European Movement UK

Britain's future is with Europe! Join the debate and put your opinion forward!

The latest figures on the EU budget and the UK’s contribution towards it show that the cost is going up. A forecast published by the Treasury just before the summer recess showed that this year’s net contribution will be £4.1 billion, up from an earlier forecast of £3.3 billion, and in 2010-11 it will be £6.4 billion.

Britain’s net contribution to the EU budget is rising because of a change in the rebate system that was agreed in 2005 resulting from EU enlargement. The rebate is a special payment back to the UK from the other member states in recognition of some structural differences in the UK public finances (higher VAT revenues, for example) that would otherwise lead to a disproportionately high UK contribution to the budget. The change that was made exempted the poor, former communist countries that joined the EU in 2004 from having to contribute to the rebate: it would be perverse to expect poorer countries to subsidise one of the richer ones.

But, even with the increase in the net contribution, Britain’s EU membership still represents good value for money. It does this in three ways.

First, there is an economic return to the UK. Much of the EU’s budget is used to invest in the poorer parts of Europe, improving their living standards and enabling them to become better customers for Britain. British exports to places such as Poland and Hungary are rising as a result.

Secondly, there is an indirect economic return in that Britain’s net contribution is a quid pro quo for membership of the single market. Poorer, less competitive countries, that might otherwise be tempted by protectionism, are thereby willing to join us in the world’s largest marketplace, with 500 million consumers, wider choice and lower prices. Our living standards have improved as a result and 3.5 million jobs are linked to this trade.

Thirdly, there is the broader political benefit. Think of the EU as an insurance against war or bad relations with our nearest neighbours. For centuries, our foreign policy was characterised by fear and the threat of war. Since the creation of the EU, all of that is forgotten. And the cost? The average cost per family of EU membership is £257 next year, or about 70 pence per day. Compare that with the average household insurance policy, that costs about £350 a year, or the average car insurance policy that costs more than £500 a year.

It provides economic benefits for now, and insurance for a better future. EU membership is good value for money.

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Comments

  1. The EU’s great value, particularly when you look at the phenomenal amounts of money the British government spends on providing remarkably little benefit.

    But let’s not fall for the great myth that this is the British government’s money. It’s not. A certain amount of the tax I pay goes to pay for the services provided by the EU’s institutions. Some of it goes to Westminster, which uses it to finance the things they deem vital, like wars and cctv cameras and a national identity register and unnecessary border controls with France. Some of it goes to pay for my local council and their £180,000 a year chief executive (the EU can get pretty well a whole commissioner for that much).

    My local council has no right whatsoever to insist that any VAT I might pay is automatically theirs. Similarly, the British government should stop insisting that any money raised for the EU’s budget in Britain is automatically the property of the Westminster government. The EU institutions are not perfect by a long chalk – the insistence of national governments on retaining most of the power rather spoils things. But I’d rather the EU kept its proportion of my taxes than have it handed over to the London.

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