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Prime Minister gave an update to the House of Commons following last week's EU budget negotiations in Brussels.
With permission, Mr Speaker, I would like to make a Statement on the EU Council.
Last week’s Council was unable to reach agreement on a seven year budget framework.
This government rejected a proposal that would have risked UK taxpayers paying for unaffordable increases in the EU’s annual budgets.
We did so together with like-minded allies from a number of countries.
As net-contributors to the EU, these countries - like Britain - write the cheques.
And together we had a very clear message: We are not going to be tough on budgets at home and then sign up to big increases in European spending in Brussels.
Mr Speaker, let me explain to the House:
- the proposal we rejected…
- why a deal is still doable…
- why it is still in our interests to work to achieve that deal, and
- why throughout these negotiations I will continue to protect the UK’s rebate.
Mr Speaker, our objective for EU spending in the 7 years to 2020 is clear: we want to see spending reduced and will insist on at least a real terms freeze.
As the House knows, the actual EU Budget is negotiated annually.
What we were negotiating in Brussels last week - and will return to again next year - is the overall framework for the next seven years which includes the overall ceilings on what can be spent.
During the last negotiation, which covered the period 2007-2013 the last government increased the payments ceiling by 8%.
The commitments ceiling was effectively set at €994 billion well above the level of actual spending.
It was a bit like having a credit card limit far above what you can afford.
It was an open invitation to the EU’s big spenders to push for higher and higher spending every year.
And we are still paying the price for that decision.
This year, 2013, the Commission and European Parliament are attempting to grow the annual budget by another 6.8%.
I am determined to get these ceilings down in line with what we can afford.
Prior to the Council the Commission produced a ludicrous proposal for increasing the commitments ceiling still further to over €1 trillion.
We said no.
So going in to the Council, the President produced a new proposal: this time a ceiling of €973 billion.
As you can see, Mr Speaker, we were making progress in getting the ceilings down.
But as I - and other leaders - made clear, it was not enough.
We set out a number of very reasonable ways in which the seven year ceiling could be reduced even further, by tens of billions more.
What was disappointing at the Council was that having heard these proposals, the President offered a new proposal that failed to reduce significantly the previous total, and simply redistributed money to buy off different countries.
In a seven-year budget of almost a trillion euros, the idea that there are no real savings to be found is simply not credible.
For example, when it came to the bureaucratic costs of the European Commission not a single euro in administrative savings was offered.
Not one Euro.
We need to cut unaffordable spending.
The deal on the table was just not good enough and that is why we - and others - rejected it.
But, Mr Speaker, we do believe a deal is still do-able.
There is absolutely no reason why we shouldn’t be able to reduce the seven year ceiling down to the level needed.
There is plenty of scope for very significant savings in the Common Agricultural Policy and the Structural and Cohesion Funds.
But there are savings to be had in the rest of the budget too.
For example, freezing the ceilings for security, justice and external spending would allow €7.5 billion of additional savings.
There are some programmes, like Connecting Europe, which have enormous proposed increases in their budget that can be radically scaled back.
And as I have said there is simply no excuse for not taking a much tougher approach towards the EU’s administrative costs.
The EU institutions have simply got to adjust to the real world.
A 10% cut in the overall pay bill would save almost €3 billion.
Relaxing the rules on automatic promotion 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 changes to pension rights could save another €1.5 billion.
All of these are perfectly reasonable proposals.
That is why a deal is still doable - and we will push hard for these reductions when negotiations resume next year.
Mr Speaker, let me be clear about why we want a deal.
If no deal is reached, the existing ceilings are rolled over and annual budgets are negotiated on a year by year basis, taking account of those ceilings.
So crucially, we would not get the reduction we need in the seven-year budget ceilings.
The credit card limit would stay beyond what is affordable tens of billions of euros higher even than the deal we rejected at this Council.
So it is in our interests to get a deal.
But that deal can not come at any cost.
We must not lock in unaffordable ceilings for the next seven years.
So if necessary, we may have to galvanise a coalition of like-minded countries to deliver budgetary restraint through annual budget negotiations each year.
Finally, Mr Speaker, let me say a word about the UK’s rebate.
As well as ensuring fairness in terms of the overall size of the EU budget - it’s also essential to ensure fairness in the net contributions to that budget that each country makes.
At this Council we faced, as ever, determined pressure from many sides for our rebate to be slashed.
The changes on the table would have cost the UK more than a billion euros every year.
But I was clear all of this was completely unacceptable.
Britain more than pays its way in Europe.
On a per capita basis, Britain is the 11th richest nation and yet as a share of our national income, we are the 3rd largest contributor - and that’s with the rebate.
Without it, we would have the largest contribution in the European Union - double that of France, and almost one-and-a-half times as large as Italy’s or Germany’s.
That would be completely unfair.
It is why Margaret Thatcher was right to fight so hard to win the British rebate.
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And it is why no government I lead will ever put that British rebate back up for negotiation.
Mr Speaker, we have put a marker down at this Council.
We stood up for the taxpayer.
Together with like-minded allies we rejected unacceptable increases in European Spending.
And we protected the UK’s rebate.
We are fighting hard for the best deal for Britain.
And that is what we will continue to do.
And I commend this Statement to the House.