The Commission proposed, last April, the 2011 draft budget – €142.6 billion in commitments and €130.1 billion in payments. At a time of severe strain on the majority of Member States’ public finances, the Commission proposes an increase of 5.9 percent on the 2010 budget.

Next year’s budget is the first to be negotiated under the Lisbon Treaty. The Lisbon Treaty has changed the budget procedure conferring further powers on the European Parliament. It has abolished the distinction between compulsory and non-compulsory expenditure, hence the Council has no longer the final say on compulsory expenditure (CAP expenditure and funding of international agreements). Consequently, the European Parliament is on equal foot with the Council, being able to influence the entire budget. Moreover, the procedure is supposed to be quicker as there is only one reading in both the Council and in the Parliament. There is, therefore, less time to negotiate it.

The negotiations have started on 30 June with a trilogue meeting, between  the European Parliament, the Council and the Commission. Whereas the Council is planning to make considerable cuts to the Commission’s draft EU budget, the MEPs, unsurprisingly, want to increase it.

According to a European Parliament press release, the representatives of the three EU institutions agreed that the new EU stabilisation mechanism should have a specific EU budget line and decided to create it through an amendment to the 2010 budget.

The Council's first reading is scheduled for mid-July. The Council shall adopt by QMV the draft budget and forward it to the European Parliament. The European Parliament's first reading is scheduled for October. The budget is deemed to have been adopted if the European Parliament within 42 days from the Council communication approves the Council draft budget or has not taken a decision. If the European Parliament amends the draft budget the Lisbon Treaty provides for a Conciliation Committee to be convened. Such Committee will be composed of Council representatives and representatives of the European Parliament aiming at reaching an agreement on a joint text. If the Conciliation Committee does not agree on a joint text within 21 days, the Commission shall submit a new draft budget. If a joint text is agreed the European Parliament and the Council have to approve it within 14 days. If both institutions approve the join text or fail to take a decision, or if one approves and the other fails to take a decision the budget is adopted in accordance with the join text. On the other hand if both reject the join text, the Commission shall submit a new draft.

If the Council approves it but the European Parliament rejects it, the Commission shall submit a new draft budget. If the Council rejects the joint text but the European Parliament approves it, the MEPs may decide to confirm all or some of the original amendments before the joint text acting by a majority of its component members and three-fifths of the votes cast. In this case “where a European Parliament amendment is not confirmed, the position agreed in the Conciliation Committee on the budget heading which is the subject of the amendment shall be retained” and the “budget shall be deemed to be definitively adopted on this basis.”

It is well known that several parts of the EU annual budget represent a substantial waste of taxpayer’s money. Britain is contributing to EU programmes that have no benefit to British people while could have been spending the money in more beneficial things.

According to a report published by the Office for Budget Responsibility, the UK’s net expenditure transfers to EU institutions is set to rise from £6.4 billion in 2009/10, to £8.3 billion in 2011/12, to £8.4 billion 2012/13, to £9.4 billion in 2013/14, to £10.3 billion in 2014/15.

Please click here to see a summary of financing of the general budget by type of own resource and by Member State.