The European commission has announced a £2.8 billion refund on the UK's annual contributions to the running costs of the EU.

The cash will be a welcome boost to the Treasury and to Labour fighting off Tory attacks over Europe.

The EU's budget commissioner, Michaele Schreyer said the "surplus is exceptional".

The commission is giving back £6 billion worth of savings on regional aid to member states and as the EU's third-largest contributor to the commission's £60 billion-a-year budget the Treasury is set for nearly half the unspent cash.

The UK used to be one of the highest net-contributors to the EU, a price paid for late membership because British agriculture's relatively successful performance ruled out CAP payments on the scale of its continental counterparts.

The bulk of the EU's budget is spent on agriculture, almost 50 per cent, with a third spent on social and regional aid.

After a bitter battle by Margaret Thatcher in 1984 a system of rebates was agreed. The payouts have been defended by Britain in reviews of the EU's budgetary system since.