Examination of Witnesses (Questions 40-59)
KITTY USSHER,
MR JEAN-CHRISTOPHE
GRAY, MR
DUNCAN SPARKES
AND MR
NICHOLAS JOICEY
5 JULY 2007
Q40 Lord Watson of Richmond: I want to
move on to Heading 4, which is somewhat related to what we have
been talking about. Under Heading 4 there is a 9.4% increase in
pre-accession funding. We are obviously interested to know what
that really is going to be spent on. Does it in fact relate to
the EU's rather ambitious proposals in terms of a zone of stability
around the Union, touching on the last question? 9.4% is not an
insubstantial increase but what is it going to be spent on?
Kitty Ussher: The short answer to your question
is that it is going to assistance to Turkey and parts of the Balkans.
It is an increase in the instrument for pre-accession which will
bring the commitment appropriations there to €1.4 billion.
The overall financing for this was largely agreed in the negotiations
for the financial framework. We strongly support pre-accession
countries' efforts in preparing to manage and implement Community
programmes. From my own personal memory I know that we have provided
some help to eastern European countries at a similar stage.
Q41 Lord Watson of Richmond: And that
has been very effective, but you said Turkey, and, of course,
the status of Turkey with regard to accession is absolutely not
clear. One of the ways in which the European Union—correct
me if I am wrong—has attempted to create a zone of stability
is by making the ultimate offer of membership, and that is the
use of soft power by the European Union and it has been extremely
effective. Heading money towards Turkey is something rather different.
I am interested if that is now becoming a significant budget feature
here.
Kitty Ussher: I must say this is different from
the general zone of stability which I am sure comes under neighbourhood
policy. In terms of Turkey, they are eligible as a pre-accession
country. The view that we take is that they should not be unfairly
treated as they attempt to work out whether they are eligible
or not or whether they can be. It would be wrong, I think, to
say, "You cannot try. We are not going to support you to
try in the way that we have supported other countries to try".
Q42 Lord Watson of Richmond: Were you
saying that the larger part of this increase is going to go towards
Turkey?
Mr Sparkes: Yes, indeed. The pre-accession instrument
which replaces the previous separate PHARE, SAPARD, ISPA and CARDS
programmes is now devoted to the candidate countries—Macedonia,
Croatia and Turkey—and the remaining countries of the Western
Balkans. It is ring-fenced to those countries. Turkey, being the
country with by far the largest population and by some measures
the poorest, is inevitably going to be eligible, if it can spend,
commission and programme it, for the lion's share of that funding.
Q43 Chairman: Can I ask a supplementary
question about the EU's ambitious plans to create a zone of stability
around the Union? Is there enough money for that? It seemed to
us to look a bit short if the zone of stability is going to include
places like Iraq and Afghanistan.
Kitty Ussher: We think there is enough money
for that, although you make an extremely important point. It is
also worth saying that the importance of a policy cannot purely
be measured in financial terms. Many of the most effective ways
of helping neighbourhood countries do not involve huge amounts
of budget resources—trade concessions, loans, targeted technical
assistance, regular dialogue, shared diplomatic concerns and so
on. We do not think that budget line is too small.
Q44 Lord Cobbold: Under Heading 5 we
note with approval your desire to examine the Commission's proposal
for increased staffing. There seem to be some pretty enormous
and varying figures. On page 41 of the Commission's Expenditure
Analysis document it talks about it requiring "the recruitment
of 3,960 additional staff members financed under heading 5 over
a transitional period from 2003 to 2008 ... ", and then there
is a figure, which one would understand, relating to the necessity
for more staff in connection with the adoption of Bulgaria and
Romania, looking for 750 posts over the period 2006-2009. These
all seem slightly vague and rather high numbers. What is your
view on that?
Kitty Ussher: I completely agree with you 100%.
This is a prime example of the more general point we were making
earlier, that we believe there can be efficiency and productivity
gains in terms of staffing and we have been negotiating very hard
at official level on this point in the last few weeks. National
administrations are facing restrictions. It is going to be a tough
spending round for us here in the UK. That is replicated across
Europe. We are making efficiency cuts and we do not think it is
right that we should be supporting staffing gains in the European
Commission, not just because it is not fair or anything like that,
but simply because we think they could do their job more effectively,
so we agree 100% and we are negotiating hard on this.
Q45 Lord Watson of Richmond: So you will
be taking a tough stance on that?
Kitty Ussher: Absolutely; we are already and
will continue to do so.
Lord Watson of Richmond: Just one point of detail.
On page 43 of this document under "General administrative
expenditure" there is an item called "Mobility",
which is moving from €900,000 up to two and a half million
euros, a 180% increase. Do we know what mobility is?
Q46 Chairman: Can it be air fares?
Kitty Ussher: Presumably. It is something to
do with moving around, I would guess. The clue is in the name.
Q47 Lord Watson of Richmond: It is not
a very large amount but it is a very large increase.
Kitty Ussher: I am waiting for my rent-a-crowd
to provide the answer. Apologies. We will find out.
Q48 Chairman: You can always write us
a letter.
Kitty Ussher: We are writing on two points.
Q49 Chairman: That is fine. Having managed
to go down the headings I now have the luxury of inviting Lord
Trimble to ask a more general question.
