EU surcharge: Another gain for the long grass

By trying to spin this as a British victory, Osborne and Cameron have convinced no one here and alienated the EU

George Osborne is like a man who goes into a shop with "50 per cent off everything" posters in the window, buys a washing machine, and says: "I beat them down to half price." He also got a "nothing to pay until July 2015" deal and claims that this means it is almost as if he did not have to pay at all.

This is the sort of attempted spin that might have embarrassed his predecessor as Chancellor, Gordon Brown. Mr Brown pioneered the double counting of misleading spending announcements but even he might have hesitated to claim "We have halved the bill", when the UK will pay the amount originally demanded, but with a politically convenient delay until after the general election.

Let us go back to the beginning of this telling episode. A while ago, the EU Commission proposed to improve its calculations of national income, on which contributions to EU funds are based. National leaders, including David Cameron, agreed, but it seems to have occurred to no one that such adjustments were bound to create winners and losers, which could be politically awkward in losing countries.

As the bean counters re-counted their beans, the Treasury failed to spot the implications of Britain being better off than previously suggested. It was only in the week before last month's Brussels summit that the UK was formally presented with the demand for an extra £1.7bn by 1 December, to take account of several years' revisions.

Mr Cameron was within his rights to question the size of the bill and the speed with which payment was expected. But he went further than that, driven like a sheep by the Eurosceptic dogs on his back benches and in the UK Independence Party. He said he would pay "nothing like as much" as £1.7bn and certainly not by 1 December. Had he already been briefed, by a civil servant more sharp-witted than the Treasury's trouble-spotters, that the British rebate would almost certainly apply to this extra contribution? The rebate, negotiated by Margaret Thatcher in 1984, is a formula that automatically reduces the UK's net contribution.

He was certainly asked about it by Andrew Lansley, the former health secretary, when he made his statement to the Commons after the summit. Mr Cameron said carefully that this was "one of the important questions that needs to be asked".

So when Mr Osborne and Mr Cameron claimed last week to have "cut the bill in half", all that had happened was that EU finance ministers had agreed what was always likely to be agreed. And EU officials had done the maths of applying the rebate formula, and come up with the exact amount of the rebated demand.

The only concession that the UK Government has secured is a deferral of the payments until July. That reasonable deferral also applies to the Dutch, whose surcharge is more per head of population than ours, and who benefit from no rebate. It is notable that the Dutch Prime Minister's initial response was that he was "unpleasantly surprised", but that he was prepared to discuss it.

That is the attitude that Mr Cameron and Mr Osborne ought to have adopted, rather than seeming so keen to overload the post-election long grass. The surcharge is a reasonable adjustment that reflects the fact that we are richer than we thought we were. The short notice of the demand was bureaucratic correctness gone mad, but now a reasonable compromise has been reached.

Mr Cameron and Mr Osborne, by trying to spin a reasonable deal as a British victory, have convinced no one in this country and further alienated their partners in the EU. All in all, a disastrous few weeks' work.