Chris Heaton-Harris MEP: A Rough Guide to the EU Budget

Chris Heaton-Harris writes A Rough Guide to the EU's Draft Budget for 2009.

For the past nine years or so I have been a Member of the Audit Committee of the European Parliament (known as "Budgetary Control") and have been trying to make some sense of the Budgets of both the European Commission and European Parliament.

We all know that every year the European Court of Auditors fails to sign off (or as they say “give a positive statement of assurance on”) the accounts of the European Commission and one question every candidate for the European elections next year will be asked is “what are you going to do to stop all the fraud, waste and maladministration, so that the accounts get signed off?”

Well, this time of year is budget time! Cannily, the process was designed so that just about everyone in the European Parliament who might care about the Budget is away on holiday around the time amendments for the budget should be submitted. This year most Committees of the Parliament (which only returned from recess on 25th August) have deadlines for the tabling of amendments around the 27th August. As you will see later on, almost every item of expenditure has its own “budget line” and this is what MEPs will try to amend. This is where MEPs, if they wanted to, could try to tame the beast.

Every year, helped by my poor members of staff, I go through the budget over the summer months and table dozens (occasionally hundreds) of amendments to try and prune out some of the rubbish that I have found contained within it. Every year I lose most of these amendments in the Committee and Plenary votes, thanks to EPP, Socialist and Liberal MEPs defending the status quo. And every year I still get asked by hundreds of different people why am I not doing anything about it!

This year is my last attempt, as I am standing down from the European Parliament next June and moving onto pastures new. However, I don’t want to leave this subject alone; I want to try and translate the Budget into plain English to explain how much money is spent by the European Institutions, where it goes, and why it is mightily difficult to make any amendments to the Budget at all. Whilst I have made the occasional political comment, the whole point of this exercise is not to say that all this is a complete waste of money and we shouldn’t give Europe a penny (although, given the accounts are never signed off, I do subscribe to that argument) – the idea here is to try and describe how big the beast is and how the scrutiny process works.

THE EU'S BUDGET FOR THE COMING YEAR IS £116BN

Firstly the numbers: all the amounts I talk about below are contained within the “Draft Budget” and most can be amended by the European Parliament or Member State governments should they want to.

This year the total Draft Budget for the European Union is £116bn. This is a 3.1% increase on last year’s amount. Of this money the European Commission’s 2009 draft budget is £95bn and the European Parliament’s 2009 draft budget is £1.25bn.

The European Commission: OK, so let’s look at the big beast first – the draft budget for the European Commission for 2009 of £95bn (yes, billion!)

- Agriculture & Fisheries

Unsurprisingly, the single biggest expense belongs to the agricultural sector and the Common Agricultural Policy – it accounts for a whopping £35.75bn! In addition to this, you will find that the UK is paying more than any other Member State in agricultural levies to the Commission - £374m. At a time of rapidly rising food costs, this is essentially just an extra European protectionist tax being levied on UK consumers.

Some of the items in the agriculture and fisheries draft budget for 2009 include:

• Budget Line 05020701: Aid for fibre flax & hemp - £17.5m
• Budget Line 05020908: National support programmes for the wine sector (Of course, the UK does not benefit from this!) - £662m
• Budget Lines 05030222, 05021105 & 170302: Community Tobacco Fund and Tobacco premium - £257.75m

The Fisheries sector has some pretty weighty items in it – and a lot of politics. I have always been uncomfortable with the fact that the European Commission spends a lot of our money on “International Fisheries Agreements” with third countries. It essentially uses our money to buy fishing rights for the Spanish and Portuguese fishermen.

There is a big political debate here. One side says that this is a good deal for European consumers, as it means more fish are landed in Europe to feed us, lots of money goes to poorer third countries and, of course, our Continental friends only fish in a sustainable way!

