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Osborne says UK's £1.7bn bill to EU will be 'halved' Osborne says UK's £1.7bn bill to EU will be 'halved'
(about 1 hour later)
The UK will only have to pay half of the £1.7bn budget surcharge demanded by the European Union, Chancellor George Osborne has said. Chancellor George Osborne's claim that the UK will have to pay only half of a £1.7bn EU budget surcharge has been challenged by his opponents.
Speaking in Brussels, Mr Osborne said the UK would make two payments next year totalling £850m instead of £1.7bn in a lump sum by December. He said the UK would make two payments next year totalling £850m instead of a larger lump sum by December after the UK's annual rebate was factored in.
This is because the UK's annual rebate will be offset against the sum due. Mr Osborne argued the deal reached on Friday was a "result for Britain".
Mr Osborne said the agreement was a "result for Britain" and "far beyond what anyone expected us to achieve". But UKIP said the UK would still pay the full sum and Labour said Mr Osborne was "taking people for fools".
But BBC Political Editor Nick Robinson said the deal would be carefully scrutinised. The BBC's Political Editor Nick Robinson said the agreement would be carefully scrutinised amid claims by opponents and analysts that it did not add up.
He said the Treasury was claiming to have cut the 2.1bn euro top-up charge, demanded by Brussels, in half by ensuring the UK's rebate applies to the payment.
InstalmentsInstalments
The surcharge follows an annual review of the economic performance of EU member states since 1995, which showed Britain had done better than previously thought.The surcharge follows an annual review of the economic performance of EU member states since 1995, which showed Britain had done better than previously thought.
The demand sparked anger across the political spectrum, with Prime Minister David Cameron insisting the UK would pay nothing by the December deadline and calling for the overall sum to be re-negotiated. The demand sparked anger across the political spectrum, with Prime Minister David Cameron insisting the UK would pay nothing by the original 1 December deadline and calling for the overall sum to be re-negotiated.
Mr Osborne welcomed the agreement after a four-hour meeting of EU finance ministers in Brussels, in which he said it had also agreed that the UK would pay the additional sum in two interest-free instalments in July and September 2015. After a four-hour meeting of EU finance ministers in Brussels, Mr Osborne hailed an agreement which he said meant the UK would pay a lower sum in two interest-free instalments in July and September 2015.
Analysis by BBC's Europe Editor Gavin HewittAnalysis by BBC's Europe Editor Gavin Hewitt
How has the UK reached this figure of £850m?How has the UK reached this figure of £850m?
It has included the figure of the UK rebate which is calculated on the gross national income figures.It has included the figure of the UK rebate which is calculated on the gross national income figures.
The Treasury argues that it was not at all clear that the rebate would have been applied in full and they gained that assurance after intensive discussions with the Commission.The Treasury argues that it was not at all clear that the rebate would have been applied in full and they gained that assurance after intensive discussions with the Commission.
Others argue that the UK rebate for next year was never in doubt and that a rebate which the UK would have got anyway is, in effect, being used to reduce this surcharge payment.Others argue that the UK rebate for next year was never in doubt and that a rebate which the UK would have got anyway is, in effect, being used to reduce this surcharge payment.
It is the case that these figures were never discussed at the finance ministers meeting today so the announcement that the UK bill has been halved has been met with some surprise. It is the case that these figures were never discussed at the finance ministers' meeting today so the announcement that the UK bill has been halved has been met with some surprise.
He said: "Instead of footing the bill, we have halved the bill, we have delayed the bill, we will pay no interest on the bill, and if there are mistakes in the bill we will get our money back." He said: "Instead of footing the bill, we have halved the bill, we have delayed the bill, we will pay no interest on the bill, and if there are mistakes in the bill we will get our money back.
"We have also changed permanently the rules of the European Union so this never happens again."We have also changed permanently the rules of the European Union so this never happens again.
"This is far beyond what anyone expected us to achieve and it's a result for Britain.""This is far beyond what anyone expected us to achieve and it's a result for Britain."
RebateRebate
He also said that if any errors had been made in the calculation, the UK would receive a refund. Asked how this had been achieved, Mr Osborne said the UK's annual rebate from Brussels would be applied in full to the surcharge next year.
Asked how this had been achieved, Mr Osborne said the UK's rebate would be applied in full to the surcharge next year.
The UK rebate is a system dating back to 1984, negotiated by Margaret Thatcher, that provides the UK with a refund on a part of its contribution to the EU budget. It is calculated on the basis of changes in national income.The UK rebate is a system dating back to 1984, negotiated by Margaret Thatcher, that provides the UK with a refund on a part of its contribution to the EU budget. It is calculated on the basis of changes in national income.
It was meant to reflect the fact that the UK had a smaller agricultural sector than other nations at a time when most EU money went to farmers.It was meant to reflect the fact that the UK had a smaller agricultural sector than other nations at a time when most EU money went to farmers.
'Worse off' Eurosceptic Tory MEP Daniel Hannan suggested the deal achieved by the chancellor may not represent any reduction to the amount being demanded from the UK.
Conservative MEP Daniel Hannan suggested that the deal achieved by the chancellor may not represent any reduction to the amount being demanded from the UK.
He said: "The EU sticks us with a bill. Ministers double it, apply the rebate, return to the original figure and claim victory. We're meant to cheer?He said: "The EU sticks us with a bill. Ministers double it, apply the rebate, return to the original figure and claim victory. We're meant to cheer?
"Britain is worse off in absolute terms, but a straw man has been knocked down.""Britain is worse off in absolute terms, but a straw man has been knocked down."
'Not a penny'
And Labour accused Mr Osborne of "smoke and mirrors".
"David Cameron and George Osborne are trying to take the British people for fools," shadow chancellor Ed Balls said. "Not a single penny has been saved for the taxpayer compared to two weeks ago when David Cameron was blustering in Brussels.
"By counting the rebate Britain was due anyway, they are desperately trying to claim that the backdated bill for £1.7bn has somehow been halved.
"But nobody will fall for this smoke and mirrors. The rebate was never in doubt and in fact was confirmed by the EU Budget Commissioner last month."
Writing on Twitter, UKIP leader Nigel Farage said Mr Osborne was "trying to spin his way out of disaster", saying the UK was still going to pay the full £1.7bn.Writing on Twitter, UKIP leader Nigel Farage said Mr Osborne was "trying to spin his way out of disaster", saying the UK was still going to pay the full £1.7bn.
And Austria's finance minister said there was no question of changing the total sums of money being demanded from countries including Britain.And Austria's finance minister said there was no question of changing the total sums of money being demanded from countries including Britain.
Hans Joerg Schelling told a press conference in Brussels: "Whether the money is to be paid in instalments or as a lump sum is a discussion we can have. "Whether the money is to be paid in instalments or as a lump sum is a discussion we can have," Hans Joerg Schelling said.
"But the amount cannot be put in question. That was clear from our position and from that of several other countries.""But the amount cannot be put in question. That was clear from our position and from that of several other countries."
But Financial Secretary to the Treasury David Gauke tweeted: "Contrary to what some are suggesting, £850k is not the same as £1.7bn & December '14 is not the same point in time as July & September '15."But Financial Secretary to the Treasury David Gauke tweeted: "Contrary to what some are suggesting, £850k is not the same as £1.7bn & December '14 is not the same point in time as July & September '15."