It’s a seriously eye-catching headline, isn’t it? The Leave campaign’s argument runs as follows: if we leave the EU, we can take back the £350 million per week we currently give to the EU, and spend it on the NHS instead. This has been plastered all over the Leave campaign’s “battle buses” – incidentally, I wonder what it’s like to be on a battle bus with Boris Johnson…
It’s easy to see why this is a really appealing prospect, especially at a time where there are raging debates about the under-funding of the NHS, and the fiasco of the junior doctor’s contracts. I am immensely proud that we have an NHS, however, this £350 million per week claim simply doesn’t stack up.
Why, you ask? Well….
The £350 million figure is misleading, because:
- The figure is based on our contributions in 2014, and our actual contributions vary year on year.
- The figure is our gross contribution to the EU. It does not take account of what the UK gets back from the EU. To obtain a more accurate figure of what the UK sends to the EU, £350 million per week needs to be reduced by:
a. The UK’s rebate on its membership fee, which is deducted before we make any payments to the EU. This reduces the UK’s contribution to £276 million per week.
b. Something called “public sector receipts” – these are grants made by the EU to the UK government as part of the EU’s various development programmes. For example, the UK receives grants from the European Agricultural Guarantee, the European Agricultural Fund for Rural Development, and other Social and Regional Development funds.[i] Most of these funds are then paid out in areas such as regional aid and supporting research in UK universities. When this is factored in, our contribution to the EU comes down to £188 million per week.
c. “Private sector receipts” – these are grants made directly by the EU to the UK private sector, for example in support of research and development projects. This reduces our contribution to the EU to £161 million per week.
So, if you take our gross contribution to the EU, and subtract all of the money that we get back, our net contribution to the EU is actually around £161 million per week.[ii] That’s half of what is alleged by the Leave campaign.
You might be thinking at this stage that is still a saving worth making. However, we then need to consider other factors which will reduce any saving we might make by leaving the EU:
- As I have argued here, if we vote to leave the EU the UK will not stop its relationship with the EU altogether. Given that 44% of our exports go to the EU, we would still need a trading relationship with those countries. I have set out the various models that we could follow in this post. However, the key point is that if we were to join the European Free Trade Association (and follow the Norwegian model), or if we were to follow the Swiss model, we would still have to contribute to the EU. It is difficult to calculate exactly what our contributions would be, but I have set out what Norway and Switzerland contribute to the EU in the post linked above. It is likely that our contribution to the EU would be higher than both Norway (because we have a larger population and GDP) and Switzerland (because we would want a more comprehensive trade deal than they have in place).
- Any calculation of the savings that might be made from leaving the EU need to factor in the costs of leaving. The Leave campaign’s figure assumes that Brexit would be costless, which it won’t be. The costs include:
a. Negotiating our exit from the EU (which could take up to two years, and possibly even longer).
b. Renegotiating our future relationship with the EU (which, as I’ve mentioned here, could take years to negotiate).
c. Negotiating trade deals with over 50 countries to replace those that may be lost from leaving the EU (depending our future relationship with the EU) and any other trade agreements we may want to conclude.
d. Passing laws to cover the areas that are currently governed by EU Law.
e. Taking back regulatory functions that we have conferred on the EU.
The Leave campaign has not provided any suggestions as to how much this would cost.
- Any savings may also be reduced by any losses to the UK economy or loss of investment into the UK as a result of leaving the EU. As I mentioned in this post – the UK currently receives £14 million per day in investment from other EU countries, and 3.3 million jobs are in some way linked to trade with the EU. I’ve also outlined above that the EU provides grants to both our public and private sector. If any of this is lost as a result of leaving the EU, this would further reduce any potential saving, especially if government funds have to be diverted to dealing with these consequences.It is true, however, that it is difficult to calculate the economic impact of the UK leaving the EU, as most of the models that are put forward are based on assumptions which can be challenged, and it will ultimately depend on what model the UK follows if it were to leave the EU. Nevertheless, Full fact/UK in a Changing Europe have looked at a number of the economic studies produced and stated “there is a wide consensus that leaving the EU would come at some economic cost.”[iii]
Finally, could we really assume that if there was any saving from the UK leaving the EU, any of this would actually go to the NHS? It’s certainly not something that can be guaranteed, and as I’ve mentioned above, it is entirely possible that funds will need to be diverted to other areas.
£350 million to the NHS? Really? I’m afraid not. It just doesn’t add up.
Some light relief…
This campaign can get a bit intense. For a bit of light relief, go and look at #catsforEurope and the photos on @mEUwCats. Here is my favourite…
Footnotes (AKA things for the super keen)