EU admin costs to be focus of new budget summit

EU leaders will meet in Brussels tomorrow for talks aimed at reaching a deal on the next seven year EU budget (Multi-annual Financial Framework) starting in 2014. 

Negotiations on the new MFF broke down in November, according to the Prime Minister due to the dissatisfaction of several countries over the EU Commission's refusal to cut administration costs.

The most recent MFF draft, circulated by EU Council president Herman van Rompuy before the last summit and revealed by Open Europe, proposed spending of €973.5bn.

However, it also proposed large reductions to the UK rebate and showed the Administration budget remaining at €62.6bn - a 12.8% increase over the €55.5bn in the 2007-13 MFF - rather than falling with other public administration cuts in EU member countries.

The Commission, supported by the European Parliament, originally proposed a 5.8% rise in the overall budget framework to €1.033tr, which included a 6% share for Administration.

Speaking to the European Parliament this week, the French President Francois Hollande said that he would accept a reduced EU budget settlement worth around €960bn, which aligns with a German figure circulated at the time of the last summit.

The British government's initial proposal was for a budget of €886bn but is now thought to be arguing for a total of around €940bn over the seven year period.

However, EU Parliament president Martin Schultz last week warned that MEPs would reject any deal that strayed too far from the Commission's original proposal.

EU taxes

Herman Van Rompuy has indicated that he will not circulate any new calculations before talks begin on Thursday. It is also not clear to what extent discussion over direct EU taxes are forming part of the EU budget negotiations.

The EU Council president before Christmas tried to turn the spotlight on Britain by proposing that proceeds from a new Financial Transactions Tax - in which Britain will not participate - should be contributed to Brussels and the amount offset against a country's contributions to the EU budget.

In 2011, the European Commission also proposed replacing the existing VAT-based contribution to the EU budget with a "modernized VAT" to arise "directly from the citizen to the EU".

The plan is thought to entail VAT levied at a fixed percentage by all member states in addition to national rates - likely to be a 1% uniform rate, rather than the 0.3% share of UK revenues the EU collects currently - and then transferred directly to the EU budget.

On the new MFF, David Cameron has pledged "at best a cut, at worst a freeze" in the seven-year spending limits, although Britain's contribution may rise in any case. On 31 October 2012, rebel Conservatives and Labour MPs teamed up defeat the government, with a majority voting for a real terms cut in the EU budget.

2013 budget rises

The EU's next MFF requires unanimous approval of EU member governments. If no agreement is reached in time to allow for legal ratification of the new deal by the end of 2013 - under a political, rather than legal, Inter-Institutional Agreement - the 2013 budget will be rolled over year-by-year with a built-in 2% rise to cover inflation.

Voting in Strasbourg just before Christmas, MEPs approved a €132.8bn (£107.2bn) annual EU budget for 2013. This included a 1.85% increase in the EU's admin costs from €8.277bn (£6.7bn) to €8.430bn (£6.83bn), at a time when member states on the other hand are making cuts to public services and national administration costs.

At €8.3bn (£6.7bn), EU administration costs amounted to 5.6% of the EU budget in 2012, but this will rise to 6.35% in the 2013 budget, showing that the EU's running costs - such as pay and perks for EU staff, plus the cost of buildings and facilities - are growing as a proportion of the overall budget despite Europe's financial difficulties.

Much of this is very visibly wasted on excessive EU pay, perks and grandiose facilities, together with EU self-aggrandisment. Examples include the EU's £45m tribute to itself, the House of European History, and a £250m refurbished 'Résidence Palace' building for the EU Council and its president Herman van Rompuy, due to open next year.

The 2013 deal also includes an extra €6bn (£4.86bn) added to the 2012 budget to cover EU overspending last year. This is less than the €9bn (£7.29bn) the Commission was demanding, likely resulting in a further request for additional funding being made by the EU as early as September 2013.

The addition of this extra €6bn to the 2012 budget gives the appearance that EU spending in 2013 will fall in comparison. But this does not take into account extra requests for funding predicted by the Commission later next year.

Cameron's challenge

This process of annual and subsequent amending budgets to make up funding shortfalls is making the patterns of the EU's actual spending more and more opaque.

EU Ministers must still formally approve the 2013 deal, but difficulties are not foreseen since the EU's annual budgets are agreed by majority vote. Member governments demanding a budget freeze or cuts are likely to be over-ruled by the majority (17) of net beneficiaries.

David Cameron was powerless to stop Britain's payments to the EU rising in 2013 and must now focus on the 2014-2020 budget framework negotiations to stem our liability to funding the EU's ever-increasing demands for public money.

Tomorrow's summit is a key test of the Prime Minister's EU negotiating abilities because if he cannot get a meaningful cut in Britain's contributions to the EU budget when he has billions of pounds in UK contributions to put on the table, confidence in the prospect of a broader renegotiation of the EU's powers will be significantly undermined.

DM letter: Pryce so wrong on the EU

The DM has a letter in today's Evening Standard in response to a comment piece published yesterday by the economist Vicky Pryce.

In her article, Pryce repeated a number of claims and myths about the impact of the EU, some so detached from reality it's hard to imagine from where they can possibly have emerged, beyond simply someone's fevered imagination.

The full version of the DM's response is reproduced below:

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Dear Sir,

No wonder Vicky Pryce thinks this is no time to seek a new deal with the EU (Comment, 14 January). Her understanding of the EU's impact is wrong in every key respect.

She says "85% percent of our budget contribution comes back to the UK", but Treasury figures for 2010-11 show the figure is just over 57% - a net cost of £8.8bn that year alone. Pryce also says "regulations are mostly national", despite a House of Commons Library study from October 2010 showing in fact just over half of new laws now have their origins in Brussels.