I, however, fall on the other side of the argument which believes that we give money to poorer (generally developing world) governments who just pocket the money. The local fishermen can’t compete with the very sophisticated Europeans and so lose their businesses. Some decide to ferry illegal immigrants on their boats to European shores; others simply don’t work. I find it hard to believe that much of the monies paid to most African governments “helps” local fisheries and fishermen.

The total in the draft budget for 2009 to be spent on the various fisheries initiatives is nearly £500m. This figure also includes:

• Budget Line 11020301: Fisheries aid for outermost regions (Azores, Madeira, Canary Islands) - £12.5m
• Budget Lines 110302 & 110303: - £9.75m. Contributions to fisheries organisations, including the "South Indian Ocean Fisheries Agreement", "The Bering Strait Convention" and the "Inter-American Tropical Tuna Commission"

- Administration and EU integration

In 2009 the total administration costs of the Commission will rise by 5% to £6.42bn. Despite many promises of internal reform (you might recall the illustrious Neil Kinnock was European Commissioner for Administrative Reform from 1999-2004) the internal admin costs of the Commission are continuing to explode. The 2008 rise was 4.4%, 2007 was 5.1%, 2006 was 5.8%.

The worst thing is that these figures are pretty successfully gerrymandered to keep them looking low. The Commission has done this by successfully pushing for bits of its administration to be cut off and floated away in new quangos and “decentralised bodies”.

For example the preliminary draft budget (PDB) for 2009 includes in its “Annex IV” over £470m worth of quangos funded by the European Commission  including:

• The Gender Institute (Budget Line 040402) based in Vilnius
• The European Agency for Health & Safety at Work (Budget Line 040404) based in Bilbao
• The European Union Agency for Fundamental Rights (Budget Line 180405) based in Vienna
• The European Body for the Enhancement of Judicial Cooperation (EUROJUST) (Budget Line 180604) based in The Hague
• And The European Environment Agency (Budget Line 070309) based in Copenhagen.

These agencies don’t come cheap either:

• Budget Line 040404: Health & Safety Agency - £10.83m
• Budget Line 170307: European Foods Safety Agency (remember the UK and most other Member States have their own Food Standards Agencies) - £58.3m

In the past many of the problems that the European Court of Auditors have found with the spending of European taxpayers money have come from these parts of the Commission that are located away from Brussels, and escape some of the media and Parliamentary scrutiny that the centralised administration attracts.

One of my biggest gripes with the Commission budget is that it spends huge amounts of money on projects where you essentially have to be a paid up Euro-luvvy to get any money. Indeed, some of the things the Commission pay for are nothing short of good, old fashioned propaganda.

The quotes below are not my additions; they come direct from the Budget document itself. Have a look at some of the following budget lines and guess what might be funded by them…

• PDB 2009 Heading 3b: Fostering European culture & diversity ("Fostering mutual understanding and a shared European identity") - £177.5m
• Budget Line 04030302: Information and training measures for workers' organisations (Trade Unions) - £13.7m
• Budget Line 150209: subsidy for College of Europe and "European integration in universities" - £22.5m
• Budget Line 150222: includes Jean Monnet programme, to "support institutions active in the field of European integration" - £779m

This is where, for example, the Young European Federalists get their taxpayer funding from to come up with really smart ideas like creating an EU Olympic Team.

As well as European integration in universities as above, the EU is coming to a cinema near you. The French, in particular, do not like all these horrid American films flowing into European markets - so we have this budget line:

• Budget Line 09060101: Support for EU audio-visual sector, including for "non-national European films" - £81.25m

- Spin

As we all have read in the papers and on blogs, the European Commission is increasingly fed up with the fact that it has a bad reputation and most people think everything it says is all spin and no substance. To communicate to all of us that this is not the case we have the European Commission's spin machine, valued at over £170m of your tax pounds:

• PDB 2009 Title 16: "Communication" - £171.6m

This money includes the following items:

