My long-awaited analysis of how the EU Budget really works is now being posted by Conservative Home, in two gripping episodes.

The first one has appeared this morning – here. The second should appear tomorrow.

Note especially the analysis of the famous British Rebate:

a) It is the wonderful Thatcherite gift that keeps on giving. It (obviously) grows as the EU budget grows: the more the UK puts into the pot, the more in absolute terms the rebate gives us back.

b) Second, in EU budgeting paperwork each member state "contributes" to the British rebate according to an agreed formula. This allows footling demagogues across Europe to wail about the unfairness of the rebate — why should poor little country X have to send money back to plump, rich, Eurosceptic UK?

The brisk answer to that is that any payments given back to the UK by poor little country X are coming from the money which the UK has given to poor little country X, so maybe poor little country X should be rather more grateful?

c) Tony Blair was attacked in 2005 for "giving up" the British rebate. He didn’t. He created a limited exception to the rebate. London kept its full veto on further concessions on the rebate next time round.

d) This limited exception in the 2005 deal excluded the new member states which had just joined the European Union (primarily former members of the Warsaw Pact, all far less rich than the UK) from ‘contributing’ to the rebate. This was a real concession, but as concessions go it was fair — successive British governments had pressed the European Union to enlarge to include these countries, so it made sense to be generous to them (if we have to subsidise other EU members, let’s subsidise the worse off).

e) One ingenious wrinkle on Tony Blair’s 2005 rebate concession to the new member states. It did not apply to their CAP receipts (London doesn’t like the CAP). So they too have to send back to us some of the money we send them. This keeps everyone honest.

Very droll. Who says that British diplomats are no good at ruthless EU knife-play?

As this is the first ever explanation of these matters in a common sense way, and as it is your money (if you are a European reader), you might want to read the whole thing.

Update  High praise from The Browser – "cut out and keep"