Wednesday, March 09, 2005

The price of membership - £180 billion

Having paid £180 billion into the Community kitty since it joined in 1973, Britain gets a worse deal from the European Union, paying more money in and getting less out, than almost every other member state, according to a House of Lords report.

This news is brought to us courtesy of the all-party House of Lords EU Select Committee, via The Times this morning, with a similar piece in The Financial Times.

The report calls for an urgent review of the EU budget, declaring it a "relic". It says the budget had failed its objectives, adding that its biggest area of spending, agriculture, was both insupportable and immoral.

The report was written by a sub-group chaired by Lord Radice, a board member of the European Movement, and, according to The Times, calls for huge amounts of EU spending to be handed back to national governments.

It says Brussels can no longer justify being in full control of agricultural and development spending, which make up 70 per cent of its budget, saying that national governments are usually better placed to spend it.

The Financial Times puts a somewhat different spin on this, stating that the report argues that Britain should use the €4.6bn ($6.1bn) budget rebate as a bargaining chip to persuade France to cut "inappropriate" farm subsidies.

Nevertheless, the report, based on evidence from senior EU officials, bolsters the government's claim that the British rebate, worth about £4 billion a year, is justified, despite demands from the EU commission and many other member states that it be scrapped.

It lends support to government figures, which it is using in the budget negotiations, that show that the British contribution to the EU since it joined in 1973 is equivalent to £7,500 per household or three years’ spending on the NHS.

If Margaret Thatcher had not secured the rebate in 1984 - when she famously declared "I want my money back" - Britain would have contributed £250 billion, or a quarter of one year's GDP.

In return Britain has got £105 billion-worth of agricultural and development subsidies since 1973, meaning that Britain has paid in £75 billion more to the EU than it has got out. Without its rebate Britain would be the largest net contributor to the EU, and even after the rebate it is the second biggest after Germany.

Lord Radice told The Times: "It's an historic relic. It can't be the way we do it in the future." The report called for agricultural spending to be taken away from Brussels and returned to national governments. "The logic of the situation in which the CAP has changed from being a production-related scheme into what is really a system of income support for one particular group of people (farmers)... is that such support ought to be financed nationally, not at EU level."

Britain is middle-ranking as a recipient of development funds, which makes up a third of the EU budget, getting €275 in subsidies per person between 2000 and 2006, compared with €154 for Denmark and €2,275 for Greece. With the enlargement of the EU to include eight poor, former-communist, Eastern European countries, the report says that rich member states should take responsibility for their own development spending.

It rejects the commission’s argument that Brussels knows better how to spend development money in countries such as Britain than the government itself does. But then, why stop at development?

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