EUROPEAN UNION SOLIDARITY FUND (8323/05)
Letter from Ed Miliband MP, Parliamentary
Secretary, Cabinet Office to the Chairman
I am writing to update your Committee on progress
on the Explanatory Memorandum submitted on 18 July 2005 by Mr
John Hutton, then Minister for the Cabinet Office and Chancellor
for the Duchy of Lancaster, on the Solidarity Fund—document
8323/05 COM(05) 108: Draft Regulation establishing the European
Union Solidarity Fund + ADD 1 (Commission staff working paper:
impact assessment) .
The current Solidarity Fund was introduced in
December 2002 with the aim of providing support in a spirit of
solidarity to member states and candidate countries in the event
of major natural disasters that have serious effects on living
conditions, the natural environment or the economy. The current
Regulation sets a high threshold for claims of damage at either
over €3 billion (£2.058 billion) or 0.6 per cent of
Gross National Income for uninsured losses. There is also an exception
to allow claims if a region is affected by an extraordinary disaster
affecting a major population in that region with serious lasting
effects.
The new Proposal from the Commission would lower
the threshold to €1 billion (£0.686 billion) or 0.5
per cent of gross national income and remove the exception for
regions. It would also widen the scope from natural disasters
to include technological and industrial disasters, marine pollution,
public health threats and acts of terrorism.
During the UK and Austrian Presidencies this
proposal has been discussed at seven meetings of Financial Counsellors.
Approval of the proposals would require a Qualified Majority Voting
in the Council and it has become clear during the discussions
that there is no majority for the changes sought by the Commission.
Some member states want no change; some would like to widen the
scope but leave the ceilings unchanged; others would want the
ceilings changed to reflect their specific national concerns.
The European Parliament for its part has delivered a largely positive
Opinion.
On the question of widening the scope, there
have been some initial exchanges but since the Commission and
some Member States have so far insisted that the ceilings and
scope must be taken as a package the discussions have been brief.
In the discussions, the UK has taken the line
that there is a clear need for a reasonably high ceiling to ensure
there is no incentive for countries not to invest in measures
to respond to and reduce the impact of disasters, including taking
steps to insure against their effects. The present Solidarity
Fund works well in assisting smaller and poorer countries whilst
ensuring that larger and better off member states will normally
fall below the threshold. On the issue of extending the scope
of the Solidarity Fund beyond natural disasters to include industrial
or technological disasters, the UK has also noted that the Solidarity
Fund should not be extended to areas that undermine the incentives
to undertake preventive action and contingency planning or lead
to under-insurance.
Under the recently signed Inter Institutional
Agreement on the EU budget it was agreed that the Solidarity Fund
will continue as now to be financed "off budget" by
one-off agreements of the budgetary authority rather than be allocated
a budget as the Commission had wished.
The latest position, therefore, is that in the
absence of a qualified majority the current Solidarity Fund Regulation
which has no expiry date will continue as early impressions are
that the Solidarity Fund will not be one of their priorities.
Should there continue to be no qualified majority, the current
Solidarity Fund Regulation will remain unchanged for the new Financial
Perspective 2007-13.
I hope your Committee finds this update helpful.
Should there be further developments I shall, of course write
to you.
13 July 2006
Letter from the Chairman to Ed Miliband
MP
Thank you very much for your letter of 13 July
updating the Committee on Explanatory Memorandum 8323/05 on the
Solidarity Fund. This was considered by Sub-Committee A at their
meeting on 25 July. The Sub-Committee noted your belief that negotiations
were deadlocked and decided to maintain the scrutiny reserve.
I enclose a copy of a letter I sent to you on
25 October 2005[15]
(not printed) on this dossier to which I have not received a reply.
May I draw your attention to the following in this letter to which
the Committee would appreciate your response.
Firstly, the Committee were concerned to know
whether the Solidarity Fund has demonstrated any added value since
the initial payments were made in the aftermath of the flooding
in central Europe in 2002.
Secondly, we asked where the money allocated
to the Fund but not spent has gone.
Finally, we expressed our view that there was
some justification in extending the Fund to include public health
threats. What is your analysis of the proposals to expand the
Fund?
25 July 2006
15 Correspondence with Ministers, 45th Report of Session
2005-06, HL Paper 243, p 58. Back
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