CELEX: 51977DC0096
Language: en
Date: 1977-03-14
Title: REFLECTIONS BY THE COMMISSION OF THE EUROPEAN COMMUNITIES ON THE APPLICATION OF ARTICLES 203/EEC, 117/EAEC AND 78/ECSC TAKING INTO ACCOUNT THE INTRODUCTION OF DIFFERENTIATED APPROPRIATIONS (Distinction between appropriations for commitment and appropriations for payment)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (77) 96
Vol. 1977/0041
 ---pagebreak--- Disclaimer
Conformément au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983
concernant l'ouverture au public des archives historiques de la Communauté économique
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983,
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit
règlement.
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983
concerning the opening to the public of the historical archives of the European Economic
Community and the European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243,
27.9.2003, p. 1), this file is open to the public. Where necessary, classified documents in this
file have been declassified in conformity with Article 5 of the aforementioned regulation.
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1.
Februar 1983 über die Freigabe der historischen Archive der Europäischen
Wirtschaftsgemeinschaft und der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983,
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. September 2003
(ABI. L 243 vom 27.9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit
erforderlich, wurden die Verschlusssachen in dieser Datei in Übereinstimmung mit Artikel 5
der genannten Verordnung freigegeben.
 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                        COM(77)96 final.
                                        Brussels , 15 March 1977 *
                                             U         . J
                                                     ni      r           f
                                                                           ;i
                                              l "» j      ** «^Ar> ».         /*• ,. /
                                             EUROPEANCOMMUNITIES^
    REFLECTIONS BY THE COMMISSION OF THE EUROPEAN COMMUNTTIES
   ON THE APPLICATION OF ARTICLES 203/EEC . 117/EAEC AM) 78/ECSC
              TAKING INTO ACCOUNT THE INTRODUCTION' OF
                   DIFFERENTIATED APPROPRIATIONS                      'i
      (Distinction between appropriations for commitment and
       appropriations for payment ) ;
  COM(77 ) 96 final
 ---pagebreak---       REFLECTION BY" THE C OMISSION OF THE EUROPEAN COT&TUTIITIES
      QT; THE APPLICATION OF ARTICLES 203 /EEC , 117 /aAEC AITO 76/ECSC
      TAKING HTTP ACCOUM1 THE INTRODUCTION OF DIFFERSbTTIATBD APPROPRIATIONS
      ( Distinction "between appropriations for commitment and
        appropriations for payment*)
The non-compulsory expenditure as defined by Article 203 of the EEC
Treaty consisted in practice of "non-differentiated appropriations"
in 1975^. But since the 1977 Budget it consists mainly of "differentiated
appropriations"^ .
This new technical structure in the composition of the "budget gives rise
to the following questions :
-    the determination of the assessment "basis ;     should the assessment "basis
      (basis in the budget of year n for calculating the increase of the
     budget in year n + 1 ) be calculated on the basis of appropriations for
     commitment or appropriations for payment ?
-    the application of the " maximum rate" ;    should the "maximum rate" be
     used to gauge the increase in the appropriations for commitment and/or
     the appropriations for payment ?
~ the application of Parl iament 's " margin for manoeuvre " : may Parliament 's
     " margin for manoeuvre" be used for increasing appropriations for
     commitment and/or appropriations for payment ?
The Commission wishes to find logical and objective solutions to these
three questions and persuade the two holders of budgetary authority - the
Council and Parliament – to adopt them so that a joint interpretation may be
arrived at ( see Annex 1 ).
 The only exceptions being Chapter 33 ( research appropriations ) and
 Chapter 55 ( Regional Fund).
 Regulation 7^/91 9/ECSG , Euratosn of 21 December 1976 which has authorized
 the "differentiation of appropriations" in the following seven sectors :
 ( i ) the European Social Fund , ( ii ) the European. Agricultural Guidance and
 Guarantee Fund , Guidance Section , ( iii ) hydrocarbons projects , ( iv ) uranium
 research , (v) the second data-processing programme , (vi ) the three-year
 plan of action on scientific and technical information and documentation ,
 (vii ) pilot research to combat poverty .
 ---pagebreak---                                        - 2 -
 1•     rjriB –OYISXOIJS 0? ARTICLE 203 / EEC AND THEIR AIM
 In short , the provisions of Article 203/EEC were laid down to attain the
 following objectives :
 1 .   First objective : the two categories in the General Budget
 The provisions of Article 203 of the EEC Treaty establish two categories
 of expenditure : compulsory expenditure and non-compulsory expenditure .
 ( a ) compulsory expenditure
       As concerns the first - which results directly from the Treaty or
       from the acts adopted in accordance therewith - the power to decide
       whether or not to enter an appropriation in the Budget lies with
       the Council . Parliament can , however , propose modifications and
       could , in the final analysis , reject the budget .
 (b ) non-compulsory expenditure
       On the other hand , as far as non-compulsory expenditure is concerned ,
       the final decision over whether or not to enter an appropriation
       lies with the Parliament , even though specific provisions - adopted
       by the legislative authority , i.e. the Council – often lay down the
       conditions for using these appropriations ( e.g. the Social Pond ).
The budgetary procedure in respect of non–compulsory expenditure thus
leads to a genuine political decision .
This decision is the result of a delicate and negotiated balance of
the powers shared by the two holders of budgetary authority . Although
there is a tendency to simplify the issue by claiming that Parliament
has the last word on non-compulsory expenditure , this is only partly
true as the exercise of these powers is far more complicated in
practice and in theory .
 ---pagebreak--- It should also be ncted in •this connection that , in practice , the
division of the budget into compulsory and non-compulsory expenditure
resulted from a pragmatic approach .
