The bottom line
On a recent Radio 5 live phone-in programme, supposedly on the I was struck by how many callers' main reason for disliking the EU was "waste of money" and "corruption".
Many of them cited the fact that
And it's that time of year again - next Tuesday, for the 13th year running, the will refuse to clear the accounts because of irregularities.
The European Commission knows how damaging this is and argues that:
- • Most of the spending is done by national governments, and so it's their fault for not keeping proper accounts
- • The accounting procedure is very tight, and under these rules many big institutions would not pass - the former head of the suggested that if he was operating under similar rules, the UK’s accounts might have failed
- • Most of the errors are technical rather than fraudulent, and could be due to paperwork that’s lost five years after the end of a project, or academics carrying out EU-funded research failing to fill in proper hour-by-hour time-sheets
I don’t think the auditors buy all of this.
They don’t distinguish between money being mis-spent due to bad paperwork and cash going missing because of deliberate criminal intent. I think this year they will find that the situation is getting better on agricultural payments but that there are still real problems with roads and bridges and the like.
Also, the commission does spend at least 20% of the budget and some of this spending is regularly criticised.
The improvement in the payments is largely because money now goes directly to farmers for the size of fields they own, and this is easier to double check using satellite pictures than the number of cows they own.
But there’s no doubt that between 70 and 80% of the EU’s spending does go through the national governments. There’s talk about countries coming up with their own audited statement saying that all the money has been spent properly. But only Britain, Sweden, the Netherlands and Denmark have shown the remotest interest.
I want to check some of these claims out for myself and see where things go wrong. But it’s a nightmare pinning down real examples.
This may be part of the story itself. The Court of Auditors doesn’t make public the irregularities it finds: the auditors feel their job is to audit, not to name and shame. The commission deals directly with the nation states, and can't give examples either. The nation states?
Well that’s what we are trying at the moment... If you run a small country and don’t keep your books properly, have built a bridge and creamed off the cash, or you lost the accounts for some fields five years ago, do drop me a line... I promise to be very indiscreet.
I’m Mark Mardell, the ³ÉÈËÂÛ̳'s North America editor. These are my reflections on American politics, some thoughts on being a Brit living in the USA, and who knows what else? My 
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I don't think the Brits dislike the Union particularly because of these auditing problems..they probably just seem as the most legitimate proxy to express their innate scepticism towards anything that remotely smells of cheese.
I always find it curious that it's the northern European countries who tend to be most sceptical, who want to improve the accountability of the EU, and who are most concerned about fraud, corruption and fiscal competence.
Is it a cultural divide, or does colder weather encourage financial responsibility? If the latter, then global warming is going to cause a lot more problems in the future than we realise!
A possible way of finding some examples is through the case law of the ECJ and CFI. There are tens of cases where the Commission brings infringement actions against Member States for violation of the rules regarding certain EC funds, or for improperly collecting funds that are part of the Communities own resources. Likewise, especially before the CFI, there is an important collection of cases brought by companies and Member States (and their regions, there are for instance a few famous 'Regione Siciliana' cases...) who have seen their subsidies reduced once the Commission found out about some irregularities.
Mark Mardell wrote: "...there are still real problems with roads and bridges and the like."
Aha, Wasn't Neelie Smit-Kroes herself once minister for "roads and bridges" (Rijkswaterstaat) in her native Holland?
Wasn't there also a scandal in Holland when an employee of a construction company revealed the double bookkeeping used to drive up profits within multi-company consortia bidding for Dutch government contracts?
Didn't the Dutch governemnt allow the companies involved to "buy off" their guilt without a court case?
I can't remember who was minister at the time -but I'm sure that Neelie would know! It is even part of her "speciality" as Commisioner....
Isn't Holland a "clean" country according to "Transparancy" -the (self-appointed?) international corruption watchdog?
Can't you (or someone like you) take the Court of Auditors and/or the commission to court, and demand they release this information?
Don't we, as European citizens, have the right to know this information?
Shouldn't this be raised to the European parliament, which is supposed to speak and act for us, the citizens?
Mark, you may also just focus on the parts of the budget that are audited and found ok. This would, for example, be the administrative expenditures of the Commission.
Having said that, I think it would not change the nationalistic instincts of many Europeans who are very full of their own nation and have mainly contempt for the others.
Petty-minded people who cannot easily cope with the challenges of a globalised world (because they do not speak languages, for example) will always tend to seek a safe haven in their nationality. It is something that is not based on merit and cannot be taken away from them. Whenever I hear a compatriot say that he/she is "proud to be German" I ask: What were the alternatives? It's like being proud of having dark hair.
In addition, we should not forget that the national elites and opinion leaders are aware that on European level they can only play second fiddle. Naturally, they tend to be "sceptical" about Europe, but it is more about their fears of decline than about substance. The auditing issue is a boon for those people who never seem to be too bothered about misappropriated money at home.
As a consultant working on EU funded programmes for many years, I have never encountered outright embezzlement of funds, only their sloppy and naive administration by people more concerned with ever more complex procedures (mainly to prevent fraud) than achieving the results. Frequently budgets underrun because the beneficiaries do not have the ability to spend the allocation. I have seen the same project ressurected year after year because the results do not reach expectations. In my view the EC's planning of expenditure is very poor, and the competence of those middle level functionnaires is highly questionable. No wonder the auditors are left scratching their heads.