• Budget Line 160301: Information centres, such as Europe Direct - £10.25m
• Budget Line 160302: Direct Communications and Local Actions, including targeting regional press - £6.83m
• Budget Line 160401: Public opinion analysis (such as Eurobarometer polling) - £4.8m
• Budget Line 160402: Online information and communication tools - £8.83m

Below are just a small number of other budget lines, so you can hopefully get a taste of the what the Commission spends on itself:

• Budget Line 260140: Guarding of Commission buildings in Brussels - £25.8m
• Budget Line XX 0102110: Mission & Entertainment expenses - £53m
• Budget Line XX 01030103: Equipment and furniture for the Commission - £67.5m
• Budget Line 04040104: Anti-discrimination and diversity - £18.67m
• Budget Line 04040105: Gender equality - £9.92m
• Budget Chapter 2901: Expenditure on statistics - £65.8m

Oh yes, I nearly forgot to tell you that the 2009 contribution to Pensions for European Union staff is in the draft budget at £970m. You’ll have to talk to the staff unions to see what a fantastic deal they get on all other perks (and tax-rates!)

Alas, the one budget line that most Europeans would probably like to see funded - Budget Line 260108: Pilot project - "Minimising Administrative Burdens" – has been cut completely. Well, they only have £116bn to spend, so I suppose something had to go!!!

- The “Dead as a Parrot” Lisbon Treaty

As we all know, the European Commission want the Lisbon Treaty and they want it badly. So badly, in fact, they are happily going to shell out millions of European taxpayers' money on measures that probably should not exist without the new treaty being ratified.

They don’t even try to hide what they are doing. This is the introduction to the Preliminary Draft Budget 2009: "In 2009, the EU should also see the entry into force of the Treaty of Lisbon".

Many of the items below might be well-meaning, but probably should not exist at all:

• PDB 2009 Heading 4: EU as a Global Player - £6.2bn

Including:

• Budget Line 191003: Co-operation with Iran, Iraq & Yemen - £51.6m
• Budget Line 19010302: Buildings for EU "External Relations" delegations - £60.3m
• Budget Line 190401: Promoting democracy around the world (despite having no democratic referendums in the EU, bar one whose result was more than a little inconvenient!) - £91.7m
• Budget Line 190605: Civil protection in 3rd countries - £6.7m
• Budget Line 190901: Co-operation with Latin American countries - £294m
• PDB 2009 Title 21: Relations with ACP countries - £1.08bn
• PDB 2009 Title 19 03: Common Foreign & Security Policy - £202.4m
• Including:
• Budget Line 190306: European Union Special Representatives - £15.9m (more than 10% increase)
• Budget Line 190307: EU Police Missions - £49.1m
• PDB 2009 Heading 3A: Justice & Home Affairs - £839m
• Including:
• Budget Line 18050501 & 02: European Police College - £6.5m
• Budget Line 180606: Criminal Justice ("creation of a genuine European area of justice in criminal matters") - £25.3m
• Budget Line 180309: Integration of third country nationals - £81.7m
• Budget Line 180303: European Refugee Fund - £81.7m
• PDB 2009 Title 22: Enlargement - £910m

President Sarkozy and other politicians have argued that no enlargement will be possible if the Lisbon Treaty is not ratified, but this is simply disproved by these items in the 2009 PDB:

• Budget Line 220201: Institution-building for candidate countries - £263m
• Budget Line 220202: Institution-building for potential candidate countries - £357.5m
• Budget Line 220402: Information and communication strategy for non-EU countries - £11.6m
• Budget Line 040601: Pre-accession assistance - £64m
• PDB Chapter 18 04: Fundamental rights & citizenship - £38.3m, including:
  
  • Budget Line 180405: Fundamental Rights Agency - £14.2m
  • Budget Line 180406: NGOs active in field of citizenship - £11m
• Budget Line 060210: "Galileo" programme - £690m to be spent on a GPS satellite system which can also be used for military means.
• Budget Line 02040101: Space Research - £101.6m

The European Commission will say that even though the “legality” of these items would have been “firmed up” by the Lisbon Treaty, they are allowed to continue with this planned expenditure because the Member States (UK included) have allowed them to do so within the existing “Financial Regulation”.

