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EU Budgetary Rebate

Volume 518: debated on Tuesday 16 November 2010

14. What assessment he has made of the effects on his Department’s ability to reduce the deficit of the reduction in the UK’s EU budgetary rebate; and if he will make a statement. (23977)

The latest forecast of the UK contribution to the EU budget shows that the UK abatement will decline from £5.6 billion in financial year 2008-09 to £2.8 billion in financial year 2010-11. The Office for Budget Responsibility will publish new projections of the UK contribution to the EU budget, including the abatement, in its autumn forecast.

Under the previous Labour Government our total net contribution to the EU was £19.8 billion; under the coalition Government it will be £41 billion. Will the British people not think it bizarre, bewildering and a betrayal that over half the money saved by cuts will go not to reduce the deficit, but to subsidise other western European countries?

My hon. Friend is right that alongside the domestic economic mess we inherited, we also inherited an EU budget deal that was completely out of touch with the situation faced by many European countries. The fall in our abatement is largely due to the give-away agreed by the previous Government in 2005, which will be fully phased in from 2011. It is expected to cost the UK about £2 billion per annum. That is £2 billion that was needlessly given away for absolutely nothing in return—yet another failing of the British people by the Labour party.