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February 2011

 File n°42 

The Parliamentary Examination of Laws on the Financing of Social Security

 

 

 

 

 

 

    Key Points

    The laws on the financing of social security led the Government, every year for almost fifteen years, to present its policy on social security to Parliament. This presentation has allowed Parliament to debate these policies. Thus Parliament makes a decision on the revenue forecast and the expenditure targets for social security, which in fact deals with financial sums greater than those of the state budget. The procedures for the examination of financing bills by the National Assembly are different from those concerning ordinary bills. They are laid down in constitutional provisions which are supplemented by an institutional act.

See also files 30, 38, 39, 49 and 51

 

    I. – THE LAWS ON THE FINANCING OF SOCIAL SECURITY: PARTICULARITY, CONTENT AND PRESENTATION

    1. – The definition of laws on the financing of social security

    Article 34 of the Constitution, as modified by the Constitutional Act of February 22, 1996, provides that laws on the financing of social security “shall lay down the general conditions for the financial balance thereof, and taking into account forecasted revenue, shall determine expenditure targets in the conditions and with the reservations provided for by an Institutional Act”.

    There are two categories of financing laws: the financing law of the year and the “corrected” financing laws. To this day, no “corrected” financing bill has been tabled.

    The specific rules which apply to them are laid down by the Institutional Act, n°96-646 of July 22, 1996, modified by the Institutional Act, n°2005-881 of August 2, 2005. These institutional provisions are codified in articles L.O. 111-3 to L.O. 111-10-2 of the Social Security Code.

    The law on the financing of social security is a particular category of law: it sets the operating balances for the basic, obligatory, social security schemes and for the bodies which contribute to their financing. Furthermore, it can authorize certain of these bodies to take out loans and can include a certain number of other measures of a financial nature or which improve the monitoring of Parliament over the finances of social security.

    The scope of the laws on the financing of social security covers all the basic, obligatory, social security schemes (and thus excludes complementary schemes and unemployment insurance) as well as the bodies contributing to their financing i.e. the Old Age Solidarity Fund. It also includes the Reserve Retirement Fund and the Social Welfare Debt Redemption Fund, as well as the National Solidarity Fund for Autonomy.

    In accordance with the Institutional Act of August 2, 2005, the laws on the financing of social security have exclusive jurisdiction in the case of the total or partial allocation to any other legal entity of the exclusive revenue of the basic schemes or of the bodies which contribute to their financing. Similarly, only a law on the financing of social security can authorize the non-compensation by the State of reduction measures in social contributions which it has decided.

    2. – The content of the laws on the financing of social security

    The Institutional Act of August 2, 2005, introduced balance sheets which are one of the specificities of the laws on the financing of social security. For each financial year examined, these balance sheets display the financial situation of each branch of the social security system, of the general scheme, of all the basic, obligatory schemes and of all the bodies contributing to their financing.

    The law on the financing of social security for the year Y has four parts.

    The first part concerns the last full financial year (Y-2) and is a ‘settlement’ act.

    The second part deals with provisions concerning the current year (Y-1). This enables the Government to propose to Parliament to pass corrections for the current year. This part is divided into two sub-sections. The first relates to revenue and the general balance and the second to expenditure.

    The third part sets down the forecast revenue and the general balance for the basic, obligatory, social security schemes and for the bodies which contribute to their financing for the year Y. In addition to the balance sheets concerning the year Y (revenue, expenditure and balance), it also sets the ceiling on the cash advances which the schemes may request.

    The fourth part sets the expenditure targets for the different branches of the social security system (health, work accidents, work-related illnesses, old age and family) which may be divided into sub-targets. This part includes the National Expenditure Target for Health Insurance (ONDAM) and its sub-targets.

    Article LO 111-3 of the Social Security Code provides that the accounts of the social security schemes and bodies must be true and fair and faithfully represent their assets and their financial situation.

    3. – Documents annexed to the bills on the financing of social security

    The bill on the financing of social security has around ten documents annexed. Amongst them three are particularly interesting:

    - One points out the financial impact of new measures proposed;

    - Another analyzes the situation concerning the reductions in resources for schemes decided by the State and the amount of the corresponding compensation which the State pays into the social security system;

    - A third is part of a more qualitative assessment approach and presents social security policy “programmes of quality and efficiency” (PQE) in each of the branches;

    - The law on the financing of social security includes, in addition, the approval of two annexed reports. The first describes the measures anticipated for the allocation of surpluses or for the covering of deficits which may be noticed at the time of the passing of the part concerning the last full financial year. The second sets out the forecast development of the social finances of the social security system over the following four years;

    - Furthermore, provisions concerning the optional area of social security financing laws are subject, like those of all Government bills, to an impact study which is tabled, at the same time as the bill, by the Government before the first assembly to which the bill is referred. In the case of social security financing bills, the components which should be included in the impact studies are transmitted in the form of a document annexed to the bills. In addition, the usual monitoring by the Conference of Presidents of the respect of the rules concerning impact studies is not applied to social security financing bills.

    II. – A SPECIFIC PARLIAMENTARY PROCEDURE

    Since the Institutional Act of August 2, 2005, Parliament has taken part in the preparation of the bill on the financing of social security through a debate in the spring on the direction to be taken by the finances of the social security system. This debate takes place at the same time as that on the State budget and is held on the basis of a Government report.

    As with the finance acts, the Government has a monopoly on the presentation of the laws on the financing of social security which can thus only be the result of the passing of a Government bill. This is in accordance with article 47-1 of the Constitution which sets down the main references for the procedure to be applied in the examination by Parliament of the bills on the financing of social security.

