EC BUDGET 2007
Letter from Ed Balls MP, Economic Secretary,
HM Treasury to the Chairman
The European Parliament (EP) recently held its
first reading of the 2005 Draft EC Budget, culminating in a plenary
vote on amendments on 26 October. I am writing to update you on
the main changes to the Draft Budget established by Council on
25 July.
Additionally, the Commission has presented two
Amending Letters to its Preliminary Draft Budget (PDB) since Council's
first reading which will be discussed and adopted during the course
of the 2006 budget procedure—this letter explains the contents.
THE EUROPEAN
PARLIAMENT'S
AMENDMENTS
Overall, the EP increased commitments by €1.54
billion to a total of €127.335 billion and payments by €7.36
billion to €122.02 billion. The payment figures correspond
to 1.04% GNI compared to the ceiling of 1.24% of GNI set by the
Community's Own Resources Decision. The total margin left under
the Financial Perspective ceiling for commitments following the
EP's amendments is €1.07 billion.
In Heading 1a (Competitiveness for Growth
and Employment), the EP increased Commitments by €550.2
million, and payments by €2.773 billion, compared to the
Draft Budget. This largely reverses the Council's reductions to
the increases proposed by the PDB, and in the case of both payments
and commitments, this actually represents an increase compared
to the PDB. These proposed increases to the Draft Budget were
to be spent on a range of priorities including:
— the Competitive and Innovation Programme;
— the 7th Framework Programme for Research;
— a pilot project on co-operation between
European Institutes of Technology;
— the Lifelong Learning programme;
— the European Centre for the Development
of Vocational Training;
— The European Social Fund;
— European Employment Services EURES;
— The social programme "Progress";
and
— Information and training measures
for workers' organisations.
This brings the total commitment appropriations
for Heading 1a to €8.837 billion, leaving a margin of €81.2
billion, and total payment appropriations to €9.541 billion.
In Heading 1b (Cohesion for Growth and Management),
the EP increased commitment appropriations by €0.023 million
and payment appropriations by €2.534 billion, compared to
the Draft Budget. This largely reverses the Council's reductions
to the increases proposed by the PDB. The EP also decided to increase
payment appropriations for the budget lines linked to the ERDF
in line with its political priorities. This brings the total commitments
for Heading IB to €45.487 billion, leaving a margin of €0.2
million, and total payments to €39.899 billion.
In Heading 2 (Preservation and Management
of Natural Resources), the EP increased commitment appropriations
by €113.5 million and payment appropriations by €1.259
billion, compared to the Draft Budget. The EP restored the PDB
proposals for all the lines on which the Council proposed a reduction.
The EP also voted amendments for increases beyond the PDB for:
— distribution of fruit and vegetables;
— help to less favoured people;
— advertising measures; and
— a new pilot project was established
on forest protection and conservation.
The EP also proposed to place 20% of planned
commitments dedicated to voluntary modulation in reserve as it
has concerns as to whether the relevant distinctions between compulsory
and non-compulsory expenditure are being respected.
These amendments brings the total commitments
for Heading 2 to €57.606 billion, leaving a margin of €744.9
million, and total payments to €56.l55 billion.
In Heading 3a (Freedom, Security and Justice),
the EP increased commitment appropriations by €58 million
and payment appropriations by €77 million compared to the
Draft Budget. The EP restored all the main programmes where the
Council had made its cuts. For the Frontex Agency the appropriations
were substantially increased beyond PDB (€12.8 million in
commitment appropriations and payment appropriations total of
€34 million), with these appropriations going into the reserve.
Increases to the PDB were also adopted for the External Borders
Fund and for "integration of third country nationals."
Pilot and preparatory schemes were proposed for the "Solidarity
in action" (migration management) for €15 million, and
for setting an anti-terror data base, for which €5 million
in commitments was proposed.
These amendments brings the total commitments
for Heading 3a to €619 million, leaving a margin of €17.8
million, and total payments to €477 million.
In Heading 3b (Citizenship), the EP increased
commitment appropriations by €28 million and payment appropriations
by €60 million compared to the Draft Budget. The EP voted
this increase to provide funding for a range of priorities within
the "Education and Culture" policy area, namely for
the programmes Citizens for Europe and Youth in Action, as well
as Multimedia Actions, Special Annual Events and the European
Year of Intercultural Dialogue. The EP also adopted proposals
for three pilot projects on "Pilot Information Networks",
which aims at increasing the networking of information between
opinion formers in the EU, and on European political foundations.
Moreover, the plan D for Democracy, Dialogue and Debate was increased
by restoring the PDB and including new initiatives.
The amendments bring the total of commitments
for Heading 3b to €615 million, leaving a margin of €20.2
million, and total payments to €708 million.
In Heading 4 (The EU as a Global Partner),
the EP increased commitment appropriations by €175.994 million
and payment appropriations by €572.892 million compared to
the Draft Budget. The increase voted by the EP was justified by
the need to maintain a geographic and thematic balance between
priorities. The EP voted to set commitment appropriations for
Afghanistan at €100 million and Afghanistan was split out
from spending on other countries in Asia and given a separate
line. The EP also voted to reduce the expenditure on the Common
Foreign and Security Policy (CFSP) by €86.6 million. A number
of pilot projects and preparatory actions were voted, including
two for business and scientific exchanges with China and India.
The amendments bring the total of commitments
for Heading 4 to €6.769 billion, leaving a margin of €44
million, and total payments to €7.834 billion.
In Heading 5 (Administration), the EP
increased commitment and payment appropriations by €83 million.