The “Financial Regulation” is essentially the rule book and is as complicated as anything I have seen in my nine years as a MEP. Article 49 of the Financial Regulation allows for five exceptions to the basic rule that expenditure on an item must have a “Legal base” (be granted within a ratified Treaty). These exceptions are:

1) Pilot projects;

2) Preparatory actions;

3) Preparatory measures in the field of Title V of the Treaties (concerning the Common Foreign and Security Policy);

4) Actions undertaken on the basis of institutional prerogatives and specific powers conferred on the Commission by the Treaties; and

5) Operations of each institution arising from its administrative autonomy.

Personally, if I had the cash, I would challenge the Commission in the European Courts on its interpretation of Article 49. It reads it as conferring the power to do whatever it wants, especially in the area of the CFSP.  Even if this were so, anyone can see from the items I have listed that the Commission, with the co-operation of the Parliament and all the Member State governments, continues to fund things it obviously has no legal basis for. Typically our government refuses point blank to raise any objections or even question what the Commission plans to do within the 2009 Budget.

- Non-Governmental Organisations

The European Commission over the years has chosen to fund hundreds of different NGOs using the money in the Budget.  I have many problems with this - not least how you can define yourself as a non-governmental organisation if you are taking a large percentage of your income from government…

It is even more dodgy if you consider the following: The Commission pays money to hundreds of NGOs. The NGOs are pleased to accept the money. The Commission proposes a Directive in an area the NGO is active in. How, then does the NGO react if it does not like the Directive – does it bite the hand that feeds it?

Actually it is worse than that. In a number of cases the Commission will consult around a policy area in which it wants to take an initiative. It consults, amongst others, with NGOs it funds and has a relationship with. The Commission takes the advice of the NGOs and then decides to run a project that it puts out to tender. The NGOs the Commission consulted with bid and perhaps win the contract.

A self-fulfilling prophecy – and probably part of the explanation as to why we have so many new laws emanating from the Commission! (Farmers watch out – the Commission funds a number of groups that came together last year to form an organisation called “Pesticide Watch”. Anyone involved in agriculture will tell you what a dog's breakfast the Commission is making of the “Pesticides Directive” and how it will hurt European farmers – and no one can work out where the support for the Commission’s proposals came from. Well, perhaps they were actually bought and paid for by the Commission itself!)

The Commission knows this is slightly dodgy and this explains why invariably the funding for each individual NGO is hidden away – it is the devil in the detail of the Budget itself. Over the past couple of years I have asked the Commission hundreds of questions to try and find out what organisations the Commission is funding.

In PDB 2009 there is at least £247.5m spent by the European Commission on various NGOs. As I suggest above, these organisations are often paid simply to lobby the Commission on policy issues from the environment to European integration.

It is difficult to estimate the true amount (I suspect that I have significantly underestimated), as many are hidden far down in obscure budget lines. The figure I quoted above is an extrapolation for 2009 based on average grants that were received over the past three years by the NGOs we know about, plus other grants found in the PDB 2009 (e.g. Budget Lines 210302, 150555, and 040409)

The organisations include:

• CLIMATE ACTION NETWORK EUROPE, environmental policy lobbyists
• EUROPEAN MOVEMENT, European federalist think-tank
• EUROPEAN TRADE UNION CONFEDERATION, who lobby on employment policy
• EUROPEAN ENVIRONMENTAL BUREAU, environmental lobbyists
• UNION OF EUROPEAN FEDERALISTS
• YOUNG EUROPEAN FEDERALISTS
• YOUTH OF THE EUROPEAN PEOPLE'S PARTY
• INTERNATIONAL FALCON MOVEMENT (SOCIALIST EDUCATIONAL INTERNATIONAL)
• COALITION FOR THE INTERNATIONAL CRIMINAL COURT, a lobby group whose aim is to persuade world governments (particularly the USA) to recognise the ICC