2•   Second objective :  the normal development of non-compulsory
   " expenditure is limited by the " maximum rate"
The authors of Article 203 of the ESC Treaty wished to control the
development of non-compulsory expenditure . They therefore created
the "maximum rate" system to link any increase in this expenditure in
the Community budget with the growth of Community GUP and national
budgets . The "maximum rate" is not simply indexation based on the
increase in the cost of living , but is more dynamic as it takes account
of the increase in GEKP and national budgets .
The drawback to the " maximum rate" system is that the Community Budget
which , by definition , is not in a state of rest since the Community 's
role is one of development – is so linked with GHP and national budgets
3.   Third objective :  the " margin" - Parliament 's exclusive power
If the increase in non-compulsory expenditure from one financial
year to the next remains within the limits of the "maximum rate",
Parliament exercises its power to fix this expenditure definitively ,
perhaps amending the allocation to the various budget headings
contained in the draft budget .
The authors of Article 203 of the EEC Treaty also wished to confer
upon Parliament an exclusive right to increase expenditure by an amount
corresponding to one-half of the "maximum rate". This is , on the
basis of the political experience of recent budgetary procedure ,
Parliament 's "margin for manoeuvre".
 ---pagebreak---                                        - 4 -
 4,   Fourth objective : the ".joint agreement" procedure for increasing
      r, on-connrulscry oy.oenditure "beyond the levels provided for by the
      " maxir.-ium rate " and the "margin for manoeuvre"
The authors of Article 203 of the EEC Treaty, realizing that the increase
in the Community Budget could go beyond the levels provided for by the
"maximum rate" and "margin for manoeuvre", laid down that the figure
could be exceeded provided that agreement is reached between Parliament
and Council .       It is important to stress that while the original wording
of Article 203 provided for the figure to be exceeded only in " exceptional
cases", this restriction no longer features in the current Article 203
as amended by the Treaty of 22 July 1975 * Use of this provision is
thus recognized as a possible outcome of a normal requirement arising
from the need to increase the Community Budget .
Following this brief examination of the aims of Article 203 , the following
two conclusions may be drawn ; their technical significance will be
discussed in greater detail below .
- first of all , this Article aims at restricting the increase of
     non-compulsory expenditure ;
- secondly, Parliament has the exclusive right to decide upon part
     of the increase under its " margin for manoeuvre".
II .   THE INCREASE OF " NOIT-COMPULSOHY EXPENDITURE" AND EXERCISE OF
       BUDGETARY POWERS
The objectives of Article 203 of the EEC Treaty having thus been clarified ,
the significance that must be attached to the increase in non-compulsory
expenditure must now be established . This problem did not arise in the
past when the budget consisted exclusively of non-differentiated
appropriations ( appropriations for commitment identical with appropriations
for payment ). It does arise now in 1977 as most non-compulsory expenditure
is now accounted for by differentiated appropriations . The question is
therefore whether the increase in non-compulsory expenditure constitutes
an increase in appropriations for commitment or in appropriations for
payment .
 ---pagebreak---                                   - 5 -
To answer this question , it is useful to follow the historical development
of the last three budgets ( 1975 » 1976 and 1977 ) preceding the new
situation represented "by the budget of the current financial year and to
draw a number of objective conclusions from this study .
1.   The situation with respect to 1975 and 1976
(a)   The establishment          975 Budget
      Determination of the_1974 assessmentjaasis
Article 203 of the EEC Treaty first took effect when the budget for the
1975 financial year was established.    The reference budget at this
time was the 1974 Budgets    this budget contained only "non -differentiated
appropriations" ( i.e. the appropriations serving at one and the same
time to enter into legal commitments and to cover the resulting expenditure ^
this was true with one exception - the research appropriations ( Chapter 33 ) .
Annex 1 shows the "assessment basis" of non-compulsory expenditure in 1974
that was used as the basis for calculating the maximum rate , and thus of
determining the potential increase in the 1975 Budget , as against that
of 1974 .
It should be pointed out that the 1974 assessment basis was homogeneous ,
with the exception mentioned above - which had not then been observed .
However , this exception was not very striking as the research appropriations
were contained in an annex to the Commission section of the Budget and      the
appropriations for commitment appeared formally only in this annex and in
practice passed unrecognized in the Commission Budget ( Section III );
Calculation of the increase between 1 974j3-nd=J 975 and parlxamentj_s_u.se
of~the""margin for manoeuvre
The calculation of the increase gave rise to no particular proolems .
Annex 1 indicates the increase in the budget between 1974 and. 1975 * The
following conclusions may be drawn s
1
  The appropriations for t he Regional Fund were not made available until
  the first Supplementary Budget of 1975 » published on 29 April 1975 *
 ---pagebreak---                                         _ 6 -
 -  the increase remained slightly "below the limits allowed by the
    Trf.ri ;m;a rate ( 14*6$) and Parliament 's "margin for manoeuvre" ( which
    amounted "to 53 150 471 u.a .), not taking the Regional Fund into
    c on s ide rax ion :
-   the "margin for manoeuvre" itself was used to increase expenditure
    by 47 U9 105 u.a .:
-   the appropriations for the Regional Fund adopted in the first
    Supplementary Budget were the subject of an ad hoc agreement ,
    Council and Parliament being , as is well known , unable to agree
    on the final classification to be given to this expenditure : however ,
    as the appropriations for commitment under the Regional Fond had
    already been decided upon for a three–year period by means of
    Regulations , entry into the budget was reduced simply to the technical
    aspect of the appropriations for payment , which gave rise to no real
    problems in practice ;
-   to sum up , the adoption of the 1975 Budget - both the General Budget
    and Supplementary Budgets – did not require formal recourse to the
    "new rate" procedure ( provided for by the provisions of the fifth
    sub-paragraph of Article 203(8 ).