The EP decided not to endorse the Council's strategy to reprioritise
half the posts due to become vacant in the course of 2008 and
voted to restore the establishment plan of the Commission as per
the PDB. The EP also decided to place €50 million in reserve.
The amendments bring the total of commitments
and payments for Heading 5 to €6.956 billion, leaving a margin
of €159 million.
The EP made no amendments to Heading 6 (Compensation)
and appropriations remained at €445 million for both
commitment and payment appropriations.
UK PRIORITIES AND
NEXT STEPS
The EP's amendments will be discussed in the
Council's budget committee (where negotiations began on 8 November)
and subsequently by Ambassadors in Coreper. A Conciliation meeting
between the Council and European Parliament will take place on
21 November during the Budget ECOFIN, at which both sides will
attempt to reach consensus on key elements of the budget. Council
will then complete its second reading of the 2007 Budget, when
compulsory expenditure (mainly agriculture) will be definitively
settled. The budget will then pass back to the EP for its second
reading on 14 December, at which non-compulsory expenditure will
be settled and the 2007 Budget finally adopted.
The Government's priority in the forthcoming
Council discussions will be to reach agreement with the EP in
as many areas as possible in a way which does not compromise sound
financial management by:
— reducing overall allocations to deliver
a more realistically sized budget, with suitable margins for dealing
with contingencies;
— reducing the agriculture and structural
funds budget to a more acceptable level in line with implementation
capacity; and
— avoiding the use of the flexibility
instrument.
We will also be working to finalise agreement
on appropriations dedicated to the reconstruction of Iraq, restore
some of the CFSP allocation made during the Council's first reading
and trying to ensure that allocations for assistance to Asia (Afghanistan)
and Transitional Sugar Assistance do not drop below the amounts
agreed in the Draft Budget.
I attach a summary of the EP's amended Draft
Budget in Euros and in Pounds Sterling (Annex A).
AMENDING LETTER
2
Amending Letter 2 (AL 2/2007) affects: the European
Globalisation Adjustment Fund (EGF); the International Fund for
Ireland 2007-2010; Hercule (Protection of the Community's Financial
Interests); the Structural and Cohesion Funds and the European
Fisheries Fund; the Joint Research Centre (JRC); Budgetary adjustments
following modernisation of the accounting system; coverage of
expenditure incurred in connection with treasury management; the
creation of a new budget item concerning European Development
Fund contribution to common administrative support expenditure;
the European Investment Fund; Platform of the European Social
Non-Governmental Organisations; and Participation by the Swiss
Confederation in Community Programmes.
The suggested changes with net financial impacts
are as follows:
— Creation of European Globalisation
Adjustment Fund must be taken into account following the approval
of the Interinstitutional Agreement on 17 May 2006. AL 2/2007
suggest €500 million in commitment appropriations be entered
into reserve as a result.
— Pending adoption of the proposal
for a new Council regulation on Community, financial contributions
to the International Fund for Ireland (IFI), it is proposed that
€15 million in commitment appropriations be entered into
the reserve.
— Following the adoption by the Commission
on 28 June 2006 of the proposal for a Decision amending and extending
Decision No 804/2004/EC on a Community action programme to promote
activities in the field of the protection of the Community's financial
interest (Hercule II), it is proposed that commitment appropriations
be increased by €6 million and €4.4 million payment
appropriations be entered into the reserve programme.
— The contribution of Heading 1b to
the European Neighbourhood and Partnership Instrument. This does
not impact on the commitment appropriations but there is an increase
in payment appropriations of €8.4 million.
The Government will be seeking further evidence
that the amounts proposed are justified and that they correspond
to likely implementation rates.
AMENDING LETTER
3
Amending Letter 3 is to update the figures underlying
the estimate of agricultural expenditure in the preliminary draft
budget (PDB) and/or to correct, on the basis of the most recent
information available concerning fisheries, the amounts and their
breakdown between the appropriations entered in the operational
items for international fisheries agreements and those entered
in reserve. The suggested changes with net financial impacts are
as follows:
— The euro-dollar rate used, in accordance
with Council Regulation No 1290/2005 on the financing of the Common
Agricultural Policy is based on the average rated observed between
l July and 30 September 2006. It comes to €1 = $1.27 and
results in an increase in needs of about €78 million compared
to the PDB.
— The change for International Fisheries
agreements relates to the entry into force of the Fisheries Partnership
Agreement with Mauritania, but without modifying the overall amount
for fisheries agreements. It is purposed to reduce the reserve
line by an amount of €86 million and to increase the corresponding
operational line by the same amount.
— The needs of agricultural expenditure
amount to €42,832 million, a reduction of €852 million
compared to the PDB.
The Government is satisfied with evidence provided
and is likely to vote in favour of Amending Letter 3.
14 November 2006
Annex A
Table 1
2007 PDB, DRAFT EC BUDGET AND
2007 EP 1ST READING (EUROS)
The table below summarises the financial allocations
set in the Preliminary Draft Budget (PDB), Council's Draft Budget
and at EP's first reading of the budget. These show relative margins
to the ceiling set for 2007 under the 2007-13 Financial Framework.
