David Blackburn

Battling for the budget rebate

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A plain speaking man, Janusz Lewandowksi. This week, the EU Budget Commissioner said, not without a clear note of pleasure, that 'the rebate for Britain has lost its original justification.'

The EU veers between incompetence and arrogance. Baroness Ashton embodies the former, Lewandowski the latter. His statement encapsulated why a majority of Britons want out of this club into which they have never been allowed to enter. Put simply, it was hectoring and counter-factual.

Mrs Thatcher negotiated the rebate to balance Britain's net contribution, which was excessive owing to Germany and France's disproportionate profit from the Common Agricultural Policy (the most glorious misnomer). At the time, the EU was run for the convenience of backward farmers and the CAP accounted for a staggering 71 percent of the commission's budget. The Commission has broadened its horizons since, but the CAP still consumes 40 percent of the EU budget, the expenditure diluted by the appearance of competitive Hungarian and Polish farmers who do not feel the need to wear Lederhosen whilst milking cows by hand.

Treasury officials are holding the line that without the rebate, Britain's net contribution as a percentage of national income would be twice that of France and one and half times that of Germany. That is unacceptable. The government is preparing for a scrap with the Commission (so too was the previous government). Obviously there is a chance that the Eurosceptic Tories will come to blows with their Europhile Lib Dem allies, but it is unlikely: the rebate is fully justified and the Lib Dems made a manifesto pledge to emasculate the overbearing EU Commission, this is the perfect opportunity to do it.

The problem for the government is William Hague, who has been out of sorts and well before the recent controversy - a meeting with Mrs Clinton was barely tepid and the content of a speech inaugurating a new foreign policy was leaden. Cameron will be a force during the negotiations, using that easy public school charm to make Angela Merkel and Sarko go weak at the knees. But Hague will have to take the lion's share of the work, assuming he remains the Foreign Secretary.