September 6, 2010

UK rebate 'no longer justified,' Brussels says

Today @ 09:23 CET

Britain's €3 billion rebate from the EU budget is "no longer justified" and should be scrapped, EU budget commissioner Janusz Lewandowski has said.

"The British rebate has lost its original justification," Mr Lewandowski told the leading German daily Handelsblatt in an interview published on Monday (6 September). "The structure of the EU budget has changed substantially. Farm subsidies – the main reason for the rebate – have decreased, while the per-capita income of the UK has increased substantially since the 1980s."

The rebate was negotiated by Prime Minister Margaret Thatcher in 1984 (Photo: European Parliament)

The rebate was negotiated in 1984 by Conservative Prime Minister Margaret Thatcher, who reportedly banged her purse on the table and said: "I want my money back." The main reason for the rebate was that 80 percent of the EU budget at that time was spent on farm subsidies, which is of little benefit to the UK because its farming sector is relatively small.

As agricultural funding has decreased to roughly 40 percent of the budget, so has Britain's rebate. In addition, former Labour premier Tony Blair agreed to give up a slice of the rebate in order to help new member states catch up the old ones economically-speaking.

The net rebate will decrease from €6 billion in 2009 to roughly €3 billion in 2011. But scrapping the deal altogether may prove a difficult task for the new British government, led by Conservative leader David Cameron.

"Of course they are defending the rebate," Mr Lewandowski said in the interview. "There will be very difficult negotiations. We will need the acceptance of London in order to come to a result. My role in this business is that of an honest broker."

Mr Lewandowski also recognised the need for further cuts in agricultural funding, strongly backed by France, which is the main recipient of this kind of aid.

"The level of farm subsidies in 2020 has to be lower than today, in order to free more money for research, development and global ambitions," he said, while noting that Paris was "aware" of the need to reform the so-called Common Agricultural Policy (CAP).

The Polish ex-MEP didn't spare criticism of his former colleagues in the EU legislature. He said he noted a "very big distance" between the vision of finance ministers and that of MEPs.

"I am concerned about it. There is simply too much on the negotiation table. It's not only about the 2011 figures and the long-term budget framework. It's also about funding for the fusion reactor Iter, the European External Action Service and more. Th ae Parliament is showing its new powers. But everybody needs to come up with the will to compromise," he said.

He also rejected the idea promoted by senior MEPs to bring EU seven-year budget planning down to five years, in order to match the mandate of the legislature.

"Negotiations on budget don't bring Europe together, they are a reason for quarrel and take a lot of time. That's why arguing over money should occur as rarely as needed. Let's enjoy the seven-year period," he said.