Ms Niamh Campbell:

I ask the members to bear with me in regard to the numbers and figures. The Commission presented its proposal in June 2011, which was updated to take account of Croatia's accession in July 2012. The proposal has elements inside the multi-annual financial framework, MFF and elements outside the MFF, which are being moved in and out. There are many moving parts. If some elements cause confusion, please ask me about it and I hope I will be able to allay the confusion.

The treaty base for the multi-annual financial framework, MFF, is Article 312 of the Lisbon treaty, which defines the MFF as the multi-annual financial framework that sets out the ceilings for budgetary commitments and payments under a limited number of headings. There are six headings in the current proposal. The treaty also provides that the MFF regulation is adopted by unanimity in the Council of Ministers and with the consent of the European Parliament. Every year the annual budget is negotiated between the Council and the European Parliament within the multi-annual framework.

The regulation we are discussing today is the overarching regulation. The MFF as a whole consists of about 75 sectoral regulations covering CAP, cohesion, research, education. Once the overarching regulation is agreed work will be able to advance on the various sectoral components. I understand these have been discussed by the Oireachtas committees dealing with the sectoral areas. There are a number of proposals related to the Revenue side and how the EU budget is funded but we are not discussing that specifically today, but again we are happy to take questions, if the committee members wish to have information on it.

The current MFF was for a seven year period that expires at the end of 2013. The yellow slide deals with the Commission proposal, which is probably the second in the pack, and is the latest version of the proposal dating from July 2012.

In the bottom corner of the right hand side, one will see the figure €1,033 billion, which is the total value of the multi-annual financial framework, MFF proposal in 2011 prices. It represents 1.08% of EU GNI, - which is basically EU GNP minus EU budget pluses and minuses. Not to cause too much confusion, there are a number of elements outside the MFF, that are added on to the figure of €1,033 billion. This can be seen in the green slide, the provision for elements such as the emergency aid reserve, the EU globalisation fund and the solidarity fund totals €58 billion.

These elements are outside the multi-annual financial framework, MFF, because they are demand-led contingency funding instruments which are allocated towards areas in which funding is unpredictable, for instance, large pan-European projects such as ITER and GMES. When these elements are added, the total volume in the Commission proposal is €1,091 billion, which is equivalent to 1.14% of the European Union's gross national income. These figures are important as the main focus of the European Council negotiations is what will be the size of the MFF. Mr. O'Sullivan will explain the different views in the European Council about its size.

The Commission proposal was for a multi-annual financial framework of €1,033 billion, with a total budget of €1,091 billion. As regards the breakdown, to return to the table in yellow, the proposal is broken down into six different headings, the largest of which is Smart and Inclusive Growth, for which the proposed figure is €494 billion. This heading is divided into two areas, the largest of which is Economic, Social and Territorial Cohesion, for which the figure proposed is €379 billion. This heading also includes smart growth elements, including the research instrument, Horizon 2020, the Connecting Europe facility, for which the proposed allocation is €40 billion, and education. We have included a slide which gives the breakdown of all the different elements of this heading in case members would like greater detail.

The second largest heading is essentially expenditure on the Common Agricultural Policy, for which the proposed figure is €386 billion. Without speaking in too much detail, Cohesion Funding and the CAP combined account for 73% of the total spending under the multi-annual financial framework. They are, therefore, the big spending areas of the MFF. The document I circulated includes a paragraph setting out areas of expenditure outside the MFF, which I will not list as I have spoken about these areas. However, we can answer any questions members may have on the issue.

The table is the annex to article 1 of the multi-annual financial framework regulation and while the latter is obviously the focus of this discussion, the table is the most important part of the regulation. Apart from the table, the MFF regulation contains a number of largely technical provisions which relate to the rules for agreeing the annual budget within the MFF ceiling, arrangements for annual inflation adjustments, provision for unforeseen circumstances, GNI capping for Cohesion Funding - this is not applicable to Ireland - and a number of other matters on which we can elaborate if members so wish.

What is the current position following the Commission proposal? The political discussions on the multi-annual financial framework have been ongoing for the past 18 months under the Polish, Danish and Cypriot Presidencies. These discussions are not about the regulation but about the financing table and overall principles relating to the operation of the expenditure and revenue elements. Since November, the negotiations have moved up to European Council level and are being chaired by President Van Rompuy. The first substantial discussion by the European Council, which took place at the end of November last, was based on a compromise proposal from President Van Rompuy which involved a reduction of €80 billion in the figure in the table. This €80 billion cut was spread across the different headings and I can provide more details if members so wish. While agreement was not reached at the discussion, the Council concluded that there was "a sufficient degree of potential convergence to make an agreement possible in the beginning of next year". On that basis, the European Council has been scheduled to meet on Thursday of next week to continue with discussions with a view to reaching agreement. My colleague, Mr. O'Sullivan, will continue the presentation.