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Last Updated: Tuesday, 14 June, 2005, 13:22 GMT 14:22 UK
Q&A: Britain's EU rebate
The UK's annual 3bn EU rebate is expected to be discussed at this month's summit of European leaders amid calls for it to be scrapped. We take a look at the 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." It 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 the rebate 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 subsidies.

Is it worth much to the UK?

It is worth 66% of the difference between the amount the UK pays into the EU and the amount it gets back. This varies from year to year and is worth an estimated 3bn (4.4bn euros) this year.

Why is the rebate on the agenda?

The rebate crops up on a fairly regular basis - but has come up now because decisions have to be taken soon on the next envelope of spending, from 2007 to 2013. Luxembourg proposed a compromise which would see the rebate frozen, but Tony Blair has rejected that.

What is the UK stance?

Tony Blair says the rebate will not be negotiated away - as long as France and other EU members refuse to reform the way the EU spends its money. He says that even with the rebate the UK still contributed two-and-a-half times as much as France over the past decade. Without the refund, it would have been 15 times more. Chancellor Gordon Brown says leaders trying to focus on the rebate are trying to wish away Europe's real problems: 10% unemployment; the rejection of the EU constitution by French and Dutch voters; and the challenge of globalisation.

Who pays for the rebate?

The rebate is paid for by other European Union member states.


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