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Prime Minister press conference at end of European Council

"The Council has ended without agreement on the future of the EU budget."

Transcript of a press conference given by Prime Minister David Cameron at the end of the European Council in Brussels on 23 November 2012.

Prime Minister

Good afternoon.  The Council has ended without agreement on the future of the EU budget.  The proposal on the table was not one I was prepared to accept nor a number of other countries either.  We came to the table in a constructive way, seeking the best deal for Britain and for Europe.  Our position is very simple, we cannot increase spending in the EU when we are cutting it at home.

So we’ve argued for a cut at the very least or - we argued for a cut or, at the very least, a freeze in spending.  We’ve rejected an attempt to commit British and European taxpayers to real terms increases and we’ve insisted on protecting the UK rebate.

We have had a good discussion.  I think we understand each other’s issues and positions much better.  But frankly the deal on the table from the President of the European Council was just not good enough.  It wasn’t good enough for Britain, and neither was it good enough for a number of other countries including Germany, Sweden, the Netherlands, Finland, Denmark.  All of these countries are net-contributors to the EU.  In other words, like Britain, they write the cheques.  And together we had a very clear message.  We’re not going to be tough on budgets at home just to come here and sign up to big increases in European spending.

From a budget of nearly a trillion euros, it is simply not acceptable to carry on tinkering around the edges, shuffling chunks of money from one part of the budget to another. We need to cut unaffordable spending.  That is what’s happening at home, that is what needs to happen here and that is why we and others rejected the deal that was on the table.

But we still believe a deal is absolutely doable.  Freezing the budget is not an extreme position, it is eminently reasonable.  There is absolutely no reason why we shouldn’t be able to reduce the Presidency’s proposal down to the level needed.  It is possible and it would not result, in my view, in hardship for any Member State.  For instance, we could freeze in real terms the budgets for security and justice and external spending. That would make €7.5 billion of additional savings without actually cutting either of those budgets by a single euro.

And there’s no excuse whatever for not taking a much tougher approach towards the EU’s administrative costs.  Now in the UK we are cutting admin department - admin budgets of departments by a third.  Cutting civil service staff more than 10% in two years, and reforming public sector pensions for the first time in decades.  None of this has been easy, but we have done it as have many other national governments.

Meanwhile, Brussels continues to exist as if it is in a parallel universe.  More than 200 Commission staff earn more than I do without counting their allowances.  Any EU staff not from Belgium get a 16% expatriation allowance on top of their generous salaries, even if they’ve lived in Brussels for more than three decades.

The EU institutions have simply got to adjust to the real world.  There are lots of things that they could do.  For example, a 10% cut in the overall pay bill would save almost €3 billion.  Relaxing the rules on automatic promotion - that’s right, they have automatic promotion here in Brussels - that would save €1.5 billion.  Reducing the extraordinary generosity of the special tax rules for Brussels staff - the levy - that could save around another €1 billion.  And small changes to basic pension rights - which don’t touch accrued rights - would save another €1.5 billion.

But last night the Commission didn’t offer a single euro in savings.  Not one euro.  And I just don’t think that is good enough.  Frankly the idea that the EU institutions are unwilling to even consider these sorts of changes is insulting to European tax payers.

Finally, in terms of the rebate, I made absolutely clear from the outset that the British rebate - which Margaret Thatcher secured - was not up for negotiation.  It is completely justified. Indeed it’s essential [Party political content].  Without the rebate we would have the largest debt contribution in the European Union. Ours would be double that of France, and almost one and a half times as large as Italy’s or Germany’s.

Now we faced, as ever, determined pressure from many sides for this to be slashed, with cuts on the table of more than a billion for each and every year.  But I was clear all of this was completely unacceptable, and I’ve successfully defended the UK’s rebate but I will have to go on doing so in future discussions.

So let me be clear.  We came here wanting a deal.  We will continue to work constructively to get a deal, but it cannot be a deal at any cost.  We put down a very clear marker.  The British people would expect us to fight hard for the best deal for them, and that is exactly what I’ll continue to do.

Question

Many accountants here are already pointing the finger at you, accusing you of holding the EU hostage.  Given the recent vote in the House, do you secretly quite like that?

Prime Minister

I come here wanting a good deal for Britain but also a good deal for Europe.  We need a functioning European Union, it needs a budget, it needs a seven-year budget deal.  That’s the way you plan, that’s how countries right across Europe can know what they’re able to spend on their infrastructure.  So it is important to get a deal.

And this wasn’t Britain as some sort of lone actor.  You know, the Swedes, the Dutch, others: we’re working together, saying, ‘Course we want a deal but we have to recognise we’re living in times where we’re taking tough budget decisions at home. We need to take some tough budget decisions here in the European Union.  And we haven’t been able to secure agreement but we’ve stopped what was an unacceptable proposal and we’re going to have to work harder in the future.

Question

You seem to be blaming Europe’s institutions for this failure.  Why aren’t you blaming the French for arguing for more farm subsidies, or the Poles and other East European countries for demanding more cohesion funds?

