Select Committee on European Legislation Twenty-Ninth Report


TRANSFER OF APPROPRIATIONS (STRUCTURAL FUNDS)

(18706)

SEC(97)2178
Proposal for transfer of appropriations No. 59/97 — Section III — Commission — of the general budget for the financial year 1997.
Legal base: Article 26(4) of the Financial Regulation; qualified majority voting
Department: HM Treasury
Basis of consideration: Minister's letter of 21 May
Previous consideration: HC 155-xvi (1997-98), paragraph 5 (11 February 1998)
Committee's assessment: Politically important
Committee's decision: Cleared


Background

    9.1  On 11 February when we looked at this proposal to transfer appropriations we were concerned that appropriations which had been allocated for Community Initiatives under the Structural Funds were being reallocated to other Structural Funds programmes which were said to be short of funds. We noted in our conclusions that however meritorious the projects may be, it remains the case that this expenditure was not included in the approved EU Budget for the 1997 financial year and that this could be a case of money being spent just because it was there. We asked the Minister to explain the background and justify the transfer. We also recommended that the Document would be relevant to the Debate on 18 February in European Standing Committee B on the 1996 Court of Auditors' Report.

The Minister's reply

    9.2  The Minister, the Economic Secretary to the Treasury (Helen Liddell), has responded in a letter dated 21 May in which she says:

        "In transfer 59/97, the Commission sought to transfer payment appropriations totalling 173.5 million ECU (£128 million) to programmes under two "Objectives" covered by the European Social Fund (ESF) from a number of other Community Initiative programmes under the Structural Funds which looked likely to underspend in 1997.

        "In its Report, the Select Committee expressed concern that this transfer was funding extra Structural Fund expenditure which was not included in the adopted 1997 EC Budget and that it could therefore be an example of money being spent just because it was there.

        "I would like to reassure the Committee that proposals such as this where the Commission seeks to transfer payment appropriations between budget lines (rather than from the Reserve Chapter) are not uncommon: about 30 per cent of the 62 EC Budget transfers in 1997 were transfers between budget lines. These do not involve an overall increase in expenditure but simply serve to correct the forecasts of execution rates which underlie the figures in the adopted Budget. They are quite different from transfers of commitment appropriations which involve a change in the way that resources are to be allocated.

        "In respect of this transfer proposal, the Commission demonstrated that the amounts drawn up with Member States for ESF projects in 1997, including many in the UK, could not be matched by available payment appropriations in the Budget. The Committee may be interested to know that, whilst the Council agreed to this transfer proposal, the European Parliament, which has the final say on this type of expenditure, did not accept the proposal. It felt that the Commission failed to explain clearly enough why the Community Initiative programmes were still executing so slowly despite concerns previously expressed by the European Parliament.

        "The Committee's report also noted that the transfer would be relevant to the European Standing Committee B debate on the 1996 Court of Auditors' Report on 18 February and I can confirm that the issue was discussed during that debate".

Conclusion

    9.3  We thank the Economic Secretary for her response and have noted her views. We accept that in this case the transfer was between budget lines and would not have added to the total amounts provided in the budget for the Structural Funds, but suggest that the degree of inaccuracy in estimates of how the monies were to be spent within the total programme which sparked our concern, may also have triggered the action taken by the European Parliament.

    9.4  We are now content to clear the document.


 
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