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Ecofin Council

Volume 405: debated on Tuesday 20 May 2003

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To ask the Chancellor of the Exchequer what the outcome was of the ECOFIN Council held on 13th May; what the Government's stance was on the issues discussed, including its voting record; and if he will make a statement. [113978]

I attended the ECOFIN meeting on 13 May, which was the first ECOFIN attended by the accession countries as active observers.The Commission presented the 2004 Preliminary Draft Budget, which will be the first budget for an EU of 25 member states, and also the first to use activity-based budgeting, matching resources to outputs. I tabled a UK paper on the reform of external actions expenditure, emphasising the need for greater poverty focus, effectiveness and efficiency.ECOFIN had an orientation discussion on the 2003–05 Broad Economic Policy Guidelines (BEPGs). I, along with some other member states, stressed the importance of the EU delivering on its economic reform agenda to boost growth and jobs. It was agreed that Finance Ministers would submit a covering letter to the BEPGs highlighting the key priorities for growth, in particular labour market reform, the implications of ageing populations and the sustainability of public finances. The BEPGs will be agreed at ECOFIN on 3 June for submission to the Thessaloniki European Council.ECOFIN adopted an Opinion on the Austrian Stability programme, and also agreed a mandate for the Economic Policy Committee to produce a progress report on the overall impact of ageing populations on public finances for the November ECOFIN.ECOFIN adopted the Occupational Pensions Directive, as amended by the European Parliament, with Belgium making an oral statement and Estonia a written statement. The adoption of this directive, an important cornerstone of the Financial Services Action Plan and the first step towards a single market for occupational retirement provision, represents an excellent outcome for the UK.I presented the UK's proposal for an International Finance Facility (IFF). This is an important initiative designed to raise substantial extra resources and make a stable, long-term commitment to development countries to help them meet the UN Millennium Development Goals. After discussion, the Presidency concluded that the IFF was an interesting initiative, which should be discussed again by ECOFIN in the near future, following an examination of the financial aspects in the Economic and Financial Committee.ECOFIN discussed a Presidency paper on the right to deduct value added taxation (VAT). Following discussion, it was agreed that further consideration of this issue by ECOFIN should await the Commission Communication on a VAT Strategy and their proposal on the place of supply of services.Over lunch, Ministers discussed the tax package and the Italian request for a Council decision under Article 88(2) on the repayment of Italian milk quota fines. Ministers agreed: that the tax package is not to be reopened and that all reservations on it should be lifted; that Ambassadors in COREPER should examine the Italian proposal on milk quotas with a view to allowing the Council to take a decision on this in June; and that the Council should take the final decisions on both the tax package and on the Italian request regarding milk quotas in June.A vote was held on the Occupational Pensions Directive, with Belgium abstaining.