The House of Lords EU Committee launched its report on the EU Financial Framework from 2014 on Tuesday 5 April. This will shape what the EU achieves in the second half of this decade. The Government responded to the report on 21 June 2011.
The report included three principal recommendations:
‘Common Agricultural Policy must be reformed’
The Common Agricultural Policy must be reformed to release resources for other priorities, including research. One third of the EU’s budget still goes on agricultural subsidies. Overall funding must be reduced. And the CAP must shift resources behind rural development (pillar two) from production (pillar one). The Committee calls for an end to trade-distorting subsidies, and a focus on today’s challenges: global food security, biodiversity and climate change. The CAP must do more to support research and development in agriculture. Reforming the CAP will resolve the issue of the UK’s rebate.
‘EU's budget must not grow’
The EU’s budget must not grow in real terms. The Committee found proposals for new EU revenue streams or taxes (own resources) to be an ‘unfortunate distraction’ on which it will be impossible to reach agreement. It also recommends that the Financial Framework be for five years, not seven as at present, so that it has more flexibility to respond to changing events – such as recent events in North Africa – and economic circumstances, like the financial crisis.
‘EU must spend its money more carefully’
The EU must spend its money more carefully. EU mismanagement of large scale projects is as unacceptable as it has become renowned (notably the ITER project to build an experimental nuclear fusion reactor and the Galileo project to build a global navigation satellite system). Member States must not allow themselves to be held to ransom to safeguard earlier investments in these projects without insisting that they be better managed. The Committee also says that the EU’s regional development funds should go to where they are most needed: the EU's poorest countries. And the EU should not spend at all where EU spending adds no value compared with spending at national or regional level.
Debate on the EU’s future financial framework is expected to continue until early 2012, when its size and shape will be set by the European Council and European Parliament. The European Commission plans to put forward revised proposals by the end of June 2011.
Commenting on the report, Committee Chairman, Lord Roper said:
‘Where the EU puts its resources, and how it manages them, are the foundation on which it will build its future. The EU must get this financial framework right. Its recent history is of one missed opportunity after another. This is frustrating for those of us who want to see it going from strength to strength. The EU has to put a stop to this. That is why we say that CAP reform is a key priority; the EU’s annual budgets must be able to respond to changes in the outside world; and the EU must manage its spending better.’