EU leaders decided in 2005 that the EU's budget needs fundamental reform. The public consultation launched by the Commission ('the Budget Review') in September 2007 is the first step in the reform process.

The UK believes that reform should deliver a more effective and efficient EU Budget. We believe that Structural and Cohesion Funds (SCF) should be focused primarily on removing differences in levels of economic development between member states. We would also like to see a far-reaching reform of the Common Agricultural Policy (CAP). The EU needs a budget designed to help Europe face the challenges of globalisation, and one designed to promote research and innovation and address climate change.

The United Kingdom will play a full part in the debate on the EU Budget, and we hope Romania will too. Three principles will guide the UK Government’s approach:

• the EU should only act where there are clear additional benefits from collective efforts or ‘EU added value’
• where EU-level action is appropriate, it should be proportionate and flexible. We must recognize the limits to EU budgetary intervention
• there must be sound financial management, including the highest standards of financial control and independent audit.

Following the principles outlined above, the UK believes the EU will take a significant step in the right direction - the direction of a modern, fit-for-purpose EU Budget.