Examination of Witnesses (Questions 40-43)|
WEDNESDAY 11 JUNE 2003
PRIMAROLO, MP, MR
Lord Armstrong of Ilminster
40. The abatement percentage, the 66 per cent,
of which I bear some scars, that is secure for 2004, is it?
(Mr Lloyd) That is secure until there
is unanimous agreement in the Council and national ratification
in Parliament, for any change.
41. How does the latest draft of the Constitution
Treaty alter the Budget procedure? Can anybody help us on that?
(Dawn Primarolo) I think the first thing
that I should flag up in responding is to say that the Government
is extremely grateful for the active part that Lord Tomlinson
has played in the discussions as a representative of this House.
You will be aware that Peter Hain's contribution tabled in the
Convention made very clear that the Government is open to changes
to simplify and streamline procedures on the expenditure side
of the Budget provided that Budget discipline and stability is
not undermined, but we will not accept any watering down of the
Council and Member States' current role for revenues and resources.
The latest draft proposes changes in both areas, revenue and expenditure.
On revenue, it is proposing maintaining the current arrangements
of Council decision and the national ratification of ceilings
on Own Resources and the introduction of new Own Resources. There
can be no increase in the overall ceilings for EU budgets without
the agreement of Parliament and there is no question of European
tax being imposed on the UK. But the draft does propose a change
in procedure for adopting the detailed rules of the Own Resource
system to QMV subject to the consent of the European Parliament
but without national ratification. I want to make it absolutely
clear, this is not acceptable and it would mean that changes to
the Own Resource decisions directly affecting the level of UK
contribution could be taken out of the hands of the UK Government
and Parliament and we are not going to agree to that. Geoff, I
do not know whether you want to pick up on any further points.
(Mr Lloyd) Those are the fundamental points on the
revenue side of the Budget. On the expenditure side of the Budget
there are some quite wide-ranging proposals for change which fall
into three headings. The first is that the draft Treaty proposes
to give legally binding status to the financial perspectives which
are currently, as I think you know, agreed institutionally between
the Council, the European Parliament and the Commission. Under
the Praesidium's proposals the Council would have the upper hand
in establishing the new multi-annual financial framework and that
would set binding expenditure ceilings with a Treaty status to
those ceilings for a limited number of categories of spending
just like the current financial perspective. In principle this
is a very important and useful development in cementing the Budget
discipline that the financial perspectives have secured for us
in recent years. I say in principle, of course the devil is in
the detail. In terms of the precise decision-making procedure
that is associated with the new financial perspective, the draft
does give the Council the upper hand and that is what the UK Government
has pressed for. We remain to be convinced that the decision-making
procedure which gives the European Parliament a right of consent
rather than that a right of consultation is one that we should
support, but this has to be looked at alongside the second proposal
which is the changes to the annual Budget procedures. Those procedures
and the changes that are proposed would help to simplify the annual
budget procedure which is very opaque at the present time, particularly
in assigning the last word on some spending to one institution
and the last word on spending to another institution. It is also
opaque to the extent that the rules of the Treaty are not precisely
what governs what happens in practice because of the application
of the inter-institutional agreement. What is being proposed is
a streamlined budget procedure with a single reading in the Council
and the European Parliament, and with the Council and the European
Parliament having a say on all expenditure rather than the European
Parliament having a last word on non-compulsory expenditure as
now and the Council having the last word on compulsory expenditure.
Again, provided we get the balance right in terms of the powers
of the Parliament and the Council on the final say over that expenditure,
in the Government's view this is a welcome step forward and a
good development and it can help to keep spending down and well
below the Own Resources ceiling. The third key change is in relation
to value for money and for this change we are particularly grateful
to Lord Tomlinson for pressing hard and securing the changes that
he has secured in the Praesidium's draft Treaty, which is to insert
a requirement for an annual Commission performance report to accompany
the financial accounts each year, which will gel very nicely with
the activity based budgeting approach and enable the budgetary
authority to take decisions on future spending levels in the light
of a specific output based report from the Commission. So these
are three developments on the expenditure side which in principle
are helpful and will be debated in the IGC because most of these
changes are reflected in the second part of the Treaty where we
are not expecting conclusions to be reached before the beginning
of the IGC.
42. Thank you very much for that comprehensive
answer. What is the timetable for the next financial perspective?
(Mr Lloyd) The Commission is active now on drawing
up its ideas for its proposals that it will make for the next
financial perspective. It has set up a number of working groups
internally to look at this and it has announced that it will be
bringing forward its so-called policy orientations towards the
end of this year. That is the Commission's starting point view.
In terms of the end point view, of course the current financial
perspective runs until 2006 and we would expect decisions to be
taken well in advance of 2007 so that the new financial perspective
can come into force smoothly.
43. When does the UK Government become involved
in this, where in the process?
(Dawn Primarolo) There will be an orientation discussion
at the Council in December, but in the meantime the Commission
has set up its working groups in a series of areas which will
conclude their work and feed in to that orientation date towards
the end of the year.
- When is the best time for us to become involved
in this? You have been very useful in giving us advice in the
past about this.
(Dawn Primarolo) Sorry, I was just asking when the
working party information might begin to emerge because that would
obviously be very helpful to you. Unfortunately we are expecting
all of this to emerge towards the end of this year, so you would
be looking towards the end of this year to cover the discussions.
There should be enough around certainly to facilitate the discussion
Chairman: Thank you for coming and for giving
us such useful and helpful answers.