Her concern about the EU market becoming more difficult to access surely makes the highly unlikely assumption that Britain could not achieve a free trade agreement as part of any new relationship with the EU - a deal that our trade deficit with the EU shows would be in the interests of EU businesses far more than that of UK plc. 

Overcoming ignorance about the EU through a proper national debate on the basis of facts and giving us all the chance to make an informed decision about Britain's best path to prosperity in the 21st century is exactly why David Cameron must promise to hold an EU referendum.

Yours faithfully,

----------------------------------------------------------------------

Pryce's article comes on the back of a recent propaganda onslaught by political and business elites seeking not only to intimidate the Prime Minister from seeking any change in Britain's relationship with the EU to bring decisions back to Westminster, but also to deny the rest of us a real choice about Britain's future and how we are governed.

In his speech on Friday, David Cameron is expected to announce an intention to renegotiate aspects of the EU's powers and hold a referendum on the outcome sometime after the next general election (IF there is a new 'fiscal union' treaty, IF other countries agree to renegotiate, IF they agree to hand back EU powers, and IF he wins the 2015 election outright).

Despite the likely dependence of such a pledge on a range of improbable developments, the temperature of the EU debate is nevertheless rising. The last few weeks have seen the opening skirmishes of a referendum battle, which David Cameron's speech on Friday may well exacerbate over the coming months and years into full political war about the best course for Britain's democracy and future prosperity. 

EU's admin costs to rise in 2013 to €8.4bn

Voting in Strasbourg today, MEPs have approved a €132.8bn (£107.2bn) EU budget for 2013.

The 2013 budget includes a 1.85% increase in the EU's admin costs from €8.3bn (£6.7bn) to €8.43bn (£6.83bn), at a time when member states on the other hand are making cuts to public services and national administration costs.

EU administration costs amounted to 5.6% of the EU budget in 2012, at €8.3bn (£6.7bn). This will rise to 6.35% in the 2013 budget, showing that the EU's running costs - such as pay and perks for EU staff, plus the cost of buildings and facilities - are growing as a proportion of the overall budget, despite Europe's financial difficulties.

The deal also includes an extra €6bn (£4.86bn) added to the 2012 budget to cover a shortfall in the EU's funding for this year. This is less than the €9bn (£7.29bn) the Commission was demanding, likely resulting in a further request for additional funding being made by the EU as early as September 2013.

The addition of this extra €6bn to the 2012 budget gives the appearance that EU spending in 2013 will fall in comparison. But this does not take into account extra requests for funding predicted by the Commission later next year.

This process of annual and subsequent amending budgets to make up funding shortfalls is making the patterns of the EU's actual spending more and more opaque.

EU Ministers must still formally approve the deal, but difficulties are not foreseen since the EU's annual budgets are agreed by majority vote. Member governments demanding a budget freeze or cuts are likely to be over-ruled by the majority (17) of net beneficiaries.

David Cameron is therefore powerless to stop Britain's payments to the EU rising in 2013 and must now focus on the 2014-2020 budget framework negotiations in a bid to stem our liability to fund the EU's ever-increasing demands for public money.

A new meeting of the European Council - comprising the heads of state and government of EU member countries - is expected in early February to try to hammer out a deal on the EU's spending framework from 2014-2020.

Leaked budget draft shows EU admin costs to rise 13%

A draft of the EU budget leaked today has revealed no change in a proposed significant rise in the EU's administration costs.

The latest draft, circulated by EU Council president Herman van Rompuy and revealed by Open Europe, shows the Administration budget at €62.6bn - a 12.8% increase over the €55.5bn in the 2007-13 MFF - rather than falling with other public administration cuts in EU member countries.

The European Commission, supported by the European Parliament, originally proposed a 5.8% rise in the overall budget framework to €1.033tr. This included a 6% share for Administration, taking the cost up to €62bn.

The EU's administration costs have become the focus of today's negotiations in Brussels, with the Prime Minister taking aim in particular at the pay and perks of EU officials. It would be particularly difficult for him politically to return without securing a significant cut in the EU's admin costs.

It is also not clear to what extent discussion over direct EU taxes are forming part of the EU budget negotiations.

Herman van Rompuy last week tried to turn the spotlight on Britain by proposing that proceeds from a new Financial Transactions Tax - in which Britain will not participate - should be contributed to Brussels and the amount offset against a country's contributions to the EU budget.

Last year, the European Commission also proposed replacing the existing VAT-based contribution to the EU budget with a "modernized VAT" to arise "directly from the citizen to the EU".

The plan is thought to entail VAT levied at a fixed percentage by all member states in addition to national rates - likely to be a 1% uniform rate, rather than the 0.3% share of UK revenues the EU collects currently - and then transferred directly to the EU budget.

If no agreement on the EU budget is reached in time to allow for legal ratification of the new deal by the end of 2013 - under a political, rather than legal, Inter-Institutional Agreement - the 2013 budget will be rolled over year-by-year with a built-in 2% rise to cover inflation.

 

Commissioner: EU should take control of taxes

EU Commissioner Viviane Reding has said that the EU should take control of taxes from national governments.

Speaking at a debate in Berlin last week, the EU justice commissioner said: "The veto right in the EU council has to be scrapped. Qualified majority voting should be extended to more policy areas, for instance taxation".

Such a move would prevent any single member country, or even minority of countries, blocking Council of Ministers decisions to impose new EU taxes.

Discussion of EU taxes is likely to form part of the EU budget negotiations at a summit of leaders later this week (22-23 November), sold as a way for member states to be 'unburdened' from contributions to the EU budget.

However, the burden of funding the EU would simply be passed to people and businesses directly and, most importantly for many in Brussels, the EU's right to govern and increase those taxes in future would be conceded.

