Mr. Kyle O'Sullivan:

Yes. The graph has an interesting indicator. In many of the negotiations, discussion varies between net contributors and net recipients. This is in some senses an artificial discussion but it is also an important one of which people are aware. The graph features a line, above which are the countries that are net recipients and below which are the countries that are net contributors. Ireland is a net recipient and intends to remain so. The other axis of the graph shows gross national income per capita. As members will note, Ireland is among the net recipients with the highest GNI per capita. This is an advantageous position for us nationally and one we hope to retain. I point this out because the issue frequently arises in negotiations. That is our national net position.

As holders of the Council Presidency we have a number of responsibilities and other priorities to address and we have to support President van Rompuy in securing agreement. We then have to take it to the European Council, put it into draft legislation, move it through the Council and obtain the European Parliament's assent. As a result of the Presidency we have a particular role at the European Parliament. One of our responsibilities next week at the European Council is to ensure that what the European Council decides is something on which the European Parliament would be able to negotiate and finalise. That is what I wanted to say on our national position and our national priorities.

In terms of the position of the Commission, the European Parliament and other member states, in summary, the Commission made its proposal in 2011 when it proposed a larger figure and it is still attached to its original proposal. However, it is aware that negotiations are moving in another direction. The Commission is concerned that the new elements in the budget are protected and particularly the new allocation towards research, innovation and SMEs. It is concerned also at the timetable and getting all the agreements reached as early as possible because the Commission has a role in implementing the budget. The European Parliament would have sought a larger budget. It was also concerned that its rights as co-legislator and its responsibilities in co-decision are not affected by an MFF which puts a different legislative procedure in front of it. It is seeking consultation, engagement and more flexibility.

In summary, the other two main groups involved tend to be divided into the nine member states which are sometimes referred to as the 1% club, a group of net contributors who have been pushing since 2011 for a lower budget. Essentially, they want it to be 1% of EU GNI or less. Those countries are the UK, Germany, France, the Netherlands, Finland, Denmark, Austria, Italy and Sweden. They contribute more to the budget than they get out of it and are seeking to reduce it. Some are more extreme than other but the UK, with German support, is pushing for an overall amount in the region of €940 billion. That is the amount they are moving towards and they will be working towards that amount again next year.

On the other side is a group of member states, mostly the newer members and those from southern and eastern Europe, who are particular supporters of cohesion policy. These are member states which have been pressing hard to ensure the cohesion side of the budget is protected and they have obviously resisted any attempt to reduce the overall size of the budget. Within that group, there are those who have argued against the 2.5% cap on cohesion and there are other specific interests. However, those are the two main groups.

Some of the member states which are not strong supporters of the CAP, including the UK, the Netherlands and Sweden, argue that rather than increase the overall size of the MFF, payments to CAP should be cut so as to redirect funding towards areas where the EU adds value in research and development and innovation. Other member states, France and Germany, while seeking a smaller overall amount, have not taken that view and are more supportive of the CAP and in some cases cohesion. That is the geometry we are looking at as we go into next week's meeting. As it is a negotiation, we will see how it goes. The UK, as the committee will be aware, has been vehement and public about retaining its rebate arrangements, as have the Netherlands, Sweden and Austria but to lesser extent. That is the position of the others involved in the negotiations.

We expect, and it is likely, there will be agreement at next week's European Council. Agreement is not certain but we expect it. Once agreement is reached revised drafts of the regulation with the table will be tabled for adoption by the Council. Meanwhile, the Irish Presidency will have to engage with the Parliament to seek to ensure that these texts are likely to be acceptable. After Council adoption, formally as a legislative item, it has to go to a vote in the European Parliament and we would hope to have that done by June.

The sectoral legislation on CAP, cohesion, overseas development and other areas - 60 plus items - has been moving through the Council and we hope to have those completed by June. What happens if there is no agreement? The treaty is clear that a one twelfth rule of 2013 will apply from January next year; funding would continue on that basis. What that would do in terms of proper planning and proper use of EU taxpayers funding and in terms of the EU reputation is another matter but the fallback is that if there is no agreement we continue on a case by case basis, and the one twelfth rule would apply.