Brian Gardner's Blog

The regular ritual verbal punch-up over the disposition of the European Union’s budget is once again in the offing. Opening salvoes have already been fired from the two traditionally entrenched sides of the Channel. The European Commission, in its hopefully impartial role, has called for a completely new approach, rising above the inevitable squabble over who pays most or least. On the other hand, the UK’s PM and Chancellor have stated unequivocally that there is to be no further reduction in Britain’s long contested budget rebate. But it is not only the UK that will be demanding a new deal. Those paying the most into the Brussels’ coffers, unsurprisingly, are calling for greater stringency and cuts in what are seen as the ‘most wasteful’ areas of expenditure.

Inevitably at the heart of this argument is the common agricultural policy, for the simple reason that it is still at the heart of EU spending. Amazingly, the canard that CAP expenditure has declined and is therefore no longer germain to arguments about the equity of national budget contributions is still alive and loudly quacking. CAP expenditure has not gone down – it is now higher than it has ever been and set to get higher, according to the Commission. Total expenditure for 2010 is estimated at €57 billions – a 39 per cent increase on 2000. As far as the finance ministers of Germany, Belgium, Italy and the UK are concerned, the fact that CAP spending’s share of the total budget has fallen is less important the the fact that it is still 40 per cent of the total and the single largest item.

The size of the CAP budget and the workings of the policy are singularly responsible for the disproportion in national burdens and benefits. For this reason it is still highly relevant to the UK Rebate argument and any arguments about economies or redistribution of EU expenditure. Because the UK has a much smaller farm sector than France or Germany, but a large non-farm economy it is inevitable that without the rebate it would still be the largest net contributor alongside Germany. There is therefore no justification for EU Budget Commissioner Janusz Lewandowski’s claim that “The British rebate has lost its original justification”, nor for his argument that ” The structure of the EU budget has changed substantially”. It hasn’t – the EU is still spending too much of its revenue on agriculture.

This shows clearly when the 2010 contributions of the net payers are analysed. Germany’s €2.44 billion would be very much greater if it was not drawing €6.6 billion for support of its farmers. For the same reason the UK, drawing only €3.7 billion for farm support, would be contributing over €4 billion net, if it were not for its €3.1 billion rebate. All of these net payments will increase further by 2013 as the cost of the CAP in the new member states increases. It is therefore little wonder that France, Ireland, Hungary Greece, Poland and Spain, each with net EU budget gains of around €1 billion, favour not only the current budget system, but also the maintenance of a largely unreformed CAP.

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