(b)    The establishment of the 1976 Budget
       Determination of_the 1975 assessment basis
Annex 2 shows the " assessment basis" for 1975 « The 1975             1976
financial years were homogeneous as differentiated appropriations
occurred in only two sectors ( research appropriations and the Regional
Fund ).
Calculation of the increase between 1975 an<! 1976 and Parliament 's
use of tSe margin for manoeuvre            – – –  ___________
Annex 2 also records the increase in non-compulsory expenditure and
Parliament 's use of the margin for manoeuvre .
It should be noted here that a special event took place unnoticed .
Parliament restored all the research appropriations for commitment .
 ---pagebreak---                                     - 7 -
To sum up , the establishment of the 1976 Budget involved application of
all the provisions of Article 203 including that provided for in the fifth
sub–paragraph of Article 203 (8 ) ( shared decision–making procedure where
recourse is made to the "new rate ").
As Annex 2 shows :
- non-compulsory expenditure increased by 38.43% ( or "by 27.88% if the
   Regional Fund is counted as compulsory expenditure ) wien the general
   Budget was adopted . These figures increased by 44.28'/' r;.nd 34.73%
   respectively under the first Supplementary Budget for 1976 (Friuli );
- Parliament had a "margin of manoeuvre " of around 72 .6 million u.a.
    ( equivalent to between 78*4 million u.a . with the Regional Fund as
   non-compulsory expenditure and 66.9 million u.a . with the Regional Fund as
   compulsory expenditure );
- as Parliament approved amendments amounting to 102.9 million u.a . when
   adopting the budget and thus exceeded its "margin of manoeuvre ", the
   shared decision–making procedure (fifth sub–paragraph of Article 203(8))
   was applied for the first time .    Because of the disagreement- between
   Parliament and Council on how to classify the Regional Fur^d , the "new rate"
   could not be fixed definitively ( as this rate was 27.88% for the Council
   and 38.43% for Parliament ). The shared decision–making procedure was
   therefore applied without any formal mention of the "new rate ".
(c ) In conclusion , for the 1975      1976 Budgets :
- the assessment basis consisted in practice of non–differentiated
   appropriations only ;
- the only two exceptions (research and the Regional Fund ) did not in practice
   change the homogeneity of the system because of the nature of these two
   chapters of the budget .
2 . The radical change represented by the Bidget for the 1977 financial year
The Budget for the 1977 financial year was significantly different from that
of 1976 .     In accordance with the Regulation adopted for this purpose it
involved much greater use than hitherto of differentiated appi opriations .
 ---pagebreak---                                       - 8 -
It may also be considered that , if the operating appropriations (Titles 1
and 2 of the tulget ) ara ignored , this system is very suitable for application
to most of the f iraxicic.l intervention measures contained in the budget
 ( excluding the EAGGF Ou^rantse Section ).      This presentation of the
appropriations is the normal system for the operating appropriations in the
General Budget , in respect of which payments are spread over several
financial years .
Annex 3 records the composition of the non-compulsory expenditure for 1977 *
It becomes clear that " differentiated appropriations " now exceed the
non-differentiated appropriations .       "Differentation" is thus tending to
become the general rule because of the need for accurate forecasting and
payment of the appropriations for the operational activities .
It is therefore essential to be aware of this new situation , which is
likely to become more pronounced in future , and draw objective conclusions
from this in order to interpret Article 203 of the EEC Treaty to the best
possible advantage .
Annex 4 contains all the data for assessing the increase in non-compulsory
expenditure in the 1977 Budget compared with the 1976 Budget .
The following facts emerge :
– the changeover from a budget containing mainly "non-differentiated
    appropriations" ( 1976 ) "to one containing mostly "differentiated appropriations"
    ( 1977 ) has made comparison very difficult ;
– limiting this     to a purely formal comparison (the "formal" approach ), it
    will be found   that non–compulsory expenditure has dropped by 4 . 90% ( or by
    14.63% if the   Regional Fund is considered as compulsory expenditure ). But
    this approach   is wrong as it compares elements that cannot be compared (the
    "non-differentiated appropriations" of 1976 are compared with the
    "appropriations" for payment of 1977 );
– if , however , a "real" approach is adopted , it will be found that there is an
    increase of 30.74% ( or of 30.08% if the Regional Fund is considered as
    compulsory expenditure ) .    In practice , the "new rate" procedure may
    therefore be applied ;
 ---pagebreak---                                       - 9 -
- in "these circumstances , the Council estimated the " margin for manoeuvre "
     pragmatically at 120 million u.a . + 7»5 million u.a . for certain new operations ,
     or 127.5 million u.a . in all .
 Parliament finally approved 140 million u.a ., exceeding its margin for manoeuvre
"by around 12 million u.a *
The final adoption of the budget "by Parliament did not take place formally
 in accordance with the provisions of the fifth sub–paragraph of Article 203(8 );
 in practice , the concerted action by the Council and Parliament on
 14 December may be considered as replacing the shared decision–making
 procedure .
 3 . The facts to be noted
 The Commission considers that the following facts command attention .
 (a) the nature of the appropriation for commitment
 An appropriation for commitment may be defined as an annual authorization
 to cover the conduct of operations for which payment is spread over several
 financial years .      An appropriation for commitment has the following
 characteristics :
  (al ) it is an annual appropriation :    it must be used in the course of the
         budgetary year for which it is made available .    Any part of the
         appropriation that has not been committed by the end of the financial
         year is cancelled (apart from in exceptional cases ) ,
  ( a2 ) the appropriation for commitment is the real budgetary instrument which
         enables an operation to be launched and the corresponding legal obligation
         to be entered into .   The budgetary authority and control must therefore
         first of all concentrate their attention on the appropriation for
         commitment which is the expression of the financial scale of the operation
         in question ;
 ( a3 ) the only difference between the traditional "non-differentiated
         appropriation" and the "differentiated appropriation" lies in the fact
         that , whereas the non–differentiated appropriation is committed for one
         year and perhaps paid in two ( one–year carryover system),   the
         differentiated appropriation is committed during the year and involves
         payments beyond the second year .
