Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum

There is also little serious controversy about the fact that economic cohesion
and solidarity should lead to a redistribution function in the budget. The
aim is to ensure that regions which are economically backward should be
helped to close the gap with richer and more dynamic regions in the Union.
The debate here is less about the principle of solidarity but more about the
way in which the principle is being interpreted. Redistribution which is
passing money from the EU budget to the richer member states can hardly
be considered as a function of the principle of solidarity.
The EU budget should also treat current expenditure separately from
investment. At present an EU investment in a project such as Galileo or in
the trans-European networks is treated in the same way as a direct income
subsidy to farmers. This ignores the fact that the investment will bring a
stream of returns over the medium and long term.
Structural weaknesses in the way in which the financial framework is
determined are also frequently criticised. Many observers feel that the
budget of the European Union should be constructed from the bottom up.
This means that the budgetary requirements of agreed policies of the
Union should be calculated and the overall level of the financial framework
should simply be the addition of these necessary budgetary expenditures.
In reality however, recent financial frameworks have been limited by the
net contributors to the budget, who have set an upper limit to the
expenditure prior to the negotiation taking place-in other words a top
down approach.
While the bottom up approach has a clear logic, the reason for the
dominance of the top-down approach is obvious. Two of the Union
institutions, the European Parliament and the European Commission,
have a clear interest in having as large a budget as possible, because both
of these institutions are in effect spending authorities but without the
need to raise the funding for the expenditure themselves. In the Council of
Ministers the net beneficiaries of the budget also have less reason to
restrict the size of the budget than the net contributors who will bear the
greatest pain from a larger budget. It is therefore clear why the main net
contributors stated clearly before the negotiation of the 2007-2013
financial frameworks that they were not prepared to agree a budget above
1% of GNI.
On the own resources side of the budget, there are two major areas of
criticism. The first concerns the system of budgetary rebates, which aim to
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