European Community Budget Council (Hansard, 27 October 1980)

§ Mr. Lawson:

The Budget Council on 23 September established the draft general budget of the European Communities for 1981. The Council's detailed consideration of the proposals contained in the Commission's preliminary draft budget was preceded by a meeting of the EC-Greece Interim Committee and a discussion of budgetary priorities with a delegation from the European Parliament headed by its President Madame Veil.

The draft budget established by the Council provides for 20,911 meua for commitments and 19,249 meua for payments. If the 1981 budget were adopted in this form, the United Kingdom's gross contribution is estimated at 3,997 meua—approximately £2,516 million at the 1981 budget rate of 1.58894 eua=£1. The gross contribution will be partially offset by receipts from Community expenditure programmes and would be reduced to the level envisaged in the end-May agreement on the United Kingdom net contribution by the supplementary measures adopted as a result of the agreement.

Within this total, 17,073 meua for commitments and 16,812 meua for payments are for the so-called obligatory expenditure—principally for the guarantee section of the European agricultural guidance and guarantee fund, refunds to the United Kingdom, payments to Greece under the transitional arrangements for accession, and overseas aid—with 3,838 meua in commitments and 2,436 meua in payments for the so-called non-obligatory expenditure—principally the regional development fund, social fund, research and administration.

The draft budget includes full provision, totalling 1,444 meua, for refunds to the United Kingdom in respect of our contribution to the 1980 budget. It also 127W includes 100 meua for advance payments, during 1981, of refunds in respect of our contribution to the 1981 budget. The inclusion in the draft budget of full provision for refunds due to us in respect of our contribution in the 1980 budget, and explicit provision for advance payments of the refunds due in respect of our contribution to the 1981 budget, were important objectives for the United Kingdom at the Council. They were fully achieved.

There was prolonged discussion of the provision to be included in the draft budget for non-obligatory expenditure, principally for the regional development fund and the social fund. The Treaty provides that increases in non-obligatory expenditure, above the level of the corresponding provision in the previous year's budget, should be subject to a maximum rate of increase which may be enhanced if the Council and European Parliament agree. For the 1981 budget the maximum rate is 12.2 per cent. Because of the imminence of the overall limit of the Community's own resources, and the need for retrenchment in public expenditure in all Community countries, most member States stated at the Council that they could not at this stage agree to increases in non-obligatory expenditure of more than 6.1 per cent., half the maximum rate, for commitments and 12.2 per cent., the full maximum rate, for payments. The provision finally agreed is for increases of 4.8 per cent. for commitments and 11.5 per cent, for payments.

For the regional development fund, the Council agreed to commitment appropriations of 1,400 meua and payment appropriations of 500 meua. For the social fund, the Council agreed to commitment appropriations of 923 meua and payment appropriations of 560 meua. For these two funds the increases in the draft budget, compared to the 1980 budget, amount to 12 per cent. for commitments and 36 per cent. for payments. This is a very satisfactory outcome, particularly since the draft budget is only the first stage of the process for adoption of the 1981 budget.

For the guarantee section of the EAGGF the draft budget includes 12,931 meua. This is an increase of 12.6 per cent. over the 1980 budget provision and 128W is the Commission's latest estimates of expenditure likely to result in 1981 from existing agricultural policies.

The draft budget established by the Council on 23 September included a token entry for pre-accession aid to Portugal. Following the agreement on this subject reached at the Foreign Affairs Council on 7 October, the Council agreed on 20 October to a rectifying letter to the draft budget. This provides 60 meua in commitments and 30 meua in payments for the first stage of the aid programme, and increases the total of the draft budget by the same amount.

The draft budget will now be considered by the European Parliament, prior to further consideration by the Council on 24 November.