Select Committee on European Union Thirty-Third Report


14 July 2003

By the Select Committee appointed to consider European Union documents and other matters relating to the European Union.



      Preliminary Draft General Budget of the European Communities for the financial year 2004

PART 1: executive summary
The aim of this report is to inform the House of issues pertaining to the EC Budget generally and the 2004 Budget in particular. 2004 is a significant year for the EC Budget for three reasons:
  • it is the first EC Budget in which spending is linked to objectives, outcomes and performance indicators, through the use of Activity-Based Budgeting;
  • the 2004 EC Budget is the first to cover an enlarged Union of 25 members; and
  • the draft European constitutional Treaty proposes changes to the budgetary process which aim to make it simpler and more transparent.

In this report, we examine the Commission's Preliminary Draft Budget for 2004, which represents the first stage in the annual budgetary procedure, and we analyse the Government's priorities for the subsequent negotiations on the budget. The Committee has decided that it can best fulfil its responsibility of parliamentary scrutiny by examining the Government's position before it enters into negotiations on the 2004 Budget in the Council of Ministers, which will start this year on 16 July.

The Government has outlined two priorities for the 2004 EC Budget:

  • spending on external action should have a greater poverty focus; and
  • strict conditions of value for money must be applied to the substantial increases for administration expenditure related to enlargement.
We broadly agree with the Government's position, whilst insisting that focusing funding on regions affected by poverty should not deflect from the EU's other objective of working towards stability in regions such as the Middle East and the Balkans.

In relation to the changes proposed by the Convention, we welcome the proposal that the European Parliament should have a greater say over spending on agriculture. However, we concur with the Government's view that the changes to the system of Own Resources proposed in the draft Constitutional Treaty are unacceptable, and we support the Government in its efforts to retain the status quo for decision-making in this area.

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