A daily blog on the thrills, spills, and frequent absurdities of the world's one and only 'non-imperial empire' - as Barroso himself called it - the European Union.

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Tuesday, 11 October 2011

The Myth of EU Funding

The EU pays £9.2 billion net into the EU budget annually. That's the GDP of Mali. Picture by Guaka.

The myth of EU funding goes a bit like this: that the EU pays for projects within Britain, that we then benefit from, out of its own budget. That is often touted by supporters of membership as one of the main 'pros' to being in the 'club.' It is a complete abstraction of the truth, however. The EU is a bit like a government in that it has relatively little cash of its own: its assets, although vast - over one million square feet in the 'European Quarter' in Brussels alone - are not even enough to cover its daily expenditure (the title is as indispensable as the book). Its budget relies on the contributions of member states - a select few member states, officially designated by the European Union as 'net contributors.'

So, it is not EU money we are receiving: it is the public funds - originally raised through taxation - of countries such as Germany, Italy, Spain, and even ourselves, which have been paid into the EU budget and dispersed across the continent. That community sports centre down the road that the EU stuck its flag on wasn't actually funded by the EU. Or, at least, the money wasn't the EU's in the first place. It was funded by the income tax of a French worker, handed to the EU as part of France's net contribution. That may sound like a pretty neat arrangement: until you realise that we are in exactly the same boat as said French worker. Britain is one of these 'net contributor' countries - in fact we're near the top of the list. There's no point denying it: both the EU Commission and the Treasury admit this. That translates to £19.7 billion gross to the European Union's budget every single year: we get £10.5 billion back. Ignoring the fact that a lot of this came from us in the first place, and that none of it came from the EU itself - merely was handed over from national public funds for the EU to dole out as it pleases - that still leaves a net loss of £9.2 billion.

That's enough to pay for all Army field units (£8 billion), the entire Royal Air Force (£7.7 billion), and the entire Ministry of Defence equipment budget (£6.1 billion). It could pay for over half of all devolved spending in Wales (£15 billion), most of the Ministry of Justice (£9.7 billion), and the current level of investment in school buildings (£4.5 billion) twice over. Council tax, which as of 2006 amounted to £22.4 billion, could be cut by almost half. Quite a lot of money to be losing every single year, especially when you consider that the money we get back has already been taken into account.

If anyone tells you about what the EU does in your area, they're lying. You paid for some of it, other countries paid for the rest of it, the EU paid for less than a fifth, and, for all that, we're still nine point two billion pounds worse off! When someone tells you - correctly - what all that £10.5 billion we were given back was spent on, and shows you all the benefits that it brings, kindly remind them that we could have all that twice over, had we simply not paid the money in in the first place.

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