John Gormley (Dublin South East, Green Party)
Link to this: Individually | In context

Question 73: To ask the Minister for Finance his views on the European Commission's plans to cap the British budgetary rebate in 2007 and reduce it thereafter; and if he will make a statement on the matter. [18340/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

The European Commission published an own resources report in July 2004 which concerned the financing of the budget of the European Union. One of the principal proposals in the report was the abolition of the rebate for the United Kingdom. The Commission also proposed that transitional and decreasing payments be made to the UK from 2008 to 2011 to cushion the impact of the rebate's abolition.

The UK rebate mechanism was agreed by the European Council in 1984. It was based on the general principle that any member state sustaining a budgetary burden which is excessive in relation to its relative prosperity may benefit from a correction at the appropriate time. In 1984, the UK was one of the less prosperous member states and, largely because of the UK's relatively small drawdown from the Common Agricultural Policy which at that time took up the great bulk of the EU budget, it was nevertheless a very significant net contributor to the budget.

Circumstances have changed considerably since 1984. The UK is now one of the richest member states of the Union while following a series of reforms the CAP's share of EU expenditure has fallen considerably. Furthermore, the recent and prospective enlargements of the Union have increased the demand for substantial structural assistance to much less prosperous countries and regions. In these circumstances, it seems natural that the rebate mechanism introduced in 1984 has come up for review. This is a complex matter which will eventually be decided at a meeting of heads of state or government as part of an overall decision on the size, composition and funding of the EU budget for the seven years to 2013.