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Economic and Financial Affairs Council (11 and 15 November 2010)

Volume 518: debated on Wednesday 17 November 2010

I represented the UK at Budget ECOFIN on 11 November, resuming on 15 November. The Council meeting took place alongside a meeting of the Council-European Parliament conciliation committee on the 2011 EU budget.

At a time of unprecedented economic and financial difficulty throughout the EU, the Government had made clear that a 6% increase in the 2011 EU budget above 2010 levels, called for by the Commission and the European Parliament, was unacceptable. In July the UK voted against Council’s position calling for a 2.91% increase in the budget, with six other member states. This position was nevertheless adopted by a qualified majority. At the European Council on 29 October, my right hon. Friend the Prime Minister led 12 other EU leaders in stating clearly that we could not accept any budget increase beyond the level agreed by the majority in Council.

The Government’s aim at these Budget ECOFIN and conciliation committee meetings was to agree a budget for the EU in 2011 at the level of a 2.91% increase. The European Parliament said it was prepared in principle to accept this figure. The Government believe that agreement could have been reached on the 2011 budget in these terms, fulfilling the conciliation committee’s mandate.

However, the European Parliament also demanded an outcome on a number of broader, strategic budgetary issues. These included text on an increased role for the European Parliament in discussions of the next financial framework and the EU’s own resources, as well as a provision for flexibility to increase spending in the EU budget in future years.

The Government were not prepared to accept these conditions for agreement to the 2011 budget. At a time of widespread austerity measures, the Government believed that the over-riding priority for these meetings was to agree on next year’s EU budget, and that it was inappropriate to condition agreement to progress on these longer-term political issues. A number of member states expressed similar concerns.

The European Parliament was not prepared to agree the 2011 budget in these circumstances, ending the negotiating session on 11 November and declaring the conciliation committee’s deadline reached on 15 November. The committee therefore ended without agreeing a budget for next year. The Commission must now present a new draft budget for 2011 as a basis for further negotiations.

The Government strongly believe that there was a prospect for agreement on the 2011 budget at these meetings. Both Council and the European Parliament said they could have accepted a budget increase of 2.91% in 2011 compared to 2010 levels. However, the Government were simply not prepared to enter an agreement on the much wider demands from the European Parliament, on issues not immediately related to the 2011 budget. In these circumstances, the Government believe it was better for UK taxpayers not to reach agreement yesterday at all, rather than making a bad agreement which was counter to the interests of UK taxpayers.

The Government will continue to engage constructively in further negotiations aimed at securing agreement to a 2011 EU budget.