Quoting the now ex-head of the National Audit Office, Sir John Bourn is not an example of financial probity (the poor bunny has decided to 'stand down') . As he was recently found to have spent over £336,000 on first-class travel expenses for himself and his wife alone, it seems that either we are corrupting the EU or the EU is corrrupting us. Which one is it?
For the French or German speakers I highly recommend you the dealing with the way the money are spent by the EU. One should make the difference between the EU budget and the EU administrative expenses before starting throwing the blame on the EU for being a too expensive institution.
I am incensed at the regurgitated pathetic excuses for what is essentially either gross incompetence or massive financial fraud.
Either way, Great Britain is better off out of this mess - & the sooner the better.
£50 billion a year (Great Britain's current contribution) would go along way to solving our massive infrastructure & investment problems here in the UK.
We can not go on allowing the vanity of here today gone tomorrow politicians who require a seat on the EU gravy train when they are kicked out of their domestic offices to continue.
Great Britain out.
It is not in the interests of the Court of Auditors to sign off the European Commission's accounts, because if they find that everything is ok every year the Court of Auditors will find it difficult to justify a big budget every year.
As there is no profit in the public sector senior managers seem to try and constantly increase their budgets as a sign of prestige to get noticed for promotions.
Until the European Parliament addresses this issue and holds senior managers in the European institutions accountable for value for money performance this problem will not go away.
I think forcing the Court of Auditors to be transparent and detail the major problems found (and who is to blame for them, i.e. the European Commission or Member States) is the first step to making this situation better.
Lack of transparency from the Court of Auditors helps to fuel the increasingly bureaucratic rules at the European Commission, decreasing the efficiency with which European taxpayers money is spent.
I had two reactions to this blog, Mark. The first was "well done for telling the truth" and the second was "oh dear, now he'll be accused of having "gone native" and have to live out his days abroad".
Tell a lie often enough and it ceases to be a lie. The public in the UK are told so often by the press that the EU and its institutions are rotten to the core that I doubt that anyone can change that view - they "know" it to be the truth. And the British body politic just loves to have a scapegoat that is full of johnny foreigners.
Try getting your article printed in the UK and see where that gets you.
The cash is taxed from the citizens of the UK and the rest of the EU. The accounts should be published in full and open to independent scrutiny. This is the only way of both improving confidence and reducing any corruption.
I am willing to believe a body the size of the EU will encounter many technical errors leading to accounting problems. However, state bodies do not deserve the benefit of the doubt. They should be fully accountable to the people.
If you want real examples of EU money being siphoned off illicetly look no further than Malta's road infrastructure upgrading with EU money. I can t remember a single project which was completed nearly on time, or on budget. Poorly explained delays and extra costs are the name of the game. Private contracters (and almost certainly certain public officials) are making a mockery of the EU, and it really is frustrating, that the media here barely cover this issue (albeit that most of the media here is either government owned or government leaning).
The youth programme, one of the smallest EU programmes financially, especially action 2, the European Voluntary Service, is a good example of how much the national governments can screw up a basically good programme.
The Romanian government appointed a national agency when it was still a candidate country because the youth programme allowed candidate countries to be "programme countries". Its head allegedly embezzled several hundred thousand Euros while youth organisations, most of them quite small, that had done projects, hosted volunteers in Romania waited for years to get money they were entitled to for projects they had already done. Many still haven't got it back.
Each national agency has its own criteria for what projects it wants to encourage, and has discretion in determining the conditions of projects, but since volunteers have to go from one country to another, two countries have to agree. So, if one country will say it will not agree to volunteers working in elderly care, and another will say it is possible. This would be fine, except that the decisions on project policies like the one just mentioned are often done by the employees of the national agency without any transparency - let alone discussion with the voluntary sector. Then there are countries that allow NGOs and youth organisations to do their own preparation and support of volunteers - subject to the guidelines and criteria of the Youth programme, and other national agencies who insist that the national agencies will arrange all training themselves - because they can do it better than NGOs! For example, the British national agency, located in the British Council, has allowed people from organisations to apply to be trainers and to do "on-arrival" training, but not for their own volunteers! Apparently there is a fear that exposing foreign volunteers to training run by the British Red Cross, or Community Service Volunteers or other youth and social service programmes will be too biased and parochial.
It is this sort of disenfranchisement, a sort of creeping "nationalisation" of the voluntary sector in this case, that is the worst of the way the EC operates - and it is very much a result of the devolution of power without public scrutiny and control to the member states. What British MP has ever looked at how Youth Connect International in the British Council operates, or even knows that it exists? At least here it is not Brussels fault. The officials in Brussels had little power in the Romanian case, except to suspend Romania's participation in the entire programme until they dismissed the national agency which they finally did.
It’s what the EU money gets spent on – lots of projects that just can’t be justified.
I had a 2 week holiday on an island of Rhodes & it’s normal population is 100 with tourists it goes to 1000, mostly based around the harbour. Once a year there is a festival at the church the other side of the island, this attracts boat loads of people, to get to the church there was a goat track path that 4x4s used to transport people for the festival. So with EU money they built a dual carriageway up & over the island for this one day. My (or anybodies) taxes well spent I think not.
