HC Deb 23 October 1979 vol 972 cc150-2W
Mr. George Gardiner

asked the Chancellor of the Exchequer if he will make a statement about the meeting of the Budget Council in Brussels on 11 September.

Mr. Lawson

The Budget Council which I attended on 11 September established the European Communities draft general budget for 1980. This was preceded by a discussion of budgetary priorities with a delegation from the European Parliament headed by its President, Madame Veil.

At the beginning of the Council I made a short statement on the Government's attitude towards the 1980 budget. I said that, although the Council had been convened to examine the detailed proposals in the budget, my attitude towards these proposals was heavily influenced by the overall economic impact of the budget on the United Kingdom. The cumulative budgetary effect of Community policies produces a totally inequitable distribution of net financing costs that could not be ignored. In this connection I referred to the European Council's request for the Commission to produce a "Reference Paper" analysing the impact of the budget on member States. I expressed my hope that, when this was discussed at the Finance Council on 17 September, our Community partners would accept that the present situation was grossly unfair and would subsequently co-operate with the Commission in finding a solution in time for the next European Council in Dublin on 29–30 November.

I was later able to demonstrate to my colleagues the inadequacy in this respect of the existing financial mechanism when I informed them that, owing to the appreciation of sterling and revisions to the balance of payments figures for previous years, the United Kingdom would no longer satisfy the necessary conditions to qualify for a refund in 1980 in respect of 1979. As a result, the provision of 68 MEUA entered in the preliminary draft budget was replaced by a token entry.

There was a prolonged discussion on provision for the regional development fund (RDF). With support from certain other member States, I argued initially for acceptance of the Commission's proposal for commitment appropriations of 1200 MEUA. I pointed out that the RDF made a useful, though very modest, contribution toward offsetting the perverse effects of the rest of the Budget and in particular its main policy, the common agricultural policy (CAP). However, some member States favoured a figure of only 650 MEUA, while others supported amounts only slightly above this. Agreement was eventually reached on an amount of 850 MEUA, which, although slightly below the 1979 figure of 945 MEUA, was a reasonably satisfactory outcome at this stage of the budget procedure, given the need to secure qualified majority approval.

For the social fund, the Council agreed to commitment appropriations totalling 826 MEUA. An amount of 116 MEUA was agreed for aid to non-associates. Several of the Commission's proposals, particularly in the industrial and energy sectors, were removed by the Council because of the lack of an agreed Community policy. The proposed contribution of 100 MEUA to the ECSC budget was also rejected. Provisions for ACP sugar and food aid export refunds were returned to their rightful place in the agricultural title of the budget.

The draft budget established by the Council provided for 15,981 MEUA in commitment appropriations and 14,907 MEUA in payment appropriations. The Council has subsequently approved, through a rectifying letter, an amendment to the draft budget providing for an additional 417.3 MEUA in commitment and payment appropriations largely due to later information on harvests, and so on, affecting the Communities' agricultural expenditure. If the budget were adopted in this amended form, the United Kingdom's gross contribution is estimated at 3,180 MEUA—approximately 2,147 million at the 1980 budget rate of 1.4813 EUA=£1.

The draft budget, as amended, will now be considered by the European Parliament prior to further consideration by the Council, possibly on 23 November.

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