Last year, Cameron proudly proclaimed that he had “frozen” the EU budget for 2012 by accepting a 2% inflationary increase. Instead the British public will end up paying a 9% increase. Now watch the Downing Street spin doctors in the coming weeks. You will undoubtedly hear how Mr. Cameron has negotiated a “reduction” for 2013, writes UKIP MEP Marta Andreasen.
• Last week, the independent Office for Budget Responsibility (OBR) published its latest report on the Economic and Fiscal Outlook.
Tucked away inside and all but invisible to the untrained eye was an upward revision of £1.5 billion in the forecast of what the UK will be paying to the EU in the course of financial year 2012/13.
The figure, slipped in with no fanfare, said that this amount "mainly reflects revised estimates of GNI (Gross National Income) and VAT bases for all EU countries in 2012 and 2013″. This, despite the Government’s tough-guy rhetoric, is a tacit acknowledgement of defeat in the longer war over the EU budget.
But this may not be the whole of the matter.
Along with this startling admission from the OBR, the European Parliament´s Budget committee, also late last week, gave its blessing to the EU 2013 Budget after the European Council acquiesced to inject €9 billion more to cover 2012 pending invoices. The committee position went to the plenary this week where it was approved, costing you, the taxpayer, €1 billion more.
The chairman of the committee, Mr. Alain Lamassoure was cock-a-hoop, barely able to conceal his excitement and proudly exclaiming to have obtained victory over the British Prime Minister. Let us remember that this is the same Prime Minister who came back from Brussels last year, Chamberlain-like with a piece of paper, proudly proclaiming that he had “frozen” the budget for 2012 by accepting a 2% inflationary increase.
Instead the British public will end up paying a 9% increase in 2012 EU Budget expenditure compared with 2011. This is one present that won’t be welcome under the tree this year.
The root of the problem can be found in the way the European Union budget is negotiated and agreed. There are two aspects to this budget: commitments and payments. Commitments represent the legal obligations that the institutions are allowed to enter into. Payments represent the cash that can actually be disbursed. The two are treated almost as if they were independent of one another, and headlines have focused on the payments budget. In fact commitments follow payments as night follows day.
Mr. Cameron and indeed the other heads of government of the member states seem to have overlooked the increase in commitments, ignoring the fact that these would eventually have to be paid. But the truth is that he signed a declaration together with other member states undertaking to inject “fresh money” - a term the EU bureaucracy adores - if there was a need by the end of the year.And just like Oliver Twist, the EU always, without fail, comes back asking for more.
Watch the Downing Street Spin Doctors in coming weeks. You will undoubtedly hear how Mr. Cameron has negotiated a “reduction” for 2013. But again this ignores the fact that the commitments have been increased to €150 billion. The likelihood is that, just like this year, before the end of the 2013 there will be an “amending budget” that will again grant the EU another bowl of “fresh money”.
And remember too that unlike the Multiannual Financial Framework (the long term budget, about which agreement was not reached in the November summit), there is no requirement for unanimityattached to the annual budgets.
As well as attending the ‘victorious’Budget Committee meetings, I sat in on another committee where the Agriculture commissioner had been invited to explain why the “error rate” – euro-speak for irregularity or illegality – in his policy area had increased significantly. He told me, staggeringly and somewhat brazenly, that he was not overlyconcerned with regularity as long as projects such as roads had been built. He added that most of the “errors” were not fraud and that in any case they “recovered” the money.
How do they “recover” the money? The national government is sent an invoice for the wrongly paid grant. If the money has vanished, this means that the taxpayer in the member state foots the bill twice. We are paying funds mismanaged by the Commission.
When I pressed him on this he told me that this was “fair” as the agricultural subsidies are under “shared management” with the member states.
This is the reality of how the EU treats your money: waste and ‘error’ are accepted as the way things are. The trouble is that like the proverbial elephant in the room, it is something that happens ‘over there’ and, just like the tucking away of the rise in the OBR report, it is easier for the government to ignore the problem than tackle it head on.
More alarmingly, the amending budgets make a mockery of the entire budget negotiation process. What is the point of EU summits on the Budget if the EU institutions can just override the amounts agreed at the start of the year by means of top-ups at the end of it?
This amending budget thus represents a very useful means for the EU to get themoney it originally wanted but was refused. No wonder Mr Lamassoure was so proud. He doesn’t care what Mr. Cameron says as he can just get what he wants anyway.
Make no mistake the EU Budget process has now descended into farce.
Unfortunately taxpayers won’t be laughing as they continue to pick up the bill. If this is the Prime Minister´s definition of victory then we are in deep, deep trouble.