcoming Inter-Governmental Conference (paragraph 33).

Other categories of expenditure

Agriculture (Category 1)

52.  We ask the Government to explain exactly how the recently-agreed changes to the CAP will affect the final 2004 EC Budget. We call on the Government to use the recent agreement on reform of the CAP to make progress in the Doha round of world trade talks. Furthermore, we continue to urge the Government to push for further reform of the CAP (paragraph 35).

Structural Operations (Category 2)

53.  We urge the Government to make full use of the new Activity-Based Budgeting rules to ensure that structural fund money in all Member States is properly forecast and effectively spent in order to achieve clear outcomes (paragraph 37).

Pre-Accession Strategy (Category 6)

54.  We note with approval that there was a marked improvement during 2002 in the absorption capacity for funds such as the PHARE programme (paragraph 38).

Proposals for reform of the Budget process

55.  We concur with the Government's view that the changes to the system of Own Resources proposed in the draft Constitutional Treaty are "unacceptable" (Q 41). We support the Government in its efforts to retain the status quo for decision-making in this area (paragraph 41).

56.  We welcome the proposal that the European Parliament should have a greater say over spending on agriculture (paragraph 43).

57.  The proposals for a Treaty base for the Financial Perspectives, the simplification of the annual budgetary process and the requirement for the Commission to produce an annual performance report, if adopted, would greatly aid our future scrutiny of EC spending. We welcome these reforms as facilitating greater accountability for EC spending and urge the Government to continue to support these reforms in the Inter-Governmental Conference, which will decide on the final version of the Treaty. We support the Government in its efforts to retain unanimity and the need for national parliamentary ratification for decisions about the level of individual Member State contributions to the Union's resources (paragraph 45).

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