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Last Updated: Wednesday, 23 March 2005, 11:20 GMT
Q&A: Britain's EU rebate
UK Foreign Secretary Jack Straw says Britain will use its veto to protect its rebate from the EU. We take a look at rebate and how it came about.

What is Britain's EU rebate?

The British budget rebate was negotiated by Margaret Thatcher in 1984 after she declared: "I want my money back."

That was the culmination of five years of argument, with other member states saying that contributions were like taxes - nobody could claim back what they put in.

Mrs Thatcher, in one of her most famous 'handbaggings' said unless a rebate was given she would veto any further expansion of spending.

What was it for?

It was intended to make up the shortfall between what the UK paid into the EU and what it got back.

The UK tended to get back less than other countries because of its relatively small farming industry - and the fact that so much of EU spending was on farm subisidies.

Is it worth much to the UK?

It varies from year-to-year, the UK's rebate is predicted to be 4.3bn in 2004/5, falling to 3.8bn in 2005/6 and 3.4bn the year after.

Why it on the agenda?

The rebate crops up on a fairly regular basis - when talks were due to take place on EU expansion the French called for it to be scrapped.

This time it is EU Commission president Jose Manuel Barroso who has indicated he wants the rebate to come to an end because Britain is much better off than 20 years ago.

New EU members with smaller national incomes also question why Britain should still qualify for cash back.

So why the British stance?

The UK says the rebate is non-negotiable because Britain is still the second biggest contributor to EU coffers out of 25 member states and officials insist it is not the second biggest economy.

They also point out that between 1995 and 2003 Britain paid more in per person than France and Italy.

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