Tax plans

EU taxes have come back on the agenda as a way for the EU to raise more money in "own resources" and bypass the problematic task of requesting ever-increasing amounts of money from national governments.

Member countries currently pay towards the EU budget based on their gross national income, as well as VAT and customs duties.

The EU has already benefited financially from recent rises in VAT, imposed in many of its member countries as part of austerity programmes.

The Commission has also tried to drive through an EU Financial Transactions Tax (FTT) on banks which, due to opposition from a number of governments, is now only set to be adopted by ten member states. Without a veto, the FTT could have been imposed on all EU members by majority voting and particularly threatened the City of London's financial sector if the UK were forced to participate.

Budget Commissioner Janus Lewandowski has also proposed the EU collecting a climate tax on air traffic that would put up the price of holiday flights and expressed interest in governing other areas of taxation, pressing governments as a first step to agree to co-ordinate the way corporation tax is calculated and to impose minimum rates of fuel taxes on energy bills and road transport, linked to levels of carbon emissions.

Decision time

The right to directly tax businesses and citizens is one of the few powers left exclusively to national governments within the EU. For the EU to gain this power would require a change to the EU treaty, ratified by each member country.

It would be politically impossible for David Cameron to agree to such a change. However, this latest statement by Viviane Reding once again reveals the intentions of those driving the EU to take further fundamental powers from member countries towards becoming a fully-fledged pan-European government.

Advancing EU political integration brings into sharper focus the fundamental decision about Britain's future we must soon make between undiplomatically blocking political union if that is what other EU countries want or letting them go their own way and seeking for ourselves a new, looser, more flexible relationship with our European neighbours that respects democracy.

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Read more ...

Summary - Revision of the Energy Taxation Directive

http://europa.eu/rapid/press-release_MEMO-11-238_en.htm

Lesiglation - European Commission proposes to overhaul energy taxation rules
http://ec.europa.eu/taxation_customs/taxation/excise_duties/energy_products/legislation/index_en.htm

Q&A - Enhanced co-operation on Financial Transactions Tax
http://europa.eu/rapid/press-release_MEMO-12-799_en.htm

European Commission - Common Consolidated Corporate Tax Base
http://ec.europa.eu/taxation_customs/taxation/company_tax/common_tax_base/index_en.htm

Our politicians can't stop the EU budget rising

Amid the entertaining political theatre of yesterday's EU budget vote lies a far more fundamental debate than whether the amount Britain's pays into the EU budget should be frozen or cut. 

A debate that will soon come much more to the fore.

Much of the Westminster Village reaction to the government's defeat in Parliament last night by 13 votes is inevitably rotating around whether David Cameron is in control of his party; whether he will wield his veto to block a rise in the EU budget; whether Labour will support that veto and what will happen if the Prime Minister tries to secure MPs' approval for a deal that does not involve a budget cut.

Throw in some simplistic comparisons to John Major's Maastricht woes in the early 1990s and a mixture of the above is what the political commentariat are serving up for today's consumption.

But all that is a side show. Sure, a bit of discomfort for David Cameron and the fate of a few billion pounds rests on one option or another and the Democracy Movement, more than most, wants to see Britain's payments to the EU cut - in fact, far more dramatically than anything currently being considered.

Back in 2005, when the EU's last 2007-2014 Multi-Annual Financial Framework (MFF) was being debated, the DM launched its Stop the Cheques campaign, contrasting the cost of the EU with various cuts being made then to public services (see campaign postcards pictured above). A theme that is today, thanks partly I'm sure to our efforts making the case to MPs over the years since - but no doubt mostly due to the subsequent financial and debt crisis - a very strong aspect of debate on the subject among MPs across the party divide.

Impossible freeze  

No, the real punch to today's events will be delivered when the EU meets to hammer out a deal on the EU budget on 22-23 November.

For David Cameron to deliver his policy he must very likely veto an EU deal, but even then the EU budget will continue to rise with inflation anyway. It is certainly beyond his power to deliver Parliament's view that there should be real-terms cuts, as demonstrated by yesterday's vote. 

Then, or soon after, all the current chatter about EU budget vetoes, freezes and cuts will be shown to have been pointless. The various positions over which our Goverment (freeze or veto), Labour opposition (cut but no veto) and Parliament (real terms cut) have so publicly clashed this week will be revealed as a total waste of time due to the nature of the brave, new, post-democratic EU in which we are currently embroiled.

Pointless veto 

The domestic democratic agony we have just witnessed will have served only make more glaring the reality: It is actually impossible to freeze, and certainly to cut, the EU budget. There is nothing our Government or Parliament can do - even if working in unison - to stop the amount we hand over to the EU rising without completely re-writing our treaty links.

Seventeen of the EU's twenty seven member countries are net recipients from the EU budget, changes to which must be agreed unanimously. If no agreement is reached, the budget reverts to a cut-and-paste, year-by-year agreement with an in-built increase in line with inflation.

It is blatantly in the interest of the vast majority of net recipient countries to block any attempt to freeze the EU budget and certainly to cut it since, if unanimous agreement is not reached, the budget rises anyway.

The system is loaded in favour of the budget recipients and a perpetual increase. Both our Government and Parliament will be shown to be completely impotent, their views on the changes that should be made to the budget over-ruled and self-serving EU treaty clauses enacted to keep public cash flowing to Brussels at an ever-increasing level.

Real question

Our financial exposure to the EU will be demonstrably out of control, regardless of the cuts being suffered by public services. Our democratic institutions powerless to secure change. So what then? What does this say about democracy in today's EU-dominated Europe and is that powerlessness a future we wish to pursue?

