The United Kingdom’s contribution to the EU budget has often proved a contentious point in debates about the European Union, and we see various figures thrown around in anger from both sides of the argument.
Ukip, and eurosceptics in general, often state that our national contribution is £55m per day, which would equate to about £22bn per year. It should be pointed out that Nigel Farage has stated on one or two occasions that he believes this to be the gross figure (the total amount we pay to the EU without any money coming back to the UK being taken into account). This figure would be used to make our contribution appear as large as possible. It is difficult to compare this amount with those stated by more pro-EU campaigns, as pro-EU campaigners attempt to make this figure look as small as possible. This is done by giving us the net cost (the total paid minus the amount received back) per person or per household per day. Despite this confusion, the StrongerIn campaign state the cost at £340 per household per year — and in 2013 (the most recent year for which figures were available) it was estimated there were 26.4 million households in the UK, which would put the annual cost at £8.98bn per year. It is not stated whether the StrongerIn figure is net or gross — it is easy to see where confusion can come from!
This page will attempt to get rid of confusion, and shall use official European Union budget figures, as found on the EU website (europa.eu) for the financial year 2014. It should be noted that an EU financial year runs from January 1 – December 31, and not the UK’s tax year of April 6 – April 5. As the figures used are from 2014, the exchange rate used in this article is a rough average from that year, simplified for maths purposes, where €1 = 80p.
It is also important to understand the difference between a gross figure and a net figure. A gross figure is the amount paid without taking any returns into account. This would mean, for example, if your grocery shop came to a total of £35 and you paid with a £50 note, then your gross contribution to your shopping bill is £50, as this is the total amount of money you have handed over. You would, obviously, then be given £15 in change — this would mean that your net contribution to your shopping would be £35, as that’s the total amount of money you’ve spent overall.
The EU figures, which you can find at http://ec.europa.eu/budget/financialreport/2014/revenue/index_en.html, show that in 2014 the UK’s total gross contribution to the EU budget was €17.4bn (£13.9bn) — the third highest behind Germany and then France. This makes sense when we consider that the UK has the third strongest economy in the EU behind both of those countries.
One quirk to the UK’s national contribution is a rebate received by the UK from the EU; this was negotiated by Margaret Thatcher back when the UK was one of the poorest EU countries and didn’t benefit as much from certain EU funds as members such as France or West Germany. This rebate is referred to as the “UK Correction” in EU documents and despite being called a “rebate” the money is never actually paid to the EU in the first place, so some of the figures you hear about how much we pay to the EU technically include money we never hand over.
In 2014 this rebate came to just over €6bn (£4.85bn) and, according to the European Union figures brings the UK’s total national contribution to approximately €11.34bn (£9.07bn). This is lower than the often-quoted eurosceptic figure, but also slightly higher than the pro-EU campaign’s figures. The £9bn figure comes to about 9.7% of the total national contributions to the EU budget, roughly corresponding to the UK’s voting power in both the EU Parliament and Council.
This figure can now be made into a percentage of our national spending, as indicated on this wonderfully named doughnut chart of UK government spending in 2014 from The Guardian — the £9.07bn equates to 1.24% of our annual spending of £732bn. As a quick comparison, the UK government’s interest payments on national debt equate to 7.25% (£53bn) of national spending, and our spending on healthcare is £140bn, or 19% of our national expenditure.
There are some things we cannot put a definite number on, the UK also receives money back from the EU in the form of grants for projects and other initiatives — though this money must be spent in ways determined by the European Union and not the UK government, so we may want to consider these payments almost a “gift card” only redeemable on certain things. There are no figures on this for 2014, but if we were to assume the amount was the same as the 2013 figures quoted on the EU website (http://ec.europa.eu/budget/mycountry/UK/index_en.cfm), then using the 2014 exchange rate it would amount to €6.3bn (£5.04bn), taking the earlier £9.07bn figure down to £4.03bn, or 0.55% of our national spending. This particular funding varies year on year (however slightly) and should only be considered a guide rather than a definitive set of figures.
The further costs and benefits of access to the EU Single Market are hotly contested and reliable figures are hard to come by. These relate to the benefits of free trade of goods and services, to the costs of uniform regulations, which do ultimately mean that firms in the UK can trade with firms in the other 27 member countries as though they were in the UK. Therefore the net figures of £9.07bn or £4.03bn including EU funding are the most accurate figures available.
For comparison with figures floated around by campaigns, £9.07bn works out at about £174m per week or £24.8m per day — or £343 per household per week. The £4.03bn works out at £77.5m per week, or £11m per day — or £152 per household per year.
Just for the record regarding the EU budget, the EU's accounts have indeed been signed off. You can see the 2014 report here: http://www.eca.europa.eu/Lists/ECADocuments/auditinbrief-2014/auditinbrief-2014-EN.pdf#page=10 — they're not free from any error at all, but this error accounts for 4.4% of EU spending and often money is given to member states to spend on the right things, and then they spend it on the wrong things. The important thing being that the accounts do get signed off!