Le stitch-up
As Osborne claims to have halved the Brussels budget demand to £850m, critics say it’s all ‘smoke and mirrors’
GEORGE Osborne last night claimed a qualified victory over the European Union as he declared Britain will only have to pay half of its controversial £ 1.7billion budget surcharge.
But the Chancellor faced an immediate backlash from critics who said he was taking credit for a discount that would always have been offered.
Mr Osborne said the UK would make two payments next year totalling £850million instead of £ 1.7billion in a lump sum by December this year.
The Chancellor said the agreement was ‘far beyond what anyone expected us to achieve’ and a ‘result for Britain’. But the European Commission hit back, claiming it had always intended to apply the complex budget rebate system to the payment, dramatically reducing the bill. Critics accused Mr Osborne of ‘smoke and mirrors’.
Treasury officials firmly disputed that account, saying Britain had to ‘work hard’ to ensure the most generous calculation possible using the traditional rebate formula was applied and for the discount to be given in advance, rather than a year in arrears as is usual.
The deal struck last night means that Margaret Thatcher’s budget rebate, which she negotiated in 1984, will be applied to the one-off demand for extra payment.
The controversial surcharge was landed on Mr Cameron at a Brussels summit last month.
EU budget rules allow for member states’ payments to be adjusted based on revisions to assessments of their economic performance.
The latest review of the economies of EU member states since 1995 showed Britain had done significantly better than previously thought – triggering
‘Not a single penny has been saved’
the huge bill. David Cameron angrily insisted the UK would pay nothing by the December deadline and called yesterday’s emergency meeting of finance ministers in Brussels for the overall sum to be renegotiated.
The UK will now pay the smaller sum in two interest-free instalments in July and September 2015.
The Chancellor said: ‘ We have worked intensively and constructively with the vice president of the Commission and with the other member states and today I can say this: instead of footing the bill, we have halved the bill, we have delayed the bill, we will pay no interest on the bill and if there are mistakes in the bill we will get our money back.’
Kristalina Georgieva, vice president of the European Commission, said: ‘The adjustments for the UK means that UK has to pay more, but also that as a result of this increase, the UK rebate will go up.’ Asked if the rebate had been in doubt, the EC vice-president said: ‘No, absolutely not.’
But government sources claimed the Commission was seeking to save face and avoid controversy with other member states by suggesting the rebate was always going to be applied.
The Prime Minister, attending a meeting of the leaders of Nordic and Baltic states in Helsinki, said: ‘These negotiations have gone well for Britain. The Chancellor has done well.’
Challenged that the lower figure was inevitable because of the rebate calculation, Mr Cameron insisted: ‘This was far from inevitable. The bill has been halved, the bill has been delayed, no interest is being paid on the bill and we’ve changed the rules so that this can’t happen again and that is very good news.’
But Shadow Chancellor Ed Balls said: ‘David Cameron and George Osborne are trying to take the British people for fools. Ministers have failed to get a better deal for the British taxpayer. Not a single penny has been saved for the taxpayer compared to two weeks ago when David Cameron was blustering in Brussels.
‘By counting the rebate Britain was due anyway they are desperately trying to claim that the backdated bill for £1.7billion has somehow been halved. But nobody will fall for this smoke and mirrors.’