New EU budget rules in place by 1 May 

The new Financial Regulation (and its Implementing Rules, adopted on 28 March 2007 by the Commission), will accompany a new generation of EU programmes worth €975 billion over a seven-year period. 

Practical improvements for both grants and public contracts are cited as being most important for small- and medium-sized enterprises, schools, universities, researchers, development agencies and municipalities:

The new Regulation will mean that:

• Grants of up to €25,000 will require less documentation;
• work done by staff may replace cash co-financing for grants;
• the financial guarantees required for grants below €60,000 prior to initial payment may be waived, after having assessed the financial risk;
• purchases of up to €60,000 using grant money may be made with the minimum of rules to be respected, with only the principle of sound financial management and the absence of conflict of interests required;
• there will be a higher threshold (€60,000 instead of €50,000) for the awarding of public contracts with simplified purchasing procedures;
• organisations competing for low-value EU contracts can make a simple declaration on their honour for access to a higher threshold, replacing complex evidence showing no previous malpractice convictions, and;
• simplifications for award of public contracts in the field of external aid will also have much higher thresholds (up to €5,000,000).

The Commission aims to gain more flexibility in budget management to react in end-of-year humanitarian or crisis-management situations by being allowed to use unspent funds without asking prior consent of the Council and the Parliament.

The revised Financial Regulation was finally agreed by the European Parliament and Member States on 29 November 2006 and adopted unanimously by the Council on 13 December last year. Now that the Implementing Rules have been adopted, translating the revised Financial Regulation into practice, the new rules will apply as of 1 May 2007.

Meanwhile, MEPs also backed a non-binding report on 29 March by French centre-right MEP Alain Lamassoure, calling for an end to the British rebate and similar arrangements by 2014, stressing that all member states should commit one per cent of their gross national income to each budgetary period without exception. 

Budget and Financial Programming Commissioner Dalia Grybauskaitė said: "Simpler, more practical solutions in the modernised financial rules give the opportunity to better use EU funds. Greater transparency and accountability will increase the effectiveness of spending and protect EU taxpayers' interest". 

Reacting to Alain Lamassoure's non-binding report, French Green MEP Gérard Onesta added: "Citizens have a right to know and understand what they pay towards the European budget. Member states should no longer be allowed to hide behind the arcane system of 'national contributions', not even for a transitional phase...Member states should agree on a clear taxation instrument, which attributes part of one or more taxes to the European budget, to help ensure transparency in how the EU is financed."

And Conservative MEP Richard Ashworth added: "We should ensure the EU spends less of our money, but spends it more effectively. It is right that national governments set both the priorities of the EU, and allocate the funding that will deliver those priorities. A stand-alone EU would be master of the national governments, rather than the servant of them."