And secondly, you said you thought you could get a deal: you’ve never put a figure on it.  Have you moved away from the original British ambition of a budget total of around €880 billion?

Prime Minister

On budget and budget figures, I mean what we want is - as I’ve always said - at best a cut, at worst a freeze.  That is what we have been negotiating for, what we are working for. That hasn’t changed at all.

In terms of blame, I don’t think it’s particularly helpful to try and point the finger of blame.  Countries come here to defend their important interests, whether that’s farming for the French, whether it’s structural fund payments for the Poles, whether it’s making sure we keep the rebate for Britain.

I think though one of the problems there’s been perhaps over the last 48 hours - and you do sense this a bit - is who’s there to stand up for the taxpayer?  Who is - which institution is there - rather like the Treasury - to say, ‘Where’s the money going to come from?  Who’s going to pay for this?’  And the problem is the institutions of the European Union are all in favour of spending money, they’re just not really in favour of saving money.  And I feel that I’m here to help defend the European taxpayer, not just the British taxpayer, and try and keep this budget under control.

So I do think in previous rounds where you’ve had a politician who’s been able to help put together some of the deal, and put things together.  We haven’t had that, we’ve had institutions, and as I say institutions that are quite keen on spending money.  I think they have to recognise - particularly when they’re telling countries to get their budgets in order - they have to have a budget that they can stand up and defend as responsible as well.

Question

I just want to be clear, are you saying that the remaining sticking point, as far as you’re concerned, is the administration budget and wanting to see cuts in that?  Because, on the headline totals, it appeared that really things have already moved quite a long way, certainly in the direction of a freeze.

Prime Minister

Well, things are moving.  I mean the good news is, compared with the Commission’s original proposal, we are seeing cuts to those proposals.  And that is welcome and I think the evidence is that the proposal produced last night, again, isn’t right, and further reductions are needed.  That is good news.

Now Britain has never simply proposed cuts to an administration budget.  It is after all only 6% of the total budget.  I do believe you can make some serious impressions in that budget and obviously, you know, overall, it’s about a €56 billion budget.  So, 10% off that budget, you’ve got some quite serious money that you can save.

The British position has been that there are a number of budget headings where you can save money.  And actually you can do that and achieve a deal even without going much further on the cohesion payments that are vitally important to new Member States, or indeed without going even further on agriculture, which is very important to some Member States.  Already being contemplated is a big cut in agricultural spending.

Our point has been you don’t have to go beyond that in order to get a deal but you have to look really rigorously at all the budget headings.  And I felt, over the last 48 hours, not enough effort has been made on those other budget headings.  And I think that’s why a deal is still doable but it will take a real exercise, a change in direction in many ways.

Question

Prime Minister, the Labour Party said that you came here isolated and then it turned out that the Dutch Prime Minister wanted to cut the budget twice the amount that you did, and the Swedes and the Germans were on the same wavelength as you.  Do you think that augurs well for the next European Council, when the really important issue of the European banking union will be on the table, where clearly you have concerns?  Or do you think it will be back to a familiar pattern where it will be the eurozone against the UK?

Prime Minister

Well, first of all on the banking union, it’s more complicated than that because there are different views about the banking union within the eurozone and there are some quite different views on the banking union from outside the eurozone.

I’d say there’s a more common interest outside the eurozone where we want to know the single market will be protected.  I think progress is being made. There are good discussions underway, so I’m hopeful we’ll be able to solve that.  In terms of this Council, Britain has very good and strong allies across Europe on lots of issues.  When it comes to the single market, where we’re one of the leading proponents and players, we’re good allies with everyone from the Germans, the Italians, the Baltic states, the Dutch, the Danes, the Swedes.

On this issue of the budget, I think it’s been very heartening that as well as myself arguing for significant reductions and being on the side of taxpayers, the Swedes and the Dutch have made very strong representations too.

And I think attempts there might have been to try and, ‘Well, let’s just put the British in a box over there and try and do a deal without them’, that didn’t work, because there were other countries who I’d worked with very closely to make sure that we were all standing up together for taxpayers and to make sure that we have a fair outcome to this budget when we’re cutting our budgets at home.

Question

Can you tell us a bit about those efforts to try and put us in a box?  There was even a suggestion that before the summit, the Germans were interested in getting the European Commission to look into whether there could be a deal amongst the 26 ignoring us - behaving as if we’d already left the room.  Did that worry you?  Does it make you anxious?  Is it a foretaste of the future?

Prime Minister

Well I think you’ve always got to try and disaggregate what might be a negotiating tactic and what is reality.  The fact is, Britain has strong allies for a tough budget outcome and we built those alliances and demonstrated those alliances at this council.  And I think the Germans also want to see a reduction in the figures that have been put about at this Council because they are also significant net contributors to the EU.  So if that was an attempt, it certainly didn’t happen because in the end I think we have a very strong case and we made the case with vigour.

Question

You say you’re here to protect the British taxpayer.  Isn’t it simply the fact that the British taxpayer could end up paying more, because of the way the budget system works with the rollover?

