Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum
Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum
Reform of EU expenditure Spending 40% of the Union budget on supporting agriculture, at a time when agricultural prices have risen sharply and profitability in agriculture has also increased, appears bizarre. It should however be remembered that the EU budget is part of total public spending in the Union and that, in some areas, member states have decided to finance their policies through the EU budget rather than national budgets. This is the case in agriculture which throughout the EU attracts only 1% or less of total public funding while absorbing between 40% of the EU budget. This is of course not a defence of the CAP. It is however an important argument. Many of the contributors to the discussion of the budget appear to want it to be a financial showpiece of a modern, future oriented and deeply integrated European Union. Yet where some policies are delegated to the Union, and others are the competence of the member states, it is obvious that the Union budget is going to be “unbalanced”, unless seen as a part of total public spending in the Union. One of the key problems with agricultural spending is that it is not progressive in the same way that cohesion spending is. It therefore exacerbates the problem of net balances, without meeting the priorities and values of the Union treaties. In spite of the serious question of food security, the subsidisation of low productivity activity in the Union does seem perverse. This situation could be changed in several ways. Subsidies, notably direct income subsidies, could simply be reduced over a number of years. On the other hand the individual member states could take over some of the financing of agricultural subsidies, although this would hold dangers for the common market in agricultural products. A considerable reduction in CAP spending is expected to allow the British government to agree to a gradual elimination of the British budget rebate, and therefore of the other distorting rebates in the budget. While almost everybody agrees that cohesion policy is a fundamental pillar of solidarity within the Union, there is much criticism of the way in which it has come to be considered rather as a permanent subsidy for regions in relatively rich member states. It will therefore be important in any major overhaul of the Union budget that the temporary nature of cohesion spending should be underlined and that complex and well endowed transitional arrangements should be kept to a minimum. 72 After the crisis: A new socio-economic settlement for the EU
As there is unlikely to be agreement to increase the size of the budget in the next financial framework, creating additional headroom for new policies and rapidly expanding policies is essential. Increased financing will almost certainly be needed in the policy areas of justice, liberty and security as well as in the common foreign and defence policies; policies providing essential European public goods. These are rapidly growing areas for which there is considerable support in the member states of the Union. However while it is easy to state the obvious, like the importance of increasing spending on research and development in the Union or additional support for European foreign policy, whether it is desirable to redirect spending in the EU budget to these issues depends partly on the efficiency and effectiveness of the instruments used to disburse the available finance. Many people believe for instance that a condition for radically increasing spending on research and development at the Union level would be changes in the institutional setup for supporting research and development. The effectiveness of financial support distributed through the Framework Programmes is considered to be rather low. This was almost certainly one of the reasons why the member states in the last financial perspective negotiation did not support the Commission’s proposal for a very large increase in R&D spending. This emphasises the need to consider the means of implementation at the same time as the budgetary allocations. The “own resources” system The own resources system has been frequently criticised because by far the larger part of these resources are contributions of the member states and not taxes which are automatically transferred to the Union budget. It is argued that if there was a type of EU tax, which automatically was collected by the Union, this would ensure that the budgetary authority would become more responsible in its expenditure decisions because these would have to be defended in elections subsequently. This is probably the least likely change to be made to the EU budget system. Politically it would be difficult to get agreement from certain member states. As the current system works quite well, it is unlikely that anyone is going to trade a system which delivers the required financing for a new system, which may well not have any of the benefits which its proponents propose. Finally, the budget rebates, which are part of the resources side of the budget, should be progressively eliminated, as measures are taken to ensure that the pain of budget contributions is more justly distributed. Chapter 4 – Alan Mayhew 73
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As there is unlikely to be agreement to increase the size of the budget in the<br />
next financial framework, creating additional headroom for new policies<br />
and rapidly expanding policies is essential. Increased financing will almost<br />
certainly be needed in the policy areas of justice, liberty and security as well<br />
as in the common foreign and defence policies; policies providing essential<br />
European public goods. <strong>The</strong>se are rapidly growing areas for which there is<br />
considerable support in the member states of the Union.<br />
However while it is easy to state the obvious, like the importance of<br />
increasing spending on research and development in the Union or additional<br />
support for European foreign policy, whether it is desirable to redirect<br />
spending in the EU budget to these issues depends partly on the efficiency<br />
and effectiveness of the instruments used to disburse the available finance.<br />
Many people believe for instance that a condition for radically increasing<br />
spending on research and development at the Union level would be changes<br />
in the institutional setup for supporting research and development. <strong>The</strong><br />
effectiveness of financial support distributed through the Framework<br />
Programmes is considered to be rather low. This was almost certainly one<br />
of the reasons why the member states in the last financial perspective<br />
negotiation did not support the Commission’s proposal for a very large<br />
increase in R&D spending. This emphasises the need to consider the means<br />
of implementation at the same time as the budgetary allocations.<br />
<strong>The</strong> “own resources” system<br />
<strong>The</strong> own resources system has been frequently criticised because by far<br />
the larger part of these resources are contributions of the member states<br />
and not taxes which are automatically transferred to the Union budget. It<br />
is argued that if there was a type of EU tax, which automatically was<br />
collected by the Union, this would ensure that the budgetary authority<br />
would become more responsible in its expenditure decisions because<br />
these would have to be defended in elections subsequently.<br />
This is probably the least likely change to be made to the EU budget<br />
system. Politically it would be difficult to get agreement from certain<br />
member states. As the current system works quite well, it is unlikely that<br />
anyone is going to trade a system which delivers the required financing for<br />
a new system, which may well not have any of the benefits which its<br />
proponents propose.<br />
Finally, the budget rebates, which are part of the resources side of the<br />
budget, should be progressively eliminated, as measures are taken to<br />
ensure that the pain of budget contributions is more justly distributed.<br />
Chapter 4 – Alan Mayhew 73
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