The new European Parliament is set to be associated with the general review of the EU budget and development of the 2014-2020 financial framework that will follow. It has already adopted its initial guidelines.

The review of the Union’s finances is not new. After an entire night spent negotiating the financial 2007-2013 perspectives, the European Council decided, at dawn on 17 December 2005, to place a ‘revision’ clause for the EU budget in its conclusions. The budget needed to be adapted to new socio-economic, political and environmental realities and to an enlarged Union. The EU’s leaders also wanted to end certain member states’ reflex of arguing for a “fair return” on funds invested.

So, in May 2006, the Council, Parliament and Commission signed the interinstitutional agreement on the financial perspectives and confirmed their commitment to convene a meeting to revise the EU budget. The three institutions agreed to give the Commission a mandate to “undertake a thorough review of all aspects of the Community budget (revenues and expenditure), including the Common Agricultural Policy and the British rebate, and to report in 2008 or 2009”. Parliament must be “associated” with this review for the revenue aspects of the budget, ie the Union’s own resources.

RESULTS OF CONSULTATION

The Commission ended up with a difficult task involving highly sensitive aspects of EU financing. This explains why it has so far adopted a very general approach. The initial proposals have been delayed, partly in order not to have a negative influence on member states’ ratification of the Lisbon Treaty. The Commission launched an extensive public consultation, in September 2007. The results were due out in May 2008, but in the interim doubts had surfaced over the Irish referendum, to be held a few weeks later, on 12 June 2008. The Commission, therefore, decided to postpone publication to avoid disrupting the ratification process. After the Irish rejected the treaty, the Commission eventually published the results, in November 2008.

What conclusions can be drawn from the public consultation? The participants brought to the fore the challenges facing the EU: from climate change and competitiveness in the global economy to security and energy supply. They recommend increased funding for new technologies and research in these areas. The Common Agricultural Policy (CAP) is seen as too old and costly and should be reformed. On the revenue side, the results reveal broad support for an increase in traditional own resources and the creation of new own sources of income. There is virtual unanimity on ending the opaque system of exceptions. All derogations should be abolished, especially the biggest: the British rebate negotiated by the then British Prime Minister Margaret Thatcher in 1984 as compensation for the cost to the UK of the CAP from which the UK received proportionally fewer benefits.

The Commission has promised to take these contributions into account “wherever possible” in its “strategic proposal” to be presented later this year. Nothing, however, has yet been published. In the autumn, after the Irish referendum, the new Commission is expected to present an “evaluation of the functioning of the interinstitutional agreement on the financial perspectives”. Its proposal is expected to remain strategic. Actual figures will not be discussed before 2011, with the launch of negotiations on the new 2014-2020 financial framework.

Parliament, meanwhile, does not have a decisive input on the subject. The report by the Chairman of the Committee on Budgets, German Conservative Reimer Böge, adopted in the May 2009 plenary in Strasbourg, expresses a wish to have a say in the budget review. This is based on the Lisbon Treaty. If the treaty enters into force, the financial perspectives will be included as the ‘multiannual financial framework’ (Article 312 of the Treaty on the Functioning of the European Union) and will become legally binding. They will be adopted under a ‘special legislative procedure’ requiring Council unanimity and approval by the European Parliament. Member states will have a right of veto on the financial framework and MEPs will have a fairly limited role since this is not co-decision. In this context, the report by Reimer Böge tries to align the multiannual financial framework with Parliament’s mandate. It proposes reducing the framework from seven to five years, as allowed under the Lisbon Treaty, and extending the current 2007-2013 framework to 2015-2016. This would mean that the new Parliament elected in June could negotiate the next financial framework and its successor would play a similar role.

It remains to be seen how the Commission will react to this resolution and to the reports by Alain Lamassoure (EPP-ED, France), adopted in 2006, 2007 and 2008, which suggest an overhaul of the own resources system, abolition of the scheme for national contributions and the creation of new own resources in the original spirit of the Rome Treaty.

There is virtual unanimity on ending the opaque system of exceptions

EP fact box2009 annual budget:

-1,526,670,930 euroStaff (May 2009): -6,166 full-time and temporary officials-1,510 MEPs’ assistants in Brussels