Forty billion for EU

Before December, Theresa May’s Cabinet is going to have to agree to pay the EU around forty billion pounds – amount negotiable, but the UK government’s resistance to paying anything has meant they’re almost out of time to negotiate the amount.

Banoffee pieRobert Halfon, Tory MP for Harlow since 2010, Chair of the Education Committee and former government minister under both David Cameron and Theresa May, says of this payment

with austerity on the agenda ahead of Wednesday’s Budget, “if we start saying that we’re going to give £40 to £50bn to the EU, I think the public will go bananas, absolutely spare”.
Mr Halfon said he had backed Remain in the EU referendum, but added “we voted to leave, the public want to leave, and I cannot believe that the public would accept such a huge amount when we need money for our schools, our hospitals, our housing, and many other things”.


Years before the EU referendum in June 2016, a seven-year budget plan was set for the European Union for the period 2014-2020, with spending plans based on paying-in from 28 EU countries, based on prices in 2011. (See: The EU budget explained, FAQ 11, “What is the EU doing to ensure future budgets don’t explode and are focused on real priorities?”)

The “divorce bill” that Robert Halfon – and angry Brexiteers – are complaining about is the UK’s share of the EU budget plan from 30th March 2019 to 31st December 2020. This is money the UK had already agreed to contribute, well before there was any idea of the UK leaving the EU, for that 7-year period 1st January 2014 to 31st December 2020. If the UK refuses to pay it, that leaves a hole in the EU’s budget for those 23 months, which will entail either other countries contributing more than they’d originally counted on, or else projects and institutions throughout the EU taking a hard knock in their funding. Either way, that isn’t going to make the organisations, businesses, countries and governments of the EU feel inclined to do the UK any favours.

The Brexiteer argument is that Brexit means Brexit: once the UK leaves the EU the UK isn’t liable for any further money to the EU. But that means hard Brexit, which is catastrophic for the UK.

A simple way to resolve this problem and still have Brexit would have been for Theresa May to hold off invoking Article 50 until 29th March 2019, so that the UK left the EU at the end of the UK’s fiscal year and three months after the EU’s budget plan for 2014-2020 expired. But according to the timetable originally laid down for UK elections in the Fixed Term Parliament Act, if May had waited til March 2019, the two-year window for negotiating with Brussels would have been eaten up by campaigning for a general election in May 2020: and it would have been the government of 2020-2025 who would have been finally held responsible for Brexit.

Leave.EU supporters cheer the EU referendum resultI also suspect Theresa May – if she ever considered this – also thought that she wasn’t politically strong enough to make the Brexiteers in her own party wait for years and years to enjoy their Leave moment: and we know that until April 2017, May thought she’d be able to deal with Brexit by formally leaving the EU and then choosing the bits of the EU she wanted the UK to have as if from a dessert cart.

At a dinner party at 10 Downing Street on Wednesday 26th April this year, barely a week after Theresa May had called a snap general election and less than a month after she’d sent the Article 50 letter to Brussels, the PM entertained Jean-Claude Juncker, President of the European Commission, joined by Michel Barnier, European Chief Negotiator for the United Kingdom Exiting the European Union since 6th December 2016, and David Davis, Secretary of State for Exiting the European Union since 13th July 2016. We have no idea what the dessert cart was like, but we know the dinner didn’t go well.

Reported in the Frankfurter Allgemeine Zeitung:

The subject of money came up in conversation. The EU estimates costs of 60-65 billion Euros for London. May argued that her country didn’t owe the European Union one penny; after all, there’s nothing in the treaty about a final tally due in the event of an exit. Her visitors countered: London accepted legally binding payment obligations with every budget decision and medium-term finance planning of the past. The EU is not a golf club one can join and quit at will (certainly not without losing one’s deposit). The European Union is much more like a lifelong partnership with the purpose of peace; the parents had children and with divorce, they must acknowledge their obligations.

This follows on from a conversation Theresa May and Jean-Claude Juncker had earlier in the evening, concerning the EU’s mid-term budget review. The dinner in Downing Street took place on Wednesday 26th April, and the official reporting of the meeting said that it was “constructive”.

But Juncker had pointed out to May before dinner that earlier in the week

Britain has annoyed leaders of the remaining 27 EU countries, who are meeting for a special “Brexit summit” on Saturday without Theresa May, by blocking EU budget talks because of the upcoming general election.

Senior diplomats from the EU27 received an email from the U.K. representation in Brussels on Monday evening blocking budget negotiations at the last minute after months of talks, European diplomats said.

The claimed reason for the UK to refuse to take part in the budget negotiations on 29th April was that Theresa May’s surprise announcement of a snap General Election on 18th April put sensitive public actions by the UK government into purdah from midnight 21st April til the new government was established after the general election in June.

Note that Theresa May announced the June 2017 general election apparently on the spur of the moment, thinking that she would greatly increase the Tory majority because in April 2017 the Tories were at the top of the polls and Labour was so far behind. Purdah on sensitive spending decisions by government ministers that could affect the results of the election is a real thing.

However, EU officials were not convinced, saying the veto appeared unprecedented and affected policies that Britain had agreed during months of prior deliberation: “This is clearly not a technical decision,” one said. “It could be a show of force.”