Thanks to the brilliant work yesterday by MP Mark Reckless and supporters of his amendment, this is the far more fundamental question that will shortly hit home about Britain's relationship with the EU than would have hit the headlines through any fleeting debate about whether we should hand over a bit more, or a bit less, cash.

The soon-to-be-apparent real achievement of yesterday's events will be to have highlighted to a fuller extent the nature of the increasingly post-democratic state in which EU member countries are currently confined. 

So bring on the EU summit later this month and the start of the real debate - about how to secure a more democratic future for Britain and hopefully Europe too.

Will the real Wayne David please step forward

Before moving on from the debate surrounding recent EU budget negotiations, it's worth taking a moment to scrutinise the quite breathtaking hypocrisy exhibited on the subject by Labour's new shadow Europe minister Wayne David MP.

In various reports about David Cameron's (increasingly dubious) efforts to reign in the EU's ever-expanding budget, Mr David offered quotes suggesting that a "sizeable" rise in the EU budget would be "against the national interest", saying: "I think we should dig our heels in and say that we want a freeze in the European Union [budget]."

Really? That's a turn up for the books.

Contradictions

Because not only did Mr David vote in November 2007 in favour of the European Union Finance Bill that approved the last EU budget deal increasing Britain's contributions by an extraordinary 60% through to 2013.

But the former MEP and leader of the Labour group in the European Parliament also in early 2008 voted to approve the Lisbon Treaty (and against the referendum his party promised voters), which is how Brussels is now attempting to justify the EU's need for yet more billions.

In particular, on 20 February 2008, Mr David voted in favour of the Lisbon Treaty's foreign, security and defence policy provisions that authorised the creation of the vastly expensive EU European External Action Service.

This is the new £5.8bn-a-year EU agency headed by the unelected Baroness Catherine Ashton that will be housed in a £10.5 million-a-year building, staffed in Brussels and worldwide by thousands of expensively-salaried EU officials, some of whom will enjoy being ferried about in one of the shiny new bullet-proof limos that will set back Europe's taxpayers £32m.

Regrets?

So for Mr David to turn around now and posture in favour of 'digging in our heels' and freezing Britain's contributions to the EU is all very well, so far as it goes.

But if he wants his apparent conversion to be taken seriously, Mr David first needs to express regret for his poor voting decisions in the past that have ccontributed to the situation Mr Cameron is today having to deal with.

Because if actions speak louder than words, Mr David's very evident past enthusiasm for gifting the EU large amounts of extra cash and voting EU institutions more powers will indicate to most that he's merely playing the sort of low-grade, party-political games that make the public very cynical about politicians and that ultimately only degrade our democracy.

So how about those regrets, Mr David? According to his website, he can be contacted at davidw@parliament.uk. Why not drop him a line and ask him? Especially if you live in his Caerphilly constituency.

Will Cameron yet freeze the EU budget?

David Cameron's strategy to secure a freeze in the EU budget may be becoming clearer.

It was, of course, never in prospect that all the EU's member governments and institutions would agree to a zero percent increase in the EU's spending during 2011.

Nevermind the cut in funding that is truly justified by the drastic austerity measures being implemented in the EU's member countries and the EU's perpetual failure to safeguard from waste and fraud the public money it is given.

Nevertheless, has Mr Cameron gambled that protracted disagreement over the level of increase may deliver exactly what he wants?

Institutional stand-off

By securing the backing of ten other EU member countries for the position that the rise must not exceed 2.9%, David Cameron has set up a stand-off between the European Council on the one hand and the European 'Parliament' and Commission on the other.

The procedure for agreeing the EU's annual budget is set out in Article 314 of the EU treaty, as usefully highlighted over on the Your Freedom and Ours blog. Skip to paragraph 5 to find the current state of play.

During the forthcoming potential 21 days of 'conciliation', the likely response from the 'Parliament' and Commission to what has occured over the last two will be to propose a figure somewhere between the 5.9% increase they currently want and the 2.9% backed by a blocking minority on the Council.

If no agreement is reached during conciliation, paragraph 8 confirms that the procedure goes right back to the start, with the Commission required to submit a new draft budget.

Freezing stalemate

That there may be no agreement during conciliation seems a real possibility. The EU 'Parliament' in particular is easily pompous enough about its position and role to believe its duty is to 'take on' national governments. And need we really say more about Commission president Jose 'dimension of empire' Barroso?

By demanding billions extra from cash-strapped European countries that will no doubt have to be additionally borrowed before being handed over, these two EU institutions have at least usefully demonstrated the emptiness of their rhetoric about seeking to help Europe recover economically.

The bigger question during conciliation is whether Mr Cameron's group of supportive countries on the European Council will stand firm.

Should this roundabout of negotiations not be resolved in time for the new budget to start in 2011, Article 315 of the treaty confirms that "not more than one twelfth of the budget appropriations for the preceding financial year may be spent each month ..."

In other words - in the absence of a specific concession by the Council that more than one twelfth per month may be spent, which would be unlikely given they will be attempting to pressure the 'Parliament' and Commission into swift acquiescence to their 2.9% deal - the 2010 EU budget continues into next year.

Bingo! That freeze.

Futile games

So is David Cameron gaming the 'Parliament' and Commission with their own procedures in order to achieve what he wants? Time, and the reaction of those institutions, will tell. Ultimately, it matters little.

For all the reasons and more that were well argued by Harry Phibbs in the Daily Mail, even a freeze isn't nearly strong enough action against the EU's financial incompetence and abject waste and the best case scenario of all this is still most likely to be a 2.9% increase.

That would leave Britain still having to stump up an extra £430 million for the EU next year, on top of the £8.3bn (net) we're already committed to handing over, while making big cuts to essential public services at home.

Justify that, Prime Minister.

