HC Deb 02 December 1986 vol 106 cc600-1W
Mr. Rowe

asked the Chancellor of the Exchequer if he will make a statement on the outcome of the latest meeting of the European Community's Budget Council.

Mr. Brooke

The Budget Council met in Brussels on 26–27 November to consider the European Parliament's amendments and draft modifications to the first reading budget for 1987 established by the Council in September. I chaired the meeting, and my hon. Friend the Economic Secretary represented the United Kingdom.

The Council established by unanimity a second reading budget within the budget discipline limits.

The Council's proposals provide for total expenditure of 37.4 billion ecu in commitment appropriations (£23.5 billion at the budget exchange rate of 1.5939 ecu to the £) and 36.2 billion ecu (£22.7 billion) in payment appropriations. The proposals leave 729 mecu (£457 million) of unused resources within the 1.4 per cent. VAT ceiling.

The Council's proposals continue to provide for keeping the growth of agricultural market support expenditure within the budget discipline limit, though the Commission has again warned that on present policies a substantial overrun is likely. In response to wide-ranging modifications proposed by the European Parliament, the Council opened a new budget line for measures resulting from the work now under way in the Community on surplus production and agricultural stocks.

The growth of non-obligatory expenditure between 1986 and 1987 implied by the Council's proposals is 757 mecu (£475 million or 8.09 per cent.) for commitment appropriations and 617 mecu (£387 million or 7.37 per cent.) for payment appropriations. These increases are within the maximum rate of increase for 1987, as laid down in the Treaty, of 8.1 per cent. Payment appropriations are 62 mecu (£39 million) below the maximum rate.

The Council's proposals continue to make provision of 1,633 mecu (some £1,024 million) for the United Kingdom's VAT abatement in respect of 1986.

The Council's proposals for the 1987 budget were influenced by the expectation that a substantial deficit would have to be carried forward from the current year: the Commission is projecting a shortfall of revenue this year, particularly customs duties, of some 1.3 billion ecu (£0.8 billion), which is likely to be offset only in part by shortfalls in expenditure. The Commission re-submitted to the Council its earlier proposal for a 1986 amending budget to budgetise 776 million ecu of the expected deficit. There was, however, no qualified majority in the Council for this, and the Council noted instead that, in accordance with the Community's financial regulation, the Commission would propose a supplementary and amending budget next year, when firm figures are available, to take account of the 1986 deficit.

The European Parliament is due to consider the Council's second reading budget for 1987 in the week beginning 8 December.