“We already send £350m to Brussels each week.”
Robert Oxley, Vote Leave
Numerous Brexit campaigners say EU membership costs the country £350m a week.
We’ve FactChecked this claim before and found it wanting. And now the Institute for Fiscal Studies (IFS) has made an important new intervention.
It is likely to remain one of the key questions for Britain as the in/out referendum on 23 June looms.
Just how much money are British taxpayers handing over to Brussels?
The figure of £350m a week is based on official Treasury figures for Britain’s gross contribution to the EU budget for 2014.
That’s £18.8bn, or about £360m a week, which represents about 0.6 per cent of national income, about 14 per cent of total UK health spending for 2014, or £252 a year for every person in the country.
But concentrating on this gross figure ignores the fact that a good deal of this money flows back to Britain in various ways.
First there is the rebate that Margaret Thatcher’s government negotiated in 1984. This reduces Britain’s 2014 contribution from £18.8bn to £14.4bn.
Then there are the billions that flow back directly to the British government. This money is mostly spent on payments to farmers, although some of the poorest regions of the UK also benefit from EU funds.
This brings the net payment down to about £9.8bn in 2014. But it isn’t the whole story.
Non-governmental bodies like universities and businesses receive money from the EU too. Most of this comes via research grants paid out under the Horizon 2020. British researchers have tended to do well out of this funding.
The IFS calculates that non-governmental spending like this reduces the net UK contribution to EU coffers to £5.7bn in 2014 (it is estimated to rise to around £8bn in subsequent years).
All these adjustments slash the contribution per person from £252 to £89.
And the IFS thinks that even this could be too high, depending on how you deal with other items of spending: aid to non-EU countries, revenue from trade tariffs and administrative spending.
Changing the way these things are worked out could reduce the cost of EU membership to the UK to around £60 per person.
To put this in perspective, it has to be remembered that Britain is still a net contributor, no matter how you crunch the numbers.
The IFS suggests that 17 of the EU’s 28 member states are net “givers” while 10 – mostly in Eastern Europe – are “takers” (Spain comes out exactly neutral).
It’s a reminder of the fact that the EU’s finances are fundamentally redistributive: resources are diverted from richer to poorer member states.
Leave campaigners are unlikely to stop using the figure of £350m a week, despite the IFS conclusion that using the gross figure and ignoring the UK rebate in this way is “not sensible”. The real net figure is slightly debatable but certainly much lower.
When we raised this with Leave campaigners last year, the suggestion was that the real issue was control: after Brexit, Britain would be able to decide what it spent the money on, rather than having the spending allocated by Brussels.
It’s possible to argue that the gross contribution minus Britain’s rebate – £14.4bn in 2014 – would be available to spend on whatever UK governments wanted in the event of a Leave vote.
But the IFS says this only works if two conditions are met. First, the UK would have to negotiate a relationship with the EU after Brexit that did not involve a financial contribution.
This could be tricky. If, like Norway, we wanted to continue to have access to the EU’s internal market, we might have to pay for the privilege.
Second, Britain only gains financially if Brexit does not adversely affect trade, jobs and growth, which is a big “if”.
[Update: In the video we refer to Norway making a contribution to the EU budget. Norway’s mission to the EU estimates an annual cost of 866m euros (£684m). Norway has a population of about 5 million, so this works out at about £135 per person. Note that this is a gross, not net, figure, so is not directly comparable to the various net figures estimated by the IFS. The Norwegian government says: “It is not possible to compare net payments between those of an EU Member State and those of a Non-Member state.”]