§ Mr. Deakinsasked the Chancellor of the Exchequer how the abatement of the United Kingdom contribution to the European Economic Community is taken into account in the European Economic Community budget process; if the 1986 abatement will require a supplementary budget; and if he will make a statement.
§ Mr. BrookeThe United Kingdom statement is taken into account in the EEC budgetary process in a number of stages. First, the Commission calculates, from its information about shares of VAT contributions and about receipts from the budget, the size of the abatement according to the formula laid down in the own resources decision of 7 May 1985. This sum is then deducted from the contributions the United Kingdom would have to make at the uniform rate of VAT needed to finance the budget,500W and a new, reduced VAT rate for the United Kingdom is calculated and entered in the budget. Once the budget has been adopted, our VAT payments are made at the abated rate. The agreed detailed methodology for the budget procedure on our abatement is set out in the EC document COM(85) 36 which was discussed during proceedings in Committee on the European Communities (Finance) Act—[Official Report, 1 July 1985; Vol. 82, c.78–116.]
This agreed methodology makes provision for two possible corrections of the abatement by means of amending budgets. The first of these is interim and optional, the second final and compulsory. The corrections are designed to take account of more complete information on our VAT and receipts shares from the Community budget. As my predecessor reported to the House on 30 October 1985, the Council of Ministers has already invited the Commission to introduce an amending budget during 1986 in order to uprate the abatement in respect of 1985 and has undertaken to take the necessary decisions on the basis of the Commission's proposal.—[Official Report, 30 October 1985; Vol. 84, c.501–2.] The preliminary assessment of the abatement in respect of 1986 will be included in the main 1987 budget.