Direct and Indirect Costs of the EU
Estimates of the true cost of the EU are difficult to come by. MPs have called many times for a cost-benefit analysis, to prove or disprove the benefits of membership. Successive Governments, both Labour and Conservative, have refused, on the grounds that the "benefits" are self-evident. In truth they are afraid of what such a study would show. The Bruges Group have finally produced an authoritative study.
(http://www.brugesgroup.com/CostOfTheEU2008.pdf)
The total gross cost to the UK of EU membership in 2008 they estimate at around £65,000,000,000* - including:
- £28 billion for business to comply with EU regulations,
- £17 billion of additional food costs resulting from the Common Agricultural Policy
- £3.3 billion - the value of the catch lost when the Common Fisheries Policy let other countries fish in our territorial waters
- £14.6 billion gross paid into the EU budget and other EU funds.
It gets worse each year. Used better, this sum could transform the UK - increase pensions, recruit more doctors, nurses, teachers and police, build advanced transport systems and start paying off the national debt.
*Even allowing for the UK rebate, which the EU wants to stop. Sources: Bruges Group report: "How Much Does the EU Cost Britain?", UK Office of National Statistics, British Government Regulatory Impact Assessments, International Monetary Fund, World Bank, World Trade Organisation, OECD, Eurostat, European Commission.
UK contributions to EU in 2010 are double the amount of last year
Figures published in Wednesday's UK budget show that the UK's contribution to the EU has increased from last year's estimates. The 2009 budget estimated that the UK's contribution for this year would be £5.6 billion. However, this figure has now increased to £6.4 billion and will rise to an estimated £7.6 billion in 2010/11. The £6.4 billion cost this year is more than twice the £3.1 billion the UK contributed last year.
The increase is due to a reduction in Britain's annual rebate, a portion which Tony Blair agreed to give away in 2005, in exchange for a 'health check' of the EU's Common Agricultural Policy, which has produced no substantial effect in reducing the amount of EU money spent on subsidising agriculture. (Telegraph, 25 March 2010)
New Open Europe research finds that EU regulation has cost UK economy £124 billion since 1998;
UK laws are on average around 2.5 times more cost effective than EU laws
Open Europe last week published the most comprehensive study to date on the costs of regulation to the UK economy since 1998. Based on over 2,300 of the Government's own impact assessments, Open Europe has found that regulation has cost the UK economy £176 billion since 1998. Of this amount, £124 billion, or 71 percent, had its origin in EU legislation.
The cost of regulation in 2009 stands at £32.8 billion. Of this 59 percent, or £19.3 billion, stems from EU legislation. Since 2005, when the UK Government launched its 'better regulation' agenda, the cost of regulation has doubled - although both the Government and the EU Commission have taken some positive steps to address overly burdensome laws.
The research also estimates the average benefit/cost ratio of EU regulations at 1.02, and UK regulations at 2.35. In other words, for every £1 of cost, EU regulations introduced since 1998 have only delivered £1.02 of benefits, meaning that on average it is 2.5 times more cost effective to regulate nationally than it is to regulate via the EU.
Following the publication of Open Europe's report, some argued that the exercise was futile, because UK and EU laws are not comparable and Whitehall would have regulated some issues anyway in the absence of the EU. (Economist: Charlemagne blog, 31 March)
It is true that the EU often produces regulations, the benefits of which are hard to quantify, such as environmental or health and safety laws. It is also true that the EU and member states sometimes regulate different parts of the economy. However, importantly, there are also a huge number of areas where the EU and UK share power, and where laws are therefore comparable, to a lesser or greater extent.
What's more, the Lisbon Treaty codifies a new category of so-called 'shared competence', further blurring the line between national and EU power, for example in social policy, financial services (via internal market legislation), environment, energy, consumer protection and transport. In these areas, a comparison between UK and EU laws is not only appropriate, but also essential, as one of the central questions when discussing EU policy must always be: at what level of government is it most cost effective and most democratic to legislate?
Crucially, our research reveals that in areas of shared competence, such as environmental policy, financial services and agriculture, EU regulations tend to generate higher costs, relative to the benefits, than UK laws. A discrepancy is not surprising, given that EU laws are one-size-fits all solutions which, by definition, cannot fully account for member states' individual circumstances. In addition, since it is very difficult to change EU laws once they've been agreed - as it requires agreement amongst 27 member states and the European Parliament - these laws can continue to generate heavy and unnecessary costs year after year.
Our research therefore provides further evidence that, when feasible, it is better to legislative as close as possible to the citizen.
To read the report in full see:
http://openeurope.org.uk/research/stilloutofcontrol.pdf
EU Spending in Britain - Does it Benefit Us?
In 2008 we will "benefit" from £5.2 billion of EU spending in Britain (spent out of our money). This is usually deducted from our gross contribution to give a net cost. However £2.4 billion of this is for agricultural subsidies - part of the wasteful and damaging Common Agricultural Policy. Much of the rest of the money we receive from the EU budget has to be spent on projects approved by the EU. Bizarrely, the rules say that these must be projects which would not otherwise be funded by public money. In other words - things which our own Government does not want to do. So we'd be much better off if we kept our own money, and did not have the agricultural subsidies or EU projects. We could devise a much more effective system of our own to support our farmers. We could hardly devise a less effective one.