    Under the proposal for amendments to the Financial Regulation put forward by
    the Commission on 19 Ifey 1976 and approved by Parliament on 14 December 1976 .
 ---pagebreak--- Thus, we see that :
– the "non-differentiated appropriation" and the "differentiated
    appropriation" are identical on the commitment level ;
– on the other hand-, the differentiated appropriation requires a longer
    payment period because of the more protracted nature of the operations
    for which it is intended .
Properly speaking , there is thus no difference of nature "between
differentiated and non–differentiated appropriations , "but solely a difference
in the respective periods of payment .      This is a "basic factor , as it means that
the non-differentiated appropriation is identical with the appropriation for
commitment as regards the financial effect of the authorization ( the entering
into the budget of the appropriation ) decided upon by the budgetary authority ;
(b ) the importance of the timetable
The appropriations for commitment are necessarily accompanied in the budget
by a tiini-ir.'ble which indicates fhe expected pattern in time of the corresponding
appropriations for payment .      It snould be noted that :
– the basic decision of the budgetary authority is to make available an
    appropriation for commitment ;
– the making available of the appropriation for payment will flow from the
    amount adopted as an appropriation for commitment and the known or expected
    pattern of the payments ;
 ( c ) the significance of the appropriation for payment
 The appropriation for payment is an ineluctable corollary to the appropriation
 for commitment .     This does not mean of course that the budgetary authority
 should no longer pay any attention to the appropriations for payment ; on the
 contrary , the appropriations for payment – the total of which corresponds to the
 estimated amount of revenue in accordance with the principle of balancing the
 budget – given the figure      fixed for the appropriation for commitment .
 ---pagebreak---                                     - 11 -
 Before fixing the appropriation for commitment , the budgetary authority will
 therefore take account of the financial consequences involved^ i.e. the
 timetable for the appropriations for payment , but once the appropriation for
 commitment is authorized , the appropriation for payment becomes ineluctable .
 The appropriation for commitment is thus the cause and the appropriation for
 payment its effect .
 (d ) the pattern of growth in time of the appropriations for commitment and the
      appropriations for payment in the budget headings containing
      non-differentiated appropriations
 The establishment of the Budget for the 1977 financial year exhibits a number of
 striking differences between the appropriations for commitment and the
 appropriations for payment in comparison with the non-differentiated
 appropriations of the previous financial year ( the Social Fund may be
 mentioned by way of example ^).    This contrast is however exceptional and is
 caused by the changeover to a new system.    The appropriations for commitment
are entered into the budget at a somewhat earlier date than the corresponding
appropriations for payment ;    after a few years (probably two or three ) a certain
 degree of parallelism will set in between commitments and payments .     In the
 final analysis , in the process of executing the Budget , the amounts set aside
 for commitments will tend to equal those set aside for payments , although the
 profile for the amounts entered in the Budget will vary from heading to
 heading.
Annex 5 shows the amount of appropriations for commitment and appropriations
for payment since 1974 «    But this annex is not conclusive because of the
short period during which differentiated appropriations have featured in the
General Budget ;   in practice , 1977 is really the first year .
                                                     2
Annex 6, which records the research appropriations between 1958 and the present ,
was drawn up to provide a clearer picture of the development of the
appropriations for commitment and the appropriations for payment : the graph
contained in Annex 6 clearly shows the respective growth in these appropriations .
Ignoring the appropriation for commitment in the 1976 financial year - which , as
stated above , was a temporary phenomenon - there is a clear parallelism of the
curves of growth for the appropriations for commitment and those for payment ,
although they exhibit "highs" and " lows" which will 'ultimately balance each
other out .
 Appropriations for payment dropped from 441 million u.a . to 172.44 million u.a .
 while the budgetary authority agreed to an increase of 98 million u.a . in the
gappropriations for commitment .
 The former Euratom Research Budget ( 1958-1970 ) which became Chapter 33 of
 Section III in 1971 .
 ---pagebreak---                                       - 12 -
  ( e ) the scone of the " maximum rate"
 As briefly stated above , the " maximum rate " is not a static standard
 representing simply a method of indexation .     On the contrary , it has a
 dynamic nature , as it makes due allowance for the increase in GUP and national
 budgets .
 It may therefore be considered that the maximum rate is applied to the
 appropriations for commitment – which express the true amount entered into
 the budget - to the extent that entry into the budget represents authority
 to start an operation which has a fixed financial effect .
                                        χ
                                   X         X
Annex 7 sums up the main data concerning the development of non–compulsory
expenditure between 1974 and 1977 *
III . THE COMMISSION 'S PROPOSALS FOR THE PROCEDURE TO BE USED IN FUTURE
The Commission believes that the following conclusions may be drawn from the
facts listed above :
 1 . the "maximum rate " is intended to measure the increase in the appropriations
for commitment and the non-different iat ea appropriations in tne financial
 year n + 1 compared with the financial year n ;
2 . the assessment basis for the financial year n is to be calculated on the
basis of the appropriations for commitment and the differentiated
app ropri at i on s .
