HC Deb 20 June 1988 vol 135 cc387-8W
Mr. Charles Wardle

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 June.

Mr. Brooke

As I informed my hon. Friend the Member for Edmonton (Dr. Ian Twinn) on 8 June at columns602–3, the European Commission estimates that its spending obligations during June will exceed the available resources available for that month, thereby leading to cash flow difficulties. In order to help ease these difficulties, and in accordance with article 10(2) of Council regulation 2891/77, the Commission has requested member states to advance into this month their payments of own resources other than VAT which would otherwise have been made in July. The Government are satisfied that the request complies with article 10(2). The gross amount of the advance is £147 million. However, the actual payment to be on 20 June in respect of the advance will be only some £36 million as a result of two adjustments to the gross figures:

  • As I informed my hon. Friend the Member for Dulwich (Mr. Bowden) on 29 March at column 397, in accordance with the conclusions of the Brussels European Council of 11–12 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.
  • The outstanding amount of the Commission's borrowing up to 20 June under article 12(2) of Council regulation 2891/77 will be recovered.

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 by the amount of the advance. The Commission's request does not, therefore, involve any net addition to public expenditure.