§ Mr. Foulkes
asked the Chancellor of the Exchequer if he plans to take any steps to counter the European Commission's implementation of the Community budget in the form approved by the European Parliament; if he intends to pay the United Kingdom's share for February on the basis of the budget approved by the European Parliament; and if he will make a statement.
§ Mr. Brooke
[pursuant to his reply, 21 January 1986, c. 109]: The European Parliament adopted on 18 December a Community budget for 1986 which includes a larger total for non-obligatory expenditure than the Council had agreed, and other disputed elements.
In the view of seven member states, including the United Kingdom, the Parliament's action was not compatible with the EEC Treaty, and the Council decided 196W accordingly on 20 December, by seven votes to three, to bring an action against the European Parliament before the European Court. The French, German, Dutch and Luxembourg Governments have decided to bring separate actions against the Parliament.
The United Kingdom Government has likewise decided to bring a separate action against the European Parliament in which the Court will be asked to rule either that the disputed elements in the budget are invalid, and in particular the 629 mecu (some £385 million) of expenditure which the Parliament added in mid-December to the Council's second reading draft budget of 27 November, or in the alternative, that no legal budget has been established. The United Kingdom will shortly deposit an application with the European Court in Luxembourg.
The Government will also be applying shortly to the European Court for an interim measures order suspending implementation by the Commission of the disputed elements in the budget pending substantive judgment by the Court.
Since in the Government's view the United Kingdom is legally obliged to make monthly VAT contributions to the budget of only some 190 million ecus (some £120 million), any contributions in excess of that figure cannot be paid as a direct charge on the Consolidated Fund under Section 2(3) of the European Communities Act 1972. The Government propose, as in the 1982 budget dispute, to contribute in full to the budget but to make clear that our contribution, to the extent that it is in excess of 190 million ecus, is paid on a "without prejudice" basis pending judgment by the European Court. The authority of Parliament for this element in our contributions, which amounts to some 10 mecu (some £6 million) a month, is being sought in a Special Supplementary Estimate for the current financial year which is today being presented to the House.
The Government's intention in adopting this approach is to minimise the risks of prejudicing the United Kingdom's case before the European Court, including our application for an interim measures order, and likewise the risks of incurring liability for penal interest rate charges.