EC demands £9.5bn for unpaid bills


The European Commission has challenged austerity-conscious EU governments by demanding another 11.2 billion euro (£9.5 billion) to cover unpaid bills this year.

The move - instantly condemned by a UK Government spokesman as unacceptable - follows a deal on the EU's long-term budget in February which Prime Minister David Cameron hailed as the first to cut costs in real terms. But Euro-MPs warned at the time that acceptance of cuts came with a catch - more cash would be needed to cover outstanding commitments this year.

Now the European Commission has tabled a "draft amending budget" claiming the extra cash for what the budget commissioner described as "a snowballing effect of unpaid claims transferred on to the following year".

Commissioner Janusz Lewandowski - effectively blaming Mr Cameron and others who pressed, ultimately successfully, to keep spending down in line with national restraints - said: "This (extra budget demand) cannot come as a surprise. In recent years voted EU budgets have been increasingly below the real needs based on estimates from member states."

Mr Lewandowski went on: "The ostrich policy can only work for so long: postponing payment of a bill will not make it go away. Not one cent of the extra amount we request today is for the EU institutions. It will merely allow the EU to play its share of infrastructure or science projects that member states agreed to start in the past." He added: "I am confident that the Council (EU governments) and the European Parliament will deliver on their commitments to avoid any shortfall in payments and take a swift decision on this proposal."

A Commission statement said the EU budget needed the top-up - involving extra contributions from national coffers - "to reimburse beneficiaries of EU-funded programmes completed across Europe in 2012 as well as to honour Cohesion Policy (money for poorest EU regions) claims that will fall due in 2013".

The statement said the bulk of the proposed draft extra budget would, if agreed "in full" by ministers and MEPs, "allow all the legal obligations left pending at the end of 2012, as well as those arising before the end of 2013, to be covered in this year's (2013) budget". The statement said the extra budget covers "claims from beneficiaries of EU funds (member states, regions and towns, universities and scientists, NGOs etc) for projects completed across Europe; it also includes member states' estimates for payments they will expect from the EU this year".

Commission officials pointed out that they were demanding far less than the 16 billion euro (£13.6 billion) many MEPs are insisting upon for outstanding financial commitments for 2013 in exchange for final approval of the long-term "austerity" EU budget for 2014-2020. Only two weeks ago, European Parliament president Martin Schulz warned that "Parliament will not even start negotiations (on the long-term budget) until all unpaid payment claims for 2012 are covered".

But Conservative MEPs promised "fierce resistance" to the Commission's budget top-up, which, although less than the amount being sought by the Parliament, still exceeds the size of the EU bailout just agreed for Cyprus. Richard Ashworth, the leader of the Tory MEPs and a negotiator on the Parliament's Budget Committee, slammed the Commission demand as "confrontational and disruptive".

Financial Secretary to the Treasury Greg Clark said: "This is a totally unacceptable request from the Commission at a time when most EU member states are taking difficult decisions to reduce public spending. It is extraordinary that the Commission should demand an increase in the EU budget that is bigger than the rescue package that was agreed for Cyprus earlier this week."

Budget 2013: Winners and Losers

Budget 2013: Winners and Losers