Timothy Kirkhope: We will stand firm against EU budget excess

I sat flabbergasted last week in Strasbourg as other MEPs rejected our Conservative amendments for an EU budget freeze for 2011, with them voting instead to increase it. It was, in the midst of the worst

financial crisis of the last 70 years, a real "kick in the teeth" to the rest of us.

My political group, the European Conservatives and Reformists (ECR) Group, has managed to form a centre-right coalition operating in a number of areas that are of importance and we are winning many arguments. But we knew that we would be in a minority when it came to the budget.

Yet we still lived in hope that other MEPs would realise that the European Parliament itself must cut back on its spending lines, and that all UK MEPs could back our amendments.

Amazingly, even Ed Miliband was "ostrich-like" in his denial of the state of the UK economy in the Commons last Wednesday. As Chancellor George Osborne laid out the scale of cuts needed to get the country

back on track after a decade of incompetent management under the last government, Labour MEPs followed their leader in the UK and voted for an EU budget rise. That made no sense at all.

The debate over the EU budget for 2011 is, however, only part of an upcoming, much bigger debate on how the EU raises and spends money. That process begins with today's summit of European leaders, including David Cameron.

To date, other than reasonably small contributions from cross- border VAT, the EU budget has been wholly financed by contributions from the 27 national governments. Now the European Commission is encouraging the Parliament to consider allowing the EU to have its own sources of funds. The buzzwords "innovative financing" are echoing around the corridors across Brussels.

Commissioners have suggested giving the EU its own tax raising powers – suggesting EU-level carbon taxes and EU-level financial transaction taxes or bank levies as possible first steps. The concept that European institutions could charge taxes directly on our UK citizens or businesses is a fundamental change that members of my ECR Group reject.

Commissioners, backed by the European Investment Bank, have also suggested that the EU could "leverage" its budget by issuing "bonds" for infrastructure projects.

And just last week a leaked "options paper" by the European Commission set out new alternatives for another direct tax on EU citizens to help

fund the 108bn-a-year cost of running the EU institutions and its policy agenda. These options include diverting a share of our own national taxes, such as carbon or aviation tax or VAT, directly to Brussels.

For Conservatives, the governments of sovereign nations should be the people to raise taxes and they alone must ultimately have a final say over how much they will then hand over to the EU. Yet again, the EU is trying to put the cart before the horse.

It seems as if the EU still believes it is negotiating with Tony Blair or Gordon Brown when it comes to Britain. Together they managed to hand over 7bn of our rebate for some very vague promises on agricultural reforms. The result of this deal was made clear last week: 631 words buried in the budget review.

Our rebate is now worth 3.1bn this year alone and will save the Treasury about 26bn between 2007 and 2013 when the current EU budget cycle ends. The Commission is now trying hard to claw back that rebate. The Conservative Government message is unambiguous: keep your hands off. That is the message that David Cameron will be giving to his European counterparts today.

You can be assured that my Conservative colleagues and I will continue to do all that we can in Brussels to swim against this tide of greater EU spending.

Now we have a government in Westminster that is eager to engage and make Britain's case forcefully in Brussels, rather than spin one line at home but do something completely different in Brussels, we might actually be able to turn the tide in our favour for once.

Timothy Kirkhope is a MEP for Yorkshire and the Humber. He is deputy chairman of the European Conservatives and Reformists (ECR) Group, and leader of the Conservatives in the European Parliament.