Update 1: Finance Ministers contradict Osborne’s surcharge discount claim

Virtually all the European Union’s finance ministers contradicted George Osborne’s claim that he fought for and got a 50% discount on the Commission’s £1.7 billion surcharge.

Ireland’s Finance Minister, Michael Noonan, in no uncertain terms contradicted Mr. Osborne’s statement:

“I don’t know what the basis of that calculation is but the installments will be paid over a period of time. My understanding is that the UK will pay the whole amount but there will be no penalties attached or interest on that.”

UK Chancellor George Osborne says he stands by his claim made on Friday that he had negotiated a 50% discount on the £1.7 billion EU budget surcharge, despite accusations from the Labour party and scores of European lawmakers of deceiving the British electorate.

Mr. Osborne said that rather than having to pay £1.7 billion on December 1st, 2014, it will pay £850 million in two interest-free amounts in 2015. However, his calculation includes an EU rebate the UK was due to receive in 2016 which has been brought forward.

So, in fact, if the already-agreed rebate is factored out, the £1.7 billion surcharge has not been negotiated down – the amount is intact.

According to the Chancellor, there was “real doubt” about whether that rebate would apply to the surcharge. However, virtually everybody else outside the Conservative party disagrees. It was a previously-settled rebate.

The Conservative party is under enormous pressure to be seen to be standing up to pressure from Brussels. There are general elections in 2015 and anti-EU Tory voters are drifting to UKIP, the party that wants the UK to leave the European Union.

Ed Balls

Shadow Chancellor Labour’s Ed Balls said Mr. Osborne had not saved British taxpeyers “a single penny.”

Several European finance ministers who were at the meeting on Friday when Mr. Osborne allegedly negotiated the discount said the UK had not received a discount. They said that absolutely nobody had contested the correctness of the surcharge.

Austrian Finance Minister Hans-Jörg Schelling said “The sum cannot be challenged. We said this and so did many others.” His statement was backed by Spanish Finance Minister Luis De Guindos.

According to Mr. Schelling, there was no argument on Friday about the amount of money the UK would have to pay and the rebate amount, only about whether the surcharge payment could be delayed and done in installments with no incurring interest. Mr. Schelling added “This proposal is supported by Great Britain.”

Dutch Finance Minister Jeroen Dijsselbloem, who is also Chairman of the Eurozone finance ministers, said “Britain has had a rebate system for a very long time. No discount was awarded.”

George Osborne

Has Mr. Osborne talked himself into a corner?

European Commission Vice-President in charge of budgetary affairs, Kristalina Georgieva, said “As we all know the UK receives a rebate on their contribution.”

The UK has received a rebate ever since it was negotiated when Margaret Thatcher was Prime Minister. So, saying there was some doubt about the status of the rebate is nonsense, many European lawmakers said.

In a BBC Radio 4 Today program on Saturday, Mr. Osborne insisted that before the Friday meeting in Brussels the status of the rebate had been unclear. “The truth is we have achieved a real win for British taxpayers.”

Whatever way Mr. Osborne chooses to spin it now, what he said on Friday clearly led people to believe that the £1.7 billion had been cut in half, and that the rebate was coming too.

He should have said he managed to delay the December 1st deadline to next year, and that the £1.7 billion would be paid in full in two amounts with no interest charged, and that the rebate had been brought forward from 2016 to 2015 – but the surcharge would be paid in full.

Regarding Mr. Osborne’s claim on Friday, Ed Balls said:

“David Cameron and George Osborne are trying to take the British people for fools. Ministers have failed to get a better deal for the British taxpayer. Not a single penny has been saved for the taxpayer compared to two weeks ago when David Cameron was blustering in Brussels.”

“By counting the rebate Britain was due anyway they are desperately trying to claim that the backdated bill for £1.7bn has somehow been halved. But nobody will fall for this smoke and mirrors. The rebate was never in doubt and in fact was confirmed by the EU budget commissioner last month.”

Labour’s MEP Clare Moody said Mr. Osborne’s victory talk is nothing more than smoke and mirrors. “He is simply bringing forward the rebate that we would have received anyway to pay the bill.”

UKIP MEO Patrick O’Flynn said:

“It is far from clear what actual reduction, if any, George Osborne has secured in this surcharge. If it does turn out that the chancellor has been engaged in spin – and is pretending the application of a rebate formula, which would have applied anyway, is a reduction secured by him – then he will have dug himself into an even deeper hole.”