EU Draft Budget 2017

Jacob Rees-Mogg Excerpts

Monday 31st October 2016 General Committees

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

It is a pleasure to serve under your chairmanship for the first time in a European Committee, Ms Buck. I will take a few minutes to explain the background to the documents and the reason why the European Scrutiny Committee recommended them for debate.

The draft budget sets out the Commission’s proposals for EU expenditure in 2017. It is the first stage in the process of establishing the EU’s budget for the following year and provides the basis for negotiations between the two arms of budgetary authority: the Council and the European Parliament. The Economic and Financial Affairs Council agreed its first reading position on the draft budget on 12 September; the European Parliament reached its first reading position on 25/26 October. A conciliation committee is to be convened to meet with the aim of reaching agreement on the 2017 budget by 17 November. This agreement will be subject to separate approval by both the Council and the European Parliament, after which the budget for 2017 will be deemed to have been adopted.

In addition to the draft budget, this year there are three other documents relevant to this debate. These concern the EU solidarity fund, which releases emergency financial aid following a major disaster in a member state or candidate country; the flexibility instrument, which provides funding in a given financial year for clearly identified expenses that could not be covered by one or more budget headings without exceeding their expenditure ceilings; and the contingency margin, a mechanism to react to unforeseen circumstances as a last resort instrument, which allows for a maximum 0.03% of EU gross national income to be redeployed between budget headings. The three draft decisions would mobilise the EU solidarity fund, the flexibility instrument and the contingency margin for sums included in the draft budget.

We suggest that among the matters that Members might explore are: how the UK’s proposed exit from the EU affects its interests in relation to EU expenditure and revenues in 2017; the degree of support the Government are receiving from other member states for a disciplined approach to next year’s EU budget; whether the Government are satisfied with the proposed margins below multiannual financial framework ceilings; whether there are any particular programme expenditure proposals that cause the Government concern; the significance for budgetary discipline of the proposed mobilisation of the EU solidarity fund, the flexibility instrument and the contingency margin; and to what extent the use of the flexibility instrument and the contingency margin to help address the challenges of migration, refugee and security crises might involve the UK in justice and home affairs expenditure—for example, in relation to Frontex, for which we should not be liable.

It is the custom of the European Scrutiny Committee to recommend the draft budget for debate before the Council concludes its first reading. Regrettably, this debate is taking place long after the Council’s first reading was agreed.

Finally, in a press release of 26 October, the Council set out the issues where the Council and Parliament disagreed: the Parliament wants the level of commitments in 2017 to be way above the multiannual financial framework expenditure ceilings; the Parliament wants the level of payments for 2017 to be above the estimated needs; the Parliament wishes to reopen the agreement on financing the European fund for strategic investments, which the Council considers would reduce the EU’s financial leeway for meeting unexpected needs for research and other future-orientated expenditure; the Parliament wishes for its own staff reductions to be lower than the 5% reduction by 2017 already agreed; and there is disagreement on the scope of the conciliation talks themselves, which should be limited to the 2017 budget.

[The Chair]

I call the Minister to make an opening statement. I remind the Committee that interventions are not allowed during the statement.

--- Later in debate ---

[Mr Gauke]

I fear that the hon. Gentleman wants to take me down a path that is a little way away from the motion in front of us. We are in new circumstances. The determination of the Government is to ensure that we deliver the best possible outcome for the British people in the negotiations with the European Union and in our relationship with the EU and other parts of the world, post-Brexit. That is our focus.

[Mr Rees-Mogg]

I was going to sit quietly for once, but the questioning has gone along a certain line. May I remind the Chief Secretary to the Treasury that the Chancellor, in front of the Treasury Committee, said that the reports before 23 June no longer applied, because their assumptions were out of date already? We therefore do not have to work on the maxim of gloom and nonsense that came from the Treasury at that point, and can look to the broad sunlit uplands. One thing we can be certain of is that once we leave, we will no longer have to pay into the budget, will not be part of the multiannual financial framework, and will not have to have these debates any more.