HC Deb 03 May 1988 vol 132 cc398-9W
Mr. Tim Smith

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

Mr. Brooke

The Budget Council met in Luxembourg on 28 April. I represented the United Kingdom.

The Council reached agreement on the expenditure provisions of its second reading draft budget. In response to the Italian delegation, however, who entered a waiting reserve on the content of the intergovernmental agreement (IGA) needed to finance the budget, the President of the Council did not declare the new draft budget formally established.

In its discussions on the European Parliament's modifications and amendments to the first reading draft budget established on 7 March, the Council agreed on total expenditure of 45.1 billion ecu (becu) (£31.3 billion) in commitment appropriations and 43.6 becu (£30.3 billion) in payment appropriations. Within these totals provision for agricultural guarantee expenditure remains, as in the Council's first reading draft budget, at 27.5 becu (£19.1 billion) with a further 1.24 becu (£0.9 billion) for disposals of existing stocks and a monetary reserve of 1 becu (£0.7 billion).

As regards non-compulsory expenditure, the Council agreed on figures of 11.4 becu (£7.9 billion) for commitment appropriations and 10 becu (£6.9 billion) for payment appropriations. The increases over 1987 are 10.5 per cent. and 8.1 per cent., respectively, compared with corresponding figures in the first reading draft budget of 7 per cent. and 5.9 per cent. and with the "maximum rate" of increase, calculated in accordance with the treaty, of 7.4 per cent. The European Parliament will have the right under the treaty to add the remainder of its half maximum rate margin to these amounts (some 27 mecu (£19 million) for commitments and 144 mecu (£100 million) for payments).

The Council agreed that the IGA total and the contributions of individual member states would be adjusted automatically so as to conform with the payments due under the Community's new own resources decision as finally agreed. The Italian delegation made clear that in the discussions on this decision they would continue to argue for an interpretation of the Brussels European Council conclusions which was more favourable to Italy than that proposed by the Commission.

The presidency asked the Italian delegation to resolve the matter of their waiting reserve by 4 May, which is the day before the deadline under article 203(5) of the treaty for the Council to act on the Parliament's modifications and amendments. I will keep the House informed about the outcome.