European Community (Budget Council) (Hansard, 27 July 1977)

§ Mr. Joel Barnett

The Budget Council on 20th July established the draft general budget of the European Communities for 1978. The total provision included in the draft budget amounts to 11,621 million European units of account (meua)—£7,567 million approximately—in commitment appropriations and 11,319 meua—7,370 million approximately—in payment appropriations, compared with the Commission proposal in the preliminary draft budget of 12,495 meua—£8,136 million approximately—in commitment appropriations and 11,850 meua—£7,716 million approximately—in payment appropriations.

The Budget Council reached agreement on a procedural formula under which the 1978 budget was established in European units of account, but without prejudice to future discussions on the interpretation of Article 131 of the Treaty of Accession, which governs the contributions of the new member States in 1978 and 1979. The Council also undertook to resolve the 270W Article 131 problem by not later than 31st October, and acknowledged that if, in the event, agreement was not reached by then on the necessary amendment to the Financial Regulation, it would not be possible for the budget to be adopted in European units of account. In such circumstances the Commission will submit proposals, within the budget timetable, for the conversion into existing units of account of the appropriations entered in the draft budget.

It was also agreed that the revenue section of the draft budget should include estimates of revenue accruing from VAT own resources. This followed from the adoption, in May this year, of the directive instituting VAT own resources. As with the use of the European unit of account, if the necessary implementing measures have not been completed by the end of the year, it will not be possible to finance the 1978 budget from VAT own resources; in those circumstances the present system of GNP-based financial contributions would continue.

On the European Agricultural Guidance and Guarantee Fund, the Council left unaltered the estimates produced by the Commission amounting to 8,307 meua—£5,409 million approximately—since the level of provision is to be reviewed later in the year when the results of the harvest are known. For the Social Fund, the Council agreed to the Commission proposal of 562 meua—£365 million approximately—in commitment appropriations but considered that, for payment appropriations, a total of 400 meua—£260 million approximately—would be more realistic. The Council, however, agreed that if in the event it appeared that a higher level of payments would be achieved, it would be ready to consider a supplementary budget. Since the arrangements for the operation of the Regional Development Fund are at present under review, the Council agreed that the provision included in the draft budget should not prejudge decision to be taken later; it therefore decided to include a total of 399 meua—£260 million approximately—for commitments and 390 meua—£254 million approximately—for payments. This corresponds to the provision for new actions included in the 1977 budget. In accordance with its normal practice, the Council did not include provision in the draft budget for policies not yet adopted. 271W The areas affected were, in particular, the energy and industrial sectors.