Until then I was pro the EU, now I like the idea but the implementation is just too costly.
Of course not every euro of EU funding is spent wisely, and of course the complexity of managing this funding can lead to problems, but the British Euro-phobe who moans for ever about EU corruption and bureacracy, should get out more.
The EU brings peace, stability and prosperity to our continent. It is improving our environment, curbing human rights abuses, widening social justice, creating a level playing field for businesses and helping reasearch bodies pioneer new technologies. It is also holding national governments to account in ways that ordinary people simply can't.
Clearly its institutions are as frail as the human beings who run them; things could always be done better, and probably far more simply -- but, from my Irish perspective, the UK obsession with the EU's failings blinds the British people to the overwhelmingly positive contribution they are making to European peace and prosperity through their taxes. The alternative would be far, far more costly and wasteful.
Mark Mardell misses the main objection - the corruption of the EU officials themselves and extravagant perks, travel/translation expenses etc.Why are they paid so much ?He should recall the hostile attitude of Neil Kinnock when interviewed by Andrew Rawnsley and asked if he shouldn´t show some gratitude to a whistleblower who had exposed corruption. Kinnock showed blank incomprehension.
Being a citizen from a country most suspicious to its politicians for corruption (Bulgaria), I think the independent analysis on irregularities in the spending of member countries will be a most interesting information, even for internal national use.
Making this report public might have a very positive effect in putting some light on government mischef. Much more than the annoying repetition of the rather obvious statement "Corruption is a problem, it should be dealt with" in EU reports.
I can't remember for the life of me what the argument / reason is, but in a book I read...on 50 unknown facts about Europe, i am sure it made reference to the fact the EU 'has' to not be financial stable as if it were it would be in breach of something, or maybe it was it will never been in credit with financiers for some reason - i'll look in to it...
To zack albion (post 10):
There is no way that the UK would be better off out of the EU. And while the accounting may not be perfect (this is only to be expected in a massively complex undertaking like the EU) I would venture to suggest that the UK would make a far worse fist of things. Or do you also think that, for example, Brussels was responsible for that beacon of budgetary professionalism known as the London 2012 Olympics?
Furthermore, you suggest that the UK contribution would be better spent at home and, as we have come to expect from so many on this blog, use your comment to attack the EU (not altogether constructively I might add).
There are infrastructure and other problems in the UK but maybe you should talk to your MP about that, rather than your MEP.
I also think you should realise that there are many people in the UK who are free of your petty resentment and firmly believe that our contribution is well spent improving the lives and prospects of all European citizens.
'Nuff said!
Whilst any misuse/incompetence regarding funds is to be condemned and should be resolved, it comes as no surprise that the real picture is nothing like that painted by the Eurosceptics of mass-embezzlement by Eurocrats and that much of the blame lies with the national governments and Quangos that actually spend the money.
To Zack Albion, the UK's contribution is nothing like as much as £50bn, where on earth did you pluck that figure from??
As the entire EU budget is only £84bn (2005), that would mean that we were paying 60% which is clearly not the case
A more realistic figure is a gross contribution of £3.6bn (again 2005). To put this in perspective the UK Department for Work and Pensions, (which has now had its accounts qualified in the same way as the EU for the past 17 years) spends over £125bn of British taxpayers money per annum, 35 times as much as the EU!
If the Eurosceptics are so concerned about probity, Why are they silent on this point?
Sources :
A few points. The auditors don't reject the accounts, but the transactions that underlie them: payments to farmers, local authorities etc.. The so-called fraud and corruption arises because too many of the millions of beneficiaries claim more EU aid - ie cheat - than they are entitled. Some will be citizens of the UK, perhaps even listeners to Radio 5 Live. The accounts are published, and in great detail - just check the Commission's website. And Oh yes, in 2005 the UK paid in €12.1bn and got back €8.4bn. Perhaps a small price for peace in Europe.
Hallo,
Having moved to the European Union from Switzerland because of my Dutch wife I noticed many things that are in my opinion wrong. For example in Holland I cannot drive a Dutch car because I have a Swiss driving licence. I cannot drive my Swiss car because I do not have a Dutch driving licence. One obtains official information which for individuals is important but at a local level is not relevant and much more. I thick it’s not impolite to say one has a mess.
As a journalist who has more resources that I please could you pass this message on to the Finnish authorities. I can not find them.
I pass my condolence to the families and loved ones of the directly effected. My feeling go out to Finland. Why did this happen?
Dr. Terence Hale Zandvoort
As I expected, EU corruption is as rife as ever. When something is rotten to the core to start with no improvements to accounting procedures, which most of them don't want anyway, will improve the situation. Our hard earned cash is being spent by foreigners to feather their own nests. Slush funds and gravy trains;- that’s all the EU is. And notice whenever corruption charges are raised, those blowing the whistle are fired, forced into hiding or forced out on medical grounds.
Mark, well put, you have touched on THE big EU problem and it must be resolved at the EU not the member state level. When member states sign to join the EU they are signing a requirement to carry on business as member states. It is for the Commission, the Court of Auditors and even the auditors themsleves to supervise the EU and its member states for compliance with the requirements and respond to breaches through obtaining undertakings, giving directions, imposing penalties and/or escalating through the European Court. Transparency and openness is a MUST and needs to be built in without furthermore ado. It is fundamental to the future European democracy that it is. The opaqueness you are finding was ill conceived at the outset, likely not thought through at the beginning. It is placing the above-mentioned EU instruments in the unenviable position of having their integrity brought into question as the years go by and less is resolved.