  However , the assessment basis for the 1977 financial year (transitional
financial year ) is to be fixed according to special procedure «
 ---pagebreak---                                        - 13 -
  3 . Parliament 1 s "margin for manoeuvre" must "be used for the appropriations for
  co .mitrncnt and. the non-differentiated appropriations , since these are the appropriations
  that express the actual financial consequences of the "budget decision ;
  4 . any comparison between the budget of financial year n and that of the financial
  year n + 1 for the purpose of applying the procedures laid down in Article 203 of
  the EEC Treaty ( calculation of the increase corresponding to the "maximum rate",
  determination of the "margin for manoeuvre", recourse to the "new rate") is "based
  on the appropriations for commitment and the non-differentiated appropriations ;
  5 . the determination of appropriations for payment , under headings containing
  differentiated appropriations , is carried out in the light particularly of the
  corresponding timetables for previous budgets and of objective and general
  criteria}
  6 . when "differentiated appropriations" are entered into the budget under a heading
  which previously contained "non-differentiated appropriations", the Commission
  provides the data necessary for objectively comparing financial year n and financial
. year n + 1 for any desired purposes ( calculation of the assessment basis , the rate
  of increase , the "margin for manoeuvre", etc .).
  IV . iTEU OPERATIONS AZTD COITCEPTATIOIT BETVIEEM THE HOLDERS OF THE BUDGET AUTHORITY
       1 . Launching new operations involving of non-compulsory expenditure
            During recent budget procedures , the opening of certain headings , decided
            by the Parliament exercising its powers in respect of non-compulsory
            expenditure , has sometimes given rise to problems with the Council , as
            the legislative authority . In turn , the Commission , responsible for
            implementing the budget , has experienced certain difficulties by reason
            of the divergent attitudes of the Parliament and the Council on the matter .
          ' The Commission therefore considers that it would be highly desirable to
            prevent such difficulties from arising in the future , in the interests: of
            greater harmony between the Institutions and of creating better conditions
            for implementing the budget .
            To that end the Commission considers that the three institutions involved
            should seek ways and means of resolving the problem of expressing new
            action projects in the Budget .
 ---pagebreak---                                     - 14 -
2 . Concertation procédure
    Finally , the concertation procedure Between the Council and the Parliament -
    restricted to two stages for the 1975 and 1376 "budgets , i.e. the first and
     second readings "by the Council - must "be accompanied ( as has happened for the
    first time in respect of the 1977 "budget ) by a third phase of concertation
    "between the Parliament and the Council at the second reading "by the . Parliament
    "before the final adoption .
    The Commission therefore suggests that the third phase of concertation , tried
    out for the 1977 "budget , should "become standard practice .
V. CONCLUSIONS
The Commission suggests that the guidelines set out in Item III above be given
consideration by the Institutions involved so that agreement may be reached .
In the Commission 's view , such agreement might be expressed in a joint declaration .
 ---pagebreak---                              INCREASE IN " NON-COMPULSORY EXPENDITURE" FROM 1974 TO 1975
                                 AND PARLIAMENT 1 S USE OP THE "MARGIN FOR MANOEUVRE"
                                                                                                                  in u.a .
1974 assessment "basis      Non-compulsorv expenditure 1975
                             Initial "budget                                              867 931 636
                             First supplementary "budget ( Regional Fund )                150   000  000
728 088 652                  Second supplementary "budget ( Research appropriations )        1  315  000    = + 296 817 984
                             Third supplementary budget ( Research appropriations )          3  160  000
                             Third supplementary "budget ( Aid to "bee-keepers )            2   500  000
                                                                                                                                     VJ1
                                                                                      1 024 906 636                                   I
     The "maximum rate" was 14.6%                                           728 088 652 x 14*6/0 = 106 300 943
     Parliament 's margin for manoeuvre was 7«3*f°i                         728 088 652 x 7.3$ = 53 150 471
 The increase in non-compulsory expenditure between 1 ;74 and 1975 may be broken down as follows :
 ( a)    increase accepted by the Council
 ( b ) Parliament 's initial use of the margin for manoeuvre
                                                                                       + 94 493 879 (= 12.97/. from a possiWe £c>tal
                                                                                       + 45 349 105 ( from a possible total §£' '    .
 ( c ) Third supplementary budget : research ( appropriations for payment )             .      A AH c nnr\
                                                                                                      000 .                     'ill /
                                       beekeepers*                                                    00075
                                                                                       + 1 / 6 817 y 3.4
   ( d ) Regional Fund ( appropriation for payment )                                        150 000 000
 *to be added to Porliaicnt' s "margin for manoeuvre"                                       296 817 92^
 ---pagebreak---                                           INCREASE - IN NON-COMPULSORY EXPENDITURE FROM 1975 TO 1 976
                                              AND PARLIAMENT 'S US3 0? THE "MARGIN FOR KANOEUVRT?'
                                                                                                                              m u.a .
A.    SUMMARY OF THE PROGRESS OF NCE DURING THE BUDGETARY PROCEDURE
                        Assessment "basis     Draft "budget    Draft amended   Draft amended    Pari i am ent ' s decision    First supplement arv
                                                                    oy
                                                                                     • 1 /
                               1975                            Parliament      Council 3/ 12      ( initial "budget )            budget   (Friuli )
    1 . ERDF ( nee )    1 024 906 636       1 316 039 503    1 637 496 367   1 406 618 0 66           1 418 811 367             1 478 811 367
                                             = + 28.41$       = + 59.77/°      = * 37.24/°              = + 38.43$                 = + 44.28$
    2.    ERDF ( ce )     874 906 636       1 016 039 503    1 187 496 367   1 106 618 066            1 118 811 367             1 178 811 367
                                             « + 16.1 :         + 35.73%       - + 26 .                 *» + 27 • 88$              = + 34.73$
B.  REMINDER OF PARLIAMENT 'S "MARGIN FOR MANOEUVRE"
    1 . RF ( nee ) = 1 024 906 636 ( assessment basis ): "margin for manoeuvre" = 15.3$ = 7*65$ = 78 405 358
                                                                                         2
    2 . RF ( ce ) =    874 906 636 ( assessment basis ):     "margin for manoeuvre" = 1 5»3$ = 7*65$ = 66 930 358
                                                                                         2
C.   PARLIAMENT 'S USE OF THE "MARGIN FOR MANOEUVRE"
     1.   On the first reading , Parliament increased the Council 's draft ( see A 1 , above ) by :              + 321 5^5 301
     2.   Of the 321 585 301 u.a., the Council accepted , at the second reading on 3 December , only : + 90 707 000
     3.   On 18 December Parliament increased this 90 707 000 u.a . to :                                         + 102 900 301
NB . The bracket for the "margin for manoeuvre" was<gg ^ or an average of around 72.6
       Parliament increased expenditure by 102.9 million u.a .: however , this appropriation includes 30 million u.a. for
       research for which the Council was responsible . Thus , 102.9 - 30 = 72.9B B B
       Parliament thus used all its "margin for manoeuvre" (= bracket average ).