    1. – A Discussion within constitutional time limits

    Article 39 of the Constitution states that bills on the financing of social security, just like finance bills, must be firstly submitted to the National Assembly. The bill on the financing of social security for the year, must be tabled, at the latest by October 15, or if this day is a holiday, then the first working day after.

    Just like article 47 in the case of finance bills, article 47-1 of the Constitution sets strict time limits for the examination of bills on the financing of social security: if the National Assembly has not reached a decision on first reading within twenty days following the tabling of the bill, the Government refers the bill to the Senate. The later must rule within fifteen days. If Parliament fails to reach a decision within fifty days in all, the provisions of the bill may be implemented by ordinance.

    The institutional law of August 2, 2005 makes the accelerated procedure automatically applicable to the examination of bills on the financing of social security. The last paragraph of article 42, in addition, provides that the six-week time period which should pass between the tabling of a bill and its discussion in plenary sitting, is not applicable to social security financing bills.

    Just as for finance acts, the compensation for these restrictive time limits is a specific protection for the field of the law on the financing of social security. Thus provisions having no connection with the financing of social security are considered as “social wooden horses of Troy” and are thus removed by the Constitutional Council (if they have not already been declared inadmissible by the Chairman of the Finance Committee in the case of amendments coming from Parliament).

    2. – Examination in committee

    Contrary to the finances bills which, in accordance with an institutional provision, are referred to the committees dealing with financial matters, there is no automatic referral for a bill on the financing of social security to the parliamentary committees dealing with social matters. However, at the National Assembly, the Committee for Social Affairs traditionally takes the role of the lead committee for the bills on the financing of social security. The Finance, General Economy and Budgetary Monitoring Committee refers the bill to itself for consultation.

    In the first quarter of each year, the Committee for Social Affairs appoints five rapporteurs, who are in charge, respectively, of revenue and general balance, health insurance, work accidents and work-related illnesses, the family branch, the old age branch and the medico-social branch. These rapporteurs follow and monitor the implementation of the laws on the financing of social security and carry out an evaluation of all questions relating to the financing of the social security system. To do this, they may carry out checks which grant them complete access to all evidence. Before July 10, every year, they send questionnaires to the Government so as to prepare the examination of the bill on the financing of social security. The Committee for Social Affairs may follow all year long the implementation of the laws on the financing of social security thanks to the work of the Assessment and Monitoring Mission for the Laws on the Financing of Social Security (MECSS), which is made up of some of its members.

    The work relating to the bill on the financing of social security begins with the hearing, by the Committee for Social Affairs, of the First President of the Court of Accounts during the month of September.

    After hearings with ministers, the Committee for Social Affairs examines the bill on the financing of social security in the same way as other bills. The general discussion is followed by the examination of the articles along with the amendments tabled in committee. The latter finishes its work with a vote on the whole bill.

    The examination of the bill on the financing of social security usually requires three or four meetings taking into account the number of articles and amendments to examine (respectively 80 and 563 for the 2009 law on the financing of social security).

    The five rapporteurs each write one section of the report on the bill. An additional section contains a comparative table (initial provisions, the bill and amendments adopted) as well as the list of the amendments not adopted by the committee.

    3. – The discussion in plenary sitting

    The procedures for the discussion of the bill on the financing of social security are decided by the Conference of Presidents. On the agenda of the National Assembly, it is traditional that the discussion of the bill on the financing of social security should take place in the last week of October, following the passing of the first part of the finance law. The so-called “Set Time Limit Debate Procedure” cannot be applied to the social security financing bill.

    The discussion in plenary sitting usually takes up between four and five days of sitting. Although it follows the usual rules as regards the discussion of bills, the bill is dealt with in a specific way when it comes to the order of the votes on its different parts. In fact, article L.O. 111-7-1 of the Social Security Code sets out an order of voting which makes provision, in particular, that the fourth part of the bill for the year which includes the provisions concerning the expenditure for the coming year, can not be discussed before the passing of the third part which includes the provisions relating to revenue and the general balance for the same year. Besides, the National Expenditure Target for Health Insurance, although divided into at least five sub-targets, is subject to a forced vote.

    In addition, in application with the second paragraph of article 42 of the Constitution, one of the innovations introduced by the constitutional revision of July 23, 2008, i.e. the fact that discussion in plenary sitting should be held on the basis of the bill as amended in committee, does not apply to social security financing bills.

    It should also be stated that the possibility for the Government to have recourse to article 49-3 of the Constitution (the making of the passing of a bill an issue of confidence) is maintained without limitation in the case of the vote on the social security financing bill.

    4. – The parliamentary “shuttle” and the promulgation of the law

    As the accelerated procedure is applied automatically to the bill on the financing of social security, it becomes the subject, after its reading in the Senate within the time limit of twenty days, of a meeting of a joint National Assembly/Senate committee which is responsible for examining the provisions which remain under discussion. The procedure followed in the case of a successful joint National Assembly/Senate committee (i.e. the drawing-up of an agreed bill) or its failure, is the normal one applied to all bills.

    Before its promulgation, the law on the financing of social security is usually submitted to the Constitutional Council for its opinion, if a referral, as has always been the case until now, has been made. The Constitutional Council has developed a substantial jurisprudence and is particularly vigilant concerning the respect of the limits of the laws on the financing of social security and the priority of the National Assembly concerning the examination of the new measures proposed by the Government in the framework of financial laws.