REPORT ON BUDGETARY AND FINANCIAL MANAGEMENT

Section I: European Parliament

FINANCIAL YEAR 2018

(2019/C 365/01)

CONTENTS

Page INTRODUCTION 2 I. OVERVIEW OF PARLIAMENT’S ACTIVITIES IN 2018 2 II. EVOLUTION OF SECTION 1 OF THE EU BUDGET UNDER HEADING 5 (PARLIAMENT’S BUDGET) OVER THE PAST FIVE YEARS OF THE MFF 2014-2020 3 III. BUDGET IMPLEMENTATION IN 2018 3 A. Initial budget and amending budgets 6 B. Commitments and payments 6 C. Carryovers from 2018 to 2019 7 D. Use of carryovers from 2017 to 2018 7 E. Revenue 7 F. Appropriations from assigned revenue 8 G. Cancellations of appropriations for the year 8 H. Transfers 8 I. Budget implementation by chapter 9 LIST OF TABLES AND FIGURES 11 ANNEXES 12 Annex I — Overview of C transfers during the financial year 2018 13 Annex II — Overview of P transfers during the financial year 2018 16 Annex III — Implementation of appropriations during 2018 19 Annex IV — Implementation of appropriations carried over from the previous year 31 Annex V — Implementation of appropriations from internal assigned revenue 38 Annex VI — Revenue in 2018 48 Annex VII — KAD project — key figures 50

INTRODUCTION

1. This report analyses the European Parliament’s budgetary and financial management during the financial year 2018. It outlines the use made of financial resources and the events which had a significant influence on activities during the year.

2. The report has been drawn up in accordance with Article 249 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council ( 1 ) , hereinafter referred to as ‘the Financial Regulation 2018’. The analysis is based on the provisional accounts established by the Accounting Officer.

3. Pursuant to Article 282(3)(c) of the Financial Regulation 2018, Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council ( 2 ) , hereinafter referred to as ‘the Financial Regulation 2012’ was applicable to all operations and transactions effected in the financial year 2018.

I. OVERVIEW OF PARLIAMENT’S ACTIVITIES IN 2018

4. In 2018, legislative activity substantially increased as Parliament was approaching the end of its 2014-2019 legislative term. Legislative work was to a high degree shaped by the dossiers of the Joint Declaration. The new Joint Declaration on the EU’s legislative priorities for 2018-2019, signed in December 2017, combined unfinished files from the 2017 Joint Declaration and added new ones.

5. Two temporary committees, TERR (Special Committee on Terrorism) and PEST (Special Committee on the EU authorisation procedure for pesticides), successfully concluded their work during the year and a third one, TAX3 (Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance), was started. The rapid setting-up and staffing of this temporary committee was a considerable challenge due to the extra coordination efforts and work as regards staffing, offices and other organisational issues.

6. The Brexit preparation continued to have a considerable impact on committee secretariats, research units and horizontal services of Parliament’s political Directorates-General.

7. In view of the 2019 elections, the communication campaign was launched and the related financial commitments were established in 2018.

8. Measures of the institution to enhance security continued in 2018, notably in matters of physical and building security but also cyber- and communication security.

9. The rationalisation and modernisation of key areas of Parliament’s Administration continued (building policy — notably with the adoption of the Building Strategy beyond 2019 in April 2018; IT modernisation; environmental policy and staff policy).

10. The Martens Building project in Brussels was completed in 2018. The building provides office space for about 1 000 persons and is a key element for the major renovations planned in Brussels in the coming years.

11. The reconstruction of the Montoyer 63 building in Brussels was also completed and final installation works are ongoing. The building is planned to be put in use in the first half of 2019.

12. The Adenauer project constitutes the main axis of Parliament’s property policy in Luxembourg. The new Adenauer building will consolidate activities in Luxembourg in one building complex with a view to rationalising costs. Overall completion of the works is scheduled for end of June 2023. Following the Bureau decision of 6 July 2015, the decision on the future of the old Adenauer building is left for the beginning of the next term. As in previous years, the Committee on Budgets authorised in 2018 a mopping-up transfer for the pre-financing of the project. This transfer amounted to EUR 29 million (see Section III. H. on transfers). Following Recommendation 3 of the Court of Auditors Special Report 34/2018 on office accommodation of EU institutions, a detailed overview of the financing of the KAD building project is annexed to this report (Annex VII).

