Britain gets delay on disputed EU payment

Britain claimed victory in its budget battle with the European Union yesterday

after EU finance ministers agreed to a delayed payment schedule for member states.

Under a proposal agreed by the EU’s 28 finance ministers, Britain will now pay the €2.1 billion extra charge, originally due on December 1st, in two instalments next year, probably July and September.

Britain will also be able to set its EU rebate against the payment, allowing British chancellor of the Exchequer George Osborne to claim yesterday that Britain’s bill had now “halved.”

While the total bill remains unchanged at this point, crucially the first payment will take place after the British general election in May. In addition, the total bill could fall further once the European Commission’s figures are checked more thoroughly.

Put off payment

British prime minister David Cameron welcomed the deal last night, saying Britain had halved the amount demanded and “we’re not paying it until next year and with no interest.

“I was presented with a bill for £1.7 billion and told that I had to pay by December 1st,” he said. “These negotiations have gone well. It is good progress and the chancellor has done well. The rules have been changed so that this can’t happen again.”

His comments were echoed by Mr Osborne in Brussels.

“Instead of footing the bill, we have halved the bill. We have delayed the bill, we will pay no interest on the bill,” he said. “We have also changed permanently the rules of the European Union so that this never happens again. This is far beyond what anyone expected for us to achieve and it’s a result for Britain.”

As part of the complex deal, the European Commission proposes to introduce special rules for countries that have particularly high budget contributions each year.

However, Labour’s Ed Balls accused Mr Cameron and Mr Osborne of trying “to take the British people for fools” by claiming that they have saved nearly £800 million.

“By counting the rebate Britain was due anyway, they are desperately trying to claim that the backdated bill for £1.7 billion has somehow been halved. But nobody will fall for this smoke and mirrors,” said Mr Balls.

Nigel Farage, leader of the UK Independence Party leader, said Mr Osborne is “trying to spin his way out of disaster. UK still paying the full £1.7 billion. His credibility is about to nosedive”.

Treasury sources denied last night that it was inevitable the EU rebate would apply, saying critics would have pointed this out beforehand if that had been the case.

Speaking after yesterday’s meetings, European Commission vice-president Kristalina Georgieva said she understood why the budget contribution had been contentious, noting that this year “we have had an unusually large correction”.

“Last year the total adjustment was €360 million; this year it is €9.5 billion. The closest we come to this large of a correction was €3.7 billion in 2007,” she said.

Controversy over Britain’s contribution to the EU budget ignited at last month’s summit, when it emerged that Britain had been billed with an extra €2.1 billion due to its improved economic performance and recalculation of gross national income figures.

Ireland is among nine countries that have to pay extra contributions, with the Department of Finance planning to pay €6 million in additional payments by December 1st.