HC Deb 23 May 1990 vol 173 cc190-1W
Mr. Hanley

To ask the Chancellor of the Exchequer if he will make a statement on the revision of the European Community financial perspective.

Mr. Ryder

Under article 12 of the inter-institutional agreement (IIA), a substantive revision of the financial perspective requires a joint decision of the Council and the European Parliament. On 21 May, the Council approved a revision based on texts negotiated by the Presidency and representatives of the Parliament. Final ratification by the Parliament will now be sought.

The article 12 revision provides for a net increase in the financial perspective of 200 mecu (£147 million) in 1990, 1,225 mecu (£894 million) in 1991 and 1,478 mecu (£1,080 million) in 1992. Around two thirds of the total increase over the period is to accommodate expenditure on assistance to central and eastern Europe. Under the terms of the revision, the amounts set aside for this assistance can be used for no other purpose without a further joint decision by the Council and the Parliament. Most of the remaining increase in the ceilings will be devoted to expenditure on aid to Mediterranean, Asian and Latin American countries; and on completion of the internal market. There is also extra provision for the structural funds in 1991 and for administrative expenditure in 1992.

The overall net increase for each year is within the contingency margin of 0.03 per cent. of Community GNP specified in article 12 of the IIA. But there is a difference of view in relation to this margin. The Commission and the Parliament believe that it can be reconstituted—ie, used more than once—provided that the overall expenditure ceiling in the financial perspective is within the legally binding ceiling on member states' contributions. The Council, however, believes that the margin is available only once and cannot be reconstituted: it has accordingly declared that it will deem inadmissible any article 12 revision proposal reliant on a partial or complete reconstruction of the margin."

On this basis, any future article 12 revision would have to be confined within the headroom which remains after the current revision. That headroom totals 895 mecu (£655 million) in 1990, 300 mecu (£220 million) in 1991, 105 mecu (£75 million) in 1992.

The revised expenditure ceilings in the financial prespective are comfortably within the ceilings on member states' contributions. In 1990, for example, the headroom is equivalent to 0.09 per cent. of Community GNP, or around £11 billion.