I worked for 12 years on EU funded programmes, and would confirm John Lancaster's experience. I never came across outright fraud - but lots of ineffiency caused by the needlessly complex procedures, and very careful presentation of accounts so that one could do what one had proposed to do originally with acceptable accounts. In general the EU financial services are more flexible in practice than the national services administering EU money, where the siutuation is a bureaucratic and inflexible nightmare.
The objective is to spend money efficiently to get useful results. EU projects can do things national projects can't. But this is often forgotten in the financial process!
Ronald,
"Petty-minded people who cannot easily cope with the challenges of a globalised world (because they do not speak languages, for example) will always tend to seek a safe haven in their nationality."
The problem is that, generally speaking, people like you have the exact same problem in that you seek a safe haven in nationality [just that you think there is a 'nation' called Europe], and have just as much antipathy to other 'nations' like the United States of America. And I would be very interested indeed to know whether you speak either Mandarin Chinese or Hindi, or are you just as parochial in your outlook as the people you seem to detest ? Just a thought..
Zack Albion Wrote:
" Either way, Great Britain is better off out of this mess - & the sooner the better. £50 billion a year (Great Britain's current contribution) would go along way to solving our massive infrastructure & investment problems here in the UK. "
Being true to the ways of Europhobic propaganda, you of course conveniently neglect to mention just how much money the UK and its citizens are getting back from the EU (via rebate/sponsorships/funding/etc), and how much is our economy benefiting in general from being a part of the common market.
Somehow, UKIPians like you always do.
Thanks for publishing this objective analysis of a "cause celebre" topic amongst serial europhobes.
There is no doubt misappropriation of funds, incompetency and downright fraud taking place within the EU budget but claims, pursued routinely by visceral anti-Europe campaigners, that these malpractices are somehow an exclusively European defect are blatanly disingenous. Just check out the ill-informed rants regularly appearing on the ³ÉÈËÂÛ̳'s "Have Your Say" site whenever a topic associated with the European Union appears.
Such traits are a universal feature of human behaviour and are found everywhere, from your local tennis club to the World Bank.
I've just been through a fairly long scientific project financed by the EU.
While the researchers do their own accounting (taking time away from actual work), the EU scientific officer responsible spends most of his time making sure the accounting is correct. We had two audits in the course of the 3-year project, and both had been sent back for re-evaluation, because even though they have been done by accredited German auditors, they didn't meet some of the more obscure EU audit requirements.
Overall, we did actually get some science done ... sometimes ... when not filling out forms.
I don't think the EU organization is corrupt, I also don't think it's wasteful, as a matter of fact, especially when compared to national governments.
But it *is* way too bureaucratic.
Zack, if you want "out" you have to remember that you will also have to go "out" of the common market. Your shortsighted 50bn saving will translate into a 500bn loss. It's easy to forget what UK gains from access to the common market, remember, Britain was the 3rd poorest EU country when it joined it. Now your economy is doing better and you suddenly don't need anyone or anything. Luck changes, just look at America's economy and don't think it's never going to happen to you, it happens to everyone, that's the point of EU solidarity.
To Max sceptic. No doubt about it, it's the UK that has always corrupted first the EEC and then the EU by trying to make it become a "super-EFTA", which it was not the direection it had decided to embrace.Maybe your politicians, from McMillan on, have tried to sell you this bill of goods but it's a lie, well in line the lies which Blair told you about Irak. And now some of you have the gall to mention his name as a posssible candidate for the permanent council presidency. We've had quite enough with Thatcher's handbag (which did have a positive "collateral effect", her ranting led to the euro's creation, out of her colleagues sheer exasperation with her; they were willing to settle for a "common currency" but changed it to a "single curreency" just to make her mad). So maybe from opt-out to opt-out, we'll manage to get you fully out with only the Chunnel remaining as a relic of your presence (you'll still have St Pancras as a magnifient memory)
* 2.
* At 07:06 AM on 08 Nov 2007,
* Andy wrote:
"I always find it curious that it's the northern European countries who tend to be most sceptical, who want to improve the accountability of the EU, and who are most concerned about fraud, corruption and fiscal competence.
Is it a cultural divide, or does colder weather encourage financial responsibility?"
Personally, I suspect that cultural issues do play a role. The Protestant tradition does not seem to believe in forgiving human frailties so much as the Catholic tradition does. In this context I'm curious about the newer EU from "Orthodox" countries.
The above remarks are not intended to suggest that Catholic traditions are more "corrupt". In fact, from my experiences of life in Holland -I suspect that it is just as corrupt as many other more notorious countries (let us say Italy, for example) -but the "corruption" is more embedded into the system -so it does not appear to be corrupt. Under these conditions -a place like Italy that is apparently full of scandals may actually be more honest (because the scandals come to the surface) -than a "clean" place such as Holland where they are hidden much deeper....
@Zack Albion
Great "nom de plume", shame for the wrong information.
I don't know where you get the 50 bn GBP from. The UK contributed 12.34 bn Euro to the EU budget in 2005, compared to 21.3 bn from Germany, 16.9 bn from France and 14 bn from Italy.
