5% EU budget hike? Not as simple as Cameron would like you to believe

By Jon Worth / @jonworth

Scandal! The European Union wants to increase its budget by 5% for the period from 2014 onwards. Prompt critical statements from Downing Street, the leader of the Tory MEPs in the European Parliament and even Tony McNulty. How dare those bureaucrats in Brussels propose such a thing?

Unsurprisingly the whole thing is more complicated, and a lot more interesting.

For a start let’s put the EU’s budget in context. At just over 1% of the EU countries’ total GDP, the EU budget represents about one fortieth of public spending. The UK’s Department of Work & Pensions alone spends more money than there is in the EU budget. Yet 75% of the British population thinks the EU budget is larger than the UK’s budget.

Second, the European Commission’s proposal to increase the budget 5% serves two purposes. They set the aim high, knowing that 5% will never be achieved, so Cameron can bluster but he can sleep easy. More importantly the proposed increase puts the ball into the Member States’ courts, asking them what they would actually want to cut from the proposed budget.

There are two main aspects of EU funding – regional funding and agriculture, each accounting for about 40% of the budget. (Only 6% of the budget pays for the functioning of the EU’s institutions, so McNulty’s critique is even wider of the mark than Cameron’s).

Regional funding has a clear rationale – the vast majority of it goes to the EU’s poorer areas (those with less than 75% of GDP per head of the EU average), and its aim is to improve the economic performance of those regions. It’s redistributive, helps achieve EU-wide solidarity, and should be welcomed. Areas of the UK have benefitted enormously from these funds in the past; now it’s time to assist our neighbours.

The EU’s Common Agricultural Policy (CAP) is the area ripe for reform, but it is an area where UK governments – both Labour and Tory – have been most disingenuous over the years. The UK is not a major recipient of agriculture subsidies, receiving less than half the amount France does, but the UK has few but rather large landowners who benefit from the Single Payment Scheme, the UK Royal Family foremost among them. Successive British governments vaguely talk about CAP reform in the UK but are too nervous to make the case for proper reform in Brussels, fearing a backlash from British landowners.

So any complaint that a 5% budget increase is too high must be met by a counter question: what budget area matters less – helping Europe’s poor regions, or helping farmers? That challenge needs to be posed especially vociferously towards Tory ministers and MEPs who at the same time whine about the EU and seek to defend wealthy landowners. For Labour the case must be clear – favour solidarity and economic assistance to poorer regions rather than agricultural subsidies.

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A little more about this column

I’ve been a member of the Labour Party since 1996 and blogging about UK-EU relations at www.jonworth.eu since 2005. This new column for LabourList will be a combination of those experiences, looking at why EU questions need to be central to the rebuilding process for Labour, and why issues from tax evasion to environmental degradation cannot be dealt with without our EU partners.

I have spent five years of my adult life working in and around the EU institutions in Brussels and also work closely with politicians from a number of different countries; these experiences will also inform the column.

I start from the point that the EU is broadly a good thing, and it is better for the UK to be in the EU (rather than complaining from the outside), but that does not mean I am going to be unquestioning in my support for all the EU does and the way it behaves.