BUDGET DISCIPLINE: INTER-INSTITUTIONAL AGREEMENT (Hansard, 3 November 1993)

The Earl of Caithness

The Edinburgh Council of 11th to 12th December 1992 concluded thatthe Inter-Institutional Agreement (IIA) for 1988–1992 was a positive development and hopes that the agreement can be re-established on terms ensuring strict budgetary discipline and a smooth passage of the annual budgetary discussions. … It calls upon the Council … subject to acceptable terms being attainable, to reach agreement with the Commission and European Parliament on a revised IIA.

Since Edinburgh, discussions have taken place between the Council (represented by the presidency), the Commission and the European Parliament with a view to fulfilling the Edinburgh mandate. These discussions were difficult at times. However, the Belgian presidency have recently succeeded in negotiating a satisfactory agreement. This was endorsed by the Council at the Foreign Affairs Council on 4th October and the informal meeting of ECOFIN on 9th October, and by the European Parliament at its plenary session on 27th October. The agreement was signed at the recent Special Foreign Affairs Council. A copy of the text has been placed in the Library.

The IIA is a political but not legally binding agreement which clarifies the Community's budgetary procedure. Under the treaty, the Council and the European Parliament have joint responsibility for deciding the Community budget on the basis of proposals from the Commission. The IIA sets out the way the three institutions will exercise their responsibilities in accordance with the treaty, and respecting the revenue ceilings which are laid down in the own resources decision. In particular, it provides for the annual Community budget to be set in the context of a 124WA multi-annual financial framework. This allows a more orderly development of spending priorities than would be possible if the budget were agreed one year at a time without reference to a longer term plan.