Osborne's credibility cut by EU omission

Today the chancellor of our new coalition government, George Osborne, presented his 'emergency budget'.

In a bid to resolve the potentially disastrous situation in which one pound in every four he spends is borrowed, Osborne set out a 'tough' budget that will cost people in all walks of life.

The headlines are that VAT will rise to 20%, child benefit will be frozen for three years, there will be a two-year pay freeze for more than 70% of public sector workers and 25% cuts for government departments that aren't ring-fenced.

While spending on health and international aid are the only two areas Mr Osborne admits to ring-fencing, his speeched revealed that there is one more. The European Union.

Many pennies more

In a catastrophic omission for Mr Osborne's credibility as the right person to tackle Britain's debt mountain, no mention was made of any attempt to cut the - now upwardly-revised (since March alone) - £8.3bn (net) that Britain will pay to the EU in this financial year.

An amount that his own Budget documents show (pdf, page 102) will continue at this level every year until 2013, when it is projected to rise still further - to £9.3bn in 2013-14, £10.3bn by 2014-15 and £8.7bn in 2015-16.

So much for Treasury minister Justine Greening's recent claim that there will be "not a penny more" for Brussels. Even under the current deal, her own department's documents project our payments to Brussels spiralling upwards by further billions, totally out of control.

Brussels bubble

Yet it will be the sight of the unaccountable ruling class who inhabit the EU's glass palaces in Brussels continuing to enjoy their lavish salaries, allowances, perks and privileges, immune from belt-tightening while the rest of us get squeezed, that will dismay most.

The effect of George Osborne's apparent unwillingness to tackle the cost of the EU is that we must all pay 20% VAT for years ahead and see spending on areas like education together with the pay of teachers, doctors, police officers, paramedics and many more being cut or frozen to ensure the EU keeps pocketing huge amounts agreed to back in 2005.

Millions of people face paying more tax, or a pay freeze, or will not receive services that they might expect from a government department, while the EU and its multitude of hangers-on - whose activities enjoy very little public support - continue to receive exactly the same level of spending and benefits as before this Budget.

Much of which largess from our government and others is in any case either wasted, mis-spent or, year after year, subject to question by the EU's auditors when they are unable to verify the "legality and regularity" of payments in multi-billion pound areas of EU spending.

What, Mr Osborne, is either 'responsible' or 'fair' about a Budget that meekly tolerates this?

These are the points the Democracy Movement - working together with like-minded organisations such as the TaxPayers' Alliance - will be putting to people up and down the country between now and the full Spending Review that Mr Osborne has announced will be revealed on 20 October.

Preparing propaganda

The only mention that the European Union received during Mr Osborne's speech was in relation to the Treasury's outrageous Euro Preparations Unit, which has been active for years burning millions of pounds of public money putting out pro-euro propaganda.

The chancellor confirmed that Britain would not be joining the euro in this Parliament, so the Unit would be scrapped. A welcome act, of course. But its total cost, even over a decade, probably amounts to not even one week's worth of our current payments into the EU budget.

Urgent EU cuts

George Osborne must act quickly to reverse the damage today's EU omission has done to his credibility.

He can build on today's Budget and save billions more from Britain's debt by joining with like-minded European colleagues - such as the recently elected parties in the Netherlands - to demand that the EU makes cuts to its spending on a similar scale as he, and as many other European governments, are proposing at home.

As Prime Minister David Cameron said earlier this month, in a speech about tackling Britain's "massive deficit" and "growing debt", this is "the most urgent issue facing Britain today".

Tony Blair's 2005 EU budget deal was made in a completely different economic era. That old deal simply cannot continue unquestioned for years more at such a critical time for our attempted recovery. It's not just reasonable, but essential, for our government to demand that EU's financing arrangements through to 2013 and beyond are reopened urgently.

Second EU attack on City looms

Hot on the heels of the recent EU financial services directive looms a second EU attack on the hedge fund industry - the vast majority of which is based in London.

And presumably our own government, past administrations having handed over their powers to the EU, will once again find themselves too enfeebled to protect this major contributor to much-needed tax revenues.

The Evening Standard reports today that the German and French leaders have teamed up to call for a German-style ban on the practice of short-selling to be extended across the EU.

The shock unilateral move by the German government last month to ban short-selling destabilised markets and sent the values of shares, and the investments that rely on them, plunging.

The move was criticised over the instability it provoked while only being capable of suppressing a reaction to the euro's structural difficulties, rather than resolving the EU project's underlying, fundamental problems.

In a bid to block more financial institutions from betting on the failure of the EU's financial support packages, euro policies and the creditworthiness of euro countries, Angela Merkel and Nicolas Sarkozy have written a letter to Jose Manuel Barroso asking the Commission to examine a proposal for an EU-wide shorting ban covering both shares and sovereign bonds.

The pair have evidently ruled out the alternative of making the EU's actions more convincing to the markets, presumably in tacit admission of what virtually everyone else already realises.

Namely, that nothing the EU can do can solve convincingly the financial problems of various of its members while they remain locked within the fixed-exchange euro system.

The key question for us is this. Perhaps smarting from recent events, is our government going to 'man up', live up to their title, be worthy of the votes that many people so recently bothered to cast, and do what it takes to block this looming new move?

Or will they just allow themselves to be over-ruled and humiliated by the EU yet again?