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The EU budget and UK contributions – the facts, 2013

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Rating: 3.3/5 (28 votes cast)

Once again we are seeing big bold headlines claiming massive increase in the UK’s contribution to the EU budget in 2013. We provide figures and explanations below, but first a reminder of some general points that put these figures in context:
Traditionally, the UK net contributions to the EU budget are less than 1% of UK’s public spending.
While all bigger and richer member states are net contributors, as a contribution per capita the UK is behind countries like Germany, Sweden, the Netherlands or Austria, Finland and Belgium.
Finally, the estimated benefits of EU membership for the UK economy vastly exceed the UK’s gross budget contribution, let alone its net one. You don’t have to take our word for it – the CBI estimates the direct net economic benefits alone at between £62bn and £78bn every year http://www.cbi.org.uk/campaigns/our-global-future/factsheets/factsheet-2-benefits-of-eu-membership-outweigh-costs/

 

Back to 2013 – the most up-to-date figures available. The best estimate (there are several variations depending on the exact basis for calculation) of the UK net contribution is GBP 6.7 billion (Euro 8.6 billion). This figure – called Operating Budgetary Balance in this interactive table which provides data per year and per member state – is the gross sum the UK puts into the EU budget minus the money that flows back to the UK, whether via government bodies or directly to beneficiaries.

 

However, taking this indicator for one single year in isolation can also be misleading, because the EU budget works in seven-year cycles with payments traditionally accumulating towards the end of a cycle when programmes and projects come to fruition (2013 was the last year of such a cycle). So a better indication is the average for the 2007-2013 period – GBP 3.8 billion (Euro 4.9 billion) for the UK.

 

This latest round of media excitement follows the release of figures by the Office of National Statistics (ONS). These ONS figures while accurate do not reflect the full picture, partly because we understand they usually take into account only payments from the EU budget to the UK central and local government sectors. For example, agriculture payments pass through DEFRA so those are counted, as is Cohesion funding that passes through DCLG. But the UK figures usually exclude for example payments from the EU research and innovation programme (traditionally, the UK ranks among the top two beneficiaries of this funding) and from the digital agenda programme to UK universities and SMEs, payments into public private partnerships like the EU Innovative Medicines Initiative or Green Cars scheme or payments from the EU education and training budget to schools and students.
Which all comes to show that – tempting as they are in their simplicity – figures are deceptive unless contextualised.

The EU budget and UK contributions – the facts, 2013, 3.3 out of 5 based on 28 ratings

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2 Responses to “The EU budget and UK contributions – the facts, 2013”

  1. thecentralscrutiniser says:

    “Facts”? Don’t make me laugh!

    The UK is the second largest net contributor to the EU behind Germany.

    The CBI makes ludicrous claims to promote its pro-EU stance, such as “$1.2 trillion invested in the UK by the EU”.

    First of all, the EU has not invested this money at all. Businesses based in Europe have invested this money in order for them to exploit the UK market, which is a net consumer as far as EU output is concerned. And note that the EU and EU businesses don’t invest in the UK in dollars – the only reason they have quoted this currency is to make the number look bigger and sound more impressive.

    The CBI also says “UK citizens have also benefitted from free movement of labour – at least three quarters of a million live in other EU countries”. Of course, this includes all the retirees who have left the UK to retire in the sun and to escape from what is happening in this country. For every one British citizen who may want to go and work in the EU there are EIGHT from the EU who might want to come and work here, so the balance of benefit is not exactly balanced. Looking at the migration statistics one can see this imbalance in operation. Seven times as many non-British people are migrating here (374,000 last year) than British people leave to any overseas destination. This number of additional adults would require us to build three new towns the size of Stevenage, along with all the infrastructure of hospitals, schools, GP surgeries etc., EVERY YEAR just to accommodate them. We cannot even build enough homes to house our own growing population, let alone approximately a million more adults every three years. The CBI never takes such matters into account when calculating the benefit of all these additional eager workers to their businesses.

    That is how much one can “trust” the figures coming from the CBI.

    Referring to the House of Commons Library one can find briefing papers describing the economic impact of our membership of the EU which do not conform with the positive story told here.

