Tony Blair's sacrifice over Britain's European Union rebate has left his Chancellor to plug a multi-billion pound hole in this country's future spending plans, it emerged last night. Gordon Brown will have to find between £1bn and £2bn a year that would otherwise have been available to spend between 2008-11, a key period for investment in health, education and frontline services before the next election. Treasury sources last night played down suggestions that Brown was angry about the move or had been not been told what was happening. Although Blair did not consult his Chancellor directly before tabling a more generous offer on Friday afternoon, which finally clinched a deal on the EU budget, a senior Treasury official was with the Prime Minister in Brussels. However officials confirmed the 'spending envelope' for the next review of government spending, which is already so tight that it is causing tensions across Whitehall, would be affected by the loss of over £7bn from Britain's future rebate.
Gordon Brown will have to find between £1bn and £2bn a year that would otherwise have been available to spend between 2008-11, a key period for investment in health, education and frontline services before the next election.
Treasury sources last night played down suggestions that Brown was angry about the move or had been not been told what was happening. Although Blair did not consult his Chancellor directly before tabling a more generous offer on Friday afternoon, which finally clinched a deal on the EU budget, a senior Treasury official was with the Prime Minister in Brussels.
However officials confirmed the 'spending envelope' for the next review of government spending, which is already so tight that it is causing tensions across Whitehall, would be affected by the loss of over £7bn from Britain's future rebate.
Blair to face backlash over EU rebate deal [Note the paper version title of this article: "Blair's £7bn concession on rebate far bigger than it seems"] Mr Blair's concession regarding Britain's EU budget rebate appears to be far bigger than Downing Street has publicly admitted. At last Friday's EU summit in Brussels, the prime minister agreed to slash the cash the UK receives from the rebate by £7bn over the seven years from 2007 to 2013. Downing St has therefore argued that the cost to the British taxpayer of the decision will be about £1bn a year. But analysis of detail of the agreement published at the weekend shows that the UK's rebate will in fact remain untouched in 2007 and 2008. Instead, the £7bn cash loss suffered by the UK is to be compressed into the years between 2009 and 2013. An analysis by the FT suggests the UK treasury will forego about £500m in 2009, rising to £1.5bn in 2010, and £2bn in each of the subsequent years from 2011 to 2013. That is likely to create two problems for the UK treasury. First, the full impact of the cash shortfall is now likely to be concentrated on the period covered by Gordon Brown's next spending review, spanning 2008-2009 to 2010-2011.
[Note the paper version title of this article: "Blair's £7bn concession on rebate far bigger than it seems"]
Mr Blair's concession regarding Britain's EU budget rebate appears to be far bigger than Downing Street has publicly admitted.
At last Friday's EU summit in Brussels, the prime minister agreed to slash the cash the UK receives from the rebate by £7bn over the seven years from 2007 to 2013. Downing St has therefore argued that the cost to the British taxpayer of the decision will be about £1bn a year.
But analysis of detail of the agreement published at the weekend shows that the UK's rebate will in fact remain untouched in 2007 and 2008. Instead, the £7bn cash loss suffered by the UK is to be compressed into the years between 2009 and 2013.
An analysis by the FT suggests the UK treasury will forego about £500m in 2009, rising to £1.5bn in 2010, and £2bn in each of the subsequent years from 2011 to 2013.
That is likely to create two problems for the UK treasury. First, the full impact of the cash shortfall is now likely to be concentrated on the period covered by Gordon Brown's next spending review, spanning 2008-2009 to 2010-2011.
No wonder Brown is unhappy at Blair - the rebate "pain" is all due later, when Blair won't be around anymore... In the long run, we're all dead. John Maynard Keynes
