Multiannual Financial Framework

Mike Wood Excerpts

Wednesday 7th December 2016 General Committees

[Mike Wood (Dudley South) (Con)]

It is a pleasure to serve under your chairmanship, Mr Hanson. It might be helpful to the Committee if I take a few minutes to briefly explain the background to the documents and the reasons why the European Scrutiny Committee recommended them for debate.

The multiannual financial framework sets out annual ceilings for the six headings of EU budgetary expenditure. The Commission has presented a mid-term review of the multiannual financial framework for 2014-20, and that is the first document in the motion. The Commission’s communication covers three matters: the multiannual financial framework at mid-term and its state of implementation and challenges; strengthening the EU budget’s focus and flexibility to deliver on priorities and new challenges; and issues for preparation of the next multiannual financial framework.

Consequent to the mid-term review, the Commission sets out a financial package of €13 billion or £11 billion of additional EU funding in 2017-20 for jobs, growth, migration and security. The inter-institutional agreement between the Council, the European Parliament and the Commission on budgetary matters provides for the contingency margin, among other matters, which is a mechanism to react to unforeseen circumstances as a last resort instrument and allows for a maximum of 0.03% of EU GNI to be redeployed between budget headings.

The Commission’s financial revision package is underpinned by the next four documents in the motion, which are: a proposed Council regulation to amend the 2013 regulation establishing the multiannual financial framework for 2014-20; a proposed amendment to the 2013 inter-institutional agreement on budgetary matters and financial management; a proposed decision concerning the contingency margin; and a proposed regulation on the financial rules applicable to the EU budget, which amends 14 regulations and one decision concerning the financial management of a range of multiannual EU programmes.

The remaining two documents in the motion are a letter of amendment to update the Commission’s draft budget for 2017 and a revised proposal for use of the contingency margin in 2017, in support of the migration and security section of the amending letter. The amending letter has taken into account technical adjustments on expenditure that had occurred within the course of the year and the proposals accompanying the Commission’s mid-term review of the multiannual financial framework. The amending letter increased the draft budget’s commitment appropriations from €157.7 billion— £136 billion—to €159 billion—£136.8 billion—and payment appropriations from €134.9 billion to €135.4 billion, an increase from £116.2 billion to £116.6 billion.

The changes fall into four areas: agriculture and fisheries, technical adjustments, growth and jobs, and migration and security. The first two are annual features of amending letters; the second two were particular to the budget proposals for 2017. In recommending the first five documents for debate, the European Scrutiny Committee noted that they represent an important stage in the adoption and management of annual EU budgets. The Committee suggested that among the matters Members might wish to explore today are the Government’s view of the individual budgetary upratings suggested by the Commission; whether they see any difficulties in the implementing proposals that the Commission presents; what the financial implications for the UK are likely to be prior to Brexit; and what post-Brexit financial liabilities there might be for the UK as a result of these proposals.

The Committee recognised that the remaining two documents were relevant primarily to the negotiation of the 2017 EU general budget. Given that the Commission had also linked them to the mid-term review of the multiannual financial framework, we recommended that they be included in this debate.

[The Chair]

I now call the Minister to make an opening statement. I remind the Committee that, as in the House, no interventions are allowed during the Minister’s statement, but there will be opportunities for questions following the statement.