Who pays for the rebate

William Hague

Conservative shadow foreign secretary William Hague chooses to attack Labour for agreeing to give up part of the British rebate. This is the feature of the EU budget whereby Britain gets compensated for the fact that, because of certain characteristics of its economy, it tends to pay more and receive less than would otherwise be considered fair. In the most recent negotiations, in December 2005, it was agreed that the British rebate should fall from an average of 7.7 billion euros per year to around 6 billion. (The BBC has a briefing on the issue here: http://news.bbc.co.uk/1/hi/world/europe/4721307.stm)

William Hague’s complaint is that the government agreed to the reduction in the rebate in return for very little. (Read his article in the Spectator here.)
The demand for fundamental reform of the CAP, which he accepts was “not a wholly unreasonable position”, produced only agreement to a review. This shows weakness in defending Britain’s interests.

But there is more to it than this. In other ways, the budget rebate is quite harmful for British interests – individual co-funded spending programmes are denied to Britain because the Treasury would rather have less money but more freedom to decide how to spend it – and in any case, the question of how to pay for the EU needs deeper and more profound reform even than scrapping the CAP outright would deliver.

And, in the context of the Conservative party’s search for new allies, attacking the rebate reduction risks creating further problems. This is because the money that is no longer paid to Britain in the rebate is money that was coming from the countries that joined the EU in 2004. After years of suffering under communism, they were left very poor. It hardly seemed fair that they should be making transfer payments to Britain. William Hague disagrees. He wants the money back. Let us see whether he can make that a part of the programme of his new group in the European Parliament, composed as it will be largely of MEPs from the rural areas of eastern Europe.

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