|
| Budget Heading | Financial
Framework
Ceiling
| 2007 PDB
| Council's 2007 Draft Budget
| 2007 EP 1st Reading
|
| EURO Million |
| CA | PA
| CA | PA
| CA | PA
|
|
| 1. Sustainable Growth |
54,405 | 54,283
| 44,734 | 54,269
| 44,133 | 54,324
| 49,440 |
| 1a. Competitiveness for Growth and Employment
| 8,918 | 8,796
| 6,944 | 8,782
| 6,768 | 8,837
| 9,541 |
| Margin | -
| 121.9 | -
| 135.8 | -
| 81.2 | -
|
| 1b. Cohesion for Growth and Management
| 45,487 | 45,487
| 37,790 | 45,487
| 37,365 | 45,487
| 39,899 |
| Margin | -
| 0.4 | -
| 0.4 | -
| 0.2 | -
|
| 2. Preservation and Management of Natural Resources
| 58,351 | 57,218
| 55,683 | 56,472
| 54,895 | 57,606
| 56,155 |
| Margin | -
| 1,133.0 | -
| 1,879.9 | -
| 744.9 | -
|
| 3. Citizenship, Freedom, Security and Justice
| 1,273 | 1,174
| 1,106 | 1,148
| 1,049 | 1,234
| 1,185 |
| Freedom, Security and Justice | 637
| 571 | 427
| 561 | 400
| 619 | 477
|
| Margin | -
| 65.7 | -
| 75.3 | -
| 17.8 | -
|
| Citizenship | 636
| 603 | 680
| 587 | 648
| 615 | 708
|
| Margin | -
| 32.9 | -
| 49.4 | -
| 20.2 | -
|
| 4. European Union as a Global Partner
| 6,578 | 6,703
| 7,447 | 6,593
| 7,261 | 6,769
| 7,834 |
| Appropriation excluding EAR |
| 6,468 |
| 6,359 |
| 6,534 |
|
| Emergency Aid Reserve
| | 235
| | 235
| | 235
| |
| Margin | -
| 110 | -
| 220 | -
| 44 | -
|
| 5. Administration | 7,039
| 7,002 | 7,002
| 6,873 | 6,873
| 6,956 | 6,956
|
| Margin | -
| 112.7 | -
| 290.3 | -
| 158.6 | -
|
| 6. Compensation | 445
| 445 | 445
| 445 | 445
| 445 | 445
|
| Margin | -
| 0.4 | -
| 0.4 | -
| 0.4 | -
|
| TOTAL | 128,091
| 126,824 | 116,418
| 125,799 | 114,656
| 127,335 | 122,016
|
| Margin | -
| 1,577 | -
| 2,651 | -
| 1,067 | -
|
| Appropriations for payments as % of GNI
| | | 0.99%
| | 0.98%
| | 1.04%
|
|
| CA = Commitment Appropriations; PA = Payment Appropriations.
|
| Figures may not add up exactly because of rounding.
|
| Conversion rate as of May 2006: £1 = €1.4405 and €1 = £0.6942
|
Table 1
2007 PDB, DRAFT EC BUDGET AND
2007 EP 1ST READING (STERLING)
The table below summarises the financial allocations set
in the Preliminary Draft Budget (PDB), Council's Draft Budget
and at EP's first reading of the budget. These show relative margins
to the ceiling set for 2007 under the 2007-13 Financial Framework.
|
| Budget Heading | Financial
Framework
Ceiling
| 2007 PDB
| Council's 2007 Draft Budget
| 2007 EP 1st Reading
|
| EURO Million |
| CA | PA
| CA | PA
| CA | PA
|
|
| 1. Sustianable Growth |
37,768 | 37,683
| 31,054 | 37,674
| 30,637 | 37,712
| 34,321 |
| 1a. Competitiveness for Growth and Employment
| 6,191 | 6,106
| 4,821 | 6,096
| 4,698 | 6,135
| 6,623 |
| Margin | -
| 84.6 | -
| 94.3 | -
| 56.4 | -
|
| 1b. Cohesion for Growth and Management
| 31,577 | 31,577
| 26,234 | 31,577
| 25,939 | 31,577
| 2,769 |
| Margin | -
| 0.0 | -
| 0.0 | -
| 0.14 | -
|
| 2. Preservation and Management of Natural Resources
| 40,507 | 39,721
| 38,655 | 39,202
| 38,108 | 39,990
| 38,983 |
| Margin | -
| 787 | -
| 1,305 | -
| 517 | -
|
| 3. Citizenship, Freedom, Security and Justice
| 884 | 815
| 768 | 797
| 728 | 857
| 823 |
| Freedom, Security and Justice | 442
| 396 | 296
| 389 | 278
| 430 | 33.1
|
| Margin | -
| 45.6 | -
| 52.3 | -
| 12 | -
|
| Citizenship | 441.5
| 419 | 472
| 407 | 450
| 427 | 491
|
| Margin | -
| 22.8 | -
| 34.3 | -
| 14 | -
|
| 4. European Union as a Global Partner
| 4,566 | 4,653
| 5,170 | 4,577
| 5,041 | 4,699
| 5,438 |
| Appropriation excluding EAR |
| 4,490 |
| 4,414 |
| 4,536 |
|
| Emergency Aid Reserve
| | 163
| | 163
| | 163
| |
| Margin | -
| 76.4 | -
| 152 | -
| 30.5 | -
|
| 5. Administration | 4,886
| 4,861 | 4,861
| 4,741 | 4,741
| 4,828 | 4,828
|
| Margin | -
| | -
| 202 | -
| 110 | -
|
| 6. Compensation | 309
| 309 | 309
| 309 | 309
| 309 | 309
|
| Margin | -
| 0.28 | -
| 0.28 | -
| 0.28 | -
|
| TOTAL | 88,921
| 88,041 | 80,817
| 87,300 | 79,564
| 88,395 | 84,703
|
| Margin | -
| 1,094.7 | -
| 1,840 | -
| 741 | -
|
| Appropriations for payments as % of GNI
| | | 0.99%
| | 0.98%
| | 1.04%
|
|
| CA = Commitment Appropriations; PA = Payment Appropriations.
|
| Figures may not add up exactly because of rounding.
|
| Conversion rate as of May 2006: £1 = €1.4405 and €1 = £0.6942
|
Letter from Ed Balls MP to the Chairman
You will be aware that the ECOFIN Council adopted a second
reading position on the 2007 Budget of the European Communities
at the ECOFIN (Budget) Council on 21 November. This was followed
by conciliation with the European Parliament (EP).
