The debate about the EU budget is heating up as the June 2005 deadline for agreement gets closer. It takes about 18 months to prepare the legal paperwork to allow the EU to spend money on programmes so if a deal is not reached in time there is a risk of a gap in funding for about half of the EU’s programmes.
More information on the December agreement and the European Parliament reaction.
Background to the EU budget
The EU budget has often been a battleground between national governments as well as between the EU institutions themselves. The two budgetary authorities are the European Parliament and the Council which decide what expenditure is to be made, while the Commission implements their budgetary decisions.
The total budget is calculated as a percentage of Gross National Income (GNI) of the EU and for the period 2000-2006 this has been set at 1.24 % of GNI although in practice actual spending has been lower, approximately 0.98 %. Three quarters of this amount comes directly from member states, but money is also raised from customs duties, VAT and agricultural duties.
In terms of how European money is spent on policy priorities, the Common Agricultural Policy (CAP) and Regional policy account for over 70 % of spending.
In 1998 a major reform introduced multi-annual planning, called the ’financial framework’ which sets maximum amounts (“ceilings”) by broad category of expenditure (“headings”). On a yearly basis, the three institutions set out exactly what is spent on the actual budget headings.
EU spending plans for 2007-2013
The European Commission is proposing to set a budget ceiling of 1.14% of GNI. It says additional resources are needed to ensure the EU can fulfil the ever-increasing number of policy commitments. However, the six countries that are net contributors (e.g; they pay in more than they get out of the EU) have stated that they want the overall EU budget capped at 1 % of GNI. Commission webpage explaining the new Financial Framework 2007-2013.
The presentation of the EU budget has been simplified to make it more transparent and understandable for citizens into 4 main thematic headings and an administrative component which covers the running costs for all of the EU institutions, staff costs and pensions etc.
The budget headings are as follows:
1a: Competitiveness for growth and employment, covers research and innovation, education and training, EU networks, internal market policies.
1b: Cohesion for growth and employment, designed to enhance convergence of the least developed Member States and regions, to complement the EU strategy for sustainable development outside the less prosperous regions and to support inter regional cooperation.
2: Preservation and management of natural resources includes the common agricultural and fisheries policies, rural development and environmental measures, in particular Natura 2000.
3: Citizenship, freedom, security and justice covers a number of new policy areas such as justice and home affairs, border protection, immigration and asylum policy as well as more traditional policies of public health and consumer protection, culture, youth, information and dialogue with citizens.
4: The European Union as a global partner includes all external action, including pre-accession instruments for future EU members, development assistance and reserves for emergency aid and loan guarantees.
Controversial issues
If the overall budget ceiling is reduced to 1 % of GNI the Commission’s plans for major increases in spending on research and development and on transport and energy networks would be at risk. The Commission also claims that the ambitious plans on competitiveness and growth that Member States have already agreed would have to be cut.
The European Parliament has reservations about the increasing number of agencies and bodies that are being created, many of which are funded through budget lines for that policy area rather than the overall administrative heading.
It is also calling for the Financial Framework to be limited to 2006-2010 - eg to the same time-period as the current Parliament and Commission. Otherwise, the next set of incoming MEPs and Commissioners would be limited by political priorites and financial spending plans which they had no say in developing.
What does this mean for the health community?
A proposal for a new joint Health and Consumers programme will be published in early April 2005. This programme comes under Budget Heading 3 which is the thematic heading with the least amount of funds (2.3 %) and has the smallest relative increase compared to the 2000-2006 period. It includes hot political priorities such as security, borders, immigration and asylum. This means that there will be a lot of competition for the scarce money. It will be important for health stakeholders to lobby national governments and the European Parliament to call for an increase in spending on public health.
