April 5, 2016
I recently received a brochure from Vote Leave[i]. It says that it presents ‘5 positive reasons to Vote Leave and take back control’. How do these claims stand up?
Number one is called ‘Our money, our priorities’. The brochure claims that ‘we send over £350 million to the EU every week’, or an annual figure of around £18 billion. This amount is simply wrong. First, the UK has a rebate of £5 billion, which is not paid to the EU, so the amount actually paid is £13 billion. The UK then receives about £4.5 billion in payments from the EU for farming subsidies and development funds. Another £1.4 billion comes as grants to the private sector. The net amount is therefore around £7.1 billion[ii].
The UK does make a positive net contribution to the EU budget, as do several other countries. As the EU budget is always balanced, it’s impossible for all countries to be net recipients; some must be net donors. However, the UK is nowhere near the top of the list of contributors per person[iii]: it ranks 8th out of 10. The list is topped by the Netherlands, Sweden and Germany, with much higher contributions per capita.
It’s important to put the numbers in perspective. The EU budget is quite small: about 1% of the combined GDP of the member states. Roughly 94% of the budget is returned to member states; the remaining 6% is the cost of running the EU[iv]. The UK’s net contribution of £7.1 billion is around 0.4% of the UK GDP; for fiscal year 2014/5 GDP was roughly £1,808 billion[v]. Even the gross contribution is only 1%, or 0.7% allowing for the rebate.
But just focussing on the costs ignores the benefits. As part of the EU, the UK is in a free trade area of around 500 million people. PwC conducted an analysis[vi] of the impact of leaving the EU compared with continued membership at a GDP growth of 2.3% (the current value). The analysis considered two possible scenarios based on the type of trade deal negotiated.
The report concludes that, by 2020, the UK GDP could be between 3 and 5.5% lower, for the two scenarios respectively. Although the uncertainty would eventually be resolved, the long term effects related to exit could be that the UK GDP is 1.2 to 3.5% lower in 2030 in the two scenarios. So even the more optimistic scenario results in a reduced GDP.
The second reason to vote leave is that we ‘Take back control over our laws’. The brochure says that ‘if we vote to remain, EU laws will overrule UK laws and the European Courts will be in control of our trade, our borders, and big decisions like whether prisoners are allowed to vote’.
What proportion of UK laws is driven by the EU? A number of factors make it difficult to come up with a clear answer. If we confine ‘laws’ to Acts passed by the UK Parliament, and Statutory Instruments, the figure is 13.2% for the period 1993 to 2014[vii]. This figure does not include regulations, which apply across all EU member states. There is also a question of relevance and importance. An example quoted by Full Fact is: ‘…it’s hard to say that an EU regulation on the methods of olive oil analysis is as important as an Act of Parliament restructuring the NHS’.
The point about prisoners’ voting rights is misleading. The main court pursuing the UK about prisoners and voting is the European Court of Human Rights, which is within the Council of Europe, not the EU[viii]. And the European Court of Justice, which is part of the EU, ruled in October 2015 that it is lawful to impose a voting ban on prisoners convicted of serious offences[ix].
Reason number three in Vote Leave’s list is ‘Build a fairer, safer immigration system’. We’re told that ‘if we vote to remain in the EU, we’ll be stuck with an out-of-control immigration system which is bad for our security’. This is not true. The UK is not in Schengen and has passport checks for everyone entering. European law allows Britain to refuse entry to people for reasons including security[x]. Close international co-operation between police and other security services is essential to combat crime. It’s not likely that leaving the EU would make co-operation better[xi].
The fourth reason is that we will be ‘Free to trade with the whole world’. At present, Vote Leave claims, ‘the UK has no trade deals with important countries like China, India and Australia’. Being in the EU does not prevent UK businesses from trading with China, India or anywhere else. Germany does it and so do many UK businesses. The UK is obviously included in any EU free trade deal made with other countries. The size of the EU gives it much more weight in negotiations than the UK would have.
The final Vote Leave reason is that ‘Vote Leave is a safer choice’. By leaving, we would take back control and spend our money where we want. This is more of an exhortation than a reason.
Vote Leave reflects a persistent strand of wishful thinking in those advocating Brexit: the UK would get a free trade deal roughly equivalent to being in the EU but minus any of the inconvenience, such as a financial contribution or free movement of people. The argument is never substantiated by evidence. No one else has managed such an arrangement. We either have free trade with obligations such as payments and free movement of people, as does Norway, or we are likely to finish up with a lesser relationship. The EU is not going to allow a free ride.
Notes and sources
[ii] For a breakdown of the payments, see https://fullfact.org/economy/our-eu-membership-fee-55-million/ and The Financial Times, 2nd April 2016.
[iii] See The Economist, 13th February 2016, p 24 for details.
[vi] A summary of the report can be found at http://news.cbi.org.uk/news/leaving-eu-would-cause-a-serious-shock-to-uk-economy-new-pwc-analysis/ . The page contains a link to the full text.
[vii] Source: House of Commons Library briefing paper 07092, 10 June 2015: http://www.parliament.uk/briefing-papers/SN07092.pdf. Full Fact provides a succinct statement on the subject at https://fullfact.org/europe/two-thirds-uk-law-made-eu/ . Another useful source is http://researchbriefings.parliament.uk/ResearchBriefing/Summary/RP10-62.
[x] Quoted in The Financial Times, 2nd April 2016, page 2, Brexit myths.
[xi] I wrote about security in my previous piece, on 1st March 2016: http://peterbye.blogactiv.eu/2016/03/01/britain-and-the-eu-security/pbye