The Council agreed to a number of changes proposed by the
Commission in Amending Letters 2 and 3[6]
and broadly returned to the Draft Budget (DB) it had agreed in
July across most headings. The exception was Heading 5 (Administration)
as the Presidency withdrew a draft declaration on posts that had
met strong opposition in Council from a blocking minority of Member
States. A reduction to the 2007 Preliminary Draft Budget (PDB
2007) for Heading 2 (Agriculture) of just under €1 billion
and an allocation of €100 million for Iraq were definitely
secured. The allocation for Asia was increased by €30 million
compared to the Council's first reading, and payment levels for
Structural Funds were set at a more reasonable levels. The EP
will however have the final say in these areas in its Second Reading,
on 14 and 15 December.
During conciliation the Council and the EP did agree the
overall limit on payments in 2007 be set at €115.5 billion,
just under 1% of EC GNI. This supersedes the total agreed in the
Council's Second Reading.
My Explanatory Memorandum, submitted on 23 May 2006, set
out the Commission's 2007 PDB proposals in detail. It was followed
by two letters: on the 7 September 2006[7]
I gave you details of the DB adopted by the Council on 14 July
2006; and on 14 November I wrote explaining the EP's first reading
amendments to the DB. The EP will examine the Council's second
reading on the DB and adopt the 2007 budget at its plenary session
on 14-15 December 2006. The main changes between the Council's
second reading and the EP's first are set out below:
Overall: Council's second reading reduced commitments
by €1,747 million to €125,587 million and payments by
€7,687 million to €114,329. These figures and all the
figures below include the accepted changes proposed by the Amending
Letters 1-3.
Competitiveness for growth and employment (Heading 1a):
Council returned to the DB, cutting commitments by €55 million
to €8,782 million and payments by €2,774 million to
€6,767 million compared to the EP's first reading.
Cohesion for growth and employment (Heading Ib): Council
returned to the DB, cutting commitments by €0.226 million
to €45,487 million and payments by €2,525 million to
€37,374 million.
Preservation and management of natural resources (Heading
2): Council agreed to cut commitments by €1,367 million
to €56,329 and payments by €1,491 million to €54,663
million compared to the EP's first reading. This overall reduction
is definite and cannot be amended by the Parliament in its second
reading. The Council did accept some of the European Parliament's
amends that meant that compared to the DB commitments and payments
were increased by €232.5 million. It was necessary for these
amends to be accepted for an agreement in Council to be reached
and the much more significant overall reductions secured. A pilot
project on Biofuels was also agreed as part of conciliation with
EP.
Freedom, Security and Justice (Heading 3a): All of
the EP's amends were rejected by the Council reducing commitments
by €57.5 million to €562 million and payments by €76.9
million to €400 million compared to the EP's first reading.
Citizenship (Heading 3b): Council returned to the DB,
with one exception. It accepted the EP's amendment of Special
Annual Events increasing the line by €1.5 million. Overall,
this meant commitments were reduced by €27 million to €589
million and payments by €58.62 million to €650 million
compared to the EP's first reading.
The EU as a Global Partner (Heading 4): Council reduced
commitments by €133.1 million to €6,636 million and
payments by €654.5 million to €7,180 million compared
to the EP's first reading. Noteworthy changes include a restoration
of the CFSP line to DB levels (€159.2 million commitments
and €120.4 million payments), an increase to the Asia line
by €30 million, a return to €162 million commitments
for Transitional Sugar Assistance as per the DB. The €100
million allocation to Iraq (commitments) agreed in the EP's first
reading remained unchanged.
Administration (Heading 5): The Council returned to
the Draft Budget on most budget lines reducing commitments and
payments by €106.8 million to €6,850 million. Because
of the Gentleman's agreement that exists between the European
Parliament and the Council, the Council accepted the EP's amends
to its own administrative budget. The Council also agreed to erase
its declaration on posts which proved unacceptable to a blocking
minority of Member States.
Compensations (Heading 6): Commitment and payment allocations
of €444.5 million remained unchanged.
A table summarising the changes between the EP's first reading
and Council's second reading is attached in Annex A to this letter.
It should be noted that the payments level agreed in the Council's
Second Reading is lower than the €1l5.5 billion agreed subsequently
in conciliation with the EP. The difference in payments will be
redistributed by the EP in its second reading.
Overall, the Government believes the Council's second reading
goes a long way to meeting its key objectives. In general, budget
discipline and flexibility have been maintained. In particular,
we have reached agreement to limit total payments and preserved
the financial perspective ceilings. We have also secured funding
for Iraq, for Asia, for the EU's Common Foreign and Security Policy
(CFSP), and for Transitional Sugar Assistance.
