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Lords warn Treasury of ‘tidal wave' of EU debts stacking up

Following agreement of the Council's position on the revised EU budget for 2015, the House of Lords Economic and Financial Affairs EU Sub-Committee has written to the Treasury expressing its concerns about the weaknesses of the budget process, and asking if the UK abandoned its attempt to curb EU spending for next year.

The letter also disputes the Treasury claim that EU debts are being brought under control. In contrast to the Council ‘bearing down on upon the build-up of commitments', the Committee fears that ‘a tidal wave of money owed in relation to the EU budget is continuing to mount.'

The Committee has written to the Financial Secretary to the Treasury, David Gauke MP, asking:

  • whether the agreement by the Council of figures almost identical to the Commission's new proposal indicates that the UK and other like-minded Member States gave up in their efforts to secure greater budgetary restraint;
  • for clarification of agreement on the use of the controversial Contingency Margin, the “last resort instrument”, included for the first time in the 2014-2020 EU Budget Multiannual Financial Framework;
  • whether there is any substance behind the Council's statement that it is seeking to put the development of commitments and payments on a more sustainable footing.

Commenting, Lord Harrison, Chair of the Committee, said:

“This Committee has repeatedly stressed that the EU budget process is at breaking point. The on-off negotiations over recent weeks demonstrate once more that root and branch reform of the process is urgently needed. We want to get to the bottom of the negotiating process in which it appeared that the UK and other Member States abandoned their efforts to curb EU spending for 2015, and approved a deal which it had resisted only a few days earlier. We also fear that the Government continues to underestimate the serious implications of the tidal wave of money still owed in relation to the EU Budget created by the gap between commitments and payments. This Committee is dedicated to examining the fine detail of this deal and to hold the UK Government to account for its actions. To that end we have invited the Minister to appear before us in January to explain recent events and what efforts he will make to support our call for reform.”

The Committee has requested a response to the letter by 6 January 2015, and has also requested that the Minister appear before the Committee at its meeting on 27 January 2015.

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