13. The European Parliament uses the Eco-Management and Audit Scheme (EMAS), which is a management instrument of the European Union for private and public organisations to evaluate and improve their environmental performance in accordance with Regulation (EC) No 1221/2009 of the European Parliament and of the Council ( 3 ) . The European Parliament is EMAS-registered at all three places of work since December 2007. Following the last re-certification audit, the registration was extended until December 2019. The 2018 EMAS action plan was successfully implemented and several communication and awareness-raising activities, such as the ‘Plastic-free event’ took place.

14. In 2018, the IT modernisation continued with the renewal of obsolete hardware and an important number of strategic projects in the areas e-Parliament, mobile environment for Members and staff, and the renewal of the Financial Management System.

15. When the Staff Regulations of Officials were revised and the 2014-2020 Multiannual Financial Framework (MFF) was adopted, an interinstitutional agreement was concluded in which provision was made for reducing posts on each institution’s establishment plan by 1 % annually over five years. Due to specific new needs arising within Parliament, measures to cut posts were extended for a further year until 2019. For 2018, 60 posts were abolished in the establishment plan.

II. EVOLUTION OF SECTION 1 OF THE EU BUDGET UNDER HEADING 5 (PARLIAMENT’S BUDGET) OVER THE PAST FIVE YEARS OF THE MFF 2014-2020

Increase in the budget by comparison with the Multiannual Financial Framework Year 2014 2015 2016 2017 2018 EP budget (EUR m) 1 756 1 795 1 838 1 910 1 951 Δ % 0,3 2,2 2,4 3,9 2,2 MFF heading 5 (EUR m) 8 721 9 076 9 483 9 918 10 346 Δ % –5,0 4,1 4,5 4,6 4,3 EP share of heading 5 20,1 % 19,8 % 19,4 % 19,3 % 18,9 %

III. BUDGET IMPLEMENTATION IN 2018

16. Parliament’s final appropriations for 2018 totalled EUR 1 950 687 373, or 18,9 % of heading 5 of the Multiannual Financial Framework ( 4 ) . Table 1 below provides an overview of the implementation of Parliament’s budget in the financial year 2018. Table 1 Use of appropriations Appropriation type 2018 appropriations (EUR or %) 2017 appropriations (EUR or %) Change 2018/2017 (%) Appropriations Initial appropriations 1 950 687 373 1 909 590 000 2,2 Final appropriations 1 950 687 373 1 909 590 000 2,2 Implementation for the year Commitments 1 934 477 627 1 889 574 057 2,4 As a % of final appropriations 99,2 99,0 — Payments 1 636 858 018 1 599 788 767 2,3 As a % of commitments 84,6 84,7 — Carryovers to following year Automatic carryovers to following year (5) 299 095 028 289 785 291 3,2 As a % of final appropriations 15,3 15,2 — As a % of commitments 15,4 15,3 — Non-automatic carryovers (uncommitted appropriations carried over to following year) (6) 0 2 564 000 — As a % of final appropriations 0,0 0,1 Cancellations Appropriations cancelled 16 209 746 17 451 943 –7,1 As a % of final appropriations 0,8 0,9 — Carryovers from previous year Automatic carryovers from previous year 289 785 291 285 312 645 1,6 Payments against those carryovers 266 834 198 262 940 988 1,5 As a % of carryovers 92,1 92,2 — Amount cancelled 22 951 093 22 371 657 2,6 Non-automatic carryovers from previous year (2) 2 564 000 0 — Payments against those carryovers 1 088 581 0 — As a % of carryovers 42,5 — — Appropriations from assigned revenue for the year Appropriations from assigned revenue for the year 30 783 590 50 052 674 –38,5 Commitments 14 231 422 13 981 327 1,8 As a % of appropriations from assigned revenue 46,2 27,9 — Payments 9 619 557 10 966 895 –12,3 As a % of commitments against assigned revenue 67,6 78,4 — Carryover of appropriations available to the following year 16 552 168 36 071 348 –54,1 Carryover of commitments from assigned revenue carried over to the following year 4 611 865 3 014 431 53,0 Appropriations from internal assigned revenue (7) carried over from the previous year Appropriations from assigned revenue carried over from the previous year 31 932 985 13 692 260 133,2 Commitments 31 880 012 13 650 445 133,5 As a % of appropriations from assigned revenue carried over 99,8 99,7 — Payments 9 863 903 10 376 606 –4,9 As a % of commitments 30,9 76,0 — Cancellations 52 973 41 815 26,7 Carryover of commitments from assigned revenue carried over to the following year 22 016 109 3 273 839 572,5 Appropriations from external assigned revenue (8) and internal assigned revenue from lettings (9) carried over from the previous year Appropriations from assigned revenue carried over from the previous year 8 696 703 19 224 188 –54,8 Commitments 3 472 236 14 665 847 –76,3 As a % of appropriations from assigned revenue carried over 39,9 76,3 — Payments 2 896 017 14 213 829 –79,6 As a % of commitments 83,4 96,9 — Carryover of appropriations available to the following year 5 224 467 4 558 341 14,6 Carryover of commitments from assigned revenue carried over to the following year 576 219 452 019 27,5 Commitments from assigned revenue carried over from the previous year Commitments from assigned revenue carried over from the previous year 6 740 289 6 678 842 0,9 Payments 5 929 106 5 766 455 2,8 As a % of commitments 88,0 86,3 — Carryover of commitments from assigned revenue carried over to the following year (revenue from lettings) 30 159 72 514 –58,4 Cancellation of commitments 781 024 839 874 –7,0

