UK struggles to maintain rebate

The EU's budget negotiations faced deadlock this week, as Britain refused to give up its rebate despite pressure from most of the other member states. The summit in Brussels, expected conclude in the early hours of 18 June, is focusing on the EU's financial framework for 2007-2013. Some European leaders have used the rebate issue to attack Britain and distract attention from the crisis created by the French and Dutch rejections of the EU Constitution.

The UK has taken a strong line, insisting that the rebate is non-negotiable and that it would use its veto to oppose any changes to it. Before the summit Jack Straw said, "The rebate is fully justified, and if necessary we will use the veto" (Independent, 17 June).

Britain faces stiff opposition to its rebate from most of the other EU member states. Commission President Jose Manuel Barroso said, "We are no longer where we were 20 years ago. Britain is much more rich. There are ten new countries that are poorer, much poorer, and it would not be fair for them to support proportionally more of the burden than Britain." German Chancellor Gerhard Schroeder said, "There is absolutely no real justification for this rebate in view of the fact that Britain ranks 6th in terms of wealth per capita but way down in terms of (EU) payments per capita" (Reuters, 12 June).

However, Britain has received support from German opposition leader Angela Merkel, who is said to be in favour of a "renationalisation" of the CAP (Le Figaro, 16 June). She told the German parliament this week that Schroeder was wrong to attack the British rebate but not French subsidies (Reuters, 16 June). Sweden's Prime Minister Göran Persson also backed Britain. Asked if Blair is alone in calling for a fundamental overhaul of EU spending, Persson said: "No, no, no, no. We are quite many who are disappointed about the structure of the budget" (Bloomberg, 17 June). Persson went on to say that, "I must say I am surprised when I see the description of this summit as a fight between France and the UK - it's a media invention. There is much more in the discussion than that" (MarketNews, 17 June).

One proposal from the Luxembourg presidency of the EU is to freeze the budget rebate as it stands until 2013. In return Romanian and Bulgarian farmers would be paid from the existing pot after the two countries join in 2007, cutting the overall CAP budget by 4.2 billion pounds. However this deal was rejected by France and by the UK. Freezing the rebate in the way proposed would cost the UK 20 billion pounds over seven years.

Research shows that the UK's rebate, negotiated in 1984, has saved the UK hundreds of billions of pounds since then. Britain's contribution to the EU between 1973 and 2003 was 181 billion pounds with the rebate, and would have been 238 billion pounds without it. Over this period the UK paid 75.6 billion pounds more into the EU than we got out.

The UK's rebate is fully justified. Although it remains unclear whether a deal will be done this evening, the real issue isn't the UK's rebate but the Common Agricultural Policy, which costs taxpayers billions and harms farmers in the developing world. The Government is right to refuse to negotiate the rebate while some countries stick by the CAP.

To download the no campaign's briefing note on the EU budget, click here: http://www.nocampaign.com/downloads/budget_briefing.pdf

Text from news release by the no campaign.

► Page created 17 June 2005, amended 15 June 2008 Back to: EU referendum campaign