The European Parliament: Finally, let’s take a look at some of the items in the Parliament’s draft budget:

Should you visit the European Parliament, you will be struck by the fact that interpretation into nearly all the official languages is available in most meetings. I still to this day struggle to find the exact cost of all that, but have found this budget line for the extra interpretation required for conferences:

• Budget Line 1-4-02: Conference interpretation (in addition to EP interpreters, i.e. freelance or external interpretation) - £38m

Oh and the shiny new visitors centre in Brussels:

• Budget Line 3-2-4-3: EP Visitor Centre - £3.25m

Every Parliament now has heightened security costs:

• Budget Line 2-0-2-6: Security of Parliament buildings - £29.1m

And the European Parliament has bills like everyone else:

• Budget Line 2-0-2-4: Energy consumption (electricity, water, gas & heating) - £12.9m

Bizarrely, MEPs travel expenses are set to rise quite dramatically when we go to a system of travel reimbursed at cost, compared with the current system of lump sum payment. This change takes place at the European Elections next year. So in 2009 it is estimated that the average travel costs of an MEP will be £98,000 each:

• Budget Line 1-0-0-4: MEP travel expenses - £70.83m (average of £98,000 per MEP)

The Parliament provides a chauffeur service to MEPs, a limo for each political group leader and has a host of other vehicles:

• Budget Line 2-1-6: Parliament fleet of vehicles - £4.42m

And feeds a lot of people each day:

• Budget Line 1-6-5-2: Canteen subsidy - £1.88m (up 15% from last year!)

MEPs are always moaning that we don’t get the media coverage we deserve and so:

• Budget Line 3-2-4-6: Parliament WebTV (prototype) - £7.5m

But probably the piece of the budget I like the least is this:

• Budget Line 4-0-2: Contributions to European political parties "which contribute to forming a European awareness" - £8.3m

Although many questions have been asked, no one will say how much of this money from the 2008 budget was spent on campaigns in Ireland!

Talking of which, I mentioned earlier that the European Commission were continuing with expenditure as if the Lisbon Treaty had been ratified already. Well…:

• European Parliament Budget Chapter 10 7: Reserve for implementation of the Treaty of Lisbon - £1.67m

There are also a few other “European Institutions” that spend a good sum of money. The two listed below are simply pointless and throw-backs to when the Parliament was not elected (pre-1979), but they still exist and the European Commission would much rather consult with the two institutions below than have any other sort of meaningful consultation!

• The Economic and Social Committee’s draft budget for 2009 is £92.5m
• The Committee of the Regions' draft budget is £59m

The other monies get paid to a host of other European Institutions: The European Council, The European Schools, The European Court of Justice, The European Court of Auditors, the European Ombudsman and the European Data Protection Officer.

***
So, there we are. A glimpse at what will be funded by the European Union in 2009 if the European Commission and European Parliament get their way.

Currently there are very few people in the European Parliament who even bother to look at the Budget. As you can see, it is a horrid and complicated field. Luckily we Conservatives do have two budget experts in James Elles MEP and Richard Ashworth MEP and hopefully, when most of my amendments fall in Committee they will ride to the rescue of at least some of them and help me get them re-tabled for Plenary.

However, we all know that even if they get re-tabled (a difficult process in itself at the Plenary stage – you need forty plus signatures or your own political group to table amendments for Plenary), they will certainly fall then. Indeed, there are very very few budget amendments which even get voted on by all MEPs; to make the process palatable for those who have little interest in the subject, most amendments are grouped together into 20 or 30 bundles and then the bundles are voted on.  Forget the politics and the money; we need to vote quickly, because lunch comes immediately after the Budget vote...!