EU BUDGET 'GROANING UNDER WEIGHT'
Budget-setting in Brussels must be radically overhauled to stop "significant" cash flow problems that have led to a £1 billion payments backlog to the UK, the Treasury has been told.
Peers have warned that the method for setting the long-term spending plans is "groaning under the weight of seemingly intractable" flaws.
They found the method used to prioritise payments for certain types of EU programmes, such as youth employment schemes, is creating undue pressure further down the line.
Emergency funds, known as the contingency margin, are being used to make ends meet in the meantime, the Lords Economic and Financial Affairs EU Sub-Committee said.
It also discovered a "huge" number of outstanding payments to member states, with £18bn due in cohesion policy payments, including the £1bn for the UK.
The flawed system means the EU is having to ask for an extra £3.7bn for the 2014 budget, it added.
Last year Prime Minister David Cameron was involved in negotiations for the EU multi-year budget, which runs up to 2020, that saw its first reduction.
Committee chairman Lord Harrison said: "The EU budgetary process is groaning under the weight of seemingly intractable problems.
"In our letter to the Treasury we ask why the scale of the backlog of payments was not anticipated, and ask whether this failure is an indictment of not only the commission, but also the council and the European Parliament.
"The frontloading of programmes, while important for promoting growth and jobs, risks placing an intolerable pressure on the overall seven year budget for 2014-2020.
"Yet the council failed to foresee that the commission would need to resort to the contingency margin.
"The UK is right to press the commission on avenues for reallocation within the existing budget.
"But the Government's suggestions for where such savings can be made are woefully lacking in detail.
"Taking all these issues together we believe that the budgetary process now needs radical modernisation. We have asked the Government to write to us as a matter of urgency setting out how they believe the system can be reformed."