A. Initial budget and amending budgets

17. The initial and final appropriations in Parliament’s budget for 2018 amounted to EUR 1 950 687 373. This represented a 2,2 % increase over the 2017 final budget (EUR 1 909 590 000).

B. Commitments and payments

18. Commitments totalled EUR 1 934 477 627, accounting for 99,2 % of final appropriations (2017: 99,0%). Payments totalled EUR 1 636 858 018, or 84,6 % of commitments entered into (2017: 84,7 %).

C. Carryovers from 2018 to 2019

19. Automatic carryovers to financial year 2019 totalled EUR 299 095 028, accounting for 15,4 % of the total appropriations committed (2017: 15,3 %). There were no non-automatic carryovers from 2018 to 2019.

D. Use of carryovers from 2017 to 2018

20. Automatic carryovers to 2018 totalled EUR 289 785 291 (2017: EUR 285 312 645). Payments against those carryovers stood at EUR 266 834 198, or 92,1 % (2017: 92,2 %). Appropriations cancelled thus totalled EUR 22 951 093, 2,6 % increase compared to 2017 (EUR 22 371 657). The bulk of the cancellations was made against Article 4 0 2 ‘Funding of European political parties’, Article 2 0 0 ‘Buildings’, Article 4 0 3 ‘Funding of European political foundations’, Article 3 2 4 ‘Production and dissemination’, Article 2 0 2 ‘Expenditure on buildings’, Article 2 1 4 ‘Technical equipment and installations’ and Article 1 0 0 ‘Salaries and allowances’. Cancellations against those seven articles accounted for 80 % of the total amount cancelled.

E. Revenue

21. Total revenue entered in the accounts as at 31 December 2018 was EUR 193 998 910 (2017: EUR 206 991 865), including EUR 30 783 590 in assigned revenue (2017: 50 052 674).

22. Table 2 provides a breakdown, by chapter, of movement in revenue between 2017 and 2018. Table 2 Movement in revenue between 2017 and 2018 Chapter Heading 2018 (EUR) 2017 (EUR) Difference (EUR) Change 2018/2017 (%) 4 0 Miscellaneous taxes and deductions 87 502 544 85 083 544 2 419 000 3 4 1 Contributions to the pension scheme 74 790 660 70 212 953 4 577 707 7 Title 4 — Revenue accruing from persons working with the institutions and other Union bodies 162 293 204 155 296 497 6 996 707 5 5 0 Proceeds from the sale of movable property (supply of goods) and immovable property 0 162 (10) – 162 – 100 5 1 Proceeds from letting 3 518 901 (1) 3 069 621 449 280 15 5 2 Revenue from investments or loans granted, bank and other interest 1 874 2 077 – 203 –10 5 5 Revenue from the proceeds of services supplied and work carried out 5 682 915 (1) 6 301 830 – 618 915 –10 5 7 Other contributions and refunds in connection with the administrative operation of the institution 7 464 437 (1) 7 789 413 – 324 976 –4 5 8 Miscellaneous payments 0 20 162 097 (11) –20 162 097 – 100 Title 5 — Revenue accruing from the administrative operation of the institution 16 668 127 37 325 199 –20 657 072 –55 Title 6 — Contributions and refunds in connection with Union agreements and programmes 14 117 337 (1) 12 731 797 1 385 540 11 Title 9 — Miscellaneous revenue 920 241 1 638 371 – 718 130 –44 Total 193 998 910 206 991 865 –12 992 955 –6

