Chancellor accused over “smoke and mirrors” EU surcharge victory

George Osborne claimed victory yesterday afternoon when, after a meeting with Brussels finance ministers, he announced the unexpected EU surcharge demanded of the UK had been halved and payment put back until September next year.

But within hours of his victory his political opponents, as well as European finance experts and foreign Government ministers, were claiming he had actually produced the budget ‘cut’ by simply applying to the bill the same rebate the UK receives on any EU contribution.

The Treasury last night insisted there had been no guarantee that the UK’s regular rebate would be applied to the extra surcharge - demanded after a recalculation of Britain’s gross national income (GNI) relative to the other 27 member-states - and that the Chancellor had succeeded in having it applied at a rate of half the total demand, rather than the usual one third.

By pushing back the bill it will now come around the same time as the rebate is due to be calculated, meaning the two can be considered together.

Other EU finance ministers appeared to contradict the Chancellor’s account.

Dutch finance minister Jeroen Dijsselbloem said: “The UK has a rebate, which they have had for a very long time and of course this mechanism of rebate will also apply on the new contribution. So it’s not as if the British have been given a discount today. The rebate will apply on the UK contribution, which will increase.”

Shadow Chancellor Ed Balls said it was all “smoke and mirrors,” adding that the deal had not saved the UK “a single penny” and accusing Mr Osborne of “trying to take the British people for fools.”