13 December 2006
Annex A
Table 1
2007 PDB, DRAFT EC BUDGET, 2007 EP 1ST READING AND
2007 COUNCIL SECOND READING (EURO)
The table below summarises the financial allocations set
in the Preliminary Draft Budget (PDB), Council's Draft Budget
and at EP's first reading of the budget. These show relative margins
to the ceiling set for 2007 under the 2007-13 Financial Framework.
|
| Budget Heading | Financial
Framework
Ceiling
| 2007 PDB
| Council's 2007 Draft Budget
| 2007 EP 1st Reading
| 2007 Council 2nd Reading
|
| EURO Million |
| CA | PA
| CA | CA
| PA | PA
| PA | PA
|
|
| 1. Sustainable Growth |
54,405 | 54,283
| 44,734 | 54,269
| 44,133 | 54,324
| 49,440 | 54,268
| 44,140 |
| 1a. Competitiveness for Growth and Employment
| 8,918 | 8,796
| 6,944 | 8,782
| 6,768 | 8,837
| 9,541 | 8,782
| 6,767 |
| Margin | -
| 121.9 | -
| 135.8 | -
| 81.2 | -
| 136 | -
|
| 1b. Cohesion for Growth and Management
| 45,487 | 45,487
| 37,790 | 45,487
| 37,365 | 45,487
| 39,899 | 45,487
| 37,374 |
| Margin | -
| 0.4 | -
| 0.4 | -
| 0.2 | -
| 0.4 | -
|
| 2. Preservation and Management of Natural Resources
| 58,351 | 57,218
| 55,683 | 56,472
| 54,895 | 57,606
| 56,155 | 56,239
| 54,663 |
| Margin | -
| 1,133.0 | -
| 1,879.9 | -
| 744.9 | -
| 2,112 | -
|
| 3. Citizenship, Freedom, Security and Justice
| 1,273 | 1,174
| 1,106 | 1,148
| 1,049 | 1,234
| 1,185 | 1,150
| 1,050 |
| Freedom, Security and Justice | 637
| 571 | 427
| 561 | 400
| 619 | 477
| 562 | 400
|
| Margin | -
| 65.7 | -
| 75.3 | -
| 17.8 | -
| 75.3 | -
|
| Citizenship | 636
| 603 | 680
| 587 | 648
| 615 | 708
| 589 | 650
|
| Margin | -
| 32.9 | -
| 49.4 | -
| 20.2 | -
| 75.3 | -
|
| 4. European Union as a Global Partner
| 6,578 | 6,703
| 7,447 | 6,593
| 7,261 | 6,769
| 7,834 | 6,636
| 7,180 |
| Appropriation excluding EAR |
| 6,468 |
| 6,359 |
| 6,534 |
| 6,401 | 7,179
|
| Emergency Aid Reserve
| | 235
| | 235
| | 235
| | 235
| |
| Margin | -
| 110 | -
| 220 | -
| 44 | -
| 176 | -
|
| 5. Administration | 7,039
| 7,002 | 7,002
| 6,873 | 6,873
| 6,956 | 6,956
| 6,850 | 6,850
|
| Margin | -
| 112.7 | -
| 290.3 | -
| 158.6 | -
| 265 | -
|
| 6. Compensation | 445
| 445 | 445
| 445 | 445
| 445 | 445
| 445 |
|
| Margin | -
| 0.4 | -
| 0.4 | -
| 0.4 | -
| 0.4 | -
|
| TOTAL | 128,091
| 126,824 | 116,418
| 125,799 | 114,656
| 127,335 | 122,016
| 125,587 | 114,329
|
| Margin | -
| 1,577 | -
| 2,651 | -
| 1,067 | -
| 2,814 | -
|
| Appropriations for payments as % of GNI
| | | 0.99%
| | 0.98%
| | 1.04%
| | 0.97%
|
|
| CA = Commitment Appropriations; PA = Payment Appropriations.
|
| Figures may not add up exactly because of rounding.
|
| Conversion rate as of May 2006: £1 = €1.4405 and €1 = £0.69
|
Table 2
2007 PDB, DRAFT EC BUDGET, 2007 EP 1ST READING (STERLING)
AND 2007 COUNCIL
SECOND READING (STERLING)
The table below summarises the financial allocations set
in the Preliminary Draft Budget (PDB), Council's Draft Budget
and at EP's first reading of the budget. These show relative margins
to the ceiling set for 2007 under the 2007-13 Financial Framework.
