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European Commission

Janusz Lewandowki

EU Commissioner for Budget and Financial Programming

Budget 2014: Lewandowski “deeply concerned” with the Council’s position

European Parliament / Strasbourg

10 September 2013

I wish to express my deep concern at the Council's reading of the Draft Budget 2014.

The Draft Budget 2014 proposed by the Commission at the end of June was not like any Draft Budget proposal of recent years. It was prepared in the very specific context of an advanced stage of negotiation on the MFF for 2014-2020, in which ceilings for both commitments and payments would be very much tighter.

When we presented this Draft Budget for 2014, we were clear in our message – this is not business as usual. Compared to the 2013 budget – including the amending budgets already proposed by sheer necessity – the Draft Budget 2014 is a reduction of EUR 9.1 billion, or - 6% for commitments and EUR 8.4 billion, or -5.8% for payments

In such a context, having just agreed politically the new Multiannual Financial Framework (MFF), although tight but with the so much needed flexibilities, and before the legal bases of the new programmes are finalised, it hardly seemed possible that the Council would seek further cuts.

However, following its tradition, the Council has reduced commitments by another EUR 240 million and payments by over EUR 1 billion.

In particular, whereas all institutions share the aim of promoting growth and employment, the Council has cut the payments [EUR 202,2 million] for the structural funds under heading 1b, a key policy for Europe's economic recovery,

The biggest cuts for payments by volume are in heading 1a – a reduction of EUR 426 million. This seems entirely at odds with the repeated calls from the European Council to rapidly implement the Structural Funds as well as the programmes for the competitiveness of enterprises and SMEs (COSME) and for research and innovation (Horizon 2020). It has also reduced the administrative support expenditure for research and payments for the major infrastructure projects so dramatically, that it can only hinder implementation.

The cuts to support expenditure for external actions under heading 4 will also have a detrimental effect on the implementation of programmes.

This continuous year after year reduction on the overall level of payments is very worrying. Particularly when we are at the end of the lifecycle of the projects and MFF period, and as Council underlines, RALs have to be addressed.

The 2014 payment ceiling is EUR 8.5 billion below what the Commission requested in 2013, including the Draft Amending Budget 2. This is already very tight, given the potential backlog of payment claims. I am pleased we have agreed at our recent trilogue to have a meeting dedicated to the payments. I will provide you with all the specific elements confirming that the level of payments requested by the Commission is more than justified.

I hope we can have a mutual understanding that we need to have a sound approach on this issue and count on your support for restoring adequate payments for the budget 2014, as well as ensuring that the payment needs of 2013 are covered by sufficient appropriations.

Indeed, more than 90% of the payments requested in the Draft Budget will be used to address non-differentiated expenditure and the RAL, with less than 10% related to new programmes. The Commission is convinced that this split adequately takes into account any possible delays in the implementation of new programmes and is justified by the needs we have expressed, not least the current rate of implementation.

Part of the Council’s cuts relate to the salary adjustments for 2011 and 2012 for all institutions and for pensions. Of course, if the Court rules against the Council these amounts will have to be paid.

With respect to the agencies, the Commission had already applied a very strict policy, reducing staffing overall by 1% and even more in some cases so as to allow to the new agencies to take up the new tasks they have been assigned. The Commission considers that its proposal is fully aligned to the new draft Inter Institutional Agreement (IIA) and its point committing to reduce staff 1% for all institutions including the agencies. Further cuts would fail to provide these bodies with the resources to carry out their role.

I would ask you, the Parliament, to take account of these concerns during the preparation of your reading of the 2014 budget.

I would also like to take this opportunity to thank the Rapporteur, Mrs Jensen, for making available an indicative list of new Pilot Projects and Preparatory Actions in due time to allow for a thorough assessment, which can only help our dialogue and ultimately ensure the best possible implementation of projects eventually adopted by the Parliament.

Let us remain optimistic. A lot has already been achieved this year, on some very difficult files. As far as the 2014 budget is concerned, we need to find a commonly agreed approach. I do believe in everybody's will to do our utmost to get the deal within the 21 days as foreseen by the Treaty for conciliation.

The Commission will also need to adjust its proposals to reflect the most recent situation. There will be two amending letters to the Draft Budget in the coming weeks:

  • An amending letter in mid-September to take into account the political agreement of the MFF negotiations. It will contain the provisions for the frontloading-backloading agreed for some of the programmes (COSME, Erasmus, Horizon 2020). The amending letter will also take account of the European Council conclusions on additional assistance to Cyprus from the Structural Funds as well as provisions to adapt the structure of the Joint Undertakings to reflect their role in the new Horizon 2020 programmes.

  • The usual updating for agriculture and fisheries will be presented in mid-October. Of course, due to the financial discipline, any reductions for market measures will simply increase the payments to the farmers.

To conclude, I would like to give you the latest developments with respect to 2013. The European Parliament is set to approve the first tranche of Draft Amending Budget 2 (DAB 2), for EUR 7.3 billion. This will provide urgently needed payments, and help to address the cash-flow difficulties of the budget. The Commission's initial evaluation for the level of payments required for 2013 remains the same. We will therefore present the second tranche in the coming weeks. This will provide all the required elements for closing smoothly the Budget 2013 and for a timely agreement on the MFF. This second tranche of DAB 2 will require strong commitment and good will from both the Council and Parliament to will need to be adopted in October or we will seriously complicate the budgetary situation. I count on your support for a swift treatment of this request.

Finally, let me recall Commission's and my personal commitment for the EU Solidarity Fund, following the flooding in central Europe. The Commission services are analysing the applications which have arrived and we should be submitting immediately after the relevant amending budget, probably still in October. I recall that these amounts are outside the 2013 ceilings.

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