 ---pagebreak---                                    Non-compulsory expenditure entered into the 1977 "budget                                  in u.a .
Non-differentiated appropriations -f                                         Non-differentiated appropriations +
appropriations for commitment                                                appropriations
                                                                                 ■ fr TiBV^-n - i-V : i
                                                                                                        for payment
                                                                                                                4i,ii - ■-
 I*  Non-differentiated appropri ations                                      I.    Non-differentiated appropriations
     TITLE 1 (Expenditure relating to persons         247 877 100                   TITLE 1                                247 877 100
               working with the institution)
     TITLE 2 (Buildings , equipment and miscellaneous
                administrative expenditure )          116 943 840                    TITLE 2                               116 943 840
     TITLE 3 (Operating expenditure )                  30 842 500                    TITLE 3                                30 842 500
     TITLE 5 ( Social and Regional funds )              5 000 000
                                                          000 000                    TITLE 5                                 5 000 000
     TITLE 9 ( Expenditure on cooperation with         58 102 200                    TITLE 9                                58 102 200
               the developing countries and
               nonr-member countries )
     TITLE 10 (Other expenditure )                      4 000 000                    TITLE 10                                 4 000 .000
     Other Institutions                               148 099 329                    Other Institutions                    148 099 329
                                                      610 864 969                                                          610 864 969
II.s Differentiated appropriations (= appropri ations
     for commitment )
     TITLE 3                                                                         TITLE 3
      306 (Action to combat poverty)                    3 500 000                       306                                   1 170 000^
     3200 ( Community technological development        50 000 000                    3200                                   23 000 000
             projects )
 ---pagebreak---      3201  ( Joint projects in prospecting             25 000 000 3201                9 000 000
             for hydrocarbons )
      321  ( Prospection for uranium deposits )         5 000 000  321                2 000 000
       33  (Research and investment activities )     213 260 197    33              183 337 388
     3620  ( Plan for three-year project )              2 650 000 3620                1 250 000
     3621  (Activities supplementary to the three-        65O 000 3621                  500 000
             year project )
    3701   ( Second programme in the data^-processing 9 000 000   3701                2 835 800
             sector)
    TITLE 5 :                                                     TITLE 5 :
       Social Fund                                   61 7 100 000   Social Fund     172 440 000"^
       Régional Fund                                 500 000 000    Régional Fund   400 000 000
                                                   1 426 160 197                    795 533 188
                                                   2 037 025 166                  1 406 398 157
Amount corresponding to re-entries .
Including 8 million u*a« corresponding to re–entries .
 ---pagebreak---                                                          - 18 -                                                        ANK EX 4
                               IHCREASE II 'HOH-COMPULSORY EXPENDITURE " FROM 1976 TO 1977
                                       AM) THE EP 'S QBE OF THE "MABOIH FOR MANOEUVRE "
                                                             in u.a .
I.      CQMPARISOH 1976-77                                                                                B"8 MARQIN POR MANOEUVRE
                                                                                                 (maximum rate for 1977 - 17.3% )
        Aaaaaaaant baaia 1976          1977 Budget
                                      FORMAL APPROACH   1 406 398 1 57 - - 7 2 413 210
    1 . ERDF (ne») 1 478 811 367^                                             (- 4.90*)
                                                                                      90*)       17.351 I 2 - 8.65* * 1 478 811 367
                                      REAL APPROACH     1 933 362 357' - + 454 550   O 990                              - 127 917 183
                                                                             (+ 30.174*)
                                      FORMAL APPROACH   1 066 398 157 - - 172 413 210
                                   <T                                            14.6354
                                                                             (- 14  . 63*))      17 . 3* ι 2 - 8.65* χ 1 17β 611 367
                                      REAL APPROACH     1 533 362 357 - + 354 550 990                                   - 101 967 183
                                                                             (+ 30.08$ ) ,
II .    IHCREASE 1976-77
                                                              Formai approaoh                       Real approaoh
At first reading Parliament increased the
Oounoll draft byi                                          +_ 218 488 131
                                                                              * comparad with                        * oonparad with
                                                                              1976 aaaaaamant                         1976 asaaasMnt
                                                                              basis                                   bas la
A* Draft budget adopted by the Counoil at first
      reading ( taking aooount of the first letter
      of amendments     + 30 million u.a . to
      Artiole 930 )                                         1 337 732 086         - 9.54*           1 787 678 086        ♦ 20.89*
B. Amendments aooepted.by the Council on the
     second reading ( 23.11 )
      - Commission budget                                 +    10 092 331                         +     52 796 331
      - Parliament budget                                 +    10 487 940                         +     10 487 940
                                            TOTAL B       +    20 580 271         + 1.39*         +     63 284 271       + 4 . 2Θ*
C. Amendments aooaptad by tha EP at aaoond
      raading ( 16.12 )                                   +    48 085 800         ♦ 3.25*         +     82 400 000       +   5.57*
                                           A ♦ B + C        1 406 398 157      - - 4.90*            1 933 362 357      • + 30.74*
III . PARLIAMENT 'S USE OF THE "MARGIN FOR MANOEUVRE"
Parliaments "margin for manoeuvre " was within the range of 102.0-127.9 , corresponding to
an arithmetic average of some 115 million u.a.          In view of the problems caused by the
changeover between 1976 and 1977 and the difficulties of comparison , the Council
oonBidered at the seoond reading on 23 November 1976 that Parliaments "margin Tor manoeuvre " should amount to some
120 million u.a. plus expenditure arising from amendments to new operations ( estimated at 7*5 Billion u.a .).                Hie
total would thus be some 128 million u.a ., it being understood that this amount would be applied to non-differentiated
appropriations and appropriations for oommitment .
