Select Committee on European Scrutiny Thirty-Eighth Report



10. 2003 DRAFT BUDGET

 

(a)

(23676)

11056/02

COM(02) 399

 

Draft Decision of the European Parliament and of the Council on mobilisation of the Flexibility Instrument.

(b)

(23717)

11287/02

SEC(02) 823

 

Amending letter No. 1 to the Preliminary Draft Budget 2003.

(c)

(23844)

 

2003 Draft Budget.

Legal base:

(a) Article 272 EC and Point 24 Inter-Institutional Agreement of 6 May 1999; the special budgetary decision processes are set out in Article 272

(b) Article 272 EC and Article 14 of the Financial Regulation; the special budgetary decision processes are set out in Article 272

(c) Article 272 EC; the special budgetary decision processes are set out in Article 272

   

Document originated:

(a) 16 July 2002

(b) 24 July 2002

(c) —

Deposited in Parliament:

(a) 19 July 2002

(b) 2 August 2002

(c) —

Department:

HM Treasury

Basis of consideration:

EMs of 31 July 2002 and 6 August 2002 and Minister's letter of 6 August 2002

Previous Committee Report:

None; but see HC 152-xxxvi (2001-02), paragraph 2 (10 July 2002)

To be discussed in Council:

25 November 2002

Committee's assessment:

Politically important

Committee's decision:

(a) and (b) cleared; (c) not cleared

 

 

Background

    1. We considered the 2003 Preliminary Draft Budget on 10 July 2002 and recommended it for debate in European Standing Committee B. That debate took place on 16 July 2002.[25] These documents are further stages in the budgetary process.
    2. The documents

    3. Document (a) is a proposal to use the flexibility instrument in the Inter-Institutional Agreement of 6 May 1999 (IIP), which allows — in defined circumstances — additional financing above the agreed budgetary limits. The proposal is for additional commitment appropriations for 2003 of:

    • _27 million (included in the Parliamentary Draft Budget) for fishing fleet restructuring as a consequence of non-renewal of the EU-Morocco fisheries agreement;

    • _32 million for reform of the Common Fisheries Policy; and

    • an amount to be set by the budgetary authority (the European Parliament and the Council), but indicated as _65,814 million for administration by the Commission in the preliminary Draft Budget.

    1. Document (b) amends the Preliminary Draft Budget to include the _32 million for the Common Fisheries Policy in document (a).
    2. Document (c) is the 2003 Draft Budget established at the Council of 22 July 2002 following conciliation with the European Parliament. The European Parliament will have a first reading of the Draft Budget this month. The Council's second reading and further conciliation between Council and Parliament will take place on 25 November 2002. The final budget will be adopted after the European Parliament's second reading in December 2002.
    3. The Draft Budget documents have not been published yet, but the letter from the Financial Secretary to the Treasury (Ruth Kelly) summarises the changes from the Preliminary Draft Budget. These are:

    • Category 1 (agriculture) — commitment appropriations cut by _288 million. The budgetary authority has agreed two declarations: one that a supplementary and amending budget (SAB) would be raised rapidly if payments prove insufficient and another noting that the Commission will examine again whether the amount in the Preliminary Draft Budget for animal disease eradication is sufficient.

    • Category 2 (structural funds) — payment appropriations cut by _522 million. One budgetary authority declaration called on the Commission to quickly propose a SAB if payments prove insufficient. Another, whilst rejecting use of the flexibility instrument, committed the budgetary authority to finding a way to finance the _27 million for fishing fleet restructuring (as in document (a)) before the end of the 2003 Budget setting process;

    • Category 3 (internal policies) — commitment appropriations cut by _41 million;

    • Category 4 (external actions) — commitment appropriations cut by _20 million and payment appropriations by _20 million;

    • Category 5 (administration) — commitment appropriations cut by _101 million. In conciliation the European Parliament agreed to respect the Financial Perspective and the Council's own budget and to reject use of the flexibility instrument. In exchange the Council accepted, without creating a precedent, inclusion of temporary staff of the European Parliament's political groups in an early retirement scheme. The budgetary authority also adopted a declaration noting that the IIP allows the Emergency Aid Reserve to be used for humanitarian aid and civilian crisis operations;

    • Category 7 (pre-accession aid) — payment appropriations cut by _300 million.

