Final Adoption of the General Budget of the European Union for the Financial Year 2002.
|Legal base:||Article 272 EC; the special role of the European Parliament regarding adoption of the Budget is set out in the article; qualified majority voting
|Basis of consideration:||Minister's letter of 8 January 2002
|Previous Committee Report:||HC 152-iv (2001-02), paragraph 1 (7 November 2001) and HC 152-ix (2001-02), paragraph 19 (5 December 2001)
|To be discussed in Council:||Not applicable
|Committee's assessment:||Politically important
11.1 We cleared the 2002 Preliminary Draft Budget on
18 July 2001. On
7 November 2001, we recommended the 2002 draft general budget
for debate. The debate
was held on 19 November 2001 in European Standing Committee B.
The EC budgetary cycle is concluded when the Draft Budget is adopted
following the European Parliament's second reading. The European
Parliament's second reading took place 13 December 2001.
11.2 In her letter, the Economic Secretary to the Treasury
(Ruth Kelly) highlights some key figures from the adopted budget.
Although the official texts will not be available for some time,
we have decided to produce a short report on the 2002 adopted
budget on the basis of the Minister's letter. A table summarising
the key figures is set out in annex 1.
11.3 The Minister says:
"The 2002 adopted budget is consistent with the financial
perspective agreed by the European Council in 1999. It respects
the commitment ceilings for each category of expenditure, and
leaves a margin below the overall ceiling for both commitments
and payments. In establishing its second reading the Parliament
has also respected the package agreed in conciliation between
the two branches of the budget authority at the November Budget
"The adopted budget includes _98.64bn in commitment appropriations,
leaving a margin of _2.40bn below the financial perspective ceiling.
Commitment appropriations have been increased by 1.7 per cent
compared with the 2001 budget. Total payment appropriations amount
to _95.65 bn or 1.04 per cent of GNP. The increase in payment
appropriations was limited to 2 per cent as agreed at the November
Budget Council. Compared with the Council second reading figures,
the total commitments and total payments have been increased by
0.2 per cent and 0.9 per cent respectively.
"The level of agricultural spending was already agreed at
the Council second reading, as the Council has the final say over
this part of the Community budget. The 2002 budget includes _400m
for Foot and Mouth Disease, in addition to the _400m included
in the 2001 budget. The total allocation for agriculture is _44.26bn.
This leaves a significant margin of _2.3bn for any further needs
"As agreed in conciliation at the November Budget Council,
an additional _200m was allocated to Category 2 (structural operations)
through the mobilisation of the flexibility instrument. _170m
of this will be used to restructure the Community fishing fleet
and the remaining _30m to support the regions bordering the candidate
countries. The Parliament increased the payment appropriations
for this Category by _15m compared to the Council's second reading.
"The European Parliament has reinforced many of the Category
3 (internal policies) budget lines according to its own priorities.
The total commitments for internal policies amount to _6.56bn,
or 1.4 per cent more than proposed by the Council at its second
reading. The main increases were in education (_20m), employment
(_15.5m), information and communication (_12m), internal market
(_8.8m) and justice and home affairs (_15m). The margin in Category
3 was reduced to _186,400.
"In Category 4 (external policies) the Parliament approved
the 171m package of additional funding for Afghanistan and its
neighbours to deal with the post 11 September events. This includes
the Category 4 margin of _70m which has been earmarked wholly
for this purpose. Elsewhere in Category 4 the Parliament made
a number of changes compared to the Council's second reading.
Additional funds were made available for food aid, democracy and
human rights, MEDA and Latin America, while appropriations for
the Balkans were cut by _49m and humanitarian aid by _31m.
"Administrative expenditure will amount to _5.2 billion,
or approximately 5.4 per cent of total payments and 5.2 per cent
of total commitments. The margin in Category 5 was reduced
"The total commitments for pre-accession aid amount to _3.3
billion, unchanged from the PDB and the Council second reading.
The Parliament decided to increase the payment appropriations
for Category 7 by _54.4m from the Council second reading.
"There was also a late change to the revenue side of the
budget. The Commission advised that not all 15 member states would
ratify the 2000 Own Resources Decision (ORD) by 1 January 2002.
This meant that the 2002 EC budget had to be adjusted. The Commission
prepared a third letter of amendment to its PDB to bring the revenue
side of the budget back into line with the 1994 ORD. This is a
temporary, but legally necessary, measure. The effect on the UK
is budgetarily neutral, but some member states will see modest
increases in their call up of own resources. But this effect will
be temporary as the Commission will bring forward in 2002 a Supplementary
Budget to reflect once again the 2000 ORD when all 15 member states
have finally ratified it."
11.4 We have already expressed views on the 2002 Budget
proposals at the Preliminary Draft and Draft Budget stages. As
regards the adopted budget, we note that its size and composition
is very close to that agreed at the Council's second reading.
We welcome this outcome. We have no further questions, and therefore
clear the document, but we shall look forward to the deposit of
the official texts in due course.
2002 EC Budget
Financial Perspective Ceilings
Preliminary Draft Budget (including Letters of Amendment 1-2)
Council's First Reading Draft Budget (including Letters of Amendment 1-2)
European Parliament First Reading Draft Budget
Council's Second Reading Draft Budget (including Letters of Amendment 1-2)
Adopted budget 2002
Common Agricultural Policy
Total Commitment appropriations
Total Payment appropriations
Payments as a percentage of Community GNP
-; HC 152-i (2001-02), paragraph 50 (18 July 2001). Back
-; see headnote to this paragraph.. Back