Show Hide image

EU leaders argue over bloc’s €1tn budget cut

No deal reached.

Leaders of the 27-member European Union (EU) at the budget summit in Burssels have argued on how to cut the bloc’s €1tn budget during the period 2014 to 2020, without reaching a deal.

Before the summit, Herman Van Rompuy, president of the European Council, was planning to bring the budget to €957bn by cutting about €15bn from his earlier proposal. He, however, was considering even deeper cuts of €30bn to the budget payments category in a concession to Britain to further bring down the total to €912bn.

Britain demanded for a budget freeze compatible with the austerity sweeping national capitals, while the France and Italy argued for more spending to tackle the effects of recession.

Throughout the negotiations, the British prime minister David Cameron focused exclusively on payments citing that they are always smaller than the headline ceiling of budget commitments that are the standard measure used by other governments.

Cameron warned that “the numbers that were put forward [in November] were much too high. They need to come down, and if they don’t come down, there won’t be a deal.”

The German chancellor Angela Merkel said: “We have to be careful with the way we spend but also show solidarity between net contributors and recipients.”

Martin Schulz, president of the European parliament, warned that his members might block a deal if it strayed too far from the €1,033bn proposal made by the European Commission more than a year ago.

Alexander Stubb, Finland’s Europe minister, said: “The EU budget for the first time in its history is not going to increase. Stubb was optimistic that a deal would be reached. He said: “The mood, rumours, it keeps on changing. There’s always an element of theatre.”

A deal requires consent of the European parliament apart from unanimous approval from all 27 member states.

The EU members failed to reach a deal on budget cut in November 2012.

Getty Images.
Show Hide image

Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.