CAMERON WILL HAVE TO MOVE ON EU BUDGET

David Cameron claimed it as "a great victory" and a done deal when the
European Council (the prime ministers of Europe) agreed an
inflation-only increase of 2.9% in the size of the 2011 EU Budget. But
he ignored the fact that the Lisbon Treaty gives equal budget-making
powers to the European Parliament.

Negotiations opened, and MEPs quickly dropped their call for the 5.9%
increase needed to meet all commitments. An increase of 2.9% could be
supported they said, but only in return for concessions.

The Lisbon Treaty doesn't spell out how the Parliament will be involved
in future budget making, so this round of negotiations will create a
precedent for decades to come. MEPs want a formal procedure for
dialogue to be established that will embrace annual budgets and the
making of long term financial plans, including the way EU expenditure is
financed. When the Council flatly refused to discuss this, negotiations
between the two bodies broke down.

Now a procedure called "minimum 12" has been adopted. It means that the
EU in 2011 will be run, month by month, on the basis of a zero increase
on the 2010 budget. This will mean indefinite delays in new initiatives
such as the creation of the EU's diplomatic service, but it also means
that the bills can't be paid.

Some 80% of EU money is spent by national governments. Even by the end of February the Commission will be unable to pay all agricultural subsidies; support for other projects will be
curtailed a little later. Some governments, including those in
financial difficulties, may then have to meet the obligations by
borrowing money on the open market at high rates of interest.

The Council is not united; Britain and the Netherlands are the two
countries refusing to concede anything to meet Parliament's demands. By
contrast, Parliament appears at present to be united and determined.
One of my MEP colleagues, who happens to be the former prime minister of
Lithuania, told my Liberal Democrat colleagues that if the Parliament
doesn't now establish a procedure for the making of future budgets we
might as well give up and go home.

David Cameron may be resolute now. Wait and see what happens when his
phone is hot with other prime ministers whose bills are not getting
paid.

READ THE TREATY!

So David Cameron believes that in Brussels he has secured a deal to limit the increase in the EU budget to 2.9%

Has he never read the Lisbon Treaty? He spent enough time denouncing it last year, but it seems that he never did get around to reading it, and nor did most of the British journalists commenting on this week's European Council meeting.

The European Parliament has budgetary powers that match those of the Council. Governments can't do a deal without the consent of the Parliament, and the Parliament negotiating position is to call for a 5.9% increase.

Personally I agree with Cameron; no way should the EU budget next year increase by more than the rate of inflation. That's how I voted, as did the British Liberal Democrat delegation of MEPs. But we were on the losing side.

Real negotiations between Council and Parliament have yet to begin. The MEPs will not get their 5.9% increase. But I bet that the governments aren't able to limit the increase to 2.9%.

NO CUTS HERE

While George Osborne proposed his cuts package to the House of Commons, Euro-MPs were voting on the first round of the annual EU budget debate. The European Parliament called for a 5.9% increase.

Are these MEPs living in the real world? They claim that the money is needed to meet extra tasks the EU is expected to undertake, and anyway “it’s just a negotiating position.” I think it is madness, absolutely barmy, and makes us look out of touch with reality.

The majority approach is to contest virtually all cuts proposed by the European Council (the governments), even when money is going unspent, on the grounds that the cash could be put to use somehow. But there are some cuts I would be happy to support; for example, the Council is proposing to cut Common Fisheries Policy support by €140 million. Cutting a budget used to support unsustainable fishing practices sounds good to me.

And the budget of the European Parliament could be trimmed very significantly without any diminution in its functions. Our MPs and councillors are having to take action to “live within their means.” The difference is that MEPs are not responsible for raising the money they want to spend.

The Liberal Democrat European Group (ALDE) voted for the budget increase (comments from continental colleagues at our pre-meeting about not everyone in Europe having to be judged by the state of Britain’s finances). The British Lib Dems indicated our dissent, and voted accordingly. To do otherwise didn’t seem politically credible.