Select Committee on European Union Twenty-First Report

CHAPTER 3: Summary of Conclusions

Activity-Based Budgeting

57.  We recognise that the Government has been very active in convincing the Commission and other Member States that all future budgets must be presented in the Activity-Based Budgeting format. The Committee welcomes this new approach to monitoring spending which should lead to greater transparency. We look forward to seeing the efficiency savings Activity-Based Budgeting will lead to over time, and we ask the Government to keep the Committee informed of the progress made.

The 2005 EC Budget

58.  We note with approval that the proposed total expenditure levels in the 2005 Preliminary Draft Budget are significantly lower than the agreed ceiling of 1.24% of EU Gross National Income.

The Government's priorities for the 2005 EC Budget


59.  In our report on the 2004 EC Budget[16], we supported the UK Government in its argument for a greater margin in the external actions category precisely to avoid such overspends. It is disappointing that the Government does not appear to have succeeded in persuading the budgetary authority[17] to develop such an increased margin.

60.  As in our 2004 EC Budget report, we continue to support the Government in its efforts to improve the 'poverty focus' of EC spending on external actions. However, we continue to believe that this focus should not deflect from the EU's other objectives of working towards stability in regions such as the Middle East and the Balkans.


61.  Whilst accepting that enlargement necessitates some increase in administrative resources, the Committee strongly supports the Government's efforts to ensure that the principles of efficiency and value for money underpin any substantial increase. The Committee agrees with the Minister that before any increase in EC budget lines is agreed, consideration should be given to whether costs could be reduced through greater efficiency savings and the reprioritisation of existing resources (Q 9).

Other spending categories


62.  We strongly support the Government in its continued efforts to achieve real CAP reform and hope that the negotiations of the next Financial Perspective (2007-2013) which will take place over the next eighteen months may provide an opportunity to do so. We will return to the issue of CAP funding in our forthcoming inquiry into the future financing of the EU.


63.  We note the Government's proposals for reform of the European Structural and Cohesion Funds. We shall return more fully, as part of our forthcoming inquiry into the future financing of the EU, to the proposals put to us by the Minister that European Structural Funds should be targeted only at poorer nations to assist them in achieving the Lisbon Agenda goals (Q 11 & Q 20).


64.  The Committee agrees with the Minister that spending at EU level should be evaluated against evidence that it adds value beyond what a Member State can achieve on its own (Q 12 & Q 21), and believes that the Commission should be committed to analysing the need for expenditure on this basis.

Changes to the Financial Provisions introduced in the Constitutional Treaty

65.  The European Council agreed the final text for a Treaty establishing a Constitution for Europe on 18 June 2004. The Committee is satisfied that the status quo for decision-making in the area of 'Own Resources' has been maintained in this Treaty. The Committee will consider in more detail further changes to the EU's Financial Provisions in its forthcoming inquiry into the future financing of the EU.

16   The 2004 EC Budget (Session 2002-03, 33rd report) HL Paper 141. Back

17   See paragraph 4.  Back

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