Looking at the usual bad planning in the UK, I think your money is better spent by the EU, anyway. ;-)
this "union" is purely about placating the warmongering French and Germans to stop them going to war and resorting to fascist regimes.
And to try to bring primitive, Britain on a vague "level playing field" of Social Chapter niceties (aka. ways to con money out the taxpayer for full sickness benefit, dole money etc,..)
It has nothing to do with true "Democracy" as every country wishes to set up its own protectionist laws,.. which are in direct contradiction to the Treaty of Rome's "free movement of goods and services"
So if you live in Germany or Holland your saying anyone can get a mortgage and house insurance on your property from a firm in Scotland, Ireland, Poland or Greece,...???
In your wildest dreams !!!! as if.
Its a total con-trick,..courtesy of traitors like Winston Churchill who started all this garbage of Europe
@ Paul Allan (13)
state bodies ARE accountable to the people, which cannot be said of any of the EU's organizations.
As for the endemic corruption, it is no surprise at all, the money flows through too many channels. We can partially fix it by cutting the Brussels channel out of the procedures.
Because to me it doesn't make sense to channel money from country to EU and then back to a company in that country, when the country can channel it directly to the company without the need of an EU that siphons off some of the cash.
This is merely another example of EU-philes insistence on 'ever closer union' (ie ever more centralization) going wrong.
Centralization killed the USSR.
To Terence Hale (24):
You're complaining about your Swiss license and car not being recognized in the Netherlands. Well, maybe the Swiss people should have thought of that before voting down EU membership, ha?
To Marcel (37):
a) The EU is accountable to its citizens. Twice, actually. Once through their national governments (who vote on decisions, directives, etc), and once through the directly elected European parliament. It could be better (a directly elected commission, for instance) but you can't really say it's not accountable.
b) Why give money to the EU, if the EU gives it back? By this same logic, there's no point in taxes to the UK government as well. Why pay them, if the government spends them on you anyway?
That's the whole point of centralizaion. Many contribute, so that the money can be allocated based on the needs of the hour. For instance, when Britian was hit by floods, the EU took money (given by various states) and used it to fund our efforts.
European Court of Auditors qualifies the EU's accounts for the 13th year running (annual expenditure about £80bn). Result = annual media frenzy
UK National Audit Office qualifies the Department for Work and Pensions' accounts for the 18th year running (annual expenditure about £120bn). Result ?
Re. transparency, in cases of fraud there will normally be a criminal prosecution by the national authorities so you should be able to find the information - but as you've indicated, there are probably not that many cases of real fraud.
But in cases of error, is it reasonable to expect the auditors to give details of individuals who incorrectly complete their aid claim forms so a journalist can go and ask them questions? Would you expect the same details about the DWP benefit claimants, for example?
#35 and #6
Was that the gross or the net contribution. As I understood it France has traditionally paid very little net due totheir inefficient farmers being paid huge amounts.
Furthermore, as I have pointed out before, just because people like you do not wish to be nationalistic does not make that view correct.
As for treating others with contempt that is exactly how you seem to look upon anyone who does not hold your view of the way forward. I quote
"Looking at the usual bad planning in the UK, I think your money is better spent by the EU, anyway."
I maintain the vast majority of Britons have never had any say in whether we wish to contribute anything to "the club" far less the bilions you seem so blase about.
I can assure you I am most unhappy at the coninued failure to accurately track the huge amounts spent every year.
from Paul-Henri
Guys! What angers the Brits is the lack of transparency, and lack of accountability of the EU's bureaucracy. Their idea of "He who pays the piper calls the tune" is fair. It is because they understand the frailties of those who spend other people's cash,that they reject the EU.
As a director of a UK company I know that to file annual accounts late will result in a 2 year gaol-sentence. It was n't like that in France!
If the EU is a democratic project it will hav e to behave like one. The Brits and Scandinavians have most to lose. They at least already hold to account their own malfactors....I regret to say the rest of us will have to raise our game in europe to reach their high standards. I utterly reject the implied racism expressed elsewhere on this blog. This has got a nothing to do with the swmell of cheese.
24 - Dr Terence Hale of Zandvoort
Sorry, but it's you that's wrong. Courtesy of the EU, if you have a valid Swiss driving licence and you have a valid Dutch residence permit then you may exchange your Swiss licence for a Dutch one.
See
Happy driving!
The direct UK contribution to the EU budget (£4.7bn in 2007) is only the tip of the iceberg when it comes to the cost of EU membership. This direct cost is made up from customs duties on our trade with the non-EU world, plus a proportion of VAT receipts. It is dwarfed by other costs, for example:
(i) £15.6bn for higher food prices relative to world prices due to the CAP and the EU’s common external tariff on agricultural products. These EU policies acts to transfer money from food consumers everywhere to food producers in a few countries and are paid direct by food shoppers at the supermarket checkout. I am just about old enough to remember the bare supermarket shelves on the eve of joining the EEC as shoppers scrambled to get groceries in before prices of New Zealand butter etc. doubled.
(ii) £26bn regulatory burden on business for complying with heavy-handed EU regulations. This is paid by all businesses and not just the ~10% of the UK economy producing output for consumption in other EU countries. Naturally business has to pass these costs of EU membership to their customers and we may not notice them or associate them with the EU … at least not until we go shopping in New York or Singapore and wonder why things cost so much in Europe.
