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| David Cameron to agree to larger UK contribution to EU budget | David Cameron to agree to larger UK contribution to EU budget |
| (about 2 hours later) | |
| David Cameron will sign up to an increase in Britain's net contribution to the EU's next seven-year budget, regardless of the outcome of negotiations at a two-day summit that opens in Brussels on Thursday. | David Cameron will sign up to an increase in Britain's net contribution to the EU's next seven-year budget, regardless of the outcome of negotiations at a two-day summit that opens in Brussels on Thursday. |
| The government has accepted that the expansion of the EU into eastern Europe over the past decade means the likes of Britain will have to contribute more to the EU. | |
| The prime minister, who will arrive in Brussels early to try to build alliances with like-minded leaders, is determined to achieve an inflation freeze in the overall budget covering 2014-2020. | The prime minister, who will arrive in Brussels early to try to build alliances with like-minded leaders, is determined to achieve an inflation freeze in the overall budget covering 2014-2020. |
| Britain has given a cautious welcome to a proposal by Herman Van Rompuy, the European council president, to cut the European commission's planned €1,053.2bn budget to €973.2bn. These figures cover the so-called commitment ceiling, the term for the absolute cap on EU spending that is imposed by the EU's 27 leaders. | |
| The Van Rompuy proposal technically meets the terms of the recent Tory rebel motion in the Commons, which called for a below-inflation cut in the budget. It is €20bn lower than the €993.6bn commitment ceiling of the current EU budget, which runs from 2007-2013. | The Van Rompuy proposal technically meets the terms of the recent Tory rebel motion in the Commons, which called for a below-inflation cut in the budget. It is €20bn lower than the €993.6bn commitment ceiling of the current EU budget, which runs from 2007-2013. |
| But Britain says there are two problems with the Van Rompuy proposal. Firstly, it has no figure for the payment ceiling, the cap on the amount of money that can be released, which is always a lower figure than the commitment ceiling. Secondly, France, Spain and Poland have rejected the Van Rompuy proposal out of hand because it would involve cuts to the common agricultural policy (CAP) and to the structural and cohesion funds that help poorer regions build their infrastructure. | But Britain says there are two problems with the Van Rompuy proposal. Firstly, it has no figure for the payment ceiling, the cap on the amount of money that can be released, which is always a lower figure than the commitment ceiling. Secondly, France, Spain and Poland have rejected the Van Rompuy proposal out of hand because it would involve cuts to the common agricultural policy (CAP) and to the structural and cohesion funds that help poorer regions build their infrastructure. |
| This means Van Rompuy, who will release a new "negotiating box" on Thursday night after a series of bilateral meetings with all 27 EU leaders, will struggle to agree a lower payment ceiling. But Britain is hopeful it can rein in spending by cutting the EU's administrative budget, which is due to increase to €63bn in the commission plans. The Van Rompuy proposals cut this by only €1bn. | This means Van Rompuy, who will release a new "negotiating box" on Thursday night after a series of bilateral meetings with all 27 EU leaders, will struggle to agree a lower payment ceiling. But Britain is hopeful it can rein in spending by cutting the EU's administrative budget, which is due to increase to €63bn in the commission plans. The Van Rompuy proposals cut this by only €1bn. |
| Britain will be fighting hard to retain its annual £3.6bn EU budget rebate after Van Rompuy suggested Britain could pay part of it. Britain says the rebate is essential because it creates a level playing field. Britain's net contribution in 2011 stood at £7.3bn, compared with £6.5bn for France and £11bn for Germany; without the rebate Britain would pay £10.9bn. | |
| But Britain accepts it will end up paying more, for broad reasons. Firstly, Tony Blair agreed in 2005 that the rebate should be reduced over time to compensate for the arrival of the relatively poor new EU members from eastern Europe. Without any reform, contributions to the rebate from the likes of Poland would have made Britain one of the largest net beneficiaries. | But Britain accepts it will end up paying more, for broad reasons. Firstly, Tony Blair agreed in 2005 that the rebate should be reduced over time to compensate for the arrival of the relatively poor new EU members from eastern Europe. Without any reform, contributions to the rebate from the likes of Poland would have made Britain one of the largest net beneficiaries. |
| Secondly, Britain's net contributions to the EU have been increasing over the last 10 years because agricultural subsidies have declined in relative terms. The size of the rebate is closely related to CAP spending. | Secondly, Britain's net contributions to the EU have been increasing over the last 10 years because agricultural subsidies have declined in relative terms. The size of the rebate is closely related to CAP spending. |
| A government spokesman said: "We are looking to get the best deal for the UK taxpayer. That means holding down the total level of spending and protecting the UK's rebate." | A government spokesman said: "We are looking to get the best deal for the UK taxpayer. That means holding down the total level of spending and protecting the UK's rebate." |