23/11/2012 08:39 GMT | Updated 22/01/2013 10:12 GMT

David Cameron Demands EU Officials Take Pay Cut

David Cameron has demanded billions of pounds in pay and pension cuts from the EU's pampered civil service in a show of solidarity with austerity-hit workers across Europe.

Before a crucial budget summit last night, he confronted European Council president Herman Van Rompuy and European Commission president Jose Manuel Barroso with a paper setting out how Brussels could slash at least six billion euros - £4.8bn - off its staff costs at a stroke by upping retirement ages, lowering pensions and trimming lavish salaries.

The Cameron list caught the pair by surprise when the Prime Minister was the first through the door yesterday morning for private talks before the showdown summit began.

The start of the meeting was delayed until mid-evening as the rest of the EU's leaders held their own "confessionals" throughout the day, setting out their positions on how much cash the EU should be given to pay for policies between 2014 and 2020.

Mr Cameron's position was clear - impose a real-terms freeze in spending in common with national public sector cuts, including a solidarity gesture by targeting the 60 billion euro (£48bn) administrative budget which pays the 40,000-plus civil service behind the commission, council and European Parliament.

Mr Cameron warned at the last EU summit that he was on the warpath over planned budget increases, pointing out that 16% of European Commission staff were now earning over 100,000 euro - £80,000 - a year.

He insisted they should face the same kind of crackdown on central administration costs as in Whitehall.

The attack followed a letter to EU chiefs from Mr Cameron and six other EU leaders pointing out that national public sectors across Europe had already carried out job cuts and pay freezes.

It warned: "The staff of the European Institutions should share the burden."

Last night a government spokesman acknowledged the demand was symbolic, but important.

Mr Cameron's list of suggestions for where the administrative axe should fall included:

:: Increasing the retirement age for eurocrats from 63 to 68 for staff currently under 58-years-old, saving 1.5 billion euro (£1.2bn) over the seven years of the proposed budget;

:: Cut 10% from the pay bill, saving three billion euro (£2.4bn);

:: Cut eurocrat pensions, currently capped at a maximum of 70% of final salary, to 60%, saving 1.5 billion euros (£1.2bn).

The move turned the atmosphere frosty, according to some officials, but the Prime Minister insisted that ordinary people would not understand that eurocrats' pay and perks were continuing to flourish in the midst of serious hardship in some member states - the very member states being asked by Brussels to top up the EU budget.

Mr Van Rompuy and Mr Barroso both reportedly insisted that it was very difficult simply to take the axe to the eurocrat pay and perks regime.

But a government spokesman said: "These are not dramatic changes.

"The commission (and other institutions) are telling the Greeks, Italians and others that they should put the retirement age up to 68.

"In the UK, we have cut pensions to career-salary average.

"They (Mr Van Rompuy and Mr Barroso) argued it was very difficult legally to change people's terms and conditions (in the EU civil service) - but we have managed it in the UK."

The Dutch and Germans weighed in behind Mr Cameron's demand for eurocrats to tighten their belts - although there were still big differences in national positions on the overall budget size as the summit was getting under way.

Central European member states want budget rises - not least as they gain most of EU regional and social cash grants - while the Swedes and Dutch want tougher cuts than the UK.

Germany, France, Finland and Austria want to freeze the maximum Brussels can draw from member states every year, leaving plenty of scope to argue over the actual spending figures within the ceiling at the annual haggling on spending levels.

Earlier Mr Cameron insisted any rise in EU spending in 2014-2020 would be "quite wrong" and warned he would be fighting "very hard" for a good deal for British taxpayers and to keep the rebate negotiated by Margaret Thatcher in the 1980s.

"Clearly at a time when we are making difficult decisions at home over public spending it would be quite wrong - it is quite wrong - for there to be proposals for this increased extra spending in the EU."

Mr Cameron wants at least a real-terms freeze in EU spending, if not actual cuts, and to retain in full Britain's EU budget rebate worth nearly £3 billion a year off the UK's annual contributions to Brussels.

A compromise is already on the table - a seven-year budget "envelope" of 940 billion euros (£756 billion) for 2014/2020 - a cut of 60bn euros (£48bn) on a commission demand, and nearly 5 billion euros (£3.8 billion) lower than the 2007/2013 budget ceiling.

The move was seen in Downing Street as being in the right direction - although the "cut" is in a spending ceiling which officials say has not been reached.

It is also above the 886 billion euros (£712bn) originally pitched by the Treasury as in line with the real-terms freeze Mr Cameron wants.

But last night officials on all sides conceded that the figures were so flexible and open to interpretation that Mr Cameron and his colleagues have plenty of wiggle room within which to claim a summit budget success.

EU leaders adjourned after a brief round of talks over dinner. Summit officials said a new compromise proposal kept the budget figure the same at 940bn euros (£756bn) but with the redistribution of some funds within the total to meet demands of national delegations.

But the latest compromise does not, so far, include any cuts in eurocrats' pay and benefits, despite pressure from the UK, Germany and the Netherlands.

"If the changes in the latest compromise are confirmed by EU leaders when they reconvene today, then we have the shape of a budget agreement," said one official.

"However, there could be some way to go before everyone can accept the latest terms. We will see what happens when the leaders return to the summit."