Select Committee on European Union Fortieth Report

FINANCIAL PERSPECTIVE 2007-2013 (11734/05, 5834/06, 5835/06, 5836/06, 5837/06, 6297/06)

Letter from Rt Hon Douglas Alexander MP, Minister for Europe, Foreign and Commonwealth Office to the Chairman

  I am writing to update you on the latest developments in the negotiation for a new Inter-institutional Agreement (IIA) for the 2007-13 Financial Perspective.

  At a trilogue on 4 April, the Austrian Presidency agreed a framework for a new Inter-institutional Agreement with the Commission and the European Parliament. The Presidency circulated a detailed draft IIA text on 11 April on the basis of this framework, and which I attach for your information.

  The main elements of the draft text include:

    —  An overall Financial Perspective expenditure ceiling of €864.3 billion, €2 billion more than the agreement reached by the European Council in December. A further €2 billion of expenditure will be possible outside the Financial Perspective (including the €1.5 billion Emergency Aid Reserve, called up from Member States when needed);

    —  No change to the existing financial amounts allocated to the flexibility mechanisms, including the Solidarity Fund, the annual flexibility instrument (though funds could now be rolled over for up to two years), the Emergency Aid Reserve, or the 5 per cent reference amount in individual regulations. No change to the existing decision making procedures to activate these instruments. In addition, the Globalisation Adjustment Fund is established;

    —  The inclusion of text on various non-financial issues (including the Financial Regulation, the creation of EU agencies, certification of Member State spending, financial programming) and a separate declaration on the 2008-09 review of the budget. None of this text changes the fundamental institutional balance between the arms of the budgetary authority. Some of it, such as the text on certification, should lead to an improvement in the EU's financial management.

  Member States indicated at Coreper on 12 April that they were content with the final text agreed with the EP. The UK joined this consensus, reflecting the Government's view that this text maintains the essential elements of the agreement reached by the European Council in December. The Presidency will now formally ask the Council to adopt the IIA text. We expect this to be either by written procedure or as an A-point at a forthcoming Council. The text would also be adopted by the EP at its mid-May Plenary.

  As you know, two Community documents related to the IIA are currently under scrutiny:

    —  5973/06 Commission working document: Revised proposal for renewal of the Inter-institutional Agreement on budgetary discipline and improvement of the budgetary procedure; and

    —  6426/06 Commission contribution to the inter-institutional negotiations on the proposal for renewal of the Inter-institutional Agreement on budgetary discipline and improvement of the budgetary procedure.

  I stand ready to take forward whatever scrutiny measures the committee deems necessary after the recess.

13 April 2006

Letter from Rt Hon Hilary Benn MP, Secretary of State for International Development, Department for International Development to the Chairman

  On 16 March 2006, your Committee discussed the Communication on External Actions through Thematic Programmes under the Future Financial Perspectives 2007-13 (FP) and the five specific thematic Communications as per above. Your Committee cleared all Communications for scrutiny on the basis that I press for more clarity on the issues raised in my EM. Similarly, you asked me to inform you of the budget allocations for each programme once decided.

  There has been some development since I last wrote. On 16 February, Council decided in Coreper to pursue a line of negotiations with the European Parliament based on including all current geographic and thematic regulations into the DCECI—the new Development Instrument. Promoting simplicity and effectiveness in the management of EC external spend underpinned this decision. We supported this line.

  Following this, the Austrian Presidency prepared procedural Council Conclusions on the seven specific thematic Communications plus the global one. These Conclusions simply took note of the respective Communications and invited the Commission and Member States to integrate these as appropriate into the new external action instruments, including the DCECI. The Conclusions were adopted by the Environment Council on 9 March. A copy of the Conclusions is attached.

  The Presidency then brought forward proposals on how to include these regulations into the DCECI. They were briefly discussed in Council working groups. It is our understanding that discussions on the Communications as part of the DCECI will replace any discussions and adoption of the specific thematic Communications in Council. We plan to raise concerns spelled out in our respective EMs in the context of these discussions.

  The EP Development Committee adopted their report on the DCECI on March 21. They rejected the approach adopted by the Council for the thematic regulations. We anticipate that high-level political negotiations will be needed to move this dossier further.

  We will write again once there is more progress. It is our wish to keep you as informed as possible, but I hope you share my view that this is a complex process where the outcome is sometimes difficult to anticipate.

24 April 2006

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