Why isn't the EU budget being cut?

by Marc Glendening

On Wednesday October 13th, 35 MPs defied the coalition government and demanded that Britain's contribution to the EU be cut in real terms at a time when major spending reductions are being planned across the range of public services in Britain.

Ministers said that it would be 'illegal' for our parliament to vote for a cut in the contribution and are instead pressing for a freeze in the amount of money we hand over to a fraud-ridden budget that has not had its books given a clean bill of health by auditors in 15 years.

The European Commission wants its budget to grow by 5.8% next year,
2011-12. Britain is already paying £8.3 billion net, compared to last year's
£6.4 billion above and beyond what we get back currently. In total the gross contribution we have to hand over amounts to £48 million a day.

This year, the Commission has reluctantly settled for a 2.9% rise. The plan is to increase the wages of EU officials by 5.3% and expand the commission's administration costs by an extra 15%.

As Mats Persson of the pressure group Open Europe comments: "People and governments across Europe are fed up with the EU being the only public body protected from spending cuts".

The Council of Ministers wants the Commission to cut its increase for next year back to 2.6%. However, the European Parliament wants to go even further than the Commission and voted on October 20 for a £6.5 billion increase.

For Britain this will mean, if implemented, finding an extra £884 million next year, this being the equivalent of 14,000 doctors, 29,000 nurses, 34,000 police officers or 52,000 soldiers.

The elaborate Brussels 'conciliation procedure' will now kick in to try and arrive at some sort of compromise between the various bodies wanting more money from UK and other European taxpayers.

On top of this, unelected EU tax commissioner Janusz Lewandowski wants to remove Britain's rebate from the EU budget. This is currently worth
£3 billion. It was negotiated by the UK government in the 1980s because British farmers received a much smaller proportion of CAP money compared to their German and French counterparts. Now the Commission wants to reduce our rebate by £2.5 billion next year before phasing it out totally.

Another area of financial attack emanating from Brussels is the way in which we are being forced to contribute to the crisis in the eurozone. The UK was obliged to guarantee £8.6 billion towards the recent bail-out of Greece, about 10% of the total loan package. If the Greeks cannot pay this back, then UK taxpayers will lose their money.

We had to contribute this amount because the Commission utilised article 122 of the Lisbon treaty that allows the Council of Ministers, by qualified majority vote, to impose collective assistance to a member state hit by 'natural disasters or exceptional occurrences beyond its control...'.

This article is therefore, through a highly elastic and convenient interpretation by the EU elite, being used to justify forcing countries outside the eurozone to help prop up those within it that run into trouble. As Commission president, Jose Manuel Barroso, said: "We will defend the euro, whatever it takes".

To cap it all, recently Britain was fined £150 million by the Commission for not flying the EU flag in the vicinity of a number of projects Brussels claims to have 'financed'!

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written by Marc Glendening

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.

So, the EU isn't really an issue?

by Marc Glendening

During Britain's recent general election campaign we were repeatedly told by the BBC and various media pundits that the EU was not a key issue.

The three party leaders only briefly touched on the issue. There was one really telling moment, however.

When David Cameron outlined in the final TV debate his immigration proposals, Nick Clegg rightly informed him that his plans to stem the flow of migrants was doomed to failure as the EU treaty does not allow a national government to deny citizens of other member countries entry.

Cameron was dumbstruck and had to acknowledge his plans only applied to non-EU citizens.

With the German government claiming that 84% of all its laws, since the Single European Act, have had their origin in directives and regulations emanating from Brussels, it is becoming clear to the British and other European peoples that our elected representatives have little meaningful power.

The Lisbon treaty has only recently been passed and this will add significantly to the percentage of laws in the member countries that are determined centrally in Brussels.

Elections are becoming little more than a form of political beauty contest in Europe and, in some cases, not a very good one at that.

UKIP factor

A little commented upon fact is that the UK Independence party won over 900,000 votes in the general election and in a number of closely contested seats, including Solihull and Grimsby, may well have denied the Tories victory.

Given that it has been calculated that had David Cameron's party only gained another 16,000 votes strategically distributed it would have gained an overall majority, it is perhaps safe to conclude - as we predicted on this blog at the time - that the party's decision to abandon a referendum on the Lisbon treaty cost it outright power.

Bailout cost

While the political dust was still swirling around in the immediate aftermath of our inconclusive election, news emerged that, in his last act as Chancellor, Alistair Darling had agreed to hand over a further £8 billion from the UK taxpayer to the EU as part of the EU-IMF bailout of Greece.

This is on top of the £10 billion contribution we hand over to the EU each year, which is expected to rise yet again following the new round of budget negotiations between the Commission and the member states that will commence shortly.

It will be interesting to see how Nick Clegg's party play this issue, given their fanatical devotion to building an ever more powerful EU and the big cuts the Tories say need to be made early in the lifetime of the new coalition government.

When the Tories announced recently that they intended to cut our relatively small handout to the College of Europe (the institution that trains Brussels bureaucrats) Clegg denounced this and said the contribution should be ring-fenced.

Eurozone member countries are now trying to put together a massive new financial support package estimated to run to €750 billion (£640bn). Some of this will come from the IMF, which Britain also contributes heavily to.

Germany is committed to putting in €123 billion (£104bn) and is facing extra austerity measures at home to pay for the bailout contribution.

This is not going down well with the voters and Angela Merkel's Christian Democrats lost control of North Rhine-Westphalia in the wake of the bailout being announced.

'Beneficial' crisis

While German and other European voters look on in horror at the scale of the unfolding Greek euro crisis and the implications for those trapped in the eurozone, the European political class are needless to say seeking to use the crisis to centralise even more power in Brussels.

"The Greek case is a potential turning point for the eurozone," says Olli Rehn, the commissioner for economic and monetary affairs.

