Sarkozy aide seeks end to UK rebate by 2013

A senior adviser to French presidential candidate Nicolas Sarkozy says the UK should give up its EU budget rebate by 2013 in return for reductions in EU support to French farmers.

French centre-right MEP Alain Lamassoure, a former European affairs minister and budget minister, is proposing the introduction of co-financing by national governments of Common Agricultural Policy (CAP) payments from 2009, provided that the UK gives up its €7.5 billion-a-year rebate.

"This is not in the budgetary interest of my country," Lamassoure told European Voice, explaining that it would mean France would have to start co-financing farm payments earlier than expected. Linking it to the UK’s budget contribution was the only way to "help our British friends to negotiate the end of the rebate", he added.

Lamassoure’s plan is set out in a draft report on reform of the EU’s sources of revenue, known as the own resources system, being discussed by MEPs on the budgets committee.

Lamassoure said that it was crucial to "bring order" to the current system of own resources, which was "incomprehensible". In particular, there was a need to get rid of the British rebate, negotiated by the then prime minister Margaret Thatcher in 1984, as well as all the other rebates won by governments in subsequent budget deals.

Changing the system would require unanimous agreement from the member states, so Lamassoure proposes a two-stage solution. In the first stage starting in 2009, the EU would move to a system of contributions based on a share of value-added tax (VAT) receipts according to each member state’s relative wealth, phasing out all rebates and other special arrangements.

In return, there would be a link made to reform of polices such as the CAP which some member states consider too expensive and which disproportionately benefit some countries like France. During the last round of budget negotiations in December 2005, UK Prime Minister Tony Blair resisted pressure to give up more of the UK’s annual rebate arguing that CAP spending meant France made lower net contributions to the EU’s budget than the UK which has an economy of comparable size. In 2003, for example, France made a net contribution of €1.7bn while the UK’s contribution was €3.8bn.

Lamassoure is proposing that member states could match CAP payments from their national budgets much as they do for structural funds programmes. The level of national contributions would depend on a country’s relative wealth, he suggested.

The MEP said that France had always opposed co-financing because it unfairly penalised poorer countries which would not be able to afford to make up funds lost from the EU. But the system would ensure that poorer countries continued to receive EU farm support at a higher level than richer countries, even if they had to make a contribution from their national finances, he claims.

The MEP also suggests that member states could use structural funds to finance these national top-ups. It would be a question of political choice how they used EU funds, he said.

Lamassoure said he expected to be accused in French political circles of making concessions too early by agreeing to co-financing. But he stressed that a move to such a system was inevitable, pointing out that it had also been proposed by German centre-right MEP Reimer Böge as part of the negotiations on the EU’s 2007-13 budget.

In the second stage of the reform, after 2013, the MEP said that there should be a proper system of own resources. He added that there should not be a new EU-wide tax but that some share of an existing tax, for instance VAT, excise duties on fuel, alcohol or tobacco, or corporation taxes, should be used to fund the Union’s central budget.

Lamassoure’s report will be discussed by the budgets committee in early March before being sent to the plenary for adoption.

Joseph Daul, leader of Parliament’s centre-right EPP-ED group, said that he agreed with the "general orientations" expressed in Lamassoure’s report.

A spokesman for Mariann Fischer Boel, European commissioner for agriculture, said: "Once you open the door to co-financing you are on the slippery slope towards re-nationalisation of agricultural support, it will become more difficult to ensure discipline in public support to agriculture."

UK MEP Neena Gill, a Socialist member of the budgets committee, said: "National co-financing of the CAP is a cloak to attack the UK rebate. You don’t get a fairer CAP if you say there’s a 80:20 split [in how it’s financed] because with the CAP there are still imbalances in the budget."

A senior adviser to French presidential candidate Nicolas Sarkozy says the UK should give up its EU budget rebate by 2013 in return for reductions in EU support to French farmers.

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