UK Politics

George Osborne's EU budget claims 'a con trick' - Ed Balls

Chancellor George Osborne
Image caption Mr Osborne said there had been "unanimous" support for the rules to be changed

Chancellor George Osborne's claim to have halved the £1.7bn UK surcharge owed to the European Union is a "con trick", Labour's Ed Balls has claimed.

The chancellor told MPs the UK will only have to pay £850m next year, in interest-free instalments, rather than the larger lump sum by 1 December.

In an update to Parliament, he said the "whole episode reminds us of the reform" the Tories wanted in Europe.

But Mr Balls said his counterpart had not saved taxpayers "a single penny".

The two men clashed in Parliament after Commons Speaker John Bercow granted Labour's request for an Urgent Question on the issue.

'Taken for fools'

The surcharge followed an annual review of the economic performance of EU member states since 1995, which showed Britain had done better than previously thought.

But the demand sparked anger across the UK political spectrum, with David Cameron insisting the UK would pay nothing by Brussels' original 1 December deadline and calling for the overall sum to be renegotiated.

Analysis, by BBC News head of statistics Anthony Reuben

George Osborne criticised Ed Balls for referring to the interest rate that would have been payable on £1.7bn, even though the shadow chancellor said everybody knew there would be a rebate payable on the money.

But that ignores the timing of the payments, which are the key part of this issue.

Previously, the UK would have had to pay £1.7bn in December and would not have received a rebate for a year. That would have added £1.7bn to the UK's deficit for the current year. Whether this year's deficit is likely to be bigger than last year's is going to be a big issue at the Autumn Statement.

Instead, the chancellor has managed to negotiate a position in which this year's deficit is unaffected and next year's goes up by £850m, well after the general election.

Speaking after meeting other European finance ministers on Friday, Mr Osborne said the UK would pay £850m in two instalments next year since the Commission had agreed to apply the UK's rebate on its EU contributions in full to the surcharge.

But Mr Balls told MPs that other European countries were "queuing up to contradict" Mr Osborne's assertion that he had halved the bill.

Accusing Mr Osborne of "fog and bluster", Mr Balls said everyone had known that the rebate - a partial refund that the UK gets on its annual contribution - would be applied in full in advance of the negotiations.

"The British people do not like being taken for fools and his attempts to fool them have totally unravelled," Mr Balls said.

Mr Osborne agreed that "the British people don't like being taken for fools - that is why he is sitting in opposition".


Mr Osborne said his counterpart had never mentioned the issue of the rebate before and said it was "an absurd charade" to suggest Labour would defend the UK's interests as the last Labour government "had given away half of it".

"It was not clear that we would receive a rebate or such a large one," he said, adding that this had only been confirmed on the night before the Brussels meeting.

The rebate was specific to the surcharge, he added, and would not affect the UK's existing refund on its annual contributions.

Former Tory Chancellor Ken Clarke said the outcome was a "surprisingly good result" but accused eurosceptics of turning the episode into a "Gunfight at the OK Corral".

Veteran eurosceptic Sir Bill Cash questioned whether the UK needed to pay any money if the formula used to determine each country's contributions were flawed.

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