"If Greece fails and we fail, this will do serious and maybe permanent damage to the credibility of the European Union. The euro is not only a monetary arrangement, but a core political project of the European Union … In that sense, we are at a crossroads."

The Commission is now putting together stricter rules for member states, including "budgetary surveillance" and "reinforced economic policy co-ordination".

Of course, the EU is of no relevance to British politics.

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written by Marc Glendening

Dutch EU cuts pledge leads way for Tories

All the major parties competing in the forthcoming Dutch general election are supporting a multi-billion euro cut to the country's payments into the EU budget.

Ahead of the Dutch vote on 9 June, both the likely fourth-placed VVD and front-running CDA parties propose bringing the contribution paid by the Netherlands into line per capita with those of France and Germany.

According to EUobserver, the result would be Dutch payments to the EU being cut by around half from their current annual level of €5.3 billion (£4.6bn).

Other Dutch election front-runners, the centre-left PvdA and the Freedom Party, also support a cut.

UK contribution

According to the recent Budget documents, last year Britain handed over £6.4bn (net) to the EU and in the coming year, at a time when our next government is likely to be cutting public services towards reigning in our deficit, that net amount is due to rise to £7.6bn.

This is even more than the £6bn involved in the proposed rise in National Insurance contributions that caused such a huge fuss at the start of this general election campaign.

And so far other 'big ticket' items of government spending like the Trident nuclear deterrent and the ID cards scheme have all featured in debates about cuts.

But at no point on the campaign trail has a politician or journalist questioned the scale of money Britain will next year alone flush on the EU and what we're getting for those billions.

This is especially odd since auditors have not been able to fully approve the EU's accounts for an unjustifiable 14 years in a row and there are regular reports detailing extraordinary levels of waste and fraud.

So not even auditors can fully explain where the billions countries pay to the EU actually end up.

Vote winner

The move by leading Dutch political parties to cut the amount of public money the country wastes on the EU has proved immensely popular, with a survey showing 63% of voters support the idea.

So not just would Britain be far from alone or isolated in Europe in demanding a cut to the amount of public money the EU consumes, but the news also shows that - for the British party that made a similar pledge - the policy is likely to be a big vote-winner.

Not surprising, since such a move would show that party to be serious about the tricky task of tackling national debt levels by chopping waste and preserving key public services.

Ahead of tomorrow's 'foreign affairs' TV debate between the party leaders, during which David Cameron must produce some striking ideas to grab support and win back lost ground, now is the perfect time for the Conservatives to champion EU cuts.

Electoral credibility depends on pledging EU cuts too

Recent reports have warned that Britain faces losing its triple-A credit rating unless 'strong' action is taken after the election to cut levels of public debt.

A fortnight ago, the ratings agency Fitch said it was "uncomfortable with the fiscal adjustment path set out by UK authorities" and called for "more credible and stronger fiscal consolidation plans during 2010".

Fellow agency Moody's, meanwhile, spoke out to say that Britain had moved "substantially" closer to losing its AAA status and, at the end of March, Standard & Poors declared that the level of government debt may become "incompatible with an 'AAA' rating".

Most recently, one of the world's most powerful investment houses gave notice that Britain's AAA credit rating could be lost within a year.

The Independent reported that Scott Mather, the head of global portfolio management at the world's largest bond investor - Pacific Investment Management Co (Pimco) - said, "Miracles are needed in the next six months in order to keep economic growth in the developed world."

Looming debt trap

Alarm bells should be ringing loudly. Britain's AAA credit rating isn't merely a status symbol. Its loss would label Britain as a riskier lending prospect and, as a result, the cost of national borrowing would rise.

And when borrowing this year alone is forecast to hit £167bn, a higher interest bill could spark a spiral of higher taxes and faltering growth that could prove fatal for financial stability and prosperity.

For all the media circus of the election campaign, we are being asked to elect politicians who will have to walk a financial tightrope over that debt trap.

And so far none of them seem to be taking the problem seriously enough to be up to the job.

Major cuts to public spending - very likely public services too - will be needed. That much is being said.

But to decide which party has the credibility to govern and deserves our vote, we must be told where their axes will fall.

State the obvious

One particular point is already clear to many. We can no longer afford to splash multi-billion pound sums every year on propping up the European Union's wasteful activities.

So far, much heat and argument has been generated about the £6bn at stake over the proposed rise in National Insurance contributions.

But where is the debate about the equally substantial £6.4 billion (net) the EU cost us last year - 'taken out of the economy', if you subscribe to Gordon Brown's own rhetoric. Handed over to an organisation that hasn't had its accounts fully signed off by auditors for an unjustifiable 14 years in a row.

Surely a large and much clearer example of waste than almost any other element of government spending? But which journalist has asked Gordon Brown or David Cameron to either justify or cut this?

More relevantly, what will either party do to cut the £7.6bn that recent Budget documents show the EU will cost our new government over the year ahead?

Time must be called on where that money ends up; MEP junkets to the Canary Islands, sponsorship of dubious cultural projects, subsidised skiing holidays for the families of EU officials and much more waste.

Reality check

These are serious times and even enthusiasts in principle for the European Union must recognise that continued provision of many valued public services and even the stability of the economy are today at such grave risk that funding the grand ideals but wasteful reality of today's EU is a luxury that Britain can no longer afford.

Maybe now would in fact be a good time to discuss whether whole EU institutions which serve no coherent purpose, like the European Parliament - merely existing to provide a thin veneer of democratic respectability to the EU structure - should face the axe.

Imagine the savings! No more MEPs to pamper, grand buildings and facilities to maintain or that monthly circus back and forward to Strasbourg. No more six-figure salaries, expenses, travel allowances or multitude of other perks that - according to think tank Open Europe - cost us £1.8 million a year for each MEP.