When the budget was finally adopted by Parliament on 16 Deoember 1976 , and following a final meeting of oonoertatlon
between the Counoil and a Parliament delegation on 14 December 1976 , Parliament finally made use of 140 million u . a..
Taking aooount of the objeotive reasoning based on the "real approaoh ", Parliament thusi
( a) used all its "margin for manoeuvre " (pragmatioally fixed at 128 million u.a .)
(b )    exoeeded by 12 million u.a. its "margin for manoeuvre " which means in praotioe - even if this has not been
        formally oonfirmed - that the 1977 Budget was finally adopted in accordance with the provisions of the fifth
        sub-paragraph of Article 203(8 ) ( shared decision-making ).
  nils approaoh reflects the formal oomparison between the appropriations for payment in 1976 and those for 1977 •*
  set out in the 1976 and 1977 Budgets .
 This approach is of a formal nature as the appropriations for 1976 oarmot be compared objectively , as they are , with
  those for 1977 since the 1977 Budget makes greater use of the distinction between appropriations for commitment and
  appropriations for payment than aid the 1976 Budget .               As a result , the appropriations for psyment in 1977 cannot
 be oompared directly with those for 1976 .
2
  This approaoh permits comparison between the appropriations for 1977 end those for 1976 .              This approaoh has been made
  on the following basis !
  ( a)   the appropriations for commitment in 1977 *re considered as non-differentiated appropriations !
  (b)    the appropriations for Chapters 33 and 55 oorrespnd to the formal appropriations for payment }
  ( o ) the past system has been reconstituted for the Social Fluids
         - appropriations for oommitment - appropriations for the finanoial year + authorisations for oommltment
         - appropriations for payment « appropriations for the financial year.
 ---pagebreak---                              DEVELOPMENT ON THE ASSESSMENT BASIS SINCE 1974                         m u.a .
                     Assessment of appropriations for commitment             Assessment of appropriations for payment
                      ( non-differentiated appropriations +                  (non-differentiated appropriations +
                        appropriations for commitment )                       appropriations for payment )
1974                                881 536 8951                                           728 088 652
1975                              1 346 490 1942                                         1 024 906 636
1976                              1 920 862 1113                                         1 478 811 367
1977                              2 037 025 1664                                         1 406 398 157
  The appropriations for commitment to Chapter 33 ( research and investment ) are 77 556 162 u.a. and the authorizations
  for commitment for Chapters 50 and 51 (Social Fund ) are 160 000 000 u.a.
2
  The appropriations for commitment to Chapter 33 are 72 814 356 u.a. and to the Regional Fund 300 million u.a.;
  the authorizations for commitment to the Social Fund are 200 million u.a .
3The appropriations for commitment to Chapter 33 are 299 233 270 u.a. and to the Regional Fund 500 million u.a.;
  the authorizations for commitment to the Social Fund are 225 million u.a.
  While the figures for I974 and.1975 correspond to whole appropriation for the financial year plus the authorizations
  for commitment (it is not possible to free the appropriations for the financial year from the proportion charged with
  the commitments undertaken in previous financial years ) the final clearance was conducted for 1976 .
4rm           •      «
  The appropriations for commitment to Chapter 33 are 213 260 197 u.a., to the Social Fund 617 100 000 u.a . and to the
  Regional Fund 500 000 000 u.a .
 ---pagebreak---                                  - 20 -                            AÏJNEX 6 / 1
                         RESEARCH AND INVESTMENT BUDGET
                                                    m u.a .
                                           ï                     s
                                   Appropriations      Appropriations
                                   for commitment       for payment
 1953                                5 0C0 000            3 000,003
 1959                               55 000 000           23 500 COO
 i960                               50 330 000           34 730 000
 1961                               85 050 000           52 850 eoo
 1962                          '71 443 200               56 731 2CO
 1963                               95 836 000           75 375 C00
 1964                               94 720 000           85000 COO
 1965                               83,334,000           87-500 CO
 i960                               90 587 000          115 302 eoo
 1967                               93 118.000          117 441 000
 1963                               42 675 000           77 944 000
 1969                             : 54-317 000           53 127-500
 1970                             . 55 379 300           63 642 4C3
 1971                               95 864 000           62 5S7 <; oo
 1972                               62 539 416           72-9S2./ 93
 1973                               73-260 524           74.635 830
 1974                               77 556 162           84 107 919
 1975                               80 679 223          101 . 229 993
 1976                              299 - 233 270        135 132 526
 1977                              213 260 197          133 337 323
* appropriations entered in the "budgets
 ---pagebreak---                                                                                 - 21 -                                          ANNEX 6/ 2
million
                                                 Curve of growth of appropriations for commitment and appropriations
                                                 for payment in Chapter 33 (expenditure on research             investment)
                                                                               from 1958 to 1977
     « i ,,-
    *
     3
    -
    15*
    *1.