|
| Budget Heading | Financial
Framework
Ceiling
| 2007 PDB
| Council's 2007 Draft Budget
| 2007 EP 1st Reading
| 2007 Council 2nd Reading
|
| EURO Million |
| CA | PA
| CA | PA
| CA | PA
| CA | PA
|
|
| 1. Sustainable Growth |
37,768 | 37,683
| 31,054 | 37,674
| 30,637 | 37,712
| 34,321 | 37,673
| 30,641 |
| 1a. Competitiveness for Growth and Employment
| 6,191 | 6,106
| 4,821 | 6,096
| 4,698 | 6,135
| 6,623 | 6,096
| 4,698 |
| Margin | -
| 84.6 | -
| 94.3 | -
| 56.4 | -
| 94 | -
|
| 1b. Cohesion for Growth and Management
| 31,577 | 31,577
| 26,234 | 31,577
| 25,939 | 31,577
| 2,769 | 31,577
| 25,945 |
| Margin | -
| 0.0 | -
| 0.0 | -
| 0.14 | -
| 0.3 | -
|
| 2. Preservation and Management of Natural Resources
| 40,507 | 39,721
| 38,655 | 39,202
| 38,108 | 39,990
| 38,983 | 39,041
| 37,947 |
| Margin | -
| 787 | -
| 1,305 | -
| 517 | -
| 1,466 | -
|
| 3. Citizenship, Freedom, Security and Justice
| 884 | 815
| 768 | 797
| 728 | 857
| 823 | 798
| 729 |
| Freedom, Security and Justice | 442
| 396 | 296
| 389 | 278
| 430 | 333.1
| 390 | 278
|
| Margin | -
| 45.6 | -
| 52.3 | -
| 12 | -
| 52.3 | -
|
| Citizenship | 441.5
| 419 | 472
| 407 | 450
| 427 | 491
| 409 | 451
|
| Margin | -
| 22.8 | -
| 34.3 | -
| 14 | -
| 52.3 |
|
| 4. European Union as a Global Partner
| 4,566 | 4,653
| 5,170 | 4,577
| 5,041 | 4,699
| 5,438 | 4,607
| 4,984 |
| Appropriation excluding EAR |
| 4,490 |
| 4,414 |
| 4,536 |
| 4,444 | 4,984
|
| Emergency Aid Reserve
| | 163
| | 163
| | 163
| | 163
| |
| Margin | -
| 76.4 | -
| 152 | -
| 30.5 | -
| 122.2 | -
|
| 5. Administration | 4,886
| 4,861 | 4,861
| 4,741 | 4,741
| 4,828 | 4,828
| 4,755 | 4,755
|
| Margin | -
| | -
| 202 | -
| 110 | -
| 184 | -
|
| 6. Compensation | 309
| 309 | 309
| 309 | 309
| 309 | 309
| 309 | 309
|
| Margin | -
| 0.28 | -
| 0.28 | -
| 0.28 | -
| 0.29 | -
|
| TOTAL | 88,921
| 88,041 | 80,817
| 87,300 | 79,564
| 88,395 | 84,703
| 87,182 | 79,367
|
| Margin | -
| 1,094.7 | -
| 1,840 | -
| 741 | -
| 1,953 |
|
| Appropriations for payments as % of GNI
| | | 0.99%
| | 0.98%
| | 1.04%
| | 0.97%
|
|
| CA = Commitment Appropriations; PA = Payment Appropriations.
|
| Figures may not add up exactly because of rounding.
|
| Conversion rate as of May 2006: £1 = €1.4405 and €1 = £0.6942
|
Letter from Ed Balls MP to the Chairman
The European Parliament (EP) formally adopted the 2007 EC
Budget on 14 December. The final outcome was in line with the
agreement reached between the Council and EP during conciliation
on 21 November. Overall, commitment appropriations were set at
€126,551 million and payments appropriations were set at
€115,497 million (0.99% EU GNI).
The attached tables (Annex A) provide a breakdown of expenditure
by each heading in the 2007 Budget. Before detailing how far this
final position goes towards meeting the Government's objectives,
allow me to highlight the main changes between the Council's second
reading and the adopted budget.
— Competitiveness for growth and employment (Heading
1a): This heading of the budget consists predominantly of
non-compulsory expenditure over which the European Parliament
has the final decision. Commitments were set at €8,868 million,
€80 million higher than at Council second reading leaving
a margin of €50 million. Payments were set at €7,072
million, €305 million higher than at Council second reading.
The most significant increase to payments was made to the 7th
Framework Programme, which focuses on encouraging a cohesive European
approach to research and development, for which funds were increased
from €3,879 million to €4,026 million.
— Cohesion for growth and employment (Heading
1b): This heading of the budget consists exclusively of non-compulsory
expenditure over which the European Parliament has the final decision.
Commitments were set at €45,487 million, €0.2 million
higher than at Council's second reading, leaving a margin of €0.2
million. Payments were set at €37,790 million, €425
million higher than during the Council's second reading. The most
significant increase to payments was made to the Structural Funds'
Regional competitiveness and employment objective, for which funds
were increased from €8,972 to €9,331.
— Preservation of and management of natural resources
(Heading 2): This heading of the budget consists pre-dominantly
of compulsory expenditure and is set by the Council. Commitments
and payments are therefore largely unchanged from Council's second
reading, at €56,250 million and €54,719 million, respectively,
leaving a margin of €2,101 million below the Financial Perspective
(FP) ceiling.
— Freedom, Security and Justice (Heading 3a):
This heading of the budget consists predominantly of non-compulsory
expenditure over which the European Parliament has the final decision.
The EP returned to a position similar to that it had adopted in
its first reading. It set Commitments at €624 million, €62
million higher than at the Council's second reading and leaving
a margin of €13.2 million. Payments were set at €474
million, €74 million higher than in the Council's first reading.
The most significant increases for both commitments and payments
were made to spending on programmes under the area of Freedom,
Security and Justice instrument.
— Citizenship (Heading 3b): This heading
of the budget consists predominantly of non-compulsory expenditure
over which the European Parliament has the final decision. As
in the case of Heading 3a, the European Parliament, returned to
a position similar that adopted in its first reading. It set commitments
at €623 million, €35 million higher than at the Council's
second reading and leaving a margin of €13.4 million. Payments
were set at €703 million, €54 million higher than at
the Council's second reading. For both Commitments and Payments,
the most significant increases were granted to Community Actions
and to Citizenship programmes related to enlargement.
— The EU as a Global Partner (Heading 4):
This heading of the budget consists of non-compulsory expenditure
over which the European Parliament has the final decision. Commitments
were increased by €176.7 million to €6,578 million leaving
a margin of €0.067 million. Payments were increased by €173
million to €7,353 million. For both commitments and payments,
the most significant increase were to the Development Cooperation
and Economic Cooperation Instruments. The emergency aid reserve,
which comes in addition to the above figure stated for commitments,
was maintained at the level agreed at the Council's second reading:
€235 million.