(iii) £2.5bn for common fisheries policies measures, including the price support mechanism setting minimum prices below which fish products cannot be sold.
Total direct and indirect costs to the UK of EU membership is estimated at £52.4bn in 2007 or £837 for every man, woman and child in the country - roughly equivalent to 2/3 of Council Tax revenue. These figures will rise during the 2007-2013 EU budget period.
"many callers' main reason for disliking the EU was "waste of money" and "corruption".
I expect they would say the same thing about Westminster - if Le Soleil or Taglicher Post were to mention it.
In this country if your accounts do not pass the audit, it tells investors that there are problems with the company and people lose confidence in the institution. In serious cases the comapny can no longer legally trade. If it is good enough for BA, Siemens or other masive multinationals with complicated internal accounting why isn't the EU held to the same standards to which we hold every other company?
Ronald Grunebaum:
Britain is actually the largest contributor to the EU despite the fact that Germany has a much larger economy.
I don't think it's as straightforward an argument as to whether or not Britain would be better off out of the EU.
I think Britain is better off in the EU but I do think we get a rough deal compared to the other member states.
* 37.
* At 04:43 PM on 08 Nov 2007,
* Marcel -Netherlands- wrote:
"@ Paul Allan (13)
state bodies ARE accountable to the people, which cannot be said of any of the EU's organizations."
Oh dear -is this myth still alive.....
Surely, it is those who want the control to remain by the national governments (state bodies) that prevent the EU being directly accountable to European citizens as a whole.... Please be a little honest with yourself and others.
Actually, via the EU web portal it is very easy to get into direct contact with EU officials and bodies that deal with practical matters. In my personal experience, talking to the EU is much easier than talking to national governments (or other national organisations) -who are often more politically biased and don't wish to deal with issues that contravene their policies.
It is truly wonderful to discover that corruption is unknown in the EU. Perhaps Mark would like to give us an overview of Madame Cresson's career?
Some facts to help the discussion;
- EU expenditure accounts for about 2% of total EU government spending
- net transfers between the 27 Member States amount to no more than 30 billion euros annually, if that
- the six largest Member States account for about 75% of the EU budget.
Hostile sections of the UK press nevetheless succeed in giving the impression that the EU is mis-spending enormous amounts of (mainly UK) money.
This image hardly fits the facts. Mrs. Thatcher succeeded in "getting her money back". An understanding of how the UK rebate mechanism works is, therefore, essential to an understanding of the underlying political situation.
The rebate is calculated on the basis of a formula that establishes the difference between the UK's share of the EU-wide VAT base and its share of total EU expenditure in Member States, with the latter percentage being usually 3 to 4 points lower than the former. This percentage difference is then applied to the overall amount of expenditure and the UK is refunded two-thirds of the sum that results. Simple already. There's more.
As the percentage of money spent in the UK goes down, the refund goes up. It was this phenomenon that got Tony Blair into difficulties on enlargement as the UK would have ended up avoiding paying any of the cost. In the end, additional bells and whistles were added to the mechanism to ensure that the UK pays its fair share (capped at 10.5 billion).
Indeed, it can be argued that the UK has no interest in seeing any EU spending nationally as this has the impact of reducing the rebate. It is the UK taxpayer that is footing the bill to the tune of 80% to 85% if expressed in terms of the rebate foregone.
The Continental Member States agreed reluctantly to extend this antiquated system until 2014. Their agreement was a measure of the extent to which they are prepared to go to keep the UK on board, the net effect being to remove from the UK any need to contribute financially to the policy it most dislikes viz. the CAP.
The points raised by # 43 are wider as they relate to the overall balance of advantage and disadvantage of the UK's membership of the EU. I cannot imagine any circumstances in which the latter would outweigh the former. But I may be wrong. A final fact is that the willingness of Continental Member States to make further concessions seems to be reaching its limits.
One more thing regarding accountability: I sent commissioners several emails, complaining about what I saw as unfair treatment, such as the 5euro top up fee in Italy that everybody had to pay and which wouldnt be added to your minutes. Two weeks later I received a detailed mail back which explained the ongoing procedure to force Italian companies to abandon this shady behaviour. The same thing happened when I inquired about why Europeans cant take as much luggage on economy flights as Americans. Maybe the Commission is less accountable to us citizens, but it is definitely better in answering to questions than many national politicians
John (43): You quote dubious figures, concocted by a known Europhobic think tank. But, even if those figures are true, you neglect to mention just how much money the UK and its citizens are getting back from the EU (via rebate/sponsorships/funding/etc), and how much is our economy benefiting in general from being a part of the common market.
You can repeat the lie of our imaginary losses from EU membership many times, but it still won't be true. EU membership is one of the best things (economically and politically) that has happened for our country in a long, long time.
to Chris (no. 45)
Actually, the EU's audit is much tougher than that of a private company. It's not only about the books, and whether they are 'true and fair'(as is the case in private companies), but also about the regularity of transactions.
If you read the auditors' reports from previous years, you will see that the EU books are more or less in order (i.e. 'true and fair').
So, if the EU were a private company, it wouldn't have major problems to pass an audit test.