                                                                                                                          1
    1*1
       V                                                                                         •
    Μ                                                                                                                    Γ
                                                                                                                        1
     i-; (                                                                                             I              '
       'ï                                                                                                           /
                                                                                                                  ι
                                                                                                                 /
                                                                                                      II     II
                                                                                                               I
                                                                                                           f
                                                                                                          t
   h;                                                              *                                     /
    *
                                                          .       \                                   /
                                                         '         \                                 ν
           r                                           !        .4 *                               /
                                        /r~^                   /\ \V         ■      a
    ·.                         Κ       /       ν/ \\\/     /
                                                                                    Λ\
                                                                                    A
                             /
                              / V/ ν
                                                                     \ \\         /
                            /        /                                    N            v
    "                                                                 \
    h                       /
                   ■s
                I      s
   •v / ''     / /   •
    ■IL   ''(!>< t't     l~     l'
                                    _
                                    «    U    lï   l'«     '<■   17    II   l'  h    H   V   11                           " 7'.
            -                 & appropri aticna for coDBitzasrit
                          – .. approprìaticns fcr pc^y^ent
 ---pagebreak---                                                               - 22 -
                                                                                                                     AJUIEX 7    ,
                                         SUMHAHY OF BASIC DATA COJCEHffTNG HOI-COMPULSOHT
                                       EXPEHDITUHE IM THE FIKABCIAL YEARS 197 ->-197 6-1 Q77
                                                                                                                            1B a . a.
                              ASSESSMENT                                                            IMCKEASI              MARO IV OP
                                                  MAXIMUM
                      TEAK    FOR PREVIOUS                         PROGRESS I OM                                           MANOEUVRE USED
                                                    RATE
                              FIKAHCIAL ÏKAR                                                ABSOLWS            II i,       BT PARLIAMENT
                                                                                              3-1              3 1 1
                                        1               2                 3                       4                5           ' ¿
                      1975        728 088 652        14.65t        1 024 906 636           ♦ 296 817 984     + 40.77        47 849 IOS1
                      1976      1 024 906 636        I5.3*         1 478 811 367           + 453 904 731     + 44.28        72 900 0002
                      1977      1 478 811 367        17.35t        1 406 398 157           -  72 413 210     -   4.90
                                                                ( formal approach )
                                                                   1 933 362 357           + 454 550 990     +■ 30.74      128 000 000*
                                                                ( real approach )
     Margin for manoeuvre for the 1975 Budget
(B) Determination of the amount
       . ΧιΣΡ . 7.Μ( χ 72θ 088 652 - 53 150 471
(b ) Utilliation
       - 45 349 105 (•* adoption of ordinary budget )
         + 2 500 000 (for third aupplemantaiy budget for 1975 - bee-keepera appropriation)
       . 47 849 105
2. Margin for manoeuvre for tha 1976 Budget
( a) Determination of tha amount
       . llur . 7.6# * 1 024 906 636 (ERDP - noa ) - 78 405 348
        . i2i^ . 7.6596 * 874 906 636 (EHDF - oa ) - 66 930 358
 M Utilisation! the 'taargin for manoeuvre" was within the rang* of 78.4 and 66.9 Billion u.a.,
                          or en average of around 7 2*6 million u.a*
                          102.9 ( increase of noa by Parliament )
                         _ jo.O (amount for raaaaroh undertaken by tha Counoil )
                         - 72-9
 3 * Margin for manoeuvra for tha 1977 Budget
 ( a) Détermination of the amount
                                   ÌL·# . 8.655t *    Χ   478 811 367 (ERDF - nee ) - 127 917 193
                                      2
         * formai approaohi
                                    i7.35t . 8.695t χ 1   178 811 367 (ERDF - oe )        . 101 967 183
                                       2
                                   ÌLJ* . 8.655t χ    1 920 662 111     (ERDF - noe ) . 166 154 573
                                       2
         - real approach :
                                    IL·# . 8.6# χ      1 420 862 111    (ERDF - oe )      - 122 904 573
                                       y
  (b )   Utilization
         128 Billion u.a. ( aum fixed. pragmatically - sea below).
                                                                     – ~r Jn:> 0-127.9 . corresponding to an arithmetic average of
  Parliament 's "margin for manoauvra" waa within the                                    v„ between 1976 and 1977 and the difficultiee
  eon# 115 Billion u.a. In view of tha problems oaused by the                        ®*venber w6 that Parliaments "margin for
  of comparison , the Counoil oonsidered at the aeoond re ng                          arising from amendmenta to new operatione
  manoeuvre" should amount to aome 120 million u.a. Pl"B                             „ million u.a., it being understood that this
   (estimated
  amount    wouldathe7-5applied
                          milliontou.a.).     The total would
                                     non-differentiated     appropriations and appropriations
                                                                                    approp           for oommitmant.
                                                                    ., „      v.. I07fi and following a final meeting of oonoertation
  When the budget was finally adopted by Parliament on 16                            | parliMBant finally made use of 140 million u . a. I
  between the Counoil and a Parliament delegation on 14 "                      «noroach". Parliament thuB «
   taking aooount of the objeotive reasoning based on tha reai aw                                   ^
   U)     used all its "margin for manoeuvre" (pragmatically ^•^^^"^practioe
   lb ) exoeeded br 12 million u.a. its "margin for m
                                                                                                          - even if this has not bem
                                                                            .rtnritml ' " «r.nordanoe with tfrt WBViai ana of
          formally confirmed - «--♦            "7*                final^0Bi«*^
          sub-paragraph of Artiole 20^(8 ) ( shared dqc ?