Britain could be hit with additional £1 billion demand for EU payments

Britain could be hit with a demand for an additional £1 billion in payments to the EU this year after the European Commission reported £9.2bn black-hole in spending on regional spending projects.

By Bruno Waterfield, Brussels
9:00PM GMT 08 Feb 2012

To make up the shortfall, Janusz Lewandowski, the EU’s budget commissioner, is planning to overturn cuts made last year to the 2012 Brussels budget, reductions in EU spending that were fought for by David Cameron.

“There will probably be a deficit at the end of the year for which I will have to ask for extra financing,” he told The Daily Telegraph.

The Prime Minister, with the support of Germany and France, fought in December last year to keep the EU’s budget increase in 2012 to 2 per cent substantially down from the 5 per cent originally demanded by the commission.

If the full missing sum is added onto the current spending plans, via an amending budget, it would mean an austerity-busting spending increase of 13 per cent, taking British EU contributions for 2012 to over £14.5bn, a figure based on Britain’s obligation to pay 12.4 per cent share of all Brussels expenditure.

Further fuelling a row about high EU spending at a time of national austerity, Mr Lewandowski has blamed Britain for reducing the EU budget below the commission’s original demands for the last two years.

The Polish commissioner has also provocatively accused rich countries, such as Britain, of threatening EU regional aid payments targeted at Europe’s poorest areas, such as those in his native Poland.

“This shows that the Commission was right to issue stark warnings about the low levels of payments agreed by the Council (national governments) for these last annual budgets,” he said.

“It also shows that the Commission’s estimates for payments, as stated in its draft budget, were spot on. Now that these bills will be pushed to 2012, we risk having to interrupt payments in key areas at a time when such payments are sorely needed.”

The EU budget black-hole will set off a bitter political fight over the next month as Britain refuses to pay extra on top of resented contributions that were agreed after intense 2012 negotiations last December.

British officials have vowed to block any news increase to the Treasury’s EU payments at a time when any extra cash paid over to Brussels means new cuts to already stretched Whitehall budgets.

“We believe the 2012 budget, which was frozen in real terms, is adequate to cover essential spending,” said a government spokesman.

“The European Commission needs to manage additional spending pressures within the current agreed 2012 EU budget. This is a task that national governments face every day and the EU must make the same tough decisions.”

Martin Callanan, the leader of the Conservatives in the European Parliament, has accused the commission of playing political football with funding ahead of talks begin this spring on future EU financing for a seven year period between 2014 and 2020.

“This is the European Commission playing games,” he said.

“There is no shortage of money at the EU level. There is, however, a great shortage at the national level. The EU budget needs to be reduced.”

A recent study by Open Europe into the regional policy, which has gone into the red this year, found that over a seven-year period ending next year, Britain will have paid almost £30bn into the EU’s “structural and cohesion funds” targeted at Europe’s poorest areas but will get back just under £9bn.

The last available EU figures show that the average British family paid £672 towards the EU in 2010 but got back only £373, the difference between contributions to Brussels and funding benefits.

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