European Union Membership: Cost to UK (Hansard, 18 January 1996)

§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)
My Lords, the Government's most recent estimate of the United Kingdom's net contribution to the European Community Budget is £3.5 billion in the present financial year and £2.9 billion in the coming financial year.

§ Lord Boyd-Carpenter
My Lords, I thank my noble friend for that impressive, if somewhat depressing, figure. Does it include the additional £40 million a year that flows from the decision of the Government to accept the ruling of the European Court on the subject of the benefit entitlement of men of 60?

§ Lord Mackay of Ardbrecknish
No, my Lords, it does not. My noble friend asked about our contribution to the European budget, and that was the answer I gave. The amount of money he mentioned which we shall have to spend as a result of the ruling of the European Court falls on the health budget in the United Kingdom.

§ Lord Boyd-Carpenter
My Lords, is my noble friend aware that he is not answering my question? I did not ask what Britain's contribution was to the European Union; I asked what was the cost of our membership. Surely this particular item falls plumb in the middle of that.

§ Lord Mackay of Ardbrecknish
My Lords, my noble friend has slightly reinterpreted his Question. I did not interpret it in the way he mentioned. I interpreted him as meaning the contribution to the budget. I suppose one could go on to try to bring out a balance sheet of the costs, and the pluses and minuses of membership. The item my noble friend raises today, which I believe he raised with my noble friend Lady Cumberlege on a previous occasion, would I suppose go down as a cost. However, one would have to cite as a plus the considerable amount of inward investment that comes to this country and the jobs that come with it, thanks to our membership of the European Community.

§ Lord Brooks
My Lords, pursuant to the Question on the Order Paper, what is the gross per capita cost borne by citizens of Germany, France, Italy and the United Kingdom on an annualised basis?

§ Lord Mackay of Ardbrecknish
My Lords, I should need notice of that particular question. However, I hope 699 I can help the noble Lord in this regard. The major contributor, both in total and per capita, to the Community budget is Germany. The United Kingdom is also a major contributor to the Community but at a good deal lower level than is the Federal Republic of Germany.

§ Baroness Rawlings
My Lords, will the Minister agree that the cost of peace, which we now have within the European Union after centuries of war between those countries, is unquantifiable?

§ Lord Mackay of Ardbrecknish
My Lords, I am grateful to my noble friend for drawing the attention of the House to the broader aspects and importance of our membership of the European Union (the European Community as it was). It is an important bulwark. It helped us very much in our defences through NATO against the Soviet Union in former times. I believe it is a guarantee that the countries of Europe will never again go to war with each other. As my noble friend rightly said, that must be a unquantifiable advantage.

Lord Bruce of Donington
My Lords, is the Minister aware that his Answer to his noble friend Lord Boyd-Carpenter referred to a budgeted total cost? The Question put by the noble Lord, Lord Boyd-Carpenter, related to the total amount out of public funds. The two are not necessarily the same. In addition to the £3½ billion per annum—our net contribution to the budget as referred to by the noble Lord—is the Minister aware that other public funds are expended, notably salaries, expenses and a number of other expenditures on the civil servants and Ministers over here in trying to manage the whole thing from the British standpoint? Does he agree that that must amount to many millions of pounds more per annum than the figures he has already given.

§ Lord Mackay of Ardbrecknish
My Lords, no matter how many Ministers and civil servants travel to and from Brussels, I do not believe that the cost will in any way come near to the advantages that accrue to the UK, as a major trading nation, as a result of its membership of the most major group of trading countries in the world. I instanced inward investment as only one of the advantages to this country. The UK receives some 41 per cent. of all Japanese inward investment to the European Union. If this country were not a member of the European Union, that inward investment, to Scotland, Sunderland and Tyneside, would not be coming in.

§ Lord Monson
My Lords, is the noble Lord aware that last year the Swiss franc rose against every other currency including the deutschmark? Can he say what disadvantages are suffered by Switzerland and Norway as a result of their non-membership of the EU?

§ Lord Mackay of Ardbrecknish
My Lords, Switzerland and Norway are not entirely comparable with a country of 55 million people and one that so firmly bases its economic wealth and health on exports. It is quite false to compare this country with Switzerland and Norway. For a start, the relationship that the European Union can have with small countries such as Switzerland and 700 Norway outside it is completely different from the relationship that they would have with a major player like ourselves if we were outside.

§ Lord Hooson
My Lords, does the Minister agree that there is a contribution to public funds by taxpayers, for example, who invest in this country? Has any calculation been made of the total annual contribution to public funds from those sources?

§ Lord Mackay of Ardbrecknish
My Lords, many of these questions are very difficult to quantify. They are likely to be hedged around with so many caveats that I am not sure one would be able to give other than very broad ranges. There is absolutely no doubt that the amount of inward investment that comes to this country and the employment it generates will show through in inward revenue receipts, and therefore in the tax receipts of the Government.

§ Lord Eatwell
My Lords, is it not clear that one of the more unfortunate costs of membership of the European Union is the cost of fraud? As noble Lords will he aware, we have recently seen a very considerable increase in the cost of fraud here in the UK. Will the Minister explain why the Government have consistently failed to take up the full allowance of funds provided by the European Union to fight fraud, even though fraud is rising? Will he also explain why the Government are failing to support the European Parliament's proposals to amend the European Union agricultural budget to diminish fraud?

§ Lord Mackay of Ardbrecknish
My Lords, I will not take any lessons from the noble Lord about our determination to bite down on fraud, whether it be in the European Union or in the budget of the Department of Social Security.
The detection of fraud in the Community is left largely to individual countries and the figures therefore have to be viewed with a great deal of care. They can also reflect the care and determination with which an individual country pursues fraud. That is best illustrated by telling the noble Lord and the House that the United Kingdom detects a high number of irregularities, but for very small amounts. In 1994, in its report on fraud, the UK notified 15 per cent. of all common agricultural policy irregularities. But those represented only 3 per cent. by value of all frauds.