On the BBC Today programme David Cameron, the Prime Minister, repeated the claim that he had cut the EU Budget. His words were:

“People say you’ll never be able to cut the EU budget. I’ve cut the EU Budget… I’ve got a track record of doing what I say I’m going to do.”

This is untrue. In fact, it is so untrue that Cameron must now be labelled a liar. Cameron’s claim is contradicted by readily available statistics in official documents from the government of which, in some sense, he is meant to be “the leader”. Yes, political rhetoric and practical reality are often different things, but this is ridiculous.

This story goes back to the 7th and 8th February 2013 at an EU Budget summit, Cameron and other EU leaders agreed a €908 billion limit for the seven-year period 2014 – 2020. This was 3% lower than in the seven-year period 2007 – 2013 which was then approaching its end. This was trumpeted as the first ever cut in real terms spending in the EU’s history, with Cameron taking plaudits for his ‘tough talking’. But Cameron himself had no way of enforcing the agreement or of protecting the UK’s own share of the payments needed to cover the expenditure.

Unfortunately, the agreement of 8th February did not stick, as Cameron well knows. A few weeks later the EU’s finance ministers had their own council meeting. On 15th May they overrode what Cameron thought had been settled with Europe’s prime ministers. A big increase in the 2013 EU Budget was pushed through, with the UK’s own additional bill in that one year amounting to an extra £770 million. As the decision was taken by qualified majority voting, the UK could not stop it. The Daily Mail noted, ‘Conservative MEP and former European Commission chief accountant Marta Andreasen said yesterday that [the outcome] “made a joke” of the recent budget agreement and “sets a terrible precedent”.’

It is very important to emphasize here that the UK could neither prevent EU over-spending nor refuse to pay its share. If it had refused to pay its share, the Commission would have taken our government to the European Court of Justice, resulting in a large fine. No doubt George Osborne, our Chancellor of the Exchequer, registered loud and angry protests. But he could do nothing against the brute fact of a qualified majority in favour of more spending.

Worse was to follow. At another meeting in December 2013 the agreement of February 2013 was more or less torn up. A new medium-term budget was put in place, with the UK’s contribution soaring relative to the numbers envisaged less than a year earlier. I have to confess that it is not easy to dig up newspaper stories on exactly what was decided, but the following is from the report in The Daily Telegraph by Matthew Holehouse on 5th December,

“Britain will give an extra £10bn to the European Union because of the weakness of struggling eurozone economies, it has emerged. The British contribution to the EU will rise dramatically from £30bn to £40bn over the next five years, the Office for Budget Responsibility said. It includes a surprise £2.2bn jump in funding to £8.7bn this year.”

Now Cameron may point to a 2nd December 2013 press release from the EU Council on the 2014-20 multi-annual financial framework says that the February 2013 agreement remained in place, and that it implied reductions of 3.5% on expenditure commitments (and 3.7% in expenditure payments) relative to the 2007-13 MFF. However, it is clear that:

1.    The split of payment commitments between countries was altered in December 2013, with very adverse consequences for the UK, and

2.    In practice the Commission has now started to overspend relative to agreed budgets, in the expectation that at Council of Minister finance meetings the overspending will receive retrospective endorsement from a qualified majority. The UK then has to stump up its share.

In the 2014 edition of ‘How much does the European Union cost Britain?’ I have set out the consequences of these events for our net and gross contributions in the 2012/13 and 2013/14 financial years, and the 2012 and 2013 calendar years. I have used official sources, principally the balance-of-payments data prepared by the Office for National Statistics and the annual White Paper on European Union Finances from the Treasury. The figures are appalling, showing that

–       the UK’s net payments to EU institutions in 2013 were more than double the 2009 level, and

–       successive government White Papers admit massive overspending relative to the original so-called ‘plans’.

EU_payments

The key point is that the net cost in the last full calendar year before the present government (2009), at £5.3 billion, was less than half the net cost in 2013, which was £12.9 billion. Given the above, it is preposterous for Cameron – or indeed any of his ministers – to claim that the present government has ‘cut the EU Budget’.

At the time of writing civil servants are – I trust – putting together the material for the 2014 edition of the annual European Union Finances document. You can rest assured that I will download it from the Treasury website when it is available, and update you on its message. My strong suspicion is that – again – the government will have been shown to be complicit in massive over-spending by the EU.

In November 2013 the government thought that its net contribution to the EU Budget in 2013/14 would be £8.3 billion. My expectation is that the outcome will be over £10 billion and perhaps as much as £11 billion. I say this because we already have balance-of-payments data until the first quarter of 2014, including the net cost to the UK (public and private sectors) of its payments to EU institutions. These show a net cost in the four quarters of the 2013/14 year of £13.2 billion, compared with a net cost in 2012/13 of £12.2 billion, which is obviously a rise of a billion pounds.

Any reasonable person would interpret a “cut the EU budget” to mean that the amount spent by the EU, and therefore the cost to the UK, would be lower. Cameron has been taking to the airwaves to repeat this claim, and shows no sign of correcting the misleading impression he is giving. There’s being economical with the truth, and there’s downright lies.

The cost of our EU membership is an important part of public policy. Honesty, transparency and respect for the facts are vital if a proper debate is to be held. Cameron and his ministerial colleagues have been cavalier in their disregard for the facts and realities of our EU membership, and it is high time that they were brought to account.

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