Fact-Checking Leave: Do We Spend £350m A Week On The EU?

OK, let’s start at the beginning: Leave’s front page at http://www.voteleavetakecontrol.org/campaign

In amidst the rhetoric, they make one fact-checkable claim: that we send £350m to Brussels every week:

So is that true?

TOO LONG, DIDN’T READ VERSION:

It’s not at all true.

The total cost of EU membership to the UK, counting money going out and money coming back in, is one-third the number Leave is quoting: £136m per week.

The likely impact on the amount of money the UK government will have available to spend post-Brexit of leaving the EU, counting HM Treasury’s predictions, is that they’ll have £769m a year less.

THE DETAILS

This one’s fairly easy and already well-researched. The Brexit campaign have been warned by the UK’s Statistics Authority, the equivalent of the Advertising Standards Authority for use of official statistics, that their statistic is misleading.

So, numbers. Just in terms of the amount we pay into the EU without considering money the EU pays into the UK, we pay £14.7 billion a year. That’s £282m per week not £350m per week..

So if you’re holding the Leave campaign to the most literal interpretation — not the “spirit of the law” total cost of membership but just the literal “how much do we send to Brussels ignoring how much they send back to us” — they’re exaggerating the figure by a quarter.

(Links and detailed stats below)

If instead we assume that most people reading that will read it as “membership of the EU COSTS £350m a week”, it’s even less true. The EU puts a lot of money — around £5bn a year or £96m a week — into Britain, mostly into farming and poorer regions of Britain. For example, Wales recieves a lot of funding.

The figures get a bit slippery at this point with various bodies quoting various different numbers for additional benefits. The UK’s Statistics Authority ended up with a total cost of membership to the UK at around £7.1bn a year or £136m a week in 2010–2014.

So if we’re looking at things that way, Leave is exaggerating by nearly two-thirds.

But that still implies Britain will be better off, if we leave the EU, to the tune of 7.1bn a year, or approximately 1% of the government’s annual revenue (£648bn).

Obviously the way to figure that out is to balance it against the predicted effect of Brexit on our Global Domestic Product(GDP) — the total amount of money Britain makes every year.

HM Treasury’s whale-stunningly thick analysis of the likely outcomes predicts that we’ll lose 6.2% of GDP if we go for Leave’s preferred outcome of an independent treaty, and 7.4% of GDP if we end up having to rely on WTO membership alone. The London School of Economics’ most complete predictions predict about an 8% loss in GDP over the longer term.

Assuming no tax changes, it seems reasonable (and backed up by some studies) to assume that taxation revenue will track GDP.

So that implies that we’ll save £7.1bn a year but lose — going for the most optimistic prediction and assuming we negotiate an independent treaty with the EU — £40bn a year.

That’s £600m a week less the government will have to spend on “our priorities, like the NHS and science research”.

SOURCES:

Uk Statistics Authority’s letter on the costs of EU membership: https://www.statisticsauthority.gov.uk/wp-content/uploads/2016/04/Letter-from-Sir-Andrew-Dilnot-to-Norman-Lamb-MP-210416.pdf

HM Treasury’s predictions on Brexit (warning, 200+ pages of heavy maths): https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/517415/treasury_analysis_economic_impact_of_eu_membership_web.pdf

London School Of Economics predictions paper: http://cep.lse.ac.uk/pubs/download/brexit02.pdf

Correlation between GDP and taxation income (in the US but should apply to most developed nations): http://www.ibtimes.com/correlation-among-income-tax-rate-tax-receipts-gdp-246624