Part of a series from the Fresh Start Group on what Leave would look like. The author of today’s piece is Chris Heaton-Harris, MP for Daventry.

“Can we carry on with an organisation that has a multi-billion pound budget but not enough focus on controlling spending and shutting down programmes that haven’t worked?”
– David Cameron, 23rd January 2013

The EU has committed to spend €162 billion in 2015. The largest expenditure items are the Common Agricultural Policy, at 46 per cent, and regional funding, consuming at 33 per cent. As well as its sheer size, there are a number of serious concerns with the EU budget:

  • Spending relates to historical commitments such as the CAP and regional spending rather than areas that might promote future growth.
  • EU spending is badly accounted for, with the EU’s auditors regularly finding a large percentage contains “material error”.
  • The UK gets – and has historically always had – a bad deal from the EU budget, this results from having a smaller agricultural sector, more extra-EU imports subject to customs duties, and fewer regions subject to EU regional funding.
  • The UK’s contribution to the EU budget will rise in coming years as more funding is transferred to the new member states – post the 2005 Blair deal only spending in the old member states is subject to the UK rebate.
  • EU spending is often of low quality and politically motivated, for instance regional funding designed as temporary funding to help states improve competitiveness has in many cases become permanent. These problems are accentuated by matched financing criteria.
  • The EU spends money on undesirable items such as: propaganda, excessive salaries and politically targeted development aid.
  • There is a lack of proper democratic scrutiny of spending, often dealt with in inter-institutional arguments between MEPs and EU officials.

Immediate steps and reasons to change

For the duration of the renegotiation period, the UK would continue to be a part of the EU, so the UK would have to negotiate a final payment based on the presumed cut-off date. During this period the UK Government would work on replacement policies in areas such as agriculture and universities. Reasons to change:

  • Non-EU states that export into the EU do not have to pay into the EU budget in the same way that EU states do not have to pay into the USA budget. In 2014 the USA exported €400 billion of goods and services into the EU without contributing to the EU Budget
  • The UK’s government’s contributions to the EU budgets, in addition to UK companies and individuals payments adds £12.4 billion a year to the UK’s £96.2 billion balance of payments deficit.
  • The UK will have to decide what levels of external tariffs it wishes to impose and pay these moneys into HM Treasury.
  • The UK would be free to set its own VAT levels.
  • After leaving, the UK could democratically decide how to spend its funds.