Select Committee on European Union Minutes of Evidence

Examination of Witnesses (Questions 40-43)



Lord Armstrong of Ilminster

  40. The abatement percentage, the 66 per cent, of which I bear some scars, that is secure for 2004, is it?

  (Mr Lloyd) That is secure until there is unanimous agreement in the Council and national ratification in Parliament, for any change.


  41. How does the latest draft of the Constitution Treaty alter the Budget procedure? Can anybody help us on that?

  (Dawn Primarolo) I think the first thing that I should flag up in responding is to say that the Government is extremely grateful for the active part that Lord Tomlinson has played in the discussions as a representative of this House. You will be aware that Peter Hain's contribution tabled in the Convention made very clear that the Government is open to changes to simplify and streamline procedures on the expenditure side of the Budget provided that Budget discipline and stability is not undermined, but we will not accept any watering down of the Council and Member States' current role for revenues and resources. The latest draft proposes changes in both areas, revenue and expenditure. On revenue, it is proposing maintaining the current arrangements of Council decision and the national ratification of ceilings on Own Resources and the introduction of new Own Resources. There can be no increase in the overall ceilings for EU budgets without the agreement of Parliament and there is no question of European tax being imposed on the UK. But the draft does propose a change in procedure for adopting the detailed rules of the Own Resource system to QMV subject to the consent of the European Parliament but without national ratification. I want to make it absolutely clear, this is not acceptable and it would mean that changes to the Own Resource decisions directly affecting the level of UK contribution could be taken out of the hands of the UK Government and Parliament and we are not going to agree to that. Geoff, I do not know whether you want to pick up on any further points.
  (Mr Lloyd) Those are the fundamental points on the revenue side of the Budget. On the expenditure side of the Budget there are some quite wide-ranging proposals for change which fall into three headings. The first is that the draft Treaty proposes to give legally binding status to the financial perspectives which are currently, as I think you know, agreed institutionally between the Council, the European Parliament and the Commission. Under the Praesidium's proposals the Council would have the upper hand in establishing the new multi-annual financial framework and that would set binding expenditure ceilings with a Treaty status to those ceilings for a limited number of categories of spending just like the current financial perspective. In principle this is a very important and useful development in cementing the Budget discipline that the financial perspectives have secured for us in recent years. I say in principle, of course the devil is in the detail. In terms of the precise decision-making procedure that is associated with the new financial perspective, the draft does give the Council the upper hand and that is what the UK Government has pressed for. We remain to be convinced that the decision-making procedure which gives the European Parliament a right of consent rather than that a right of consultation is one that we should support, but this has to be looked at alongside the second proposal which is the changes to the annual Budget procedures. Those procedures and the changes that are proposed would help to simplify the annual budget procedure which is very opaque at the present time, particularly in assigning the last word on some spending to one institution and the last word on spending to another institution. It is also opaque to the extent that the rules of the Treaty are not precisely what governs what happens in practice because of the application of the inter-institutional agreement. What is being proposed is a streamlined budget procedure with a single reading in the Council and the European Parliament, and with the Council and the European Parliament having a say on all expenditure rather than the European Parliament having a last word on non-compulsory expenditure as now and the Council having the last word on compulsory expenditure. Again, provided we get the balance right in terms of the powers of the Parliament and the Council on the final say over that expenditure, in the Government's view this is a welcome step forward and a good development and it can help to keep spending down and well below the Own Resources ceiling. The third key change is in relation to value for money and for this change we are particularly grateful to Lord Tomlinson for pressing hard and securing the changes that he has secured in the Praesidium's draft Treaty, which is to insert a requirement for an annual Commission performance report to accompany the financial accounts each year, which will gel very nicely with the activity based budgeting approach and enable the budgetary authority to take decisions on future spending levels in the light of a specific output based report from the Commission. So these are three developments on the expenditure side which in principle are helpful and will be debated in the IGC because most of these changes are reflected in the second part of the Treaty where we are not expecting conclusions to be reached before the beginning of the IGC.

  42. Thank you very much for that comprehensive answer. What is the timetable for the next financial perspective?
  (Mr Lloyd) The Commission is active now on drawing up its ideas for its proposals that it will make for the next financial perspective. It has set up a number of working groups internally to look at this and it has announced that it will be bringing forward its so-called policy orientations towards the end of this year. That is the Commission's starting point view. In terms of the end point view, of course the current financial perspective runs until 2006 and we would expect decisions to be taken well in advance of 2007 so that the new financial perspective can come into force smoothly.

  43. When does the UK Government become involved in this, where in the process?
  (Dawn Primarolo) There will be an orientation discussion at the Council in December, but in the meantime the Commission has set up its working groups in a series of areas which will conclude their work and feed in to that orientation date towards the end of the year.

  1. When is the best time for us to become involved in this? You have been very useful in giving us advice in the past about this.
      (Dawn Primarolo) Sorry, I was just asking when the working party information might begin to emerge because that would obviously be very helpful to you. Unfortunately we are expecting all of this to emerge towards the end of this year, so you would be looking towards the end of this year to cover the discussions. There should be enough around certainly to facilitate the discussion for you.

  Chairman: Thank you for coming and for giving us such useful and helpful answers.

previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2003