On 25 April the European Commission presented its proposal for the EU’s budget in 2013, proposing, unsurprisingly, a considerable increase. The Commission proposed €150.9 billion in commitments appropriations which represents an increase of 2% comparing to the 2012 budget and €137.9 billion in payments appropriations. At a time of severe strain on the majority of Member States’ public finances, where governments are making huge cuts on public spending to appease financial markets and comply with the new EU's fiscal rules, the Commission proposes an increase of €9 billion in payments, a 6.8% rise on the 2012 budget.
The European Commission has ignored David Cameron, Angela Merkel, Nicolas Sarkozy, Mari Kiviniemi and Mark Rutte pleas for a freeze or, at least, a limited increase, according to the inflation rate, in the EU's budget. The European Commission, which is calling for fiscal discipline across the EU, imposing austerity measures on several member states, should not have dared to propose such increase. As the leader of the European Conservatives and Reformists group in the European Parliament, Martin Callanan MEP, said, “On the one hand the commission is telling governments to slash their deficits whilst on the other it is demanding more taxpayer money for the EU.” Moreover, he stressed “To ask for an almost seven percent increase is simply out of touch with the real world.”
The European Commission has proposed €16,032.0 million in commitment appropriations for Competitiveness for Growth and Employment (heading 1a), which represents an increase of 4.1%, compared to the 2012 budget, and €13,552.8 million in payment appropriations, representing an increase of 17.8%. Moreover, it proposed €54,498.9 million in commitment appropriations for Cohesion for Growth and Employment (heading 1b) and €48,975.0 million in payment appropriations, representing an increase of 11.7% compared to 2012 . For Preservation and Management of Natural Resources (heading 2), the Commission has proposed €60,307.5 million in commitment appropriations, and €57,964.9 million in payment appropriations. The 2013 Draft Budget also allocates €1,574.6 million in payment appropriations for Freedom, Security and Justice (heading 3a) and €2,081.6 million in commitment appropriations. The Commission has proposed €9,467.2 million in commitment appropriations for the EU as a Global Player (heading 4) , and €7,311.6 million in payment appropriations, which represents an increase of 5.1%. The Administrative Expenditure (heading 5), which includes expenditure for human resources (salaries, allowances and pensions) as well as expenditure for buildings, equipment, energy, communications, and information technology has been allocated €8,544.4 million in commitments and €8,545.5 million in payments, representing a general increase of 2.8%. It is important to mention that Baroness Ashton has requested an increased funding for the European External Action Service. Hence, whilst the Foreign and Commonwealth Office is making huge spending cuts, the Commission has allocated €516,6 million to the EEAS, which represents an increase of 5.7% compared to the 2011 budget. It is therefore clear that the EU diplomatic service is not “budget neutral” as, originally, promised by Ms Ashton.
The EU's 2013 budget will be no exception to the rule as the EU budget wastes millions of taxpayer’s money. There is no clear added value in spending such amounts at the EU level. The EU has been spending UK taxpayer’s money on policies that clearly do not benefit them. The Commission’s proposal would see the UK’s contributions to the EU budget increase by €1,102m next year compared to 2012.Under the Commission's proposal the UK would be required to contribute to the EU's budget with €17 billion in 2013, which is absolutely ludicrous.
The EU budget commissioner has justifyed the EU budget increase to pay the bills, particularly for projects in the area of EU regional policy, already approved by all EU member states. The European Commission is, therefore, arguing that the €9 billion budget increase is necessary to meet prior commitments. According to the European Commission “many commitments were made years ago for projects that are being completed now, and as the budgetary authority (Council and Parliament) consistently cut the Commission's estimates for payments, many bills related to projects remain unpaid and have to be rolled over to the following year”.
It is important to recall that the European Court of Auditors for the 17th year in a row has not signed the EU accounts. Year after year and nothing has changed, but in the meantime taxpayers' money has been spent in a system that does not work. In fact, as the ECA's report showed, there are serious errors and mistakes in the system. The EU spending continues to be affected by “material error.” The Court has estimated the error rate for payments from the €122.2 billion 2010 EU budget at 3.7%. There has been, therefore, an error rate increase from 3.3 % in 2009 to 3.7 % in 2010. This means that €4.6bn was spent against EU rules governing the spending. The UK as well as the Netherlands and Sweden voted against discharging the accounts for the 2010 EU budget, showing, in this way, their concerns over lack of accountability and transparency on how EU money is spent.
It remains to be seen what will come out of the negotiations between the Council and the European Parliament. The negotiations will start in July with a trilogue meeting, between the European Parliament, the Council and the Commission. Several Member States, including the UK, Germany, France and the Netherlands have already showed their opposition to such substantial increase on the EU's budget, particularly at a time when national governments are making deep cuts on public spending. Mark Hoban, Financial Secretary to the Treasury, said “It is unacceptable for the Commission to propose an inflation-busting budget increase when governments across Europe are making difficult decisions on public spending”. French budget minister, Valerie Pecresse, also dismissed the proposal as “impossible, unjustifiable and unacceptable” and German Europe minister Michael Link does not believe "it helps to build understanding when on one hand, member states impose ever new savings packages upon themselves, while on the other, the commission continuously demands more money for its budget."
The UK cannot veto the Commission’s proposal but it will not have difficulties in finding a blocking minority as it is not alone in its fight against the proposed increase in the EU’s 2013 budget. In fact, several Member States, as above-mentioned, are also eager to reduce EU spending. However, whereas the Council is likely to propose considerable cuts to the Commission’s draft EU budget, to reflect economic and budgetary constraints at national level, the European Parliament will call for a bigger increase.
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 aimed at reaching an agreement on a joint text. It is very likely that a conciliation committee would be convened, as happened in the last two years. If the Conciliation Committee does not agree on a joint text within 21 days, the Commission must submit a new draft budget. If the EU 2013 budget has not been approved before the end of the year, spending would have been frozen at 2012 levels. It would be, therefore, essential for the UK to achieve a blocking minority in the vote on the conciliation agreement.
