HC Deb 20 July 1988 vol 137 cc596-7W
Mr. Sackville

To ask the Chancellor of the Exchequer if he will make a statement about the early payment of non-value added tax own resources to the European Communities in July.

Mr. Brooke

The European Commission estimates that its spending obligations during July will exceed the resources available for that month, leading to cash flow difficulties. In order to help ease these, and in accordance with article 10(2) of Council regulation 2891/77, the Commission has requested member states to advance into July their payments of non-VAT own resources which would otherwise have been made in August. The Government are satisfied that the request complies with article 10(2).

The gross amount of the advance is £137 million. However, no payment will actually be made, today 20 July, in respect of the advance as two adjustments to the gross figure will be necessary:

  1. (i) As I informed my hon. Friend the Member for Dulwich (Mr. Bowden) on 29 March at column 397 in accordance with conclusions of the Brussels European Council of 11–13 February 1988 member states are entitled to deduct at source 10 per cent. of non-VAT own resources to cover collection costs. This replaces the previous arrangements whereby 10 per cent. of the amounts in question was refunded to member states;
  2. (ii) an amount equivalent to the balance of the advance will be recovered from the outstanding amount of the Commission's borrowing under article 12(2) of Council regulation 2891/77.

The article 10(2) facility does not affect the total amount which the Community is authorised to spend during the year. The payment of levies and duties on 20 July will be reduced accordingly so that the Commission's request does not, therefore, involve any net addition to public expenditure.