MPs rebuke Osborne over EU surcharge reduction claim

Chancellor George Osborne's claim last year to have halved the UK's £1.7bn EU budget surcharge is "not supported by the facts", according to MPs.

Mr Osborne made the comment after meeting EU finance ministers in November when it was announced the UK would pay a total of £850m.

The Commons Treasury Select Committee said it "should have been clear" Britain's EU rebate would apply.

But the Treasury said it had "delivered a real result for Britain".

In a new report, the cross-party Treasury committee said it recognised the government's achievement in extending the payment period and avoiding interest charges.

But it said the Treasury's arguments as to why the rebate would not have automatically applied were "unpersuasive".

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.

Committee chairman Andrew Tyrie said: "The suggestion that the £1.7 billion bill demanded by the European Union was halved is not supported by published information.

"The terms of the UK's rebate calculation are set out in EU law. It should, therefore, have been clear that the rebate would apply.

"The Government got a good deal for the UK by securing an interest-free delay to the EU bill. But by overstating its success on the rebate, it distracted attention from this achievement."

The surcharge followed an annual review of the economic performance of EU member states since 1995, which showed Britain had done better than previously thought.

It sparked an angry reaction from the government when it was revealed in October, with Prime Minister David Cameron saying the British public would find the "vast" sum "totally unacceptable".

Speaking after the finance ministers' meeting the following month, Mr Osborne 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 also said reducing the amount paid to Brussels had been "far from inevitable", a position he maintained when giving evidence to the committee.

But the committee said EU law did not leave a "great deal of room for uncertainty", and that the "specific claim to have halved the bill through negotiation is difficult to support".

It added: "Claim and counter-claim are likely to be commonplace in the UK's debates on EU matters. The public should be put in a position to reach a view based on the facts."

Labour's Treasury spokesman Chris Leslie said: "This damning cross-party report exposes George Osborne's claim to have halved the EU budget surcharge to be totally untrue."

Mr Leslie said the chancellor should "apologise to taxpayers".

But a Treasury spokesman said: "The deal the chancellor secured on the surcharge was not a technical clarification, it was a hard fought negotiation that halved the payment and delivered a real result for Britain.

"We note that the Treasury committee did not raise the possibility of the rebate applying at any point before the result of the negotiation was announced."