The people imploring us to leave the EU complain that we pay so much into the EU budget, but get so little back. It is true that last year the UK was the 3rd largest contributor to the EU budget, contributing 12.57% (after rebate), but still behind France and Germany, the largest contributor. It’s also true that we receive considerably less back from the EU than we pay in – last year the difference was £8.5Bn. This might sound like a lot, but the UK’s total Gross Domestic Product last year was £2000 Bn, so our net contribution to the EU was equivalent to 0.4% of GDP.
the UK making a net contribution to the EU budget is equivalent to London being a net contributor to the UK budget, while Cornwall is a net recipient. The UK is one of the wealthiest countries in the EU. Since the EU is not just a single market, but also has a social purpose, it seems right and proper that we contribute to make things better in poorer parts of Europe.
Who benefits directly from financial payments from the EU to the UK?
Of the £4.6Bn received last year, £3bn went straight to landowners, via the Common Agricultural Policy. Most of this was in the form of a single payment, paid to landowners whether they grow food or not. About 15% of it went to Rural Development and most of this was spent on Agri-Environment Schemes.
It’s worth noting that there are some that argue that much of this subsidy is taken from food producers by others within the supply chain, and in particular the large retailers such as supermarkets. Others still argue that ultimately consumers benefit from cheaper food as a result of these subsidies. Both of these arguments are complex and I’m not going to go into the detail of them now.
£1.3Bn went to Regional Development Funds . These have now been wrapped up into one budget, which is spent via the Local Enterprise Partnerships (LEPs). The LEPs spend the money supporting local businesses in various different ways. For example 40% of the projected £3.6Bn LEP spend of EU money in the coming years will be spent “enhancing the competitiveness of small and medium enterprises (SMEs)”. SMEs have a turnover of up to £50M a year. As a comparison, 3% of the budget goes to projects “to preserve and protect the environment and promote resource efficiency”. £370M also went into the Social Fund, to support more employment, mostly by private businesses.
It’s also worth noting that £1.3Bn of EU funding went to UK private sector businesses to support research and development, but that this figure is not included in the calculations for the UK net contribution to the EU. If it was, our net contribution (for last year) would be reduced by 8.5%.
So it’s pretty clear from these figures that the direct beneficiaries of the £4.6Bn of EU funding last year are: landowners and other private businesses. A small amount of EU funding finds its way to the Public Sector and the Charity Sector, mainly to charities with large land ownerships such as the National Trust, who benefit from CAP subsidies.
It is true, for the average UK citizen, we pay into the EU budget via our taxes, and receive very little financial return. Most of the income from the EU goes to businesses of one sort or another. Is that a reason to leave the EU? I would suggest not.
I believe the EU can be a force for good if we can reclaim its social and environmental purpose. If it is downgraded to a single market then the arguments for staying in become much weaker.
But, to paraphrase a former US President “It’s not the economy, stupid”.