I think that the decision by the UK government not to take part in the summit on 29th April had less to do with Brexit and more to do with the general election than EU officials supposed. Because the summit was going to discuss expanding the EU budget on matters connected with the refugee crisis, which hadn’t existed at the time the seven-year plan was agreed to.

Among measures affected was 2.5 billion euros for bolstering EU frontier controls to deal with the migrant crisis in the Mediterranean and 1.4 billion euros to tackle the “root causes” of migration in poor nations — a policy Britain strongly backs.

Anti-refugee sentiment among British right-wing voters can hardly be overestimated: the link to Brexit is that Brexit voters are much more likely to allow extreme anti-refugee, anti-foreign aid, and anti-Muslim feelings affect their vote. For Conservative politicians to agree to spend millions on projects overseas to do with refugees in the run-up to a general election, would be in their view a lose-lose situation: they’d gain nothing by it politically and stand to lose a great deal.

To explain that to Jean-Claude Juncker might have been embarrassing for Theresa May, and there’s no indication in the report of their dinner-party that she even tried to do so.

After Juncker had brought up the issue of the EU budget, David Davis suggested that once the UK had left the EU and was no longer subject to the European Court of Justice, the EU would have no way to make the UK pay them anything.

But then, and this is what is muddling the waters now:

Alright, said Juncker, but then the others would refuse to enter into a free trade agreement. Moreover, the entire exit process would be entirely different. According to the EU-Treaty, only the Governments and the European Parliament must agree to an exit convention in each case with a majority. But if the negotiations were to go as Davis suggested, so that the other states sit on the British bill, each and every parliament must be involved. After all, national MPs decide what their governments are going to pay to Brussels. And why should they foot the bill for London?

Since this conversation was reported, seven months ago, Brexiteers in politics and in the media, have taken the position that the “divorce bill” – the money that the UK agreed to pay into the EU’s budget years ago – is effectively a fee being demanded by the EU before the EU will agree to negotiate on free trade, and taken a stand on the grounds that David Davis raised at that disastrous dinner party: that the EU cannot make the UK pay up, and if the UK doesn’t, there’s nothing the EU can do about it.

Brexiteer Cabinet Ministers may understand that the UK has got to pay at least part of the amount due, but they persistently argue that Theresa May shouldn’t agree to pay up without first of all getting a committment from the EU on trade talks.

The unofficial deadline for this is Saturday 9th December, when Theresa May is expected to have yet another dinner with Jean-Claude Juncker: the official deadline is the EU summit on 14th-15th December, where leaders of other EU countries must agree “sufficient progress” has been made for a deal to progress.

Every aspect of the trade deal the UK wants to make with the EU, every aspect of the transition deal the UK needs to make with the EU if not to go over a cliff edge on 30th March 2019, is dependent on the goodwill of 27 EU countries’ parliaments who will need to vote and agree on a good deal for the UK on leaving the EU.

But if the UK refuses to pay the amount due for the period 30th March 2019 to 31st December 2020, the UK will be in the position of asking for goodwill votes from 27 EU countries’ parliaments that the UK has landed with a higher bill for their EU budget.

Ordinarily I detest analogising national budgets with personal spending, but think about it: Anyone can get away with taking part in a group meal in a restaurant and then walking out before the bill arrives, sticking the rest of the group with a higher bill.

That is, anyone can get away with doing that once.

But if you then have a favour to ask of any one member of that group, or the entire group, and they all know you left them early and stuck them with your share of the bill, how much of a chance of their goodwill do you think you have?

Simplest way of all to avoid paying the Brexit divorce bill would of course be to not leave the EU. The UK then benefits from the EU’s budget and we keep our fundamental rights. Win-win.

Update, 29th November

The UK government have, as predicted, agreed to pay the EU £50bn. This is money being spent to fulfil the UK’s financial obligations for leaving well before the end of the 2014-2020 budget period. This payment does not win the UK the right to a good trade deal or to have the EU resolve the problem of the Irish border: it just means the UK is allowed to sit at the negotiation table with the rest of the EU and ask.

The Brexiteer MPs who were all for the UK leaving the EU are protesting angrily now they know how much it’s going to cost us.

“Will she make sure we have an itemised account of exactly what we are paying for at the end of it and also the legal basis upon which we are making those payments…” [Philip Davies] asked Chief Secretary to the Treasury Liz Truss.

“If there’s any spare money going at a time of austerity, that should be directed to our priorities in the UK. We should not be giving a bung to the European Union that we’re not legally obliged to do.”

His intervention followed that of Labour veteran Dennis Skinner, who said any “spare” billions should be invested in the health service and social care.

“70% of people in Bolsover voted to leave. Those same people would expect me to tell the Honourable Lady that from the finance department, if they’re got £60bn to spare it should go to the National Health Service and social care,” he said.

Arch-Brexiteer Tory MP Peter Bone echoed Mr Skinner’s comments, adding that his Wellingborough constituents would want such a vast sum spent on the NHS, social care and defence.

“They would not want it given to the European Union. Would the minister agree that such a move would be betraying the trust of the British people?” he added.

Well, the simplest way to do that would be to vote to revoke Article 50, wouldn’t it?

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Filed under Brexit, EU referendum, European politics, GE 2017, Politics

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