By Paul Haydon

Although the Commons vote on the EU budget isn’t binding, the Government is now under pressure to make demands that simply cannot be met. Calling for a real-terms cut in the EU budget would not only be unrealistic, but would undermine the government’s ability to negotiate effectively and reach a much-needed compromise with other member states.

The current government position is to oppose the 5 per cent rise being proposed by the Commission and settle for a rise in line with inflation. That is supported by a number of key member states including France, Germany, the Netherlands and Finland, and so is a realistic negotiating position. Calling for a real-terms cut, on the other hand, is not.  This would reduce our already dwindling influence and our ability to defend core British interests.

The most important of these is maintaining the UK’s rebate, which is currently worth €3.5bn a year. Other EU member states have long been arguing that the rebate should be scrapped, especially since the accession of Eastern European countries substantially poorer than the UK. Denmark is now arguing that it too deserves a permanent rebate and has threatened to veto the budget unless its demands are met. Meanwhile a paper circulated last week by the Cypriot Council presidency describes Britain’s special treatment as “no longer warranted,” given that the UK is now one of the EU’s wealthier member states.

Constant bickering over the size of the budget also threatens to side-line the issue of how to reform EU spending to make it more efficient and growth-oriented. Instead of looking at how much we contribute to the EU, we should be thinking about what we get out of it. That means working with like-minded member states to push for a cut in the Common Agricultural Policy and greater investment in small businesses, renewable energy and research and innovation, all of which bring major benefits to the UK.

Of course, achieving any significant budget reform won’t be easy due to the longstanding vested interests of member states. But if we are to make any progress on the ‘better spending’ agenda, it will be important not to expend too much political capital on trying to reduce the size of the overall budget.

To get the best deal for the UK taxpayer, we need to engage with our natural allies in Europe and negotiate both a real-terms freeze in spending and a long-term commitment to reform and modernise the EU budget.