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Volume 116: debated on Thursday 14 May 1987

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asked the Chancellor of the Exchequer if he will make a statement on the latest meeting of the European Community's Economic and Finance Council.

The Community's Economic and Finance Council met in Brussels on 11 May. I represented the United Kingdom.The Council discussed the Commission's proposals for the future financing of the Community. I made clear our view that ways must be found of controlling Community expenditure, on agriculture and other programmes, before it was appropriate even to consider possible increases in own resources, and that any changes in the Fontainebleau abatement system would have to be for the better. The Council will resume discussion at its June meeting.The Council also considered the budgetary situation in the current year. I suggested that the anticipated expenditure overrun be financed by use of headroom within the 1·4 per cent. VAT ceiling, by savings in the 1987 agricultural price fixing and by a switch from advances to reimbursement of agricultural guarantee expenditure. I

Distribution of Total Income 1987–88 for Higher Rate Tax Payers1
Range of total income Lower limitTotal number of incomesNumber of incomes with investment incomeNumber of incomes with mortgage interest reliefTotal number of incomesNumber of incomes with investment incomeNumber of incomes with mortgage interest relief
(£ pa)('000s)('000s)('000s)('000s)('000s)('000s)
Single peopleMarried couples without wife's earnings

made clear the United Kingdom's firm opposition to supplementary financing through an intergovernmental agreement.

The Council had a first discussion on the Commission's proposals on financial engineering and the financing of large scale infrastructure projects of European interest. The topic was referred without commitment to officials for further consideration.

The Council agreed in principle by qualified majority, pending discussion with the European Parliament at its June meeting, on a reference framework for the 1988 Community budget of 36·6 billion ecu (about £25·5 billion at current exchange rates) in accordance with the budgetary discipline conclusions of December 1984. The framework provides for expenditure on agricultural market support and non-obligatory expenditure to be kept within the budget discipline guideline limit, now adjusted to cover expenditure in Spain and Portugal, and the maximum rate of increase as laid down in the treaty respectively. In respect of the agricultural guideline, the Council noted that it might be necessary to take exceptional circumstances into consideration in due course in accordance with article 2 of the Council's December 1984 budget discipline conclusions.

The Council discussed a draft directive on credit and suretyship insurance, and agreed to refer it back to permanent representatives for further work.

Following discussion at its March meeting, the Council received a report from the Commission on the financial effects for Spain and Portugal of the Council's decision to delay reimbursement to member states of losses incurred on the disposal of butter stocks. The Council asked permanent representatives to examine the Commission's report with a view to possible discussion at a fu lure meeting of the Council.