May ‘will ask EU to pay back our £9bn’
Tim Shipman | Bojan Pancevski in Brussels
March 12 2017, The Sunday Times
Theresa May will call on Brussels to hand back £9bn of UK assets held by an EU bank when she fires the Brexit starting gun — dramatically cutting Britain’s final bill.
Senior government sources say that when the prime minister triggers article 50, she will point out that Britain is entitled to the return of funds held by the European Investment Bank (EIB).
Legal advice circulating in Whitehall — seen by The Sunday Times — says that not only is the government not legally obliged to pay Brussels a penny, but the EU should pay Britain for its share of the funds in the EIB.
That will allow May to argue that EU demands for Britain to pay €60bn — about £53bn — in contributions to the EU budget and money to plug the deficit in its own pension scheme is unacceptable.
The prime minister will kick-start two years of negotiations as early as Tuesday by sending a letter to Brussels spelling out her demands. It will make clear that the UK will take control of money, immigration and laws, after the referendum last June.
Ministers are confident they can dramatically reduce the size of any Brexit bill to something more politically palatable.
The legal opinion concludes the demand for payments into the EU budget is “wholly without merit in law” and that it is “hard to see any credible basis upon which the UK could be said to be obliged” to pay for the pensions.
It argues: “The UK on EU exit is entitled to the return of its paid-up capital and indeed to a corresponding share of the accumulated reserves of the EIB.” The UK has a 16% share of the €63.3bn capital of the bank, amounting to €10.1bn.
The legal opinion, which has been passed to the Department for Exiting the European Union (Dexeu), was written by Martin Howe, a leading Tory barrister who is close to Boris Johnson and David Davis.
It concludes: “Overall the UK should be entitled on exit to a net payment in its favour, corresponding to the value of its capital invested in the EIB.”
Ministers expect the UK to keep paying for membership of some EU schemes, such as the Erasmus education programme, but a senior government source said Britain’s potential withdrawal from the bank would give the government leverage to drive a hard bargain.
“Their infrastructure investments are predicated on our contribution,” a Whitehall source said. “That’s one of the things they are worried about.”
A source familiar with deliberations over the letter said: “The PM will be saying the British people voted to take back control of their money. There’s absolutely no way you can sell to the British people we’re leaving Europe but we’re going to pay £50bn.
“If you leave a sports club where you’ve paid an entry fee for years, you don’t keep paying when you leave so other people can use the facilities.”
But a senior EU negotiator made clear that a row over the money is likely. While there was “great political will on both sides” to settle the issue of recognising the rights of citizens living in each other’s countries, the Brexit bill could turn “poisonous” and “derail the talks”, the source warned.
“Nothing will move forward before Britain pledges to honour its commitments,” the negotiator said. “You cannot compare the EU to a golf club, or to a pub. It’s dangerous to play with this. It’s poisonous and it can derail the talks, and yet the UK government seems to keep digging.”
Ministers are encouraging May to use her planned statement in the Commons on Tuesday, on last week’s EU summit, to announce that she is triggering article 50.
Several were cancelling foreign trips after being warned by Tory whips that the House of Lords is set to drop opposition to the legislation mandating the prime minister to proceed tomorrow.
Last night Davis appealed for MPs and peers to back down. “However they voted in the referendum, the majority of people now want the prime minister to be able to get on with the job,” he said. “By a majority of four to one, MPs passed straightforward legislation allowing the government to move ahead with no strings attached.
“I will be asking MPs to send the legislation back to the House of Lords in its original form so we can start building a global Britain and a strong new partnership with the EU.”
Speaking on the BBC’s Andrew Marr Show this morning, he added: “Please don’t tie the Prime Minister’s hands in the process of doing that for things which we expect to attain anyway.”
He added that the government was working on a contingency plan in case Britain leaves the EU without a deal. “The aim is to get a good outcome and I’m confident I’ll get a good outcome,” he said. “One of the reasons we don’t talk about the contingency plan too much is we don’t want people to think this is what we are trying to do.”
Senior government sources say that if May does not fire the starting gun on Tuesday, she might wait until the week of March 27, to avoid clashing with the Dutch elections, the Scottish National Party’s conference next weekend and the 60th anniversary of the Treaty of Rome the following week.
Lord Heseltine, who led Tory attempts to amend the Brexit legislation, signalled that he is now prepared to let the article 50 bill pass but warned that he and other peers would seek to amend the forthcoming Great Repeal Bill, which will formalise the break with Brussels to prevent a hard Brexit.
Declaring that “the fightback starts here”, Heseltine launched an outspoken attack on “Brexiteer fanatics . . . sitting on the government front bench”, accusing them of winning the referendum with “a shamelessly false prospectus”.
Countdown to leaving
- Tomorrow Bill mandating Theresa May to trigger article 50 of the EU treaty expected to clear parliament
- Tuesday The prime minister gives statement in the Commons. She could announce she is sending a letter to Brussels to start two years of EU exit talks
- Within 48 hours European Council is expected to send its first official response to Britain’s demands
- April 6 The other 27 leaders and the two EU presidents meet to finalise a common negotiating position
- May 7 A new French president elected, clearing the way for negotiations to begin in earnest
- March 2019 Britain is expected to leave the EU. If a deal has not been done, then transitional arrangements for trade and other matters could be put in place
Ministers rebuked over dereliction of duty
Ministers have been accused by a cross-party group of MPs of failing to have a contingency plan if the UK cannot reach a deal with the EU on the terms of Brexit.
Article 50 is expected to be triggered this week, meaning the UK will leave in two years’ time, deal or no deal.
The Commons foreign affairs committee said it would be a “dereliction of duty” if the UK left the EU with no preparation.
Crispin Blunt, the Tory MP who chairs the committee, said: “The possibility of ‘no deal’ is real enough to require the government to plan how to deal with it. But there is no evidence to indicate that this is receiving the consideration it deserves.”
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