Prime Minister

Well look, Britain is a net contributor to the European Union and while I fight with great vigour to defend Britain, British taxpayers to get the right outcome and all the rest of it,  we have to recognise we’re one of the wealthier countries in Europe.  We benefit from our membership of the European Union and, the fact that we are a contributor to it, is because there are benefits we get through the single market, but there are also things that we pay for.

And we have to defend the contribution that we make and also we have to recognise, with the rebate we have, it helps close the gap between  what we spend and what we get back.  [Party political content]

But you know, I think it’s perfectly possible and the debate upstairs - quite a lot of it was about the importance of the European economy, the importance of progress across the continent, the fact that we want countries that have joined Europe to be successful.  And I want those things too.  You know, success for the Romanians, the Bulgarians, the Poles, the Czechs - that is good for Britain.  We want a healthy continent that we are part of in terms of the European Union.

I believe you can stand up for Britain’s interests and Britain’s taxpayers while recognising it is still worthwhile being a member of the European Union.  You just fight your corner, and you do it in a reasonable way which is exactly what I did over the last two days.

Question

Prime Minister, does it help you or hinder you in negotiations to have the impression out there that you lead a government that may be interested in leaving the European Union if you don’t get your way in these kind of negotiations?

Prime Minister

Look, I think what helps us is explaining to our partners in Europe, which I do, that we are members of the European Union.  We actually lead on some of the key subjects in the European Union: the two biggest success stories of recent years - the single market and enlargement - have been British initiatives that we’ve backed all the way.  But it also helps to explain that there are parts of the relationship with Europe that we don’t think are working properly, that we do think there’s an opportunity for a new settlement and new consent for that settlement.

But I like to explain that’s because I think Britain does have a role in the European Union, does have a part to play in the European Union, and the changes I want to bring about are to make sure we can be positive, we can be engaged.  Whereas, actually if we just - [Party political content] - if we just ignore this debate and just say nothing needs to change, then we won’t be serving the British people and the British interest.

Question

Prime Minister, what for you actually is a real terms freeze?  Because Herman Van Rompuy’s suggestion of - is it 971 billion? - is, of course, a commitment ceiling quite considerably lower than the last budget’s commitment.

Prime Minister

Yes.  It’s a very good question.  I mean it is confusing and I don’t know how long we’ve all got because in Europe they not only have various different ways of measuring this budget.  They measure it through commitments and they measure it through payments.  We prefer to measure it through payments because that is actually, as it were, money out the door.

And you’re absolutely right.  The payments ceiling that is being suggested from the deal that effectively we’ve just rejected, that payment ceiling is a payment ceiling that is coming down, that is from the Commission proposal.  That is good news.  But obviously what matters is not just the ceiling which, if you like, is the limit on the European credit card, what also matters is what does this mean for the individual future European budgets.

So what I mean by a real terms freeze is very straightforward: it’s that spending shouldn’t go up by more than inflation.  That is what we mean by a real terms freeze.  Cuts in the payment ceiling, cuts in the credit card: that is good news.  The credit card limit set by the last government when it made these negotiations was too generous.  And, if you like, the proof of that is that they’ve never spent up to the credit card limit.  So we are looking for a tough settlement.

Question

Just to follow on from [a previous] question, can I just say, there are some people/critics from the European Parliament and elsewhere who have suggested that what they see as uncertainty/ambiguity about Britain’s future in the European Union essentially means you shouldn’t be listened to, you shouldn’t have as much influence.  I was just wondering if you would like to take the opportunity for [inaudible] to give a clear, unambiguous statement now that no government you lead will ever take Britain out of the European Union?

Prime Minister

What I’ve said is very clear.  I support our membership of the European Union but I don’t support the status quo.  I believe that we need a new settlement.  I think the opportunities for that new settlement will grow as the countries of the single currency are clearly going to have to do more things together, to change their arrangements.  So I think there will be opportunities for us to seek that fresh settlement.  I think there will then be opportunities to then have fresh consent for that settlement.  So I have a positive vision of what I want us to achieve in Europe.

In terms of not being listened to, I would argue Britain is listened to, has been listened to and will go on being listened to.  If you think of what has Europe done recently on the foreign policy front: the arms embargo against Syria; the oil embargo against Iran; engaging positively with the Burmese now that Aung San Suu Kyi is free and can potentially fight a general election.  All of that has been British leadership.  Look at the big issues where Europe has succeeded: the single market, a British initiative. The enlargement of the European Union, very much a British initiative.

And at this Council, when a lot of people said, ‘Well, Britain will just be isolated and alone in standing up for a good budget deal,’ actually we had strong allies, particularly the Dutch and the Swedes, in terms of making sure that unacceptable increases in European spending were rejected.  So I would call that, if not an outcome today - we haven’t got a deal, I can’t stand here and say we’ve got the deal we wanted - but we’ve stopped what would have been an unacceptable deal.  And, in European terms, I think that goes down as progress.

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