§ Viscount Cranborneasked the Chancellor of the Exchequer whether he will make a statement on the outcome of the meeting of the European Community Budget Council on 24 November.
§ Mr. LawsonI represented Her Majesty's Government at a meeting of the Budget Council in Brussels on 24 November. The purpose of the Council was to consider the amendments and modifications proposed by the European Parliament to the draft general budget of the European Communities for 1981.
The draft budget had been established at the previous meeting of the Budget Council on 23 September, which I also attended and the outcome of which I reported to the House on 27 October.—[Vol. 991, c. 126–28.] It provided for total expenditure of 20,902,194,030 European units of account (eua) in commitment appropriations and 19,239,916,325 eua in payment appropriations for the year. Of the latter figure, 19,079 million eua would be financed by member States in accordance with the Council decision of 21 April 1970—the "own resources" decision; the VAT own resources part of this revenue would require a percentage rate of 0.88 applied to the harmonised base.
This draft budget had since been adjusted by two letters of amendment. The first of these, established by the Council on 7 October, had added 60 meua in commitment appropriations and 30 meua in payment appropriations for pre-accession aid to Portugal. Following the establishment on 6 November of supplementary and amending budget No. 1 for 1980, which made provision for advance payments of 119.7 meua to the United Kingdom in 1980, the second letter of amendment, established by the Council on 48 November, reduced the provision in chapter 58—supplementary measures in favour of the United Kingdom—by the same amount. The supplementary budget was adopted by the Parliament on 20 November.
These two letters of amendment altered the total expenditure provided for in the draft budget to 20,842,494,030 meua in commitment appropriations and 19,233,216,325 meua in payment appropriations, with a VAT own resources rate of 0.8755 per cent. The sterling equivalents at the rate of exchange used for the 1981 budget of £1 = 1.5889 eua are respectively approximately £13,117 million and £12,104 million.
The European Parliament considered the draft budget on 6 November. It proposed total reductions in provision for obligatory expenditure of 395,285,000 eua in commitments and 392,369,431 eua in payments. On the non-obligatory side, using the classification followed by the Council of expenditure as obligatory or non-obligatory, the Parliament proposed total increases of 969,962,299 eua in commitment appropriations and 744,490,299 eua in payment appropriations. In sum, the Parliament had thus proposed net increases of 574,677,299 eua in commitment appropriations and 352,120,958 eua in payment appropriations.
Before its own discussion of the draft budget, the 24 November Council heard the views of a delegation from the European Parliament led by its President, Mme. Veil. The delegation emphasised the European Parliament's view that, despite the economic problems facing the 115W Community, expenditure on certain policies, in particular the regional development fund, overseas aid and energy, should be increased. It also considered that savings should be made within the agriculture sector, particularly to control expenditure on surplus products. Its amendments and modifications had reflected these priorities.
The Council then, acting by qualified majority, considered the detailed proposals of the Parliament within the framework of the provisions of article 203(9) of the Treaty of Rome, as subsequently interpreted by the Council, relating to the maximum rate of increase in total appropriations for non-obligatory expenditure compared to the previous year and the margins available to the Parliament to increase the totals of such expenditure. These margins were approximately 281.4 meua on commitments and 133.3 meua on payments.
Of the Parliament's modifications to obligatory expenditure, the Council accepted, by qualified majority, two relating to the European agricultural guidance and guarantee fund. The first of these reduced by 50 meua the provision for aid for skimmed milk powder for use as feed for calves. The second reduced by 2 per cent the provision on each budget line within the EAGGF chapters, and transferred 254,500,000 eua to a special reserve in chapter 79. This sum can, if necessary, be used during the financial year by means of transfer at the Commission's request and subject to a decision by the budgetary authority. Member States had differing positions on these two modifications; I supported both for the United Kingdom. Most of the Parliament's other modifications to obligatory expenditure were rejected.
Member States also had differing views on the Parliament's proposals on some items of non-obligatory expenditure and on the extent to which increases should be contained within totals of 281.4 meua for commitments and 133 meua for payments. However, the decision of the Council by qualified majority was to accept amendments to non-obligatory expenditure items within totals of 281 meua on commitments and 183 meua on payments. The Council therefore kept within the maximum rate on commitments but exceeded it by 50 meua on payments.
The increases accepted by the Council included 140 meua in commitments and 120 meua in payments for the regional development fund, 40 meua in commitments and 60 meua in payments for the social fund, 47.3 meua in commitments and 0.3 meua in payments in the energy sector, and 50 meua in commitments, with no increase in payments, for aid to non-associated countries. The Council also agreed to 22 new permanent posts in the Commission and five additional posts for Greek translators.
Before contributing to qualified majorities for these increases, I reminded the Council of the need to put the Commission in a position to be able to honour its obligations by providing sufficient payment appropriations for the regional and social funds to be able to fulfil commitments already entered into. The decisions of the Council go some way, though not far enough, towards ensuring this.
The Council rejected an amendment by the Parliament to insert 112 meua in chapter 54 of the budget for transfer to the budget of the European Coal and Steel Community for social measures related to steel restructuring. Although the United Kingdom supports the view that further Community aid is necessary to alleviate the social consequences of restructuring in the steel sector, no policy 116W decision has yet been taken and there could be legal difficulties about such a transfer. However, with my support, the Council agreed by qualified majority to a token entry pending a policy decision.
The Council also considered further the Parliament's views on possible budgetisation of Community loans. The Council agreed that an additional annex should be attached to the 1981 budget in order to provide the Parliament with more information on this subject. The Council did not agree to include loans as part of the budget, nor to any change in the existing rules governing the authorisation of tranches of loans. The Council also agreed to reply during the budgetary procedure to comments which the Parliament made on this annex. On this basis the Council rejected the Parliament's amendment to reinstate part II of the budget.
Taking account of the decisions of the budget Council, the 1981 budget now contains 21,123,494,030 meua in commitment appropriations and 19,416,216,325 meua in payment appropriations; the appropriate VAT own resources rate would be 0.9058 per cent. The sterling equivalents are respectively approximately £13,294 million and £12,220 million.
The decisions of the budget Council will now be conveyed to the European Parliament for consideration at its mid-December session. It is possible that there may be further exchanges between the Council and Parliament before the latter adopts the 1981 budget.