Select Committee on European Union Twenty-First Report


The aim of this report is to inform the House of issues pertaining to the 2005 EC Budget, and to scrutinise the Government's position before the Commission's Preliminary Draft Budget is considered at the Budget Council on 16 July 2004. The 2005 EC Budget is significant for the following reasons:

  it is the first full budget to be presented for an EU of 25 Member States; this is therefore the first time that the ten new Member States will participate fully in the negotiations;

  it is the first budget to be presented exclusively in the new Activity-Based Budgeting format, which seeks to tie budgetary resources to clear policy objectives with appropriate performance indicators and evaluation measures.

The Government has outlined three priorities for the 2005 EC Budget:

  to ensure a realistic level for payments, particularly in spending on structural operations;

  to reprioritise the external actions budget by developing a greater 'poverty focus', while still maintaining spending on Iraqi reconstruction;

  to cut the European institutions' administrative budgets and apply stringent criteria for value for money.

We broadly agree with the Government's position and we fully support the Government's efforts to ensure that the principles of efficiency and value for money underpin any proposed increases to the EC budget. We also support the Government's continuing efforts to reform spending on the Common Agricultural Policy.

We note the Government's proposals for reforming the Structural and Cohesion Funds. We also note that the Constitutional Treaty agreed by the European Council in Brussels on 18 June 2004 has made significant changes to the budgetary procedure[1]. We will return to both of these issues in more detail in our forthcoming inquiry into the future financing of the European Union.

1   Provisional consolidated version of the draft Treaty establishing a Constitution for Europe (CIG 86/04): 2 en.pdf Back

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