EU tells Britain to pay extra €2.1bn
Britain has been told to pay an extra €2.1bn to the EU budget within weeks because of its relative prosperity, a hefty surcharge that will further add to David Cameron’s domestic woes over Europe.
To compensate for its economy performing better than other EU countries since 1995, the UK will have to make a top-up payment on December 1 representing almost a fifth of the country’s net contribution last year. France, meanwhile, will receive a €1bn rebate, according to Brussels calculations seen by the Financial Times.
The one-off bill will infuriate eurosceptic MPs at an awkward moment for the prime minister, who is wrestling with strong anti-EU currents in British politics that are buffeting his party and prompting a rethink of the UK’s place in Europe.
Mr Cameron is determined to challenge the additional fee and on Thursday night met Mark Rutte, the Netherlands premier, to discuss the issue. His country is also being required to make a top-up payment, although it is smaller than the UK’s at €642m. Under the rules, Greece will be required to pay €89m, and Cyprus will owe €42m.
George Osborne, chancellor, on Friday denounced the decision as having been made by “junior officials” in the “bowels” of the commission. Interviewed on Sky News, he said that once he had learned of it, Mr Cameron was “immediately” on the phone to other European prime ministers presented with demands who were “similarly surprised”.
“It speaks to the wider complaint about Europe,” he said of the process. “It’s relationship with Britain is not right at the moment.”
The surcharges stem from the EU changing the way it calculates gross national income to include more hidden elements such as prostitution and illegal drugs.
A Downing Street source said: “It’s not acceptable to just change the fees for previous years and demand them back at a moment’s notice.”
The source added: “The European Commission was not expecting this money and does not need this money and we will work with other countries similarly affected to do all we can to challenge this.”
EU calculations of subsidies and rebates
Data on how Brussels has reached its calculations on how much extra cash member countries are going to have to pay or receive
Mr Rutte said he was considering possible legal action to reverse the ruling.
“This is an unpleasant surprise and raises many questions,” he said. “We will get to the bottom of this and of course will be asking for detailed clarifications from the commission.”
EU officials say the calculation simply reflects the longstanding practice of adjusting contributions of countries according to their pace of growth. “Britain’s contribution reflects an increase in wealth, just as in Britain you pay more to the Inland Revenue if your earnings go up,” the European Commission said.
John Redwood, the eurosceptic former Conservative cabinet minister, said that Mr Cameron should decline to pay, describing the surcharge as “unacceptable and illegal”.
In an interview with the BBC’s Today programme on Friday, he said he assumed the new EU Commission, due to take office on November 1, would withdraw the demand.
“If the new commission wishes to increase our contribution, we need to know why and what we will receive in return, as we will clearly need a lot of other changes in our relationship with the EU,” he said.
In depth
David Cameron is under pressure from all sides and faces a delicate balancing act in attempting to renegotiate an acceptable UK membership settlement with the EU
Further reading
While the EU budget is a perennial gripe for Tory eurosceptics, the surcharge will be an unwelcome development for Mr Cameron in what is already looking like a stormy few weeks in Westminster over Europe.
Partly in response to Nigel Farage’s resurgent UK Independence party, which claimed its first seat in Westminster this month, Mr Cameron is eyeing a more profound renegotiation of EU membership terms that includes curbs on immigration. Any deal would be put to an in-out referendum in 2017.
Britain will make the top-up payment less than a fortnight after the Conservative party’s expected defeat to Ukip in the Rochester by-election next month. According to latest polling by ComRes, Ukip is 13 points ahead in the race, which was triggered by the sitting Tory MP defecting to Ukip last month.
It will also coincide with a fraught House of Commons vote on whether to “opt-in” to 35 EU justice and policing measures, including the European Arrest Warrant. That must take place by December 1 and the prime minister has been warned that up to 100 Tory MPs might rebel.
News of the revised contributions, which the UK was told about last week, comes as Mr Cameron urged EU leaders at a summit on Thursday to stand up to the European parliament’s demands to increase EU spending to help boost growth.
The surcharge comes on top of the net UK contribution to the EU budget, which was £8.6bn in 2013. Britain faces by far the biggest top-up payment, while Germany receives a rebate of €779m, France €1bn and Poland €316m.
In a note to EU member states explaining the adjustments, the commission said that it was “aware that in some cases this might have a significant budgetary impact in terms of cash flow”.
Mr Cameron is braced for defeat in the Rochester and Strood by-election on November 20, but has promised to “throw the kitchen sink” at holding the seat. A second by-election defeat to Ukip – the anti-EU party won the Clacton by-election this month – would cause further ructions in the Conservative ranks only six months before the general election.
Some Tory MPs say it is unlikely Mr Cameron would face a vote of no-confidence, although only 46 critical MPs are needed to trigger such a vote. However the party fears further defections to Ukip would follow defeat at Rochester.
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Letter in response to this report:
Our net contribution to EU budget may be well over £8.6bn / From Tim Congdon
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