A recent Daily Express report puts the figure as heading up to £2.1 million for each of the EU's 736 MEPs, nevermind the legions of support staff.

Really, would we miss MEPs? With our economy in dire straits, is it really such a hard decision to cut that all away, rather than slash much more valued public services?

In any case, for national ministers to get together periodically to discuss how to co-operate on the issues that affect us all, it isn't fundamentally necessary for the EU to be as politically centralised or have such a massive central budget as it wields today.

Wealth redistribution

Superstate ideology has long overtaken necessity. The EU has expanded way beyond its original purpose to the extent that its institutions and policies are now swallowing up far too much of Europe's financial resources.

Now these resources have become so critically scarce, they absolutely must be redirected - spent on the ground around Europe supporting economic recovery, rather than on glass palaces full of extra layers of lawmakers in Brussels.

Superstate enthusiasts, of course, like to downplay the EU's massive £116 billion budget by comparing it to the even bigger figure of the continent's total GDP. They conjure up an ocean to try to make a sea of money look like a drop. It's the oldest political trick in the book and, by now, surely the lamest.

So who in this election will show in the weeks ahead that they are serious about protecting public services, limiting the burden of taxes, and combatting obvious financial waste - by making clear that the £7.6bn ear-marked for the EU in the coming year will be the first piece of public spending under their axe?

Brown's double standards on jobs and public spending

It's day two of the general election campaign and the usual suspects are already trying to take voters for fools.

Business secretary Peter Mandelson was first on the stump this morning, making a speech to the Foreign Press Association.

Mandelson, a powerful yet unelected government minister, seems to enjoy inexplicable credibility from the media - even when talking about trust and honesty in politics. Can the media already have forgotten how Mandelson's own actions twice previously caused him to be sacked from the cabinet?

His latest argument about an opposition party being too 'inexperienced' for government is nothing more than an argument that government must never change - that only the experienced should govern. An argument against democracy itself.

Admittedly, not an entirely unexpected point of view, coming from someone known for his enthusiasm for the European Union. His favouritism for technocracy over democracy has long been clear.

But sadly the media seem to be letting the public down by reporting such anti-democratic sentiments from a senior government minister completely uncritically.

Brazen Clegg

Lib Dem leader Nick Clegg also joined the fray early in the day, to claim that this election 'isn't a two horse race'. Despite presumably knowing what the rest of us do - that in reality, unlike Gordon Brown and David Cameron, he is not likely to become Prime Minister.

A much more remarkable claim, however, was his assertion that only the Lib Dems are untainted by corruption and can therefore restore trust in politics.

Firstly it's plainly clear that, like the other parties, Lib Dem MPs were also caught up in the expenses scandal and had to apologise and pay back misclaimed expenses.

But Clegg's claims about trust are especially brazen, given it assumes people have such short memories that we will already have forgotten how he led his party to break a clear 2005 election promise to support a referendum on the EU Constitution / Lisbon Treaty.

Worse, during that process, Clegg engaged in precisely the dodgy backroom deals he accuses the other parties of employing to ensure that his party quietly voted whichever way it took at each stage of the Lisbon Treaty's progress through Parliament - abstaining in the Commons and voting against a referendum in the Lords - to prevent people being given a say on something as important as who decides new laws.

Hardly very trustworthy, or democratic. So who does Clegg really think he's fooling with his 'holier than thou' rhetoric? In reality, such claims just serve to make himself look something of a joker and badly out of touch.

Commenting on the euro today, Clegg also reinforced his party's enthusiasm for handing power over to the EU.

The Lib Dem leader admitted that "we think there is a case for, a long-term case for, considering entry into the euro, which needs to be done with a referendum" but admitted that "eurozone interest rates over the last few years would have been wrong for Britain".

In revealing that he believes we should ultimately join the euro while admitting eurozone interest rates can be wrong for our economy, Clegg displays how his EU-statist ideology trumps the economic stability and prosperity on which many jobs depend. Hardly the best bid for a leadership position in our democracy!

Certainly, given his low grade behaviour over the Lisbon Treaty, it would be a brave person indeed who took seriously his purported commitment to holding a referendum before signing Britain up to the euro.

Brown's £6bn gaffe

At Prime Minister's Questions, a major theme was the government's proposed increase in National Insurance, versus the Conservatives' plans to ditch that increase.

Gordon Brown banged on repeatedly about the dangers of "taking £6bn out of the economy" that the NI increase will raise.

As the BBC reports, Brown said "Take six billion out of the economy now and there is more unemployment, more businesses go under and there is less growth."

"Thousands of jobs would then go", Brown lectured.

Yet this is the man who, last year, despite our growing deficit and massive borrowing, was quite happy to take £6.4bn out of the economy and hand it over to the European Union.

This is an institution about which there are regular reports of financial waste and fraud on a grand scale, and whose accounts have not been fully approved by auditors for an unjustifiable 14 years in a row.

According to the recent Budget documents, next year, if Brown remains Prime Minister, at the same time as he is slashing public services, his plan is to increase our cash payments to the EU to a scandalous £7.6bn net.

So, once again please for the record, Mr Brown. How many thousand jobs has taking such sums "out of the economy" and wasting them on the EU already cost?

Schools cuts will only pay for extra £2bn to EU

This weekend Schools Secretary Ed Balls became the first cabinet minister to set out where the axe may fall on public services, in the government's bid to bring Britain's finances back into balance.

But rather than cut the unjustifiable extra £2bn the government plans to give to the EU next year, Mr Balls revealed that he wants to cut the same amount from the schools budget instead.

Speaking to the Sunday Times, Mr Balls said that up to 3,000 senior school staff could be axed instead of excessive spending on the EU.