    1. These changes reduce the total of commitment appropriations by _487 million (297.5 million) to _99.5 billion (60.78 billion) and of payment appropriations by _1,249 million (763.01 million) to _97 billion (59.26 billion). These totals are well within the limits set in the Financial Perspective and give a margin of _5.9 billion (3.6 billion) under the payment appropriations ceiling. The increase of commitment appropriations over the 2002 Budget is now 0.9% as opposed to 1.4% in the Preliminary Draft Budget, and of payment appropriations, 1.4% as opposed to 2.7%. We annex to this Report a table derived from the Minister's letter showing the broad outline of the 2003 Draft Budget.
    2. The Government's view

    3. In relation to the proposals in documents (a) and (b) the Minister tells us that the budgetary authority has rejected the use of the flexibility instrument for these purposes. On the _27 million proposed for fishing fleet restructuring, she notes that the Government agrees this money will have to be found but wants other options such as redeployment to be examined. As for the _32 million proposed for reform of the Common Fisheries Policy, the Government believes the reform measures should be financed by reprogramming the structural fund for fisheries, the FIFG.
    4. As for document (c), it is implicit in what the Minister told us in relation to the Preliminary Draft Budget and her comments on these three documents that the Government is generally content with the way the final budget is developing, particularly in relation to having widened the margin below the Financial Perspective limits.
    5. Conclusion

    6. We are grateful to the Minister for her helpful EMs and her advance description of the 2003 Draft Budget. We are content to clear documents (a) and (b). But we will hold document (c) under scrutiny and ask the Minister to confirm our understanding, at paragraph 10.8 above, of the Government's view and to inform us of the outcome of the European Parliament's first reading and of the approach the Government will take, in the light of that outcome, at the Council meeting and conciliation on 25 November 2002.
    7. We note that, during the conciliation process between Council and Parliament, the European Parliament agreed to respect the Financial Perspective and reject use of the flexibility instrument only in exchange for inclusion of the temporary staff of the European Parliament's political groups in an early retirement scheme. We regard this sort of horse-trading favouring the narrow self-interest of the European Parliament as a disgrace, and it provides a fine example of why the conciliation process needs to be opened up to much greater public scrutiny.

 

 

 

ANNEX

BUDGET AND FINANCIAL PERSPECTIVE

 

Current prices

Financial perspective

PDB 2003

Council 1st Reading

Headroom below ceiling

 

 

  Million euros

Commitment appropriations

1. Agriculture

of which:

 - "traditional" CAP

 - rural development and accompanying measures

2. Structural operations

3. Internal policies

4. External policies

5. Administration

6. Reserves

7. Pre-accession aid

 

 

  47,378

  42,680

  4,698

 

  33,968

  6,796

  4,972

  5,381

  434

  3,386

 

 

  45,118

  40,420

  4,698

 

  33,995

  6,715

  4,912

  5,447

  434

  3,386

 

 

  44,830

  40,132

  4,698

 

  33,968

  6,674

  4,892

  5,447

  434

  3,386

 

 

  2,548

  2,584

  0

 

  0

  122

  80

  16

  0

  0

Total commitment appropriations

  102,315

  100,006

  99,520

  2,767

 

Payment appropriations

1. Agriculture

of which:

 - "traditional" CAP

 - rural development and

 accompanying measures

2. Structural policies

3. Internal policies

4. External policies

5. Administration

6. Reserves

7. Pre-accession aid

 

 

 

 

 

 

 

 

  45,118

  40,420

  4,698

 

  33,538

  6,132

  4,692

  5,447

  434

  2,857

 

 

 

  44,830

  40,132

  4,698

 

  33,013

  6,112

  4,676

  5,336

  434

  2,557

 

 

Total payment appropriations

  102,938

  98,218

  96,958

  5,946

 

 

 

   Million

Commitment appropriations

1. Agriculture

of which:

 - "traditional" CAP

 - rural development and

 accompanying measures

2. Structural policies

3. Internal policies

4. External policies

5. Administration

6. Reserves

7. Pre-accession aid

 

 

  28,943

  26,073

  2,807

 

  20,751

  4,152

  3,037

  3,287

  265

  2,069

 

 

  27,563

  24,693

  2,870

 

  20,768

  4,102

  3,001

  3,328

  265

  2,069

 

 

  27,387

  24,517

  2,870

 

  20,751

  4,077

  2,989

  3,328

  265

  2,069

 

 

  1,557

  1,557

  0

 

  0

  74.53

  48.87

  9.77

  0

  0

Total commitment appropriations

  62,504

  61,094

  60,797

  1,690

Payment appropriations

1. Agriculture

of which:

 - "traditional" CAP

 - rural development and

 accompanying measures

2. Structural policies

3. Internal policies

4. External policies

5. Administration

6. Reserves

7. Pre-accession aid

 

 

  

 

 

  27,563

  24,693

  2,870

 

  20,488

  3,746

  2,866

  3,328

  265

  1,745

 

 

  27,387

  24,517

  2,870

 

  20,168

  3,734

  2,857

  3,260

  265

  1,562

 

 

Total payment appropriations

  62,885

  60,001

  59,232

  3,632

 


25  Official Report, European Standing Committee B, 16 July 2002, cols. 1-32. Back

 
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