How much does EU membership ACTUALLY cost the UK?

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Brexit

As we near the European Referendum, in which British citizens will decide whether they or not they want to remain part of the European Union, both sides are bombarding the public with facts, figures and scare stories to try to ensure they get the result they want.

But how much of what is being said is actually true?

A major point of contention is how much the UK pays into the EU budget, which the ‘Leave’ campaign have dubbed a ‘membership fee’.

In reality, what we pay into the EU isn’t a ‘membership fee’, but what is clear is that we pay more into the EU budget than we get back, making us a net contributor.

Currently, the UK is the second largest net contributor, behind Germany, but for many years, the two countries were the only significant net contributors. Now, ten countries contribute more than they get back.

Net contributions of EU states

In total, the UK is expected to pay £18 billion into the European Union annually, but we receive an discount, or ‘rebate’ which amounts to £5 billion. This is applied immediately, so last year, the UK actually paid £13 billion.

On top of this, last year, the EU spent £4.5 billion on the UK, meaning our ‘net contribution’ was estimated to be around £8.5 billion. However, how this money is spent is decided by Brussels and not by the UK government.

As a daily amount, using the post-rebate figure, it’s more accurate to say the UK sends £35 million a day to the EU.

The amount the UK pays varies annually, but it has risen significantly in the last 7 years.

The Pros and Cons of EU membership

An argument put forward by the ‘Remain’ side, is that although we pay into the EU, what we get out of the organisation more than makes up for the cost.

They argue that our membership creates trade, jobs and investment.

However, according to the House of Commons library, “There is no definitive study of the economic impact of the UK’s EU membership or the costs and benefits of withdrawal”.

It goes on to say that:

Many of the costs and benefits are subjective or intangible and a host of assumptions must be made to reach an estimate.

If the UK were to remain in a reformed EU, assumptions need to be made about what the reforms might be. Any estimate of the effects of withdrawal will be highly sensitive to such assumptions.

In some policy areas – the environment, for example – where the UK is bound by other international agreements, much of the content of EU law would probably remain. In others, it might be expedient for the UK to retain the substance of EU law, or for the Government to remove EU obligations from UK statutes.

What else does Britain get back?

Some of the money we contribute to the EU returns to the UK in the form of subsidies and grants.

UK gross post rebate and net contributions

British farmers benefit financially from the Common Agricultural Policy, while a number of economic development and scientific research projects are also given EU cash.

The Treasury says total EU payments to the British public were £4.4 billion in 2015 and another £1.4 billion went to private organisations in 2013 (the most recent year on record). This suggests we get back almost £6 billion a year.

However, while EU supporters say that shows how valuable membership is to Britain, those in favour of leaving the EU claim that the Government would still be able to spend that money in EU, and possibly more effectively too.

International Aid

Almost £1 billion of British money given to the EU is spend on international aid, but this spending is counted towards the UK Government’s target of spending 0.7 per cent of Gross Domestic Product on aid.

So this is money the UK would have to spend anyway outside the EU, for as long as the Government remained committed to their aid target.

Final figures

When all the money coming to and from the EU, including the spending on aid, last year Britain gave almost £6.5 billion, which amounts to almost £18 million a day.

Supporters of the UK remaining part of the EU claim that this amount is more than worth it, as we get access to the single market, which they say profits the UK by far more than £6.5 billion we contribute.

Leave campaigners have argued that Britain could still negotiate access to the single market, keep some (or all) of that membership money, while also having the freedom to negotiate deals outside of the EU with new markets, such as other Commonwealth countries.

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