— Administration (Heading 5): This heading
of the budget consists of non-compulsory expenditure over which
the European Parliament has the final decision. The European Parliament
returned to a position similar to that of its first reading. It
increased both commitments and payments by €92.8 million
to €6,942 million. The most significant increase was made
to the Commission's budget which was increased by €82.2 million
for commitments and payments.
— Compensations (Heading 6): Commitment and
payment allocations of €444.5 million remained unchanged.
The Government's main objectives when the Commission's Preliminary
Draft Budget for 2007 was published in May were to: control budget
growth; maintain budget discipline; under Heading 4 (The EU as
a Global Partner) ensure sufficient resources were allocated to
CSFP, Transitional Support for Countries Affected by EU Sugar
Regimes Reforms, Iraq and Afghanistan; under Heading 5 (Administration)
ensure staff proposals were based on genuine need and accommodated
within the ceilings of the heading; and under Heading 1b (Cohesion
for Growth and Employment) ensure that allocations were in line
with implementation capacity.
Overall, the Government feels the adopted budget meets these
objectives and that this is a good outcome for the UK. Budget
discipline has been maintained by ensuring the budget is consistent
with the inter-institutional ceilings. Budget growth was contained
as a level of payments was agreed that remained under 1% of EU
GNI. The final budget payments were set at €155.5 billion,
equivalent to 0.99% of GNI or 0.98% of GNI for EU 27.
More specifically:
— The Preservation and Management of Natural
Resources budget was reduced by around €1 billion (to
€56.3 billion) below the Commission's original proposal,
providing a more realistic budget overall.
— The Administration budget was reduced below
the Commission's original proposal by around €60 million
for both payments and commitments, leaving a margin of €173
million for commitments. While we would have liked to have seen
greater reprioritisation of the administration budget according
to new EU priorities, the Commission has agreed to carry out a
full screening exercise of personnel needs by 30 April. This should
help ensure better justification of future staffing needs and
encourage reprioritisation of resources to the necessary areas.
— Where External Actions are concerned:
— an allocation of €100 million commitments
for actions in Iraq, €17 million above the Commission's original
proposal;
— an allocation of €661 million commitments
was secured for Asia, providing an extra €36 million in addition
to the Commission's original proposal;
— the CFSP commitment allocation was set at €159
million, providing €86 million more than the EP had allocated
in their first reading and providing a level of funds necessary
to meet increasing EU needs, such as for the impending operation
in Kosovo; and
— commitment levels for Transitional Support for
Countries Affected by EU Sugar Regimes Reforms were secured at
€165 million, the level initially proposed by the Commission.
— Finally, where the Cohesion for Growth and
Employment budget was concerned, the Government was successful
in ensuring the EP's suggested further increases in Commitment
and Payments were not adopted. The Government would have liked
to see further reductions in this area, but a clear majority of
Member States supported the allocation suggested by the Commission's
original proposal.
I hope this information is helpful to the Committee.
22 January 2007
Annex A
|
| Budget Heading | Financial
Framework
Ceiling
| 2007 PDB
| Council's 2007 Draft Budget
| 2007 EP 1st Reading
| 2007 Council 2nd Reading
| Budget 2007
|
| EURO Million |
| CA | PA
| CA | PA
| CA | PA
| CA | PA
| CA | PA
|
|
| 1. Sustainable Growth |
54,405 | 54,283
| 44,734 | 54,269
| 44,133 | 54,324
| 49,440 | 54,775
| 44,137 | 54,855
| 44,862 |
| 1a. Competitiveness for Growth and Employment
| 8,918 | 8,796
| 6,944 | 8,782
| 6,768 | 8,837
| 9,541 | 8,782
| 6,767 | 8,868
| 7,072 |
| Margin | -
| 121.9 | -
| 135.8 | -
| 81.2 | -
| 136 | -
| 50 | -
|
| 1b. Cohesion for Growth and Management
| 45,487 | 45,487
| 37,790 | 45,487
| 37,365 | 45,487
| 39,899 | 45.487
| 37,365 | 45,487
| 37,790 |
| Margin | -
| 0.4 | -
| 0.4 | -
| 0.2 | -
| 0.4 | -
| 0.2 | -
|
| 2. Preservation and Management of Natural Resources
