Britain reckoned to owe E.E.C. $600M

Press, 3 February 1984, Page 6

Britain reckoned to owe E.E.C. $600M

NZPA-Reuter Brussels

The European Commission rejected an assertion by Common Market accountants yesterday that Britain should pay back $6OO million in illegal farm subsidies. Officials said that the recommendation by the financial controller, Carlo Facini, that London be forced to return the money, spent to support British dairy production in 1978 and 1979, had produced a “storm in a teacup.”

By coincidence the amount in dispute was nearly equal to London’s controversial 1983 Budget rebate, agreed to last year but now blocked by the European Parliament. Diplomats said that that

had raised suspicions, which the Commission said were unfounded, that the 14-mem-ber Executive Commission was devising ways to get around paying the rebate if the Parliament frees it.

Commission officials say that Mr Facini, who is reviewing the bloc’s 1978 and 1979 budgets, has demanded similar repayments from other member States before, none of which have been implemented. Commission officials say that Britain has broken a 1979 regulation covering the prices it can pay to its dairy farmers.

Because the State-backed Milk Marketing Board has a monopoly on all milk produced in Britain it has been able to keep fresh milk

prices to the consumer high while selling the same milk to butter producers at a lower rate. That is illegal under the 1979 ruling. The board uses Community support funds to finance this system, officials say. The commission based yesterday’s decision not to demand repayment on the fact that the 1979 regulation had not been in force for most of the period under review.

But they noted that the commission had begun a case last week against Britain in the European Court of Justice for the practice.

If it wins the case London could end up paying far more than the $6OO million at issue for 1978 and 1979, officials and diplomats say.