F. Appropriations from assigned revenue

23. Assigned revenue made available in 2018 totalled EUR 30 783 590 (2017: EUR 50 052 674). Commitments totalled EUR 14 231 422, i.e. 46,2 % commitment rate (2017: 27,9 %). Payments totalled EUR 9 619 557, accounting for 67,6 % of the commitments entered into (2017: 78,4 %).

G. Cancellations of appropriations for the year

24. The sum of EUR 16 209 746 (2017: EUR 17 451 943), representing 0,8 % of final appropriations (2017: 0,9 %), was cancelled.

H. Transfers

25. During the financial year, eleven C transfers (including what is termed the ‘mopping-up’ transfer) were approved in accordance with Articles 27 and 46 of the Financial Regulation 2012. They totalled EUR 53 533 500, which is 2,7 % of final appropriations (in 2017: seven C transfers accounting for 3,0 % of final appropriations). Table 3 Analysis of C transfers by expenditure category and purpose Expenditure category receiving transfer Purpose Transfer Amount transferred (EUR) As a % of amounts transferred Buildings policy Adenauer building project C11 29 000 000 54,2 Building maintenance C5 4 200 000 7,8 Buildings policy — Total 33 200 000 62,0 IT infrastructure IT infrastructure and technical equipment C9, C10 9 781 500 18,3 IT infrastructure — Total 9 781 500 18,3 Personnel and other staff Other staff C1,C3,C8 6 882 000 12,9 Mobility C2 140 000 0,3 Payment of allowance C6 130 000 0,2 Personnel and other staff — Total 7 152 000 13,4 Other expenditure External translation C7 3 000 000 5,6 Organisation of meetings C4 400 000 0,7 Other expenditure — Total 3 400 000 6,3 Total 53 533 500 100,00

26. The ‘mopping-up’ transfer for the benefit of the Adenauer project totalled EUR 29 000 000, 29,0 % less than in 2017 (EUR 40 850 000).

27. The President authorised seven P transfers of appropriations for the year under Article 25(1) of the Financial Regulation 2012 ( 12 ) , covering a total of EUR 9 343 804, or 0,5 % of final appropriations for the year (in 2017: ten P transfers accounting for 1,0 % of final appropriations for the year) and a total of EUR 1 065 000 of appropriations from assigned revenue for the year.

I. Budget implementation by chapter

28. This section looks at the use of appropriations by budget chapter, their share of the overall budget and changes in the use of appropriations over the previous financial year. Four chapters accounted for 67,6 % of total commitments. Those chapters were Chapter 1 0 ‘Members of the institution’, Chapter 1 2 ‘Officials and temporary staff’, Chapter 2 0 ‘Buildings and associated costs’ and Chapter 4 2 ‘Expenditure relating to parliamentary assistance’.

