Knowing the cost of everything but the value of nothing
Posted by on 07/02/13
If all government spending was subject to the same amount of scrutiny the EU budget is then maybe the world (certainly public finances) would be in a better state.
Watching EU member states labour over what accounts for a mere 1% of government spending makes one wonder. Some of the statesmen and stateswomen who point the finger at EU spending are the same people that have managed to amass massive debts and run huge deficits at home. But they whip the EU budget (which has never over-spent or run a deficit) like a tired donkey under the Mediterranean sun, with a holier-than-thou attitude often dripping with hypocrisy.
The EU budget is not perfect; especially the way it is raised leaves a lot to be desired. But what gets missed in the current debate is the good the EU budget does. 94% of that 1% of EU GDP is invested, the vast majority straight back into member states and the remaining towards development assistance in third countries.
The money goes towards supporting rural areas and helping the poorer regions around Europe. It creates jobs and growth, putting money into people’s pockets.
Estimates for 2009 are that the number employed was 5.6 million higher as a result of EU cohesion policy spending in 2000-2006. GDP in the EU-25 has been 0.7% higher in 2009 due to EU cohesion policy investments during the same period. This is estimated to rise to 4% by 2020.
In Britain alone EU funding has created 117.391 new jobs and supported 207.662 SMEs from 2000 to 2006.
The EU budget also supports Research and Development, with the UK being a major beneficiary. According to Research Councils UK “funding from the European budget for research and innovation is a valuable funding stream for UK research, with the UK receiving the second largest share of the funding after Germany (14.9% or nearly €4 billion in the period until June 2012)”.
The EU budget also helps protect wildlife in Britain, with 75% of the £450 million spent annually on Environmental Stewardship schemes in England coming directly from the EU’s Common Agricultural Policy. This money helps repair much of the damage caused by intensification of agriculture; without it, for example, the recovery of the rare cirl bunting would have been otherwise impossible, according to the Royal Society for the Protection of Birds.
Savings are of course always welcome and the EU civil service has been an easy target, called “wasteful”, “expensive”, “over-bloated”. Such adjectives ignore that only 6% of the EU budget goes to administration and it pays for 55,000 civil servants, who serve 500 million EU citizens. Compare that with the 1 million Brummies the 60.000 Birmingham civil servants serve and it all of the sudden sounds like value for money. But those facts aside, it is unfair and disingenuous to say that EU administration and those “evil” eurocrats have been immune to cuts. Administrative reform undertaken just 7 years ago has already saved EU taxpayers €3 billion, and it is expected to generate another €5 billion in savings by 2020. Salaries and pensions have been cut, retirement age has been raised, working hours have increased and all that with recruitment frozen while the EU went from 15 to 27 member states.
So the debate around the EU budget is disingenuous, light on facts, focused on the wrong thing and ultimately too much hassle for not that much money. It is of course a handy destruction from the real malaises member states suffer from and a good opportunity for grant-standing and EU-bashing.
What we should be really talking about is how the EU budget is raised. Today we have found ourselves in the perverse situation where about 85% of the budget comes from member states’ contributions (if one also takes the value added tax resource in account).
That was never the intention and the European Union Treaty actually states that “the EU budget shall be financed wholly from own recourses”. Instead, the current system has created a complex web of political compromises between member states – made up of rebates, exceptions and correction mechanisms. These are based on the “fair return” principle, which sets in opposition the so-called “net contributors” to “net recipients”. Everybody wants a piece of the EU budget and one way or the other everyone must get their fair share, ignoring often the common good.
It is imperative we replace this opaque system with something that resembles what the treaty originally intended. Allowing the EU to raise its own resources would signal an end to the clientelistic relationship between the Union and its member countries (for ideas how see a previous article). It will free the EU to focus on things that can serve the collective interest of the Union, rather than the sum of the national interests of its member states. It will allow it to invest even more in green technologies, research and development, telecommunications infrastructure, interconnection of energy grids (as well as financial assistance for poor regions and struggling farmers) measures that increase competitiveness and intra-EU trade, create more jobs and growth.
This is the conversation we should be having. But attacking those eurocrats is always more fun.
Petros Fassoulas, European Movement
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