HC Deb 30 October 1990 vol 178 cc492-3W
Mr. Hanley

To ask the Chancellor of the Exchequer if he will make a statement on the outcome of the meeting of the European Community's Budget Council in July.

Mr. Maude

The Budget Council met in Brussels on 27 July. The Paymaster General represented the United Kingdom. The Council established a first reading draft budget for 1991 totalling 54.7 becu (£38.1 billion) in commitment appropriations and 52.4 becu (£36.5 billion) in payment appropriations, respectively 830 mecu (£578 million) and 586 mecu (£408 million) below the figures proposed by the Commission in the preliminary draft budget (PDB).

The 1991 budget is the third to be subject to the arrangements for budgetary discipline arising from the 1988 European Council and the inter-institutional agreement between the Council, the Commission and the European Parliament which incorporates expenditure ceilings for 1988–92. The table shows that the first reading draft budget is some way within those ceilings:

conclusions of the 1988 February European Council, the Budget Council distinguished without these totals between so-called "privileged" and "non-privileged" expenditure. The draft budget established by the Budget Council marginally reduced privileged expenditure. As regards non-privileged DNO, the Council agreed that the maximum rate doctrine would not be applied this year. However, the draft budget in effect reduced non-privileged expenditure as against the PDB by more than in previous years; and the Council endorsed a robust declaration making clear that non-application of the maximum rate in relation to this year's budget was an inevitable consequence of developments in eastern Europe, and implied no weakening of budgetary discipline.

The budgetary implications of German unification were not reflected in the PDB and the Budget Council did not attempt to make provision for this in its draft budget. The Commission has now put forward a proposal to revise the financial perspective as a result of German unification. An amending letter to the PDB or a supplementary budget will be required to take account of the consequences of agreement on this proposal for the 1991 budget.

The European Parliament considered the draft budget at its October plenary. The Parliament's amendments and modifications will be considered by the Budget Council on 15 November.