Primary school heads as well as deputies, assistant heads, plus heads of subject in primary and secondary schools could all find themselves in the firing line.

But any benefit to our public finances contributed by these likely painful schools cuts will be quickly eaten up by the looming 60% increase in the amount Britain pays into the EU's mismanaged accounts.

Rot at the top

As the minister widely recognised to be Gordon Brown's right-hand man, it's fair to assume Mr Ball's stance - that cash for key services must be chopped before cash for the EU - represents misguided attitudes to public services right at the top of government.

But how many MPs - especially those in the most marginal seats - will stand by this twisted credo when schools in their own constituencies face staff cuts?

MPs can't possibly hope that voters will accept an explanation that the state of our public finances warrants cuts when people can see even more billions being splashed on the audit-failing EU.

Angry reaction

The government's plans have been angrily criticised by teachers' organisations and are already being described as a potential 'bloodbath'.

Speaking about Mr Balls, Mick Brookes of the the National Association of Head Teachers, said: "The impression he gives is that head teachers are among the 'bureaucrats' who can be replaced."

"What does he think they're doing all day? We're looking for him to get his own house in order before criticising school leadership."

EU waste

Stopping the complete waste of public money on the EU - at the very least blocking next year's unacceptable £2bn increase - would be a good first step towards the government getting its own house in order.

Two recent examples of how the EU is wasting public money on a grand scale are typical of the stories that now appear regularly.

According to the Irish edition of the Sunday Times earlier this month, retiring Irish Commissioner Charlie McCreevy is set to receive a massive £362,000 (€400,000) EU payoff, having spent five years enjoying a £216,000 (€239,000) EU salary plus lavish expenses.

Worse, Mr McCreevy is just one Commissioner of 27 enjoying that pay packet, and not the only one soon retiring.

And just last week there was news via EUobserver that the EU is splashing £280m on a new, self-titled 'palace' in Brussels to house its top officials.

Take action

To contact Ed Balls and ask him why teachers are getting the chop rather than the £2bn extra the government plans to give the EU, you can email him at dcsf.ministers@dcsf.gsi.gov.uk

EU gets 60% more as public services face 'efficiency savings'

This week, Alistair Darling proclaimed that the government is "ready to make the tough choices necessary" in order to bring Britain's public finances back into balance.

Speaking in Cardiff, the Chancellor warned of "slower growth in public spending in the coming years" and that "setting priorities inevitably means tough choices."

"The first priority", he said, "has to be to look for areas where we can achieve greater efficiency."

The Chancellor's comments have been seen as paving the way for public sector spending cuts expected to be outlined in the Pre-Budget Report this autumn.

Wrong priorities

But in an early example of the kind of priority setting we can expect from this government, just a couple of weeks ago we learnt that one of the most wasteful elements of government spending - Britain's cash contributions to the European Union budget - will next year rocket by 60%.

According to the BBC, the increase will take Britain's annual net contribution to the EU budget from £4.1bn to £6.2bn in 2010 - equivalent to writing a cheque to the EU for £119 million every single week.

Unjustifiable increase

Handing this much extra cash to the EU is completely unjustifiable, not just in today's tightened financial circumstances, when public services are clearly facing cuts.

But also in light of the fact that the EU's accounts have been severely criticised by auditors now for 14 years running. Even the EU's auditors have trouble telling us how EU institutions are spending the money they currently receive.

That any public money at all is still being handed to the EU, given the
on-going uncertainty by auditors over how it is being spent, is scandal enough. But now Gordon Brown and Alistair Darling plan to give the EU billions more.

Short-sighted deal

The increase comes as a result of the 2007-2013 EU budget deal done by Tony Blair in late 2005 and pushed through Parliament by Gordon Brown in 2007. All highlighted by the Democracy Movement at the time in a campaign called Stop the Cheques.

Some of the main myths perpetuated by the government to justify the deal were dismantled in our December 2005 EU budget factsheet and these points remain just as relevant today.

Because if you tackle the government over their enthusiasm for splashing billions more on the EU, you'll get the same old myths in response.

The full consequences of that short-sighted deal are today hitting home at the worst possible time for Britain's public finances.

EU waste

The EU has to be by far the least deserving of all possible recipients of extra public cash.

Beyond the critical role of public services like the NHS, on which so many depend, you only have to watch programmes like Channel 4's Secret Millionaire to see how many people are struggling with next to no financial help to support the worst off in our society through small, local charitable initiatives.

For these people, often working to improve people's quality of life in struggling communities where the local council cannot or will not provide much-needed facilities, even small amounts of money can make a huge difference to their work continuing.

Next to such real life realities on our screens every week, news that the audit-failing EU, with its legions of pampered hangers-on and lavish glass palaces in Brussels, is being given an extra £2bn by the government - despite no-one being absolutely sure how such money is being spent and regular reports of waste and fraud - is a glaring injustice.

Real message

The message from Alistair Darling is clear. Swathes of services on which people depend for their health, care, education, financial security and much more will shortly find themselves in the firing line. But spending on the EU is sacrosanct.

The reality is that, as public finances are squeezed, the government plans to deprive essential services of funding and cause cuts in order to pay for this outpouring of cash to the wasteful EU.

Unless the government and the MPs who voted to approve this EU budget deal take urgent action now to reverse it - to refocus public money on real needs in a very different economic situation than when the deal was agreed - they must accept personal responsibility for the resulting public service cuts to come.

Short-sighted decision-making, disinterest in correcting their mistake despite the billions at stake, topped with hypocrisy over the proper funding of public services will hardly be the best scenario for success in the looming general election.

Alistair Darling may talk of his "tough choices", but inaction now over the unjustifiable scale spending on the EU will mean that he makes the choice of many at the ballot box very easy indeed.