29. Table 4 provides a breakdown by chapter of the appropriations committed in 2018 as against those committed in 2017. Table 4 Appropriations committed in 2018 as against those committed in 2017 Chapter Heading 2018 (EUR) 2017 (EUR) Difference (EUR) Change 2018/2017 (%) 1 0 Members of the institution 208 099 582 203 969 300 4 130 282 2 1 2 Officials and temporary staff 652 349 114 641 373 448 10 975 666 2 1 4 Other staff and external services 154 757 192 138 007 588 16 749 604 12 1 6 Other expenditure relating to persons working with the institution 15 500 166 14 743 257 756 908 5 Title 1 — Persons working with the institution 1 030 706 054 998 093 592 32 612 462 3 2 0 Buildings and associated costs 240 603 149 267 588 704 –26 985 555 –10 2 1 Data processing, equipment and movable property 181 639 405 174 379 445 7 259 960 4 2 3 Current administrative expenditure 4 971 333 4 681 409 289 924 6 Title 2 — Buildings, furniture, equipment and miscellaneous operating expenditure 427 213 887 446 649 558 –19 435 671 –4 3 0 Meetings and conferences 33 677 487 32 136 133 1 541 354 5 3 2 Expertise and information: acquisition, archiving, production and dissemination 123 042 836 101 488 708 21 554 128 21 Title 3 — Expenditure resulting from general functions carried out by the institution 156 720 323 133 624 841 23 095 482 17 4 0 Expenditure relating to certain institutions and bodies 112 329 060 109 814 922 2 514 138 2 4 2 Expenditure relating to parliamentary assistance 207 068 303 200 971 143 6 097 160 3 4 4 Meetings and other activities of current and former members 440 000 420 000 20 000 5 Title 4 — Expenditure resulting from special functions carried out by the institution 319 837 363 311 206 065 8 631 298 3 Title 5 — The authority for European political parties and European political foundations and the Committee of independent eminent persons p.m. p.m. — — Title 10 — Other expenditure 0 0 0 — Total 1 934 477 627 1 889 574 057 44 903 570 2

30. Expenditure on officials and temporary staff (Chapter 1 2) amounted to EUR 652 349 114 in 2018, making it the largest spending category (accounting for 34 % of total commitments for 2018). The growth stems largely from the increase of ‘Remuneration and allowances’, which reflects career progression as well as index-linking of pay. In December 2018, pay for officials and other staff of the European Union was increased by 1,7 %, backdated to 1 July 2018.

31. The main reason for the increase in the committed appropriations within Chapter 1 4 is the fact that commitments for other staff increased mostly due to new recruitments, career progressions as well as index-linking of pay. Recruitments were partly linked to the European elections campaign of 2019.

32. Expenditure under Chapter 2 0 is to a large extent project-driven and several factors led to the overall decrease of – 10 % in commitments. The transfer for the benefit of the Adenauer building project in Luxembourg was less important than in the previous year (2018: EUR 29 million; 2017: EUR 40,85 million — see Section H of this report). Budget item 2 0 0 7 ‘Fitting-out of premises’ decreased by EUR 17,4 million. In the previous year 2017, almost EUR 17 million of commitments had related to the fitting out of the Martens building in Brussels.

33. The increase of expenditure under Chapter 2 1 relates to both IT business-as-usual operations and to investments in IT infrastructure.

34. The increase of commitments under Chapter 3 2 is mainly due to expenditure for publications, information and participation in public events linked to the 2019 European elections.

35. The increase of expenditure relating to parliamentary assistance (Chapter 4 2) is mainly linked to the index-linking of pay.

LIST OF TABLES AND FIGURES

Table 1 — Use of appropriations 4

Table 2 — Movement in revenue between 2017 and 2018 7

Table 3 — Analysis of C transfers by expenditure category and purpose 8

Table 4 — Appropriations committed in 2018 as against those committed in 2017 9

(1) Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).

(2) Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (OJ L 298, 26.10.2012, p. 1).

(3) Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25 November 2009 on the voluntary participation by organisations in a Community eco-management and audit scheme (EMAS), repealing Regulation (EC) No 761/2001 and Commission Decisions 2001/681/EC and 2006/193/EC (OJ L 342, 22.12.2009, p. 1).

(4) Council Regulation (EU, Euratom) No 1311/2013 of 2 December 2013 laying down the Multiannual Financial Framework for the years 2014-2020 (OJ L 347, 20.12.2013, p. 884).

(5) Articles 13(1) and 13(4) of the Financial Regulation 2012.

(6) Articles 13(1), 13(2)(a) and 13(5) of the Financial Regulation 2012.

(7) With the exception of internal assigned revenue defined in point (g) of Article 21(3) — revenue from lettings. Under Article 14(b) of the Financial Regulation 2012, that revenue is carried over automatically instead of being carried over for one year only.

(8) Article 14(a) of the Financial Regulation 2012.

(9) Articles 14(b) and 21(3)(g) of the Financial Regulation 2012.

(10) Assigned revenue.

(11) Assigned revenue, including the payment of the insurance company in relation to the collapse of the Strasbourg Chamber ceiling in 2008.

(12) Decision by the institution to transfer appropriations within a given article.