EU Administration
The total budget for EU 'administration' alone is £34 billion. The European Commission claims on its website to employ 25,000 staff. The true figure, according to an Open Europe study in August 2008, is 170,000. Nearly 10,000 of these receive over £54,000 pa - over twice as many as in the whole of Whitehall.
Britain's new EU Commissioner, Baroness Ashton, will get £750,000 for just one year's service - including £200,000 in salary, £250,000 in "transitional payments" on leaving her post, and a raft of perks. She will also get an annual pension of £8,000 pa for one years service - twice what a UK pensioner gets for a lifetime of work.
Government Cost Benefit Study - by the Swiss, not Us
A Swiss Government cost/benefit analysis of full European Union membership ("Europe 2006" June 2006) concluded that membership would cost between six and nine times the cost of their present bilateral agreements with EU countries. The UK Government has never carried out an official cost benefit analysis of our membership.
Britain's Net Contributions To EU Budget Set To Double
A paper by Ruth Lea, Director of Global Vision, showed that, based on recent estimates, the UK's contributions to the EU budget are set to double in coming years.
During the last decade (1997-2006), Britain's gross contributions to the EU Budget averaged £10½bn a year whilst the net contributions averaged £3¼bn. For the current 7-year EU financing period (2007-13) these figures are expected to rise significantly. Gross contributions are forecast to run at more than £14bn (in 2004 prices) whilst average net contributions will be over £5½bn.
Reflecting a smaller rebate and weaker receipts in the final 3 years of this financing period, Britain's net contributions are expected to average almost £6½ bn for the years 2011-2013 - double the average of the decade from 1997 to 2006. Much of this money will be swallowed up by EU corruption and waste.
The author commented, "British net contributions to the EU are rising and will average £6½ bn by the beginning of the next decade. These funds could be far better spent on either cutting people's taxes, improving Britain's health, education and transport facilities or increasing Britain's aid budget to the poorest countries across the globe."
We say: We can avoid these huge costs - we can leave the European Union and prosper outside it.
EU Climate Package to Cost the UK 600 Euros per family per year
At the European Summit this week, EU leaders agreed to press ahead with the controversial EU Climate Action and Renewable Energy Package, which sets a 20% target for overall emissions reduction by 2020, and - crucially - includes binding targets for 20% of energy to be sourced from renewables and for 10% of transport fuels to come from biofuels.
New research from Open Europe estimates that the cost of the package as a whole will be more than 73 billion euro per year by 2020 for the EU 25, and £9bn per year for the UK. This is the equivalent of £150 per person per year, or £600 for a family of four per year in the UK, and has the potential to push one million extra people into fuel poverty in Britain alone.
Importantly, the study concludes that the EU plan is an unnecessarily costly way of reducing carbon emissions, and will do little to help the environment. One of the main problems with the package is the highly prescriptive targets for renewables and biofuels, which will channel money towards very expensive and inefficient means of reducing CO2 emissions, imposing unnecessary burdens on people struggling through already tough economic conditions.
The political agreement to finalise the package within the next two months was marred by deep divisions over the plan, with scepticism rising amongst some member states over the implications of the proposals in the context of looming recession in Europe. Italian Prime Minister Silvio Berlusconi told the Summit: "Our businesses are in absolutely no position at the moment to absorb the costs of the regulations that have been proposed." Italian Industry Minister Claudio Scajola confirmed the immense costs of the package, estimating that it would cost his country 181 billion euros between 2011 and 2020. (Il Messaggero, 15 October)
President Sarkozy of France said: "[Mr Berlusconi] made some good points, saying they have a problem with off-shoring jobs already. And he's quite right." However, Sarkozy emphasised his determination to push the package through before the French Presidency ends, at the end of the year, stating that: "we are not going to do what we normally do, which is hand off the whole thing to the next presidency. We are not going to do that."
For more information, see News of the European Union.
The Costs of the EU Fall Disproportionately on the Poor
The costs of the EU weigh especially heavily on the UK poor, who spend a higher proportion of their incomes on:
- Food: It is estimated that the Common Agricultural Policy costs the average British household £322 pa. EU Budget Commissioner Dalia Grybauskaite has said that the CAP forces consumers to pay "two or three times more for food than we would pay without this policy (source: Telegraph, 25 November; Irish Times 13 November)
- Imported clothes, whose prices are artificially higher because of EU trade policies, designed to protect their inefficient and high cost producers. Genuinely free trade, outside the EU, would reduce the prices we pay for imported goods.
- Taxes. A large chunk of our taxes go into the EU budget. When we leave the EU, we will be able to use that money to reduce our tax burden.
In addition, when EU regulations hit UK businesses so hard that they go under, it is the workers who lose their jobs.
We will Leave the European Union - when we see it for what it is.
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