The UK is a heavy contributor to the EU budget. The EU’s wish to increase this budget in cash and real terms is unpopular in the UK. Many people here think that we need to cut our deficit, and that we need to do this by reducing public spending. EU spending should be at the top of the list of budgets to cut, not at the top of the list of budgets to protect and increase.
The UK in particular dislikes the high subsidies paid to small and inefficient farmers on the continent from our money. We dislike the regional policy, which entails UK taxpayers subsidising relatively affluent regions on the continent. We dislike the large regulatory bureaucracy, which imposes costs directly through the EU budget, and indirectly by requiring us to have so many enforcement and compliance officials in domestic departments. There could be a fairer and cheaper agricultural and regional policy, and less regulation. Mr Blair was promised agricultural reform in return for losing some of our rebate. The reform was never delivered.
On Wednesday in the Commons the government will ask the Commons to express its view on this important issue. Many of us think that now is the time for the UK to say that we do not want to lock ourselves into a rising budget for the period 2014-20.Maybe now is the time to consider how the budget could be cut, or to consider how the UK could have a new relationship that did not require us to be part of the expensive policies that we currently do not like. The government has tabled the idea of a real terms standstill. Mr Reckless, a Conservative MP, has proposed an amendment to press the EU for a real terms cuts. The UK has a veto over the seven year budget settlement, a rare event in EU matters these days. There will be a debate over how far this veto can be used and when the UK is going to set out the new relationship the government says it seeks.
Past governments have tended to concentrate on the UK’s net contribution to the EU. We should, of course, look at the gross contribution. Getting some of our own money back in ways the EU wishes to spend it is no great deal for us. It is all public spending, and all needs tax revenue to pay for it. That is why we should be able to review all of the spending and decide which we no longer need, and which we should sacrifice in difficult times because it is not a priority.
In the event of a veto being exercised so there is no new multiannual framework Article 312 of the Treaty says they have to stay within the limits of the last year of the old multiannual framework, i.e. no increase. If the Council and Parliament fail to agree or set an annual budget, the Commission proceeds on a monthly basis with no increase on the previous year.