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George Osborne to fight EU's £1.7bn UK tax bill George Osborne seeking 'better deal' on £1.7bn EU bill
(about 7 hours later)
Chancellor George Osborne is to argue the UK's case against paying the EU an extra £1.7bn at a meeting of European finance ministers. Chancellor George Osborne is arguing the UK's case for not paying the EU an extra £1.7bn in a meeting of EU finance ministers in Brussels.
Prime Minister David Cameron is refusing to pay the full surcharge and will not hand over any money by the 1 December deadline. Ahead of the talks, Mr Osborne said the sum being asked for was "unacceptable" and he would get a "better deal".
David Cameron has repeatedly said the UK will not hand over any money by the 1 December deadline.
A senior EU official has warned of opening a "Pandora's Box" if the surcharge is not paid.A senior EU official has warned of opening a "Pandora's Box" if the surcharge is not paid.
A final agreement is not expected to be reached at Friday's Brussels meeting. Amid reports that the UK could be allowed to pay the bill in interest-free instalments, Treasury sources said Mr Osborne would continue to demand a cut in its size.
On Thursday, new European Commissioner Lord Hill called for a period of calm, while Treasury sources said Mr Osborne would continue to demand a cut in the size of the bill. 'On the agenda'
He is expected to also press for any payment to be delayed or phased in. Speaking ahead of the Ecofin meeting, Mr Osborne said: "The demand that Britain should pay £1.7bn by the 1st December is unacceptable. I wanted this on the agenda. It is on the agenda. I will make sure we get a better deal for Britain."
However, a final agreement is not expected to be reached at Friday's meeting.
But BBC political editor Nick Robinson told BBC Radio 4's Today programme that a compromise based on phasing in interest-free payments over a given time is one that "David Cameron will not be able to sell back home".
He added that "after the stance he has taken", Mr Cameron "needs the total figure cut rather than phasing in payments.
"If he doesn't get an offer of that, or George Osborne doesn't get it face-to-face in Brussels today, there will have to be more talks to get more concessions."
'Practical solution''Practical solution'
The surcharge follows an annual review of the economic performance of EU member states since 1995, which showed Britain had done better than previously thought.The surcharge follows an annual review of the economic performance of EU member states since 1995, which showed Britain had done better than previously thought.
Elements of the black economy - such as drugs and prostitution - have been included in the calculations for the first time.Elements of the black economy - such as drugs and prostitution - have been included in the calculations for the first time.
Last month, David Cameron reacted angrily to the bill presented to the government by the EU for £1.7bn (2.1bn euros).Last month, David Cameron reacted angrily to the bill presented to the government by the EU for £1.7bn (2.1bn euros).
Italy, Greece and Cyprus were also asked to make extra contributions, while France and Germany are set for refunds.Italy, Greece and Cyprus were also asked to make extra contributions, while France and Germany are set for refunds.
Lord Hill told the BBC: "It seems to me that this is one of those classic examples you get from time to time, where something that a group of people think are technical matters suddenly, and in this case for perfectly understandable reasons, become highly political.Lord Hill told the BBC: "It seems to me that this is one of those classic examples you get from time to time, where something that a group of people think are technical matters suddenly, and in this case for perfectly understandable reasons, become highly political.
"The sensible thing now is to try to calm the situation down, and to look at the facts, and to look at a practical solution to the challenges that various member states face.""The sensible thing now is to try to calm the situation down, and to look at the facts, and to look at a practical solution to the challenges that various member states face."
The former leader of the House of Lords, who was appointed as European Commissioner for financial services last month, said the meeting of the Economic and Financial Affairs Council (Ecofin), would go some way to finding a "practical solution".The former leader of the House of Lords, who was appointed as European Commissioner for financial services last month, said the meeting of the Economic and Financial Affairs Council (Ecofin), would go some way to finding a "practical solution".
A referendum on EU membership has been promised by the prime minister if the Conservatives win a majority at the next general election. Speaking last week, the European Commissioner for Budgets, Jacek Dominik, said EU members had approved the process by which the figures were calculated and it would be "extremely difficult" to change it.
Speaking on the wider issue of whether the UK should remain in the union, Lord Hill said he hoped the country would decide to do so. "Never in the past was there a situation that such a decision was changed and implementation regulations have been changed because one of the member states has contested," he said, adding that "if you open this act for future negotiations you open up a Pandora's box".
"My view is that on the back of a reform process, Britain would want to choose to stay in the EU," he said. 'Synthetic anger'
At Prime Minister's Questions on Wednesday, Labour leader Ed Miliband accused Mr Cameron of "weasel words" over Europe as he challenged him over his support for EU membership. Conservative MP Ken Clarke, who served as chancellor in the 1990s, told the Today Programme on Friday that although it was "quite reasonable" not to pay a lump sum of £1.7bn by the 1 December, the UK did not default on its debts and a compromise will "depend on how good our case is".
At a press briefing in Brussels last week, the European Commissioner for Budgets, Jacek Dominik, said: "We all agree on the methodology and the elements that are included in the contributions and we simply apply them. He expressed confidence that Mr Osborne would negotiate a solution at the meeting of European finance ministers today, after there has been "a look at how the £1.7bn figure was arrived at".
"Never in the past was there a situation that such a decision was changed and implementation regulations have been changed because one of the member states has contested and… it would be extremely difficult to do it." Mr Clarke also said a lot of the anger about the bill was "synthetic", saying "it's all politics getting in the way of commons sense".
He added that "if you open this act for future negotiations you open up a Pandora's box". He added that if the EU was to be kept together as an economic entity "you have to pay your contribution and you have to have free movement of labour".