Enlargement to herald tougher budget control pline

Date: 24/04/1997

By Rory Watson

THE twin pressures of enlargement and a single currency are combining to impose unprecedentedly tough limits on Union expenditure next year.

For the first time, the European Commission is planning to table draft spending plans which will be well below the ceiling agreed by EU government leaders almost five years ago.

“The budget proposals now facing the Commission are very different from those in the past. Previously, the proposals would follow the increases already agreed. The aim now is to break that trend in all policy areas. The clear message is that we have reached a turning-point in EU spending,” explained one senior official.

The strategy is designed to ensure that the eventual cost of integrating the countries of central and eastern Europe into the Union can be met within the existing legal ceilings on the EU's annual budget.

“If we are to handle enlargement without asking governments for more money, then we have to build in a sufficient margin between what we actually spend and what we could spend if we used our existing financial resources to the full. That margin will be very noticeable next year and will continue to grow,” said one source.

If previous practice were followed, actual EU spending in 1998 would grow by almost 10&percent; from this year's 82.7 billion ecu. Instead, the overall proposed increase is expected to be nearer to 2.5&percent; and, in the vast majority of policy areas, closer to 0.5&percent;.

The gap between recommended and legally permissible expenditure will be particularly marked in a wide range of internal and external policies - with the major exception of social and regional spending - when the Commission finalises its 1998 budget proposals next Wednesday (30 April).

But if the strategy is to work, EU governments and the European Parliament will have to stick closely to the Commission's proposals when they finally adopt the spending estimates.

Pressure for a stringent EU budget is expected to come from Union finance ministers when they are presented with the spending forecasts on 12 May.

But MEPs insist that the budgetary rigour be equally spread across all EU expenditure.

“We support a value-for-money budget and have our own priority guidelines for creating jobs by supporting small and medium- sized companies, preparing for enlargement of the Union and encouraging education and training programmes. But the stringency must be coherently applied in all spending areas, not just in some,” said German Christian Democrat MEP Stanislaw Tillich, the Parliament's 1998 budget rapporteur.

The change in budgetary practice is expected to be accompanied by an equally radical shift in the Commission's internal management and staffing policies. In the pipeline is a greater decentralisation of day-to-day administrative decisions and a redeployment of staff.

“A systematic redeployment of Commission staff will start for the first time in this budget. Traditionally, the Commission has put forward its budgetary proposals and then decided on staff allocation when the budget is finally adopted. From now on, the Commission will do the two together,” said one official.

Under the policy, up to 180 'A' grade officials are likely to be moved to new tasks.