View from Brussels: Rebate is a dirty word

Brussels-London relations are at an all-time high at the moment – if you pretend that their history began in 2016 with the Brexit vote – fuelled largely by the UK government’s recent success in putting the Northern Ireland Protocol issue to bed (for now).

That post-Brexit trading regime spat had gummed up the works completely, prompting Brussels to put Horizon Europe talks on hold until both sides could agree on a deal that respects the Good Friday Agreement and the realities of leaving the EU.

Horizon is one of the few programmes that the UK wanted to cherry-pick during the drawn out withdrawal negotiations, elevating it above the Erasmus student exchange scheme and the Galileo global positioning network.

With nearly €100bn up for grabs over the funding period, Horizon is an impressive research war chest that allows scientists, developers and experts from a broad range of disciplines to collaborate on a wide array of different projects.

Brussels is currently looking into extending the scope of the programme by finalising a pact with New Zealand and making overtures towards the likes of Australia, Canada and Japan. There are big things ahead and the UK wants to be a part of them.

But despite positive signals after the Northern Ireland deal was done, there has been little tangible in the way of progress on the issue. A major sticking point behind the scenes is how much it will cost the UK to get association status.

The European Commission, the EU’s executive branch, already confirmed earlier this month that Britain will not have to pay its membership dues for the years in which it was not part of Horizon, i.e. 2021 and 2022.

It is not the first time that Brussels has offered this deal to third-party countries. Anybody that has joined in the past has not been expected to pay backdated fees, so there is precedent for this reduced price.

However, that is not enough for the UK government, which is angling for a further discount and form of rebate that would be a form of compensation for time lost and progress stalled. It would reflect modelling reportedly produced by UK civil servants.

This is dangerous territory for the UK to try and cross, as rebates are very much a dirty word in Brussels and diplomats are keen for there to be no repeat of the rebate secured by Margaret Thatcher when she was Prime Minister.

No formal offer has been made by either side yet, although the UK has attempted to strengthen its negotiating hand by unveiling the Pioneer scheme, a replacement of sorts for Horizon Europe as a fallback option.

"If it is required, Pioneer will ensure that the UK continues to attract the top talent, lead multilateral collaborations and has access to world class research infrastructures," Prime Minister Rishi Sunak wrote in a reply to a letter from 15 Nobel Laureates. 

Much like the Erasmus-aping Turing Scheme, Pioneer has been criticised for lacking the financial firepower of its EU equivalent and the international reach that is the true benefit of both programmes.

Sunak mentions in his letter that Horizon association would need to "be on the basis of a good deal for our researchers, businesses and taxpayers", supporting the theory that the UK is holding out for further financial sweeteners.

But they might be disappointed.

The UK would be best advised to get a move on, as 2024’s EU elections are looming large in everybody’s minds in Brussels, most of all the MEPs that would have to vote in favour of any pact struck by both sides.

A month-long summer break, a winding-down period before Christmas, a tonne of domestic business that needs sorting and a new Commission after the elections all mean that there will simply not be enough bandwidth to go through yet more Brexit angst.

There is interest and plenty of good faith to broker an Horizon agreement by the end of the year but the consensus suggests that if the UK tries to overplay its hand, then Brussels will just not bother.