Documents considered by the Committee on 23 May 2012 - European Scrutiny Committee Contents


15 European Union Solidarity Fund

(a)

(33771)

7770/12

COM(12) 126

(b)

(33772)

7772/12

COM(12) 125


Draft Decision on mobilisation of the EU Solidarity Fund



Draft amending budget No 2 to the general budget for 2012: Statement of expenditure by Section: Section III — Commission

Legal base(a) Article 175 TFEU; co-decision; QMV

(b) Article 314 TFEU; co-decision; QMV

DepartmentHM Treasury
Basis of considerationMinister's letter of 12 May 2012
Previous Committee ReportHC 428-lvii (2010-12), chapter 7 (18 April 2012)
Discussion in Council15 May 2012
Committee's assessmentPolitically important
Committee's decisionCleared

Background

15.1 In 2002 a European Union Solidarity Fund (EUSF) was established to assist financially Member States or candidate countries affected by a "major natural disaster with serious repercussions on living conditions, the natural environment or the economy".

15.2 During the course of a financial year the Commission presents to the Council and European Parliament Draft Amending Budgets (DABs) proposing increases or reductions for revenue and expenditure in the current EU Budget — there are about ten DABs each year.

15.3 The draft Decision, document (a), relates to a severe natural disaster in northern Italy. On 25 October 2011, an extreme weather system centred over north-west Italy led to a very heavy rainfall within just a few hours. Italy applied to the Commission for assistance from the EUSF Fund in December 2011 and the Commission proposes financial assistance to Italy of €18.06 million (£14.68 million), which is 2.5% of the estimated direct damage.

15.4 In conjunction with the proposal to award Italy with assistance from the EUSF the Commission presents Draft Amending Budget No. 2 for the 2012 EU Budget (DAB 2/2012), document (b). This concerns mobilisation of the EUSF for €18.06 million in commitment and payment appropriations. The Commission says that:

  • at this stage in the year, and on the basis of implementation forecasts, there is no source of possible redeployment of the required payment appropriations;
  • it proposes, therefore, increases in commitment and payment appropriations for the 2012 EU budget by an additional €18.06 million; and
  • this would mean that the 2012 EU budget (including DAB 1/2012)[62] commitment appropriations would increase to €147.9 billion (£120.24 billion) and payment appropriations would increase to €129.11 billion (£104.97 billion).

15.5 When we considered these proposals last month we heard that:

  • the Government supports the broad objectives of the EUSF Solidarity Fund in providing financial assistance to Member States and countries engaged in accession negotiations in the event of major natural disasters, where the Member State or country alone cannot handle the repercussions;
  • it welcomes the Commission's analysis of the application from Italy for assistance from the EUSF;
  • based on this analysis, the Government is content that the application is justified and meets the criteria for assistance;
  • the Commission had argued that there is no scope for redeployments from other areas of the EU budget, and therefore proposed an increase in the level of payment appropriations for the 2012 EU budget;
  • the Government had recalled that the previous three DABs were related to proposals for assistance from the EUSF;
  • for each of these, the funding for payment appropriations was found from redeployments from other areas of the EU budget, rather than additional funding;
  • given this, the Government was urging the Commission to carefully scrutinise all areas of EU spending for possible areas of redeployment towards the costs of this proposal for EUSF assistance for Italy, instead of calling for additional funding;
  • if adopted unaltered, this proposal would cost the UK €2.50 million (£2.03 million) (based on the UK's 13.85% share of additional spending, pre-abatement); and
  • the Government was, however, seeking full redeployment, so that the UK would incur no extra costs.

15.6 We said that we were not taking issue with the Government's support for EUSF assistance for Italy, as in document (a). But, we noted its aim that financing of this assistance should be achieved by redeployment within the existing 2012 EU Budget, rather than with additional appropriations, as proposed in document (b) — an aim we supported. So we asked, before considering the matter further, to have an account of the outcome of the Government's efforts on this issue. Meanwhile the documents remained under scrutiny.[63]

The Minister's letter

15.7 The Financial Secretary to the Treasury (Mr Mark Hoban) reports now that:

  • the Council's Budget Committee discussed these proposals on 27 March and 23 April, where the Government, supported by a number of other Member States, pushed-back on the Commission's request for new funding and instead called for the proposal to be funded through redeployments from within the existing EU budget;
  • the Commission reconsidered the possibility for redeployment and the Presidency then issued a new proposal, which was discussed by Budget Committee on 3 May;
  • this called for redeployments to cover the full amount of payment appropriations from the budget area "energy projects for economic recovery";
  • this was agreed by the Budget Committee by QMV, with the Government abstaining on scrutiny grounds;
  • the proposals then went to COREPER on 10 May (where the Government again abstained) and was now to go to the ECOFIN Council on 15 May for final agreement; and
  • this outcome protects the real freeze agreed for EU spending in 2012 and also ensures that the UK bears no extra costs.

Conclusion

15.8 We are grateful to the Minister for this account of the satisfactory outcome on this budgetary issue and now clear the documents.





62   (33654) 5826/12: see HC 428-lii (2010-12), chapter 22 (29 February 2012). Back

63   See headnote. Back


 
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