| 58,351 | 57,218
| 55,683 | 56,472
| 54,895 | 57,606
| 56,155 | 56,241
| 54,665 | 56,250
| 54,719 |
| Margin | -
| 1,133.0 | -
| 1,879.9 | -
| 744.9 | -
| 2,110 | -
| 2,101 | -
|
| 3. Citizenship, Freedom, Security and Justice
| 1,273 | 1,174
| 1,106 | 1,148
| 1,049 | 1,234
| 1,185 | 1,150
| 1,050 | 1,246
| 1,177 |
| Freedom, Security and Justice | 637
| 571 | 427
| 561 | 400
| 619 | 477
| 562 | 400
| 624 | 474
|
| Margin | -
| 65.7 | -
| 75.3 | -
| 17.8 | -
| 75.3 | -
| 13.2 | -
|
| Citizenship | 636
| 603 | 680
| 587 | 648
| 615 | 708
| 588 | 650
| 623 | 703
|
| Margin | -
| 32.9 | -
| 49.4 | -
| 20.2 | -
| 47.9 | -
| 13.4 | -
|
| 4. European Union as a Global Partner
| 6,578 | 6,703
| 7,447 | 6,593
| 7,261 | 6,769
| 7,834 | 6,401
| 7,180 | 6,578
| 7,353 |
| Appropriation excluding EAR |
| 6,468 |
| 6,359 |
| 6,534 |
| 6,636 | 7,180
| 6,812 | 7,353
|
| Emergency Aid Reserve
| | 235
| | 235
| | 235
| | 235
| - | 235
| - |
| Margin | -
| 110 | -
| 220 | -
| 44 | -
| 177 | -
| 67 | -
|
| 5. Administration | 7,039
| 7,002 | 7,002
| 6,873 | 6,873
| 6,956 | 6,956
| 6,850 | 6,849
| 6,942 | 6,942
|
| Margin | -
| 112.7 | -
| 290.3 | -
| 158.6 | -
| 265 | -
| 173 |
|
| 6. Compensation | 445
| 445 | 445
| 445 | 445
| 445 | 445
| 445 | 445
| 445 | 445
|
| Margin | -
| 0.4 | -
| 0.4 | -
| 0.4 | -
| 0.4 | -
| 0.4 | -
|
| TOTAL | 128,091
| 126,824 | 116,418
| 125,799 | 114,656
| 127,335 | 122,016
| 125,587 | 114,329
| 126,551 | 115,497
|
| Margin | -
| 1,577 | -
| 2,651 | -
| 1,067 | -
| 2,814 | -
| 2,350 |
|
| Appropriations for payments as % of GNI
| | | 0.99%
| | 0.98%
| | 1.04%
| | 0.97%
| | 0.99%
|
|
|
| Budget Heading | Financial
Framework
Ceiling
| 2007 PDB
| Council's 2007 Draft Budget
| 2007 EP 1st Reading
| 2007 Council 2nd Reading
| 2007 Budget
|
| Pound Sterling Million |
| CA | PA
| CA | PA
| CA | PA
| CA | PA
| CA | PA
|
|
| 1. Sustainable Growth |
37,768 | 37,683
| 31,054 | 37,674
| 30,637 | 37,712
| 34,321 | 38,025
| 30,640 | 38,080
| 31,143 |
| 1a. Competitiveness for Growth and Employment
| 6,191 | 6,106
| 4,821 | 6,096
| 4,698 | 6,135
| 6,623 | 6,096
| 4,698 | 6,156
| 4,909 |
| Margin | -
| 84.6 | -
| 94.3 | -
| 56.4 | -
| 94.4 | -
| 35 |
|
| 1b. Cohesion for Growth and Management
| 31,577 | 31,577
| 26,234 | 31,577
| 25,939 | 31,577
| 2,769 | 31,577
| 25,939 | 31,577
| 26,234 |
| Margin | -
| 0.0 | -
| 0.0 | -
| 0.14 | -
| 0.3 | -
| 0.1 |
|
| 2. Preservation and Management of Natural Resources
| 40,507 | 39,721
| 38,655 | 39,202
| 38,108 | 39,990
| 38,983 | 39,043
| 37,948 | 39,049
| 37,986 |
| Margin | -
| 787 | -
| 1,305 | -
| 517 | -
| 1,465 | -
| 1,459 |
|
| 3. Citizenship, Freedom, Security and Justice
| 884 | 815
| 768 | 797
| 728 | 857
| 823 | 798
| 729 | 865
| 817 |
| Freedom, Security and Justice | 442
| 396 | 296
| 389 | 278
| 430 | 333.1
| 390 | 278
| 433 | 329
|
| Margin | -
| 45.6 | -
| 52.3 | -
| 12 | -
| 52.3 | -
| 9.1 |
|
| Citizenship | 441.5
| 419 | 472
| 407 | 450
| 427 | 491
| 408 | 451
| 432 | 488
|
| Margin | -
| 22.8 | -
| 34.3 | -
| 14 | -
| 33.3 | -
| 9 | -
|
| 4. European Union as a Global Partner
| 4,566 | 4,653
| 5,170 | 4,577
| 5,041 | 4,699
| 5,438 | 4,444
| 4,984 | 4,466
| 5,104 |
| Appropriation excluding EAR |
| 4,490 |
| 4,414 |
| 4,536 | 4,607
| 4,607 | 4,984
| 4,729 | 5,104
|
| Emergency Aid Reserve
| | 163
| | 163
| | 163
| | 163
| | 163
| - |
| Margin | -
| 76.4 | -
| 152 | -
| 30.5 | -
| 123 |
| 46.5 | -
|
| 5. Administration | 4,886
| 4,861 | 4,861
| 4,741 | 4,741
| 4,828 | 4,828
| 4,755 | 4,755
| 4,819 | 4,819
|
| Margin | -
| | -
| 202 | -
| 110 | -
| 184 | -
| 120 | -
|
| 6. Compensation | 309
| 309 | 309
| 309 | 309
| 309 | 309
| 309 | 309
| 309 | 309
|
| Margin | -
| 0.28 | -
| 0.28 | -
| 0.28 | -
| 0.28 | -
| 0.28 | -
|
| TOTAL | 88,921
| 88,041 | 80,817
| 87,300 | 79,564
| 88,395 | 84,703
| 87,182 | 79,367
| 87,852 | 80,178
|
| Margin | -
| 1,094.7 | -
| 1,840 | -
| 741 | -
| 1,953 | -
| 1,631 |
|
| Appropriations for payments as % of GNI
| | | 0.99%
| | 0.98%
| | 1.04%
| | 0.97%
| | 0.99%
|
|
| CA = Commitment Appropriations; PA = Payment Appropriations.
|
| Figures may not add up exactly because of rounding.
|
| Conversion rate as of May 2006: £1 = €1.4405 and €1 = £0.69
|
6
The detail of these Amending Letters was discussed in my letter
dated 14 November 2006. Back
7
Correspondence with Ministers, 40th Report of Session 2006-07,
HL Paper 187, pp 21-25 Back
|