    The UK’s total contribution to the EU after abatement and refunds has been inexorably rising year on year, largely due to non-agricultural expenditure in new EU states being excluded from our rebate calculation. the figures are:

    2007: £8,933bn, 2008: £7,791bn, 2009: £8,737bn, 2010: £12,150bn, 2011: £12,214, 2012: £12,636bn, 2013: £13,861bn. Money is received back from the EU in the form of development grants etc., so this sum is often removed from our net contribution figure to produce a much lower figure closer to that stated above. But these “grants” of our own money being handed back to us can only be spent on projects that the EU approves and sanctions, and it is normally a requirement that the funds are “matched” so we end up spending an equivalent amount again which cancels out the receipt from the EU.

    Therefore, in expenditure terms, the figures presented here represent a truer indication of what the EU actually costs us. So, rather than agricultural subsidies which are mentioned here being a benefit of our membership of the EU, we are effectively paying these subsidies to ourselves through our EU contributions, with a significant amount of extra money going in the EU’s direction with us having no control over how that money is being spent. A large amount of that money is lost every year through fraud and misappropriation due to the enormously over-complicated and inefficient EU bureaucracy that we help to finance, but we also have no control over that either.

    This equates to a NET “donation” of just over £1 per working person every day of the year, for which we receive nothing in return (because it is a NET contribution). If a charity collector came around every factory, office, shop and workshop in the UK with a collecting bucket and asked for a £1 donation from everyone, every day of every week of every month, year after year regardless of their income, for us to support an unelected bureaucracy in the EU, I wonder how many British workers would think this is a worthwhile expense?

    The House of Commons briefing document also makes the following points:

    ● The UK had a deficit in trade in goods with the EU of £66.4 billion in 2013
    ● Despite the EU growing and our contribution growing, the UK’s share of exports to the EU has fallen from 54.8% in 2002 to 45.1% in 2013.
    ● The British Chamber of Commerce in 2010 estimated that the annual cost of EU regulation to British businesses was £7.5bn, cumulatively £55bn.
    ● The number of jobs in the UK that are estimated to be involved in trade with the EU has repeatedly been presented by EU supporters as if it were the number of jobs created in the UK as a result of our membership of the EU. This has been categorically refuted, with a formal response given in Prime Minister’s Questions, with the bulletin stating:
    ● “It is important to note that this estimate is the number of jobs related to trade with other EU member states. This is not the same as saying that over three million jobs are dependent on the UK’s EU membership”
    ● The UK Treasury also stated in a formal response: “the 3.3 million figure was “not an estimate of the impact of EU membership on employment””

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    • uk.admin says:

      This comment posted by ‘thecentralscrutiniser’ talks of “propagandist” claptrap but itself applies a selective reading of the House of Commons library paper cited.

      The paper starts by clearly explaining the deficiencies of applying strictly numerical cost-benefit analysis to judge the value of EU membership http://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN06730

      This is true for measurable variables – like support for agriculture – let alone intangible benefits like peace and prosperity. The paper notes that a lot of the benefits are: “subjective, diffuse or intangible”. It concludes that the studies which frame EU membership as a “cost” tend to take static snapshot in time while those that see it as “beneficial” look into the future and adopt a long-term approach.

      The comprehensive UK government consultation and review of evidence pointed to major benefits to the UK from EU membership. The CBI has estimated the benefits of the single market to the UK economy at between £62bn and £78bn annually, a multiple of the UK contribution to the EU budget however it is calculated.

      When it comes to that UK contribution, a plethora of figures circulate in the public domain – from official data by the European Commission or the Office of National Statistics, to pamphlets with unspecified methodology.

      There are substantial differences even between official sources. This is due among other things to the fact that some figures take account of funds paid by the EC to universities and SMEs in the UK and others reflect only payments to the UK government. Differences are also caused by exchange rate fluctuations and by the UK financial year being April to April, whereas the EU budget is calculated from 1 Jan to 31 Dec.

      One important point – which we make in the comment above – is that these annual figures themselves are a statistical snapshot in time. The UK, although a net contributor, is far from the top contributor per capita or as a percentage of GDP.

      Finally, on the point of fraud. Less than 0.2% of the annual expenditure is affected by fraud and there are strict mechanisms to recover the money when this occurs. The EU budget is one of the most tightly controlled public budgets in the world. The Commission is committed to maintain its rigour while making the underlying procedures simpler and less burdensome.

      It is a myth that the EU Court of Auditors refuses to sign off the accounts. A further blog post refers: http://blogs.ec.europa.eu/ECintheUK/european-auditors-point-to-errors-but-sign-off-eus-accounts/

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