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Cameron Vows To Protect Britain's EU Rebate

(c) Sky News 2012

David Cameron has vowed not to give away any more of Britain's EU rebate as he pushes for a freeze in the group's budget.

At PMQs, Mr Cameron described the rebate - secured by Margaret Thatcher in the 80s - as "incredibly important" and pledged to protect it.

The promise came amid fears that British taxpayers could end up handing over more money to Brussels even if the total EU budget is frozen or cut.

The Prime Minister is heading to a key summit on Thursday where the union's spending for 2014-2020 will top the agenda.

Mr Cameron wants at least a freeze but faces stiff resistance from countries who are overall winners in the way EU money is shared out, as well as from the European Commission.

The complicated formula under which Britain's rebate is calculated means the UK's net contribution to the EU could rise even if the budget is slashed.

The rebate effectively compensates the UK for the fact it receives relatively little support from the Common Agricultural Policy (CAP).

It is currently worth around 3.6bn euros (£2.9bn) and meant Britain's net contribution to the EU in 2010 was 7.3bn euros (£5.9bn) instead of 10.9bn euros (£8.8bn).

Any cut in the EU's overall budget would be likely to involve a reduction in the CAP, which is one of Europe (Chicago Options: ^REURUSD - news) 's largest spending areas.

This would trigger a recalculation of the kickback.

Under a separate deal agreed at the time of EU enlargement, contributions of wealthier states like Britain have also risen each year to help pay for the cost of absorbing poorer countries.

In PMQs, Mr Cameron said he could "certainly" promise that he would not agree to any further reduction in the rebate.

"The rebate negotiated by Margaret Thatcher is an incredibly important part of Britain's position in Europe and making sure we get a fair deal," he told MPs (BSE: MPSLTD.BO - news) .

He added that he would be "fighting incredibly hard for a good deal" this week but accused Labour of having "cut our feet away" by giving away part of the rebate when they were in power.

Britain also faces proposals from European Council president Herman van Rompuy to reform the so-called "Own Resources" system, which determines how much each country pays towards the EU's budget.

Mr van Rompuy has tabled proposals to put a ceiling of 973 billion euros (£783bn) - at 2011 values - on the amount the EU can commit to spending over the seven years between 2014 and 2020.

This would represent a real-terms reduction compared to the 993bn euro (£799bn) limit for 2007-13 and is well below the Commission's request for 1,033bn euros (£831bn) - also both at 2011 values.

However, the council president has not put a figure on the maximum amount which could actually be spent, which tends to come in rather lower than the commitment ceiling, and was 943bn euros (£759bn) over the period 2007-13.

Mr Cameron's goal for the summit is a freeze or cut in the actual amounts to be spent by the EU, rather than in the commitment level or in the UK contributions.

A government spokesman said: "We are looking to get the best deal for the UK taxpayer. That means holding down the total level of spending and protecting the UK's rebate."

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