Q50 Lord Trimble: It is a question more
about the Commission's annual policy strategy, which I understand
is drawn up without any costing or figures. It looks as though
it is drawn up without thinking about the cost of these strategies,
and surely in terms of determining their annual policy strategy
there ought to be some consideration given to costings.
Kitty Ussher: I understand there is some consideration
but the two documents are not really parallel parts of the same
process. The Commission can set out its activities for the year,
as it is doing. It presents its political priorities and key initiatives
and so on, but the annual budget process is the breaking down
of the priorities that were agreed in 2005 when we agreed the
financial perspectives. Obviously, there is some overlap and you
can easily cross-reference between one and the other but one is
not the political narrative for the other in any sense whatsoever.
The timings are different for a start.
Q51 Chairman: If I may have another go
at this, the EU Select Committee has done a critique of the policy
strategy which suggests that it is meaningless unless it is related
more closely to and within the same timescale as the budget. Would
you agree?
Kitty Ussher: We can look into it but, to be
honest, our focus has been on making sure that the budget lines
are more clearly associated with targets and that is why we have
been pushing activity-based budgeting, simply because there are
timing problems with comparing the two documents. The composition
of the annual budget is inevitably dominated by ongoing multi-annual
expenditure programmes which may not correlate to the policy initiatives
that people are thinking about in the European Commission at any
one time and are covered in their programme.
Q52 Lord Trimble: But those policy initiatives
will eventually come through with budgetary consequences and surely
in determining a policy you should have regard to what the budgetary
consequences are going to be?
Kitty Ussher: Of course, though I think what
I am saying is that that document in the Annual Policy Strategy
is not directly comparable to discussions that take place around
the annual budget, but I agree with your general point, which
is that we need to be able to hold the Commission to account and
make sure that we completely understand what is happening as a
result of each budget line. We will certainly reflect on what
you say, but our instinctive answer and my view, having looked
at both documents, is that they are talking about things happening
in different time periods and being looked at in different ways.
I am not sure it is the most effective way of scrutinising the
budget.
Q53 Lord Trimble: It is not a question
of time periods and it is not a question of thinking whether these
things are comparable. It is just that in deciding what your policies
are you need to think about what they are going to cost rather
than have the policies there and then later work out what the
financial implications of them are.
Kitty Ussher: Sure, but I think we feel we have
an effective policy process through the negotiations on the financial
perspective and the big European Council set-pieces rather than
through a document that the Commission is effectively producing,
saying, "This is what our managers are thinking about this
year". I do agree with your general points. It is just that
I think we are having a debate about the mechanism to do it. There
is absolutely no doubt, I agree with you, that we should be scrutinising
exactly what happens as a result of each budget line. At the moment
we feel that focusing on the policy statement is not the way to
make progress, but I am hearing what you are saying.
Q54 Chairman: We have about five minutes
left. I am therefore going to allow myself the luxury of asking
you about the first report which was done under my watch, which
was on funding the EU. We arrived at the conclusion that really
it worked quite well as it was, that a share of GNI turned out
to be the right way to do it. This view, I have to say, last Thursday
went down with elements of lead balloon in the meeting of Budget
Committee MEPs and national Parliamentarians and there is clearly
pressure to change the basis on which the own resources are calculated.
Are you expecting this pressure? Are you ready for it?
Kitty Ussher: It is not something that we think
will come up in the annual budget.
Q55 Chairman: No, indeed.
Kitty Ussher: However, I am sure it will be
discussed in the budget review, the process of which is just beginning
to start. I think I have already made clear that we were very
keen to get the commitment to the budget review in the negotiations
that culminated in Council at the end of 2005, and we think it
should be root and branch; it should look at the fit-for-purposeness
of the whole aspect of the EC budget. I am sure that there will
be conversations about how that budget is financed as part of
it. We are absolutely ready but it has not quite started yet,
so we can come back to it next year.
Q56 Lord Watson of Richmond: Just before
I come to the last question, connected with it you are saying
that there should be a root and branch review.
Kitty Ussher: Yes.
Q57 Lord Watson of Richmond: Is the basic
motor behind such a root and branch approach that we are after
all now looking at a European Union of 27 countries, that it is
an entirely different animal from what it was when the original
budget procedures were evolved? Is that the basic reason for this
different kind of European Union and we therefore should take
a different sort of look at the budget?
Kitty Ussher: That is one of the reasons but
the main reason from a UK point of view is that we think the budget
has always not represented value for money for UK taxpayers. We
can discuss the various reasons for that but that is why we want
a review.
Q58 Lord Watson of Richmond: In that
specific context then, why are we no longer insisting, as we were
previously, that the UK rebate should be calculated first? We
appear now to be saying that we are happy to wait until the rebate
negotiations complete with Germany, Sweden and the Netherlands.
Why have we moved our place in the queue?
Kitty Ussher: If I may, and this is a slightly
different point, there was press speculation when the own resources
decision was being negotiated, I think following the 2005 agreement
on the financial perspective, because you complete the budget
line and you work out how to finance it, that the UK had somehow
retreated on its negotiating stance.
Q59 Lord Watson of Richmond: You are
saying that is not true?
Kitty Ussher: I am saying that we are extremely
happy with the outcome. With regard to negotiations in European
fora, there is some realpolitik in there and you would expect,
and it is right, that the British Government should take an extremely
aggressive negotiating stance, but we always knew the backstop
beyond which we would not go, and we did not go beyond it, and
we are extremely happy about that.
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