Rescuing
Democracy in the United Kingdom from our current Elected
Dictatorship
|
Spin, not
face-to-face confrontations with the voters, is the Government's
chosen method of communication. Ordinary
people are dangerous. Ordinary people might ask a question
which throws a politician 'off message'; the Cabinet member
might reveal himself or herself to be a human being like
us, and not a programmed android. Worse still, he or she
might tell the truth.
Ann Leslie - Daily Mail, September
16, 2004
|
Costs and Benefits
of the European Union
Would we be better
off if we left?
If
the UK were to leave the EU, there would be no net loss of jobs
or trade. In addition we would b nearly £20 billion per
year better off, and possibly much more. These are the preliminary
findings of a study, shortly to be published by Civitas.
Drawing
largely on official sources and deploying the most cautious of
assumptions, the net costs of EU membership are appraised in five
areas: EU regulation, the common agricultural policy, net payments
to EU institutions, the single market, and inward investment.
Where independent sources suggest different figures, a range of
costs is given.
EU
Regulation
Based on the Government’s
own regulatory impact assessments (RIAs), the cost between 1999
and 2004 was £6.33 billion per year. The total cost of regulation
(one-off costs spread over the period plus recurring costs), according
to the British Chambers of Commerce, was £7.91 billion per
year. Based on information supplied by the House of Commons Library
in May 2004, 83% of the cost of regulations originated in EU directives.
If rounded down to 80%, then about £6.33 billion of the
£7.91 billion total cost is due to the EU. There were no
RIAs before 1999 and the estimate for the period from 1973 to
1999 has to be far more tentative. An official study of the overall
impact of EU regulation in the Netherlands has put the figure
at 2% of GDP. If also true of the UK, the net cost would be £20
billion, giving a range from £6.33 billion to £20
billion.
Common
Agricultural Policy
An OECD study put
the total cost to the EU in 2002 at 1.4% of GDP (the UK figure
in 2004 would be £14 billion). About £5 billion (o.5%
of GDP) is returned to UK farmers in subsidies, putting the net
cost at about £9 billion per year. A Treasury estimate put
the cost about 20% lower than the OECD at about 1.1% of GDP or
£11 billion. The range is, therefore, from £6 billion
to £9 billion, with the higher OECD estimate the most plausible.
Payments
to EU Institutions
This is an annual figure published by the Office for National
Statistics. The latest Pink Book shows net payments of £4.3
billion and, over the last ten years, the UK has paid a similar
net average amount each year, paying out an average of £11
billion per annum and receiving back £7 billion in ‘aid’.
Single
Market
The single market came into effect in 1993 and a number of independent
studies have found no hard evidence of net benefits. For example,
the Bundesbank can find no evidence that it has helped German
trade. The UK economy is unlikely to be any different. The Institute
of Directors reviewed studies from the Commission, the OECD and
others and noted the absence of persuasive evidence of the benefits
of the single market. In 2003 an Institute of Directors’
survey of members (before enlargement) found that trading in the
EU 14 was on balance unattractive and more costly, with more paperwork
than before the single market. The overall conclusion is that
the balance of costs and benefits for the UK economy is zero,
that it could be negative, and that the UK would not suffer economically
by being outside the single market.
Inward Investment
The UK is one of the world’s leading overseas investors,
but also a recipient of significant inward Foreign Direct Investment
(FDI). UK Trade and Investment, part of the DTI, monitors investment
flows and its annual review for 2002/03 lists the main reasons
why the UK attracts investment. Access to the single market is
one among several other advantages, including the skilled and
English-speaking labour force, the flexible labour market, good
communications, the strong science and technology base in universities,
low corporation tax, ease of market entry and tax allowances for
start-ups. These other advantages would remain and, if the UK
left the EU, the impact on inward investment is likely to be neutral.
Would Leaving the EU Damage UK Jobs?
A number of authoritative studies have found that leaving the
EU would be trade and jobs neutral, including a report by the
National Institute for Economic and Social Research, and a report
for the US Congress by the US International Trade Commission.
In particular, if the UK left the EU it is unlikely that UK companies
would be denied access to other EU markets. The latest figures
are for the period before enlargement and show that the other
14 members exported more to the UK than they imported. It might
be said that they need the UK more than the UK needs them. Moreover,
now that Switzerland and Mexico have free trade agreements with
the EU, it would be extraordinary if the UK did not. In trading
relations, self-interest tends to prevail, but in any event the
EU’s average external tariff on non-EU imports is down to
about 1.5% and the World Trade Organisation would prevent any
‘retaliation’, however improbable.
Total Net Cost
On very cautious assumptions the total net cost of EU membership
is £19.63 billion (£6.33 billion for EU regulation,
£9 billion for the CAP and £4.3 billion in net transfers
between EU institutions). Based on less cautious, but still conservative,
assumptions the cost could be £33.3 billion (£20 billion
for EU regulation, with the other costs the same).
From
Ian Milne, A Cost Too Far: An analysis of the net economic costs
and benefits for the UK of EU membership, London: Civitas, July
2004.
