§ Mr. Tim SmithTo 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[pursuant to his reply, 3 May 1988, c. 399]: The President of the Budget Council yesterday (5 May) declared the second reading draft budget formally established and has sent the necessary documentation to the European Parliament, thereby respecting the deadline under article 203(5) of the treaty for the Council to respond to the Parliament's modifications and amendments to the Council's own earlier proposals.
The Italian delegation has made a unilateral declaration to the effect that it cannot approve the draft inter-governmental agreement (IGA) needed to finance the budget before agreement has been reached on the method for calculating member states' contributions to the United Kingdom's abatement. This calculation affects the relative amounts of VAT and of IGA payments contributed by member states. The amounts entered in the draft IGA text are still explicitly provisional and indicative. The Council has agreed that they will be adjusted as necessary to conform with the payments due under the new own resources decision as finally agreed, and with the eventual size of the budget as adopted taking account of the Parliament's rights under the treaty as regards non-obligatory expenditure.
The provisional amounts in the draft IGA text are shown in the table. The total includes 1,000 mecu (£690 million) to cover the monetary reserve which, as agreed at the Brussels European Council, will be drawn upon only if changes in the ecu-dollar exchange rate increase spending requirements in the agricultural guarantee section of the budget by more than 400 mecu (£277 million). The intention is that member states should contribute to the IGA in accordance with the sums which they would have paid had the new own resources decision taken effect immediately. Their contributions will represent non-repayable advances against amounts due under the new own resources decision and will be payable by monthly instalments.
mecu £ million Belgium 251 174 Denmark 171 119 Germany 1,982 1,375 Greece 84 58 Spain 528 366 France 1,532 1,063 Ireland 45 31 Italy 1,342 931 Luxembourg 15 10 Netherlands 369 256 Portugal 63 44 United Kingdom 1,263 876 TOTAL1 7,647 5,304 1 The individual lines may not add up to totals because oF rounding. All sterling equivalent flgures are calculated at the rate of 1 .4417 ecu to the pound used by the Commission in its latest budget proposals. As explained in my reply of 9 March, columns 208–9, the extra financing will be partially offset by smaller VAT 651W payments. On the foregoing figures, the total extra financing, compared with the maximum amount available under the existing own resources ceiling, would be around 5,400 mecu (£3,700 million), after allowing for a surplus of 500 mecu (£350 million) carried forward from 1987.
I have made it clear in the Council that the United Kingdom cannot pay over any of the additional sums without the approval of Parliament. Parliament's approval will be sought by means either of a special estimate or of a Bill, following the precedents of the 1984 and 1985 IGAs respectively. The method chosen will depend mainly on the timing of the adoption of the budget and the IGA and of the agreement of the new own resources decision. The IGA is subject to approval in the national Parliaments of all other member states as well.