But the EU is also checked on the regularity of transactions, e.g. if a payment to a farmer in Scotlad was made in line with all the rules and procedures. If it was late, the auditor will have to flag it up as 'irregular'. Most EU spending is done through such individual payments, hence the dificulty to get a clean bill of health on the entire spending.
For all the Eurosceptics/phobes etc.
"It is estimated that the real direct cost of the EU to the UK is about £50 per head per year.
But it's also estimated that EU membership is worth about £300 per head per year to the UK economy as a whole, through increased trade, lower cross border costs and so on.
In other words, membership is certainly a good financial investment for the UK."
Obviously this outrageous pro-EU propaganda must emanate from the EU iself. Yes?
No - HM Government. see
Now please, drop the Daily Mail fairy stories.
John in post 43 set out what he believes the cost of the EU is to the UK.
I cannot agree with his analysis as it assumes that were we not in the EU we would have no business regulations and no agricultural support.
This was certainly not the case before we joined the EU and I doubt very much that it would be after we left.
Your first point relates to the CAP. I don't see any government whether in or out of the EU allowing our farmers to turn the British countryside into american mid-west style open prarie. If we want farmers to do the non-commercial job that looking after our countryside entails, we will have to pay them to do it in some form or another. This is a political decision and there are many who would argue for continued support in one form or another. For an example, look at the heavily supported agriculture sector in non-EU Switzerland.
The second point relates to business regulation, it may well be the case that if we scrapped all regulation of business where EU directives are currently in force we would save money through cheaper prices but to assume that we would not have any independent regulation is unrealistic.
In addition, Much of the precise nature of how directives are implemented is left to individual member states to decide, if many regulations have been heavy handed, it is just as much the fault of the UK government as the EU. That being the case, it is unlikely that that same UK government would engage in a regulatory bonfire once it had left the EU. Domestic politicians of all shades are happy to allow Eurosceptics to blame the EU for any over-regulation as it lets them off the hook.
Any right-wing/libertarian dreamers who think that the UK would become a free-trading, open-bordered, deregulated, minimal taxation country and reap a massive growth windfall as a result if only it wasn't for our EU membership are living in a parallel dimension. There are many forces and interest groups here in the UK that would not want to see the country go in that direction and you would not just be able to impose your agenda as you wish.
The recent study by the World Economic Forum shows that 5 of the 10 most competitive economies in the world (including the UK) are EU members. Being a member is therefore not at all incompatible with economic success and competitiveness.
Look at the example of Ireland for further evidence, yes they received some cash from the EU but that is not the main reason for their success, it was domestic policies. They have achieved their economic miracle while complying with the same EU regulations that we do, any domestic politician who tries to blame the EU for the UK not having the same success is just trying to mask their own failures.
Mark is quite correct in pointing out some of the difficulties with signing off the EU budget - as are the Lords EU committees who have also continually raised these points in relation to the matter. But it would prove very helpful if another proposal that regularly emanates from members of the Lords, a motion to conduct a thorough and official cost/benefit analysis of EU membership, would be taken up in the Commons.
Greypolyglot provides some very useful figures from the FCO, but s/he neglects to reveal that the "£300 per head per year" is based upon a document published by the EU. What you also neglect is that this present government is generally pro-EU and keen to play, or overplay I might add, the benefits. But, it would seem, not to test such benefits and arguments in a promised referendum.
Most of the rigorous and independent cost/benefit analyses I've come across chime more with the picture John illustrates in #43. One such analysis, conducted by a think tank which cites its objective to be "balanced" and have its EU Factsheets "refereed by experts from both sides of the European debate" is that published by . They published a cost/benefit analysis which concluded the UK "would be between £17 billion and £40 billion per year better off, possibly more" should the UK withdraw. This report also debunked some of the popular misconceptions, particularly questioning the perceived benefits of the Single Market and some of the nihilistic scaremongering that abounds regarding the economic impact of membership. It would seem "fairy stories" are not an exclusive forte of the Daily Mail.
What I believe this analysis does highlight however, along with others who put the figure two-to-three times higher, is that the EU is first and foremost a political project. A customs union is not the objective, but merely the vehicle to greater economic and political integration. As much as some British parties might be keen to overplay the economic aspect of membership, they remain rather reluctant to do the same when it comes to the political aspect.
55 - Tony - refers us to the "balanced" Civitas for data.
That's the same one that "as part of (its) continuing effort to ensure that schools are supplied with objective materials about the EU ... provide(s) a network of about 200 EU-sceptic speakers willing to talk to schools" is it?
Doesn't is strike anyone else as both odd and amusing that those who don't trust the EU delight in quoting the EU's Auditors to confirm their prejudice and "prove" that the EU is "corrupt from top to bottom"?
Now, if we shouldn't the EU's figures and we shouldn't trust the FCO's figures whose should we trust? UKIP's, BNP's ?
Greypolyglot (53) is to be applauded for at least posting some supporting evidence for his claim that the benefits of EU membership outweigh the costs. But he should note that the FCO website is only referring to the DIRECT costs of EU membership and ignores the indirect costs which tip the balance decisively against EU membership.
