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EU: Membership

Volume 722: debated on Monday 8 November 2010

Question

Asked by

To ask Her Majesty’s Government what is their latest estimate of the net cost to the United Kingdom of membership of the European Union.

My Lords, the UK's net payment to the European Union budget is projected to increase from £3.8 billion in 2009-10 to £8.6 billion in 2014-15. The main reasons are the increase in the size of the budget and the disapplication of the abatement to non-agricultural spending in the new member states. Both were signed up by the previous Government for 2007-13. We are very concerned about those growing contributions, and we are working hard to moderate them.

My Lords, I am grateful to the noble Lord for his reply, which does not accord with the Treasury's spending review in October, which reveals that the net cash we are sending down the drain in Brussels this year is £8.3 billion, or £23 million a day, or the salaries of 750 nurses every day. Will the noble Lord confirm the other ruinous costs of our EU membership, which the Taxpayers’ Alliance has given as more than £100 billion a year? Also, what conceivable benefit do the British people get out of our EU membership? Do not the Government yet understand that we would create—

This is my second question. Do not the Government yet understand that we would create a great many jobs and be very much better off out of it?

Now that the noble Lord has given up the strains of office of leading a party, we should allow him to be a bit more expansive—this afternoon, at least.

Of course, if we look at the wider benefits of EU membership, we can see that the UK gets much more out of it than it puts in, including in better access for British companies, whatever their size, to EU markets, cheaper prices and greater choice on our high street, more foreign investment, and a stronger voice for the EU in co-operation with countries such as India and China. The benefit of free trade with the EU alone has been estimated to boost GDP by more than 2 per cent—which, for the UK, would equate to benefits of about £25 billion to £30 billion each year.

My Lords, as individuals, I do not believe that any of your Lordships would continue paying good money to the bank which looked after their money, their savings, and perhaps their mortgage, pensions, life policies and investments if the auditors refused to sign off the accounts because of fraud, theft, mismanagement and embezzlement, yet Britain continues to pay good money to Europe, although the auditors have refused to sign off on the accounts for 14 years for those same four reasons. Why do the Government not pay our great contributions to the EU into a bank account in London, draw down on that to make a payment to the British people as necessary and then pay only the net amount to Brussels if and when the auditors are happy to sign off the accounts? That might concentrate a few minds.

I am grateful to my noble friend for that suggestion. Certainly I thoroughly endorse anything that concentrates minds in Brussels on the need for good housekeeping. I am not sure that his specific arrangement would quite meet our treaty obligations, but I shall bear it in mind.

My Lords, if we were to withdraw from the European Union, would not the costs be infinitely larger than the noble Lord, Lord Pearson, suggests?

My Lords, I agree with the noble Lord and, as I have already explained, the huge benefit from our membership of the EU significantly outweighs the budgetary contribution that we make.

My Lords, is the Minister aware that we run a consistent trade deficit with the EU of about £40 billion a year? Could he say in relation to our net contribution, given the extra £450 million agreed by the Prime Minister at the recent quarterly meeting—or perhaps the £900 million which we will have to pay if the European Parliament has its way—how much we will then be paying?

My Lords, in answer to the first part of the noble Lord’s question, 40 per cent of the UK’s trade goes to Europe, so it is a critical trading partner. On the potential increase of our budget contribution for next year, I should say that it was only thanks to the work of my right honourable friend the Prime Minister that the budget was put on to the agenda of the Council of Ministers and, thanks to the work he did with a number of other member states, the ridiculous proposal of a 6 per cent increase has been thrown out of court. The Council instead discussed the 2.9 per cent increase which we believed to be the absolute upper limit of what should be acceptable for next year.

My Lords, further to the Minister’s answer when he was referring to the enormous benefits in all sectors, would he agree that even the City earnings from being the largest euro currency trading centre in the whole world are enormous in comparison with the budget contribution we have to make? There are many other examples.

In view of the low quality of the characteristic questions of the noble Lord, Lord Pearson, should he not return to being leader of UKIP, the only party in Britain that wants us to leave, after 37 years of membership of the EU? If he were right, Richard Branson and many other businessmen would be wrong.

My Lords, I suppose there was a question in there for me somewhere. I certainly agree with my noble friend that the City of London over a number of decades has indeed become the principal financial centre for the European Union. It is important that business across the European Union understands what benefit it gets out of the financing that goes through the City of London.

My Lords, the Minister said a moment or two ago that the only reason that the 2.9 per cent had been adhered to was because of the Prime Minister’s intervention. Indeed, the Prime Minister claimed he was “building an alliance” to “insist on the 2.9%”. Can the Minister explain therefore why it was that before the Prime Minister’s intervention 20 countries supported the 2.9 per cent cap, and after the Prime Minister’s intervention only 13 did?

My Lords, the question of next year’s budget was not even on the Council’s agenda for the latest meeting. Therefore, getting 13 Heads of State to sign a letter on 29 October was critical to getting a sensible result out of the Council. Meanwhile, as I said in repeating the Statement by my honourable friend the Financial Secretary, Labour MEPs in the European Parliament were voting on an amendment to increase the budget next year.