§ Mr. Nicholas Baker
asked the Chancellor of the Exchequer if he will make a statement on the recent judgment by the European Court of Justice concerning advance payments of traditional own resources to the European Community.
§ Mr. Brooke
The European Court of Justice gave a ruling yesterday in case 93/85 brought by the European Commission against the United Kingdom. The case concerned non-payment by the United Kingdom of an interest rate penalty claimed by the Commission when we delayed complying with a Commission request for an advance payment of levies and duties to the Community in May 1983.
The background to this delay was that the Government took the view that there was no clear legal obligation to make this advance payment and that Parliament's approval was therefore required through the Supply procedure: this approval could not, however, be obtained until Parliament had returned after the 9 June 1983 election. The Government's later decision not to pay the interest penalty was based on the same ground that there was no clear legal obligation to comply with requests for advance payments. The amount of interest claimed by the Commission was some £2 million.
The court's judgment finds that member states are legally obliged to meet requests for advance payments and that the Commission was therefore justified in charging the United Kingdom an interest penalty because of the delay in our payment.
The Government naturally accept the court's judgment, which clarifies the position. There are three consequences to which I should draw the House's attention.
First, the court's conclusion that member states are legally obliged to meet justified requests for advances means that such advances come within the scope of section 2(3) of the European Communities Act, 1972 and will therefore fall to be paid in future direct from the Consolidated Fund, in accordance with the direct charging provisions of that Act, rather than from Supply Estimates. The Government will, however, continue to ensure that the House is informed whenever such advances are made.745W
Secondly, it follows that no further drawings will be made on the current year's Estimate of £930 million for advance payment of levies and duties, approved by the House in July, beyond the £431 million which has been drawn already.
Thirdly, the interest rate penalty now confirmed by the court will be paid direct from the Consolidated Fund, again in accordance with section 2(3) of the European Communities Act, 1972, as soon as practicable.
I am arranging for copies of the court's judgment to be placed in the Library.