Tick Tock Tory Boys

Reposted from the Sunday Telegraph

When even the Telegraph, which is the de facto house paper of the Conservatives, starts baying for your blood then you know you’re in trouble. The tock is ticking for Cameron and Osborne.

David Cameron in Brussels for the European Council. Photo: REX

The European Union warned Britain months ago that it was facing a massive increase in its EU membership fee, according to documents seen by The Telegraph.

A furious David Cameron vowed on Friday that he would not pay an “appalling” and unexpected demand for an extra £1.7 billion in British contributions to the EU budget by the December 1 deadline.

However, The Telegraph can disclose that EU officials warned member states in January that new bills were coming, and produced figures showing that Britain was likely to have to pay higher fees this autumn.

The disclosure cast doubt on Mr Cameron’s claims that he had been ambushed out of the blue by the demand for more money on the eve of the Brussels summit on Thursday.

The development will intensify pressure on the Prime Minister and George Osborne, the Chancellor, over why Britain was apparently so unprepared for the extra surcharge.

In other developments as the row grew:

•  Treasury ministers are to be hauled before MPs this week to explain why Mr Cameron was not informed of the impending£1.7 billion charge from the European Union

•  Labour’s Treasury spokesman, Chris Leslie, wrote to Mr Osborne demanding that the Chancellor set out what he knew, when about the demand for more money. Mr Leslie told Mr Osborne he had “serious questions to answer”about how long the government had known about the potential for Britain to be hit with such a massive surcharge;

•  Mr Osborne is preparing to launch talks with other European finance ministers, ahead of a meeting on November 7 at which the dispute is expected to be discussed. The Chancellor will raise Britain’s concerns with the German Finance Minister, Wolfgang Schaeuble, and others, when they meet in Berlin this week at a global forum on tax transparency

•  Senior Treasury officials are meeting this weekend, and will be speaking to their counterparts in the Netherlands, Italy, and Greece to build an alliance of countries to fight the extra demands for money

•  A senior Member of the European Parliament warned that Mr Cameron would have to pay the £1.7 billion, saying the confusion was “an entirely British affair” and that the rest of Europe “expects” the UK to pay up;

•  It emerged that Britain would face EU fines worth more than £1.3 million a day for every day the country refuses to pay the extra bill.

The call for the extra cash, which followed a review of member states’ economic performance since 1995, was described by Mr Cameron as “completely unacceptable”.

The detailed demand for £1.7 billion was first sent to EU member state governments on October 17, several days before the information reached the Chancellor.

The Chancellor has said he learnt about the bill “earlier this week”, but it appeared to catch the Prime Minister off guard.

On Saturday, Sir Bill Cash, chair of the Commons European scrutiny select committee, announced that ministers from the Treasury would be summoned to explain the apparent lack of action over the bill which left Mr Cameron exposed at the summit.

Sir Bill said: “I’m calling in Treasury ministers next week to my committee so that we can go through how this happened in addition to what they have to say about the way in which they intend to handle it from now on.”

“So we’ll have a proper examination which will obviously include looking at the system itself which I’ve already described as crazy.”

The extra £1.7billion bill is a result of changes in the way national accounts are calculated across the world, which have had the effect of increasing Britain’s GDP by more than the European average. This meant Britain’s required contribution to the overall EU budget would also increase by more than the EU average.

Different EU member states make different contributions to the EU budget, depending on their national incomes.

On January 16, European statisticians said the EU-wide average increase resulting from the change in the way national accounts are calculated was a rise of 2.4 per cent in GDP. For Britain, the projected figure was higher, between 3 per cent and 4 per cent.

A prominent MEP warned Mr Cameron yesterday that Europe “expects” Britain to pay the surcharge by the December 1 deadline.

“It appears the Prime Minister was surprised by this in Brussels,” said Alexander Graf Lambsdorff, vice-president of the European Parliament.

“And that I can understand, because a bill of €2bn, £1.7bn, is significant enough to be informed about before you go to a summit and then are confronted with it in a surprising way. But that is an entirely British affair. The rest of Europe expects you to pay and that’s that.”

On Saturday, The Telegraph reported that Angela Merkel, the German Chancellor, had told Mr Cameron he should have anticipated the European Union’s demand.

According to a diplomatic record of talks between European leaders seen by the paper, the German Chancellor told the Prime Minister the call “did not come out of the blue”.

“I understand that it is difficult to come up with €2 billion [£1.7billion] David, but this should have been expected,” Ms Merkel said.

The European Commission president, Jean Claude Juncker, also told Mr Cameron to “show some political courage” over the call.