For example, the FCO claim of £300 per head benefit to the UK of EU membership is derived from the Commission's estimate for additional GDP due to the Single Market in their report "The Internal Market – Ten Years without Frontiers". On page 6 it says "The Commission estimates that EU GDP in 2002 is 1.8% or €164.5 billion higher thanks to the Internal Market". Assuming UK GDP of £1 trillion and population of 60 million yields £1000000 million * 0.018 / 60 million = £300 per head of UK population.
The same figure has been used by UK government ministers, for example in the following speech from the minister for Trade & Industry to the European Parliament.
However this figure is more than outweighed by the EU Commission’s more recent estimate for the indirect cost to business of complying with EU regulations alone. See for example the following report in the Financial Times where the relevant Commissioner (Verheugen) says the indirect cost to business of complying with single market legislation is 600m euro per year - more than 3 times the Commission’s estimate for the benefit of the single market and more than enough to tip the cost/benefit analysis against the UK’s EU membership.
Similarly the indirect cost to consumers of EU agricultural policies (i.e. paid for at the supermarket checkout rather than through taxation) dwarfs the direct costs of the CAP. For example it is elementary economics that if the EU has a common external tariff for agricultural products averaging 10.9% its main effect will be to raise the price of food within the EU customs union by an amount equivalent to the tariff thus transferring this amount from the collective pockets of food consumers (i.e. everyone) throughout Europe to food producers in a handful of countries. I would be interested to hear from Denis O’Learly as to how he squares this with his astonishing claim (for which he provides no supporting evidence) that the Common Agricultural Policy does not cost anyone in Britain a penny.
Mark (54) is correct that not all the cost of Britain’s EU membership would be reclaimable outside the EU. Some alternative agricultural support and business regulation would still be necessary. But lighter touch policies than those from Brussels could surely be developed and of course they would benefit British producers alone rather than mainly those in other EU countries.
The E.U. is an evolving organisation. The debate about whether we want an ever closer union is subservient to what sort of Union do we want.
At the present time it is developing very much along the route of better social justice and increasing employment protection issues. This necesarily involves regulations on business' etc. Depending on your political view point this is either admirable or a worrying trend.
However there could come a time in the future when the E.U. actually think this is not such a good idea. If competitiveness falls dramatically, for example and economies in the E.U. start to suffer, the E.U. members may decide we need to roll back the social chapter. It may decide that the maximum hours for the working week should be increased or scrapped. It may decide workers rights should be reduced etc. I appreciate at this time such a scenario is unlikely but not impossible.
If such a decision was made and we were still working towards ever closer union, such laws would apply across the E.U. If a particular country did not like this they could accept it or leave.
I pose the question if such circumstances arose would the pro E.U. people still be pro and would the anti's still be anti ?
Neil
Even if the EU were still of overall economic benefit to Britain i don't feel the loss of democracy is acceptable any more. It may be different for other countries but for the UK it is not worth it any more.
John (57) refers to the FT report of Gunther Verheugen's estimate of 600bn (not million) euro per year as the indirect cost to UK business of complying with single market legislation.
At £405 bn that still looks to me like a cost of £675 per head rather than the wild figures others quote. Set aqainst a benefit of £300 that doesn't look too outrageous to me.
Sorry about the delay in replying. I've been busy.
Hi,
To Mr A Hershko:-
You're complaining about your Swiss license and car not being recognized in the Netherlands. Well, maybe the Swiss people should have thought of that before voting down EU membership, ha?
You missed my point The situation with my car and driving licence apply in Holland by Dutch law to any non Dutch car British, France, German. The remark regarding the Swiss rejection of EU membership you are obviously not well informed. Switzerland has the direct democracy that is by a referendum any village has the ability to block a law as any land in the EU has a veto right With Swiss EU membership with the Swiss democratic system a veto right of any village would apply to EU law which would bring the EU to stand still.
Regarding money there properly more EU companies in Switzerland than Swiss companies in the EU. If you look at the EU web site you see in all aspects of EU activity Switzerland and Liechtenstein are consider EU equivalent as the EU Switzerland. This year the Swiss borders will be made free to the EU.
Dr. Terence Hale
Hi,
As ³ÉÈËÂÛ̳ European correspondent I did not see many reports in the British media about the dispute between Germany and Liechtenstein where by the German secret service paid over four million euros to a staff member of a Liechtenstein bank for details over its customers bank accounts. This amounts to industrial espionage and has coursed many resignations of top German management and a diplomatic argument between the two countries. This regards tax evasion and is strange because the ruling German party had a secret bank account in Liechtenstein of around twenty million euros. The under laying reason is the German tax system is so complicated I don’t think there a person in Germany who understands it: The damage to German industry will be considerable if they put all there top managers in prison.
Regards Dr Terence Hale
Hi,
One of the biggest subtle forms of corruption in the European Union is the manipulation of expense reimbursement. The Court of Auditors seem to be looking at the big boy’s The German Eon for example but at the level of EU officials a creeping culture of expense manipulation is taxing the budget. It has been many times said that EU politics is a form of prostitution however it’s getting expensive.
Regards Dr Terence Hale
Hi,
For The attention of Mr.
One of the biggest subtle forms of corruption in the European Union is the manipulation of expense reimbursement. The Court of Auditors seem to be looking at the big boy’s The German Eon for example but at the level of EU officials a creeping culture of expense manipulation is taxing the budget. It has been many times said that EU politics is a form of prostitution however it’s getting expensive.
Regards Dr Terence Hale