Europe 'wasting time' in bid to claw back Thatcher rebate

7th September 2010, Comments 0 comments

European rivals are "wasting their time" trying to claw back the 'Thatcher rebate' that returns billions of euros annually to London in place of farm payments to France and Germany, a British minister warned on Tuesday.

Asked how he intended to fight off a move by European Union budget commissioner Janusz Lewandowski to slash the rebate, finance minister George Osborne said: "By making it very clear from the start that we are not going to give way on this at all.

"I have no doubt that others will want to put it into the mix, but they'll be wasting their time because we are not going to give way on the abatement," the Conservative finance minister stressed.

"People better know that at the beginning of the process, because they'll certainly discover it at the end."

French President Nicolas Sarkozy has already warned that he is willing to trigger a "crisis in Europe" if anyone tries to "dismantle" the Common Agricultural Policy, which accounts for some 40 percent of all EU spending.

And Osborne suggested that the previous Labour administration had been ready to sign away the rebate on a promise of CAP reform.

"We're going to avoid a situation, entirely hypothetical, where a British prime minister, at the last minute, gives away a chunk of the rebate... and that ends up costing British taxpayers billions of pounds -- with the promise of CAP reform which never materialised," he said.

British Treasury figures put its rebate for this calendar year at 3.1 billion pounds (3.7 billion euros or 4.8 billion dollars) and about 26 billion pounds for the 2007-2013 budget cycle as a whole.

London claims that "without the rebate, the UK's net contribution as a percentage of national income would be twice as big as France's, and one-and-a-half times bigger than Germany's."

These represent huge sums at a time of deep and unpopular cuts to public services across England, Scotland, Wales and Northern Ireland.

The then prime minister Margaret Thatcher was infamously caricatured as hitting fellow EU leaders of the day over the head with her handbag when she won the argument in 1984.

The EU budget was, and is, run on the basis of a mutual fund rather than on closely measured balancing of amounts contributed and amounts received under various funding programmes.

But Thatcher said that she wanted her money back, making use of an understanding when Britain joined the then European Economic Community that it would be able to re-open calculation of its contributions if they became severely skewed, mainly because of the particular structure of British agriculture.

Her eventually successful campaign was long and caused much bad feeling.

Osborne was keen to play up to that level of rhetoric after talks with counterparts in Brussels focused on new rules for EU supervision of the financial sector.

The issue has returned to the agenda as Brussels seeks to find its own cuts in straitened times, and while Osborne said that "unfortunately we can't veto" the EU budget for 2011, which Britain wants to see slashed heavily, he stressed that his "focus" in negotiations is now on "protecting the fully justified British abatement" for the next decade.

Once 2011's final figures are agreed next month, the EU tackles reforming principles for budgets over a new seven-year cycle running from 2014 to 2020.

European Commission chief Jose Manuel Barroso said in a 'state of the union' speech to the European parliament in Strasbourg, France, on Tuesday that "quality of spending should be the yardstick for us all."

"We should invest it where it leverages growth and delivers on our European agenda," he said.

© 2010 AFP

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