Osborne trying to spin defeat, say Eurosceptics

British Finance minister George Osborne talks to the press prior to the meeting. Picture: Getty

British Finance minister George Osborne talks to the press prior to the meeting. Picture: Getty

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CHANCELLOR George Osborne’s claims to have pulled off a victory over a £1.7 billion bill from European commissioners has been described by one of his own MEPs as “an insult to people’s intelligence”.

The attack by leading Tory Eurosceptic Daniel Hannan came as Mr Osborne cut a deal with other EU finance ministers at an emergency summit over the £1.7bn surcharge levied because of extra growth in the UK economy. It had been due to be paid on 1 December.

Mr Osborne hailed the deal as “a victory for the UK” and said it meant the UK will “only” pay £850 million on 1 September next year.

But critics, including Mr Hannan, pointed out that the reduction was made only because of the UK’s EU rebate of £785m, which would always have applied, and that, in reality, the total had not changed.

Ukip leader Nigel Farage said Britain would still pay the full bill. Writing on Twitter, he said: “Osborne trying to spin his way out of disaster. UK still paying full £1.7 billion, his credibility is about to nosedive.”

Labour shadow chancellor Ed Balls said: “David Cameron and George Osborne are trying to take the British people for fools.

“Ministers have failed to get a better deal for the British taxpayer. Not a single penny has been saved for the taxpayer compared to two weeks ago when David Cameron was blustering in Brussels.”

But a No 10 source insisted there was “no guarantee the rebate would have applied to this [payment]” before the deal struck in Brussels.

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“The rebate on the surcharge is being applied in full,” the source said. “We are not getting a third back but getting a half back, and exceptionally that is being applied straight away.

“That means we are paying £850m, in two instalments, next year, with no interest and no fine. Our view is that this is a very good deal.”

Speaking after summit, Mr Osborne said he had also won an agreement in a change to the rules, which means no member state will be asked to pay a huge bill at short notice in future.

The European Commission had asked the UK to pay £1.7bn by 1 December and threatened interest payments of more than £3m a month if the bill was not paid.

After an emergency summit in Brussels, Mr Osborne agreed a delay and the commission dropped the threat of interest charges.

Speaking in Brussels, he said: “The Prime Minister said this was unacceptable and I said we would get a better deal.

“We have worked intensively and constructively with the vice-president of the commission and the other member states.

“And today I can say this – instead of footing the bill, we have halved the bill, we have delayed the bill, we will pay no interest on the bill. And if there are mistakes in the bill, we will get our money back.

“We have also changed permanently the rules of the European Union so this never happens again.

“This is far beyond what anyone expected us to achieve, and it’s a result for Britain.”

Other European finance ministers played down Mr Osborne’s “victory”.

Dutch finance minister Jeroen Dijsselbloem said: “The UK has a rebate, which they have had for a very long time, and of course this mechanism of rebate will also apply on the new contribution. So it’s not as if the British have been given a discount today.

“The old mechanism of the rebate will also apply on the UK contribution, which will increase.”

Austria’s Hans Joerg Schelling said: “Whether the money is to be paid in instalments or as a lump sum is a discussion we can have. But the amount cannot be put in question.”

The European Commission’s vice-president with responsibility for the budget, Kristalina Georgieva, said the additional contribution being demanded from the UK meant its rebate was also increased, leading to a “downward correction” in the overall sum to be paid.

The rebate of around €1bn would normally be payable in the spring of 2016, but in these exceptional circumstances it would “converge” with the payment, she said.

Ms Georgieva added: “The adjustments mean that the UK has to pay more, but also that, as a result of this increase, the UK rebate will go up.”

The summit’s host, Finnish prime minister Alexander Stubb, criticised the way Brussels had issued the surcharge demand but said there was “no doubt” that countries had to pay into the EU’s coffers.

He said: “I fully understand the sensitivities that David [Cameron] and the UK have about these surcharges.

“Finland, Denmark, Sweden – and actually Norway – are net contributors to the European Union’s budget. We all accept that we have to pay, there’s no doubt about that.

“I think this was a case of communication gone completely sour and haywire by Brussels.”

He said Brussels should not “put a prime minister, be that David Cameron or anyone else, in front of a fait accompli out of the blue and tell him to pay €2.1bn euros by December”.

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