|EU Budget Surcharge
The Chancellor of the Exchequer was called to Parliament by an Urgent Question submitted by Labour’s Shadow Chancellor Ed Balls, asking him to explain in more detail the deal that he claimed to have negotiated over the weekend over the £1.7bn surcharge to the EU Budget.
George Osborne (Chancellor of the Exchequer): Last month the previous European Commission presented Britain with a bill for £1.7 billion, which it insisted must be paid by 1 December. The Prime Minister spoke for British taxpayers when he said that that was completely unacceptable, and we set about getting a better deal. Following intensive discussions with the new Commission and at the ECOFIN meeting last week, we have achieved such a deal. I can tell the House that we have halved the Bill, have delayed the Bill, will pay no interest on the Bill, and have changed the rules of the European Union so that such unacceptable behaviour never happens again.
As a result of those discussions, we achieved unanimous agreement that, first, expecting payment on 1 December was indeed unacceptable. The budget rules will therefore be rewritten to allow for a delay in any payment. In Britain’s case, that means that we will pay nothing this year, and will instead make payments in two instalments in July and September, in the second half of next year. Secondly, the suggestion that we might have to pay interest charges was rejected, and it was agreed unanimously that no interest would be charged on the delayed payments. Thirdly, in our discussion with the new European Commission, it was agreed that a full rebate would apply to the British payment, that the rebate would be specific, that it would be in addition to any other rebate that we might expect next year, and that, for the first time ever, it would be paid at the same time as any money owed.
It had not been not clear that we would receive a rebate, let alone such a large one. No one in the House had suggested that we would. Only my right honourable Friend the Member for South Cambridgeshire had even asked a question about it. Indeed, it was only confirmed that we would receive a rebate, and a large one, by Vice-President Georgieva on 6 November, last Thursday evening. This means that Britain’s payments have been halved, from £1.7 billion to about £850 million.
In the face of this budget challenge, we have far exceeded the expectations and predictions that preceded Friday’s meeting. We have achieved a real result for Britain. The whole episode reminds us of the reform that we need in Europe—reform that Government Members believe should be put to a vote of the people of Britain.
Ed Balls (Shadow Chancellor of the Exchequer): If this is such a good deal, why did the Chancellor not offer to make a statement? Why was he dragged to the House this afternoon? Talk about smoke and mirrors, Mr Speaker—I can barely see you through the Chancellor’s fog and bluster!
Is not the truth that the Chancellor failed to reduce our contribution by a single penny? All he is doing is simply counting the rebate that was due anyway—a rebate that was never in doubt—in an attempt to fool people into thinking that the bill has been halved. His so-called victory is nothing more than a con trick. The Chancellor claims that the rebate was somehow in doubt, but that claim has been contradicted by everyone else. The EU Budget Commissioner was very clear when he said, on 27 October, in a statement on the backdated gross national income revisions, “the UK will benefit from the UK rebate for the additional payments”.
On Friday, having been asked whether the rebate was in doubt, the Vice-President of the Commission replied, “No, absolutely not.” On Friday, the Treasury was telling journalists that the Government had legal advice that the UK rebate somehow might not apply. If the legal advice exists, the Chancellor should publish it. Mr Barroso’s spokesperson, Mr Mark Gray, has directly contradicted the Treasury’s claims, saying: “Commission position on this clear at European Council—rebate was never in doubt”...
And it is worse. The Financial Times reported: “Officials involved in the closed-door negotiations between finance ministers said Mr Osborne did not complain about the overall bill.” He didn’t even complain about the overall bill, Mr Speaker! I have here the minutes of Friday’s ECOFIN meeting: 21 pages, and not a single reference in those 21 pages to the UK rebate or the amount Britain owes being reduced. Is it not now clear that the Chancellor totally failed to get a better deal for the taxpayer? He did not reduce Britain’s backdated bill by a single penny. The British people don’t like being taken for fools, and his attempts to fool them have totally unravelled.
George Osborne (Chancellor of the Exchequer): No, the British people do not like being taken for fools which is why the Shadow Chancellor is in opposition. The Shadow Chancellor is one of those people who is wise neither after the event nor before the event. How do we know that? Because he wrote an article in The Guardian last Friday. It appeared alongside another article called “Labour is doomed” by one of his colleagues, and in his article he set out four tests that I had to pass. The first test, he said, was that we needed a coalition of support, and he asked me about that again today. We had unanimous support around the ECOFIN table for the deal that was agreed. The second test he set me before the ECOFIN council was that we needed the support of Germany. Well, we went to Berlin and the German Finance Minister was central to the deal that we did.
Thirdly, in this article, he said: “The Prime Minister should be clear about whether he intends to take the EU Commission to the European Court of Justice if they insist on the deadline of 1 December.” Well, we do not have a deadline of 1 December anymore, because we did not challenge the law; we changed the law. So three tests passed, and here is the fourth and final test the Shadow Chancellor set us: he said that the interest rates on any delayed payments should be fair. Well, I disagree. I do not think we should pay any interest at all, and we are not, but what is revealing about this fourth test is the number he himself gave for the fines Britain might face. He said: “Britain could face a…fine of £114,000 a day.”
Does he confirm that that is what he said in the article: £114,000 a day? [Interruption.] Well, he has given himself away because £114,000 a day happens to be the EU penal interest on £1.7 billion, so the shadow Chancellor, who stands before us today and says he always knew the rebate would apply, is the same shadow Chancellor who on Friday said we would paying £1.7 billion.
And of course the word “rebate” never appeared once in that article or, indeed, in any intervention from the Labour Party on this issue. This whole question from the Shadow Chancellor today is based on the absurd charade that he would stand up for Britain’s interests in Europe, but he gave away billions of pounds of the rebate, he signed us up to billions of pounds of Eurozone bail-out, and he still refuses to give the British people a say on our future in Europe. May I suggest to him that he should leave the strong leadership in Europe to us, and he should get on with throwing over the weak leadership in the Labour Party?