§ 2.50 p.m.
Lord Bruce of DoningtonMy Lords, I beg leave to ask the Question standing in my name on the Order Paper.
1212 The Question was as follows:
To ask Her Majesty's Government whether they have been informed by the EC Commission, formally or otherwise, of the projected overrun in Community expenditure for 1987; what is the estimated United Kingdom share of such overrun and the preferred manner for its discharge; and what effect it will have on the agreed arrangements for contribution rebates to the United Kingdom for 1987.
§ The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara)My Lords, a communication from the Commission on the 1987 budget outlook is expected shortly. The Commission's present estimate of the potential overrun on agricultural expenditure in 1987 is some 3.5 billion ecu. Its 1987–88 price fixing proposals would reduce this by about 1.3 billion ecu. The Commission has also indicated that it plans to bring forward additional proposals to deal with the remaining excess. The Government have made clear that the Community must live within its means in 1987. Any overrun would have no effect on the arrangements for the UK's abatement.
Lord Bruce of DoningtonMy Lords, is the noble Lord aware that the figure of the anticipated shortfall in 1987, which he put at 3 billion ecu is equivalent to £2,200 million, of which the United Kingdom's share would be somewhere in the region of £600 million? Can the noble Lord indicate whether the deficit figure of 3 billion ecu for 1987 contains or does not contain the deficit of some 750 million ecu incurred for the year 1986? Will he indicate how this state of affairs squares with the assurance of the Prime Minister following the Fontainebleau conference that strict financial discipline will in future be exercised within the Community?
§ Lord Brabazon of TaraMy Lords, the figure I gave in the first part of my Answer was 3.5 billion ecu, and that concerned agricultural expenditure. There is also a deficit of some 800 million ecu carried forward from 1986. That I think is the figure to which the noble Lord, Lord Bruce of Donington, referred. We are firmly of the view that the prospective deficit in 1987 must be contained within the resources available within the 1.4 per cent. VAT ceiling, and overall spending levels must be controlled accordingly.
Lord Bruce of DoningtonMy Lords, is the noble Lord aware that the expenditure envisaged in the 1987 budget cannot possibly be contained within the 1.4 per cent. limit on VAT? Will he say how much of the deficit which he envisages for both 1986 and 1987 will be "satisfied" by the queer payments of non-recoverable advances?
§ Lord Brabazon of TaraMy Lords, I cannot give a figure for that, of course; but the budget council reached agreement by a qualified majority on the draft budget for 1987 on 13th February. The United Kingdom opposed proposals since they included the negative reserves which would add to the pressures on expenditure, As regards the 1.4 per cent. VAT ceiling, 1213 the Fontainebleau Agreement says that the ceiling may be raised to 1.6 per cent. from 1st January 1988 only with the unanimous consent of member states. Her Majesty's Government see no scope for increases of the order proposed by the Commission.