Knowing the cost of everything but the value of nothing

Posted by European Movement 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

4 Responses to Knowing the cost of everything but the value of nothing »»

  1. Comment by Vérité | 2013/02/09 at 00:20:19

    The figure of 60,000 civil servants for Birmingham City Council was disputed by the council when that claim was first made. The actual figure from the time was 48049 of which 26323 were financed by the Children, Young People and Families Grant (CYPF) programme of the Department of Education.

    See: http://birminghamnewsroom.com/2011/07/rebuttal-ec-claims-on-city-council-staff-numbers/

  2. Comment by Iwantout | 2013/02/09 at 17:17:56

    You make the usual pro EU case in relation to the UK with regards to the budget. May I please provide some balance.

    Then EU budget is “a mere 1% of government spending.” Just so, but the governments must provide social security / welfare, health, education, defence, etc. These are the really big ticket items which the EU clearly does not, although of course the EU does pass laws that it then requires national governments to finance, e.g. social legislation etc. Indeed it is the growth of the welfare state that has contributed mightily to the overspending you refer to. You are not comparing like headings.

    The 6% administrative cost you refer to equated to £918m for the UK in 2011 (all figures from UK Pink Book, 2012 figures are still only provisional) For this we gave the EU £15.3bn, received a rebate of £3.1bn, and received £4.1bn in EU ‘investment and assistance’. You then suggest that this £4.1bn was invested so as to create jobs, protect the environment, assist research etc., and I would not contest that it may well have done some good. But one wonders what more could have been done if we had simply kept a greater proportion of the money we passed to the EU and invested it directly ourselves and not had to pay a 6% surcharge for the privilege of doing so? Let us not forget all the great infrastructure projects the political vanity of the EU has created, airports in Spain that have never had a plane land, the Rio-Antirio Bridge, Calabia Autostrada etc. Each examples of projects that either had significant corruption or were unsustainable on economic grounds which net contributor money has gone to finance.

    Incidentally with regards to foreign development aid, according to the OECD the UK gave more to Third World Countries than most other EU countries and more than any of the other large states at 0.52% GNI, compared with 0.47% France, 0.35% Germany, and 0.16% Italy.

    There is then the discussion regarding the mere 55,000 EU civil servants as opposed to the 60,000 council employees in Birmingham. Birmingham council employees provide amenities such as housing, social, child and highway services etc., direct services to the public. What services exactly would the average Brummie miss if the 55,000 EU civil servants went home tomorrow ? I can imagine the howls of anguish when the EEAS stopped functioning, when the number of directives issued dropped to zero etc. I may exaggerate for effect, but to compare these two groups of workers is to compare apples and oranges, they do entirely different jobs and the question really is how you value the worth of each type of employment. Oh and let’s not forget, there is a considerable difference in the average salary between the two sets of staff.

    Most workers in the UK have had a pay freeze for several years now, all our pension contributions have increased and no one will collect their pension for many more years than was originally the promise. Please why do you believe that the EU staff should be treated differently ? If they find it so unpleasant they always have the option to leave the EU service and find better positions.

    With regards to the EU having it’s own resources. This is the real political issue, to support this you must believe that the EU should be more than a trade organisation. I appreciate many (perhaps even a majority on the mainland continent) want and accept this. You must be aware that this is not the case in the UK, hence the fundamentally different points of view that so often emerge between the UK and the EU. But to comment specifically on one of the sources of revenue your link mentions, the idea of an FTT applicable to only part of the global market is a great way of moving trade to parts of the world where it is not in place. Ask Sweden about their experience and then consider the original EU report that suggested 90% of the trade would be lost when such a tax was imposed.

  3. Comment by euromove | 2013/02/14 at 12:39:12

    Dear Vérité, thank you very much for your comment. During our work we pay attention to the details, therefore we are only using official figures approved and used by the European Commission and by the Eurostat. In this case we will forward your information and ask for a clarification in the figures.


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