How has the EU affected you?

That was the question which the BBC is asking of its listeners.  Send us your experiences, they ask.  What a fatuous question.  Even worse, what a biased question, designed to induce a series of responses about how the EU funded our local visitor centre, how it paid for the reinstatement of a coastal footpath, how it funded an arts centre, how it financed this and how it financed that.

How can most people have a negative experience of the EU when most have no contact with it, and have no idea what exactly it does.  And is there an item on our income tax form saying EU levy?  If there were, a taxpayer on £30k per year would see every month a deduction of around £20 alongside his tax payable to the UK government of around £310.  He knows what he is getting for his £310 (schools, NHS, roads, an army and navy and air force, etc) but what is he getting for his £20?  For most people it is less than zilch.

Of course, the Cambridge scientists referred to in a previous article will say they’ve got research funding.  Lucky them.  What they and other researchers got will account for about £1 of our taxpayer’s £20.  Where has the other £19 gone?  Well, our farmers got more than anybody (£3.60), but it is worth remembering that long before we entered the Common Market (which transmogrified itself into the EU without any vote of agreement by the people) we were committed to supporting our farmers, and it is inconceivable that this policy would change in the event of a Brexit.  So how  else does the money get back to the UK?

The third largest source of “EU” money coming back to the UK is the Structural Funds.  These funds are aimed at improving the competitiveness and sustainability of regions with well below economic performance.  And about 80 pence of our average taxpayer’s money is used for this purpose.  Adding in various minor activities, and the costs of administering these EU activities, about £7.40 of the taxpayer’s £20 actually comes back to various interest groups in the UK.  Without Mrs Thatcher battling for Britain in the 1980s and getting a rebate, this figure would have been as little as £4.

If the taxpayer had these figures pointed out to him or her, it is fairly certain he or she would not be happy.  But taxpayers are not told.  Instead, they are led to believe that the EU is a generous benefactor, funding many activities that the wicked UK Government would never consider.

In recent weeks, I have heard on radio and television (BBC, of course) numerous interviews of individuals lauding the EU for paying for this and that.  Most of the examples have been of expenditure under the Structural Funds, particularly helping a region or area to “converge” towards the average, and improving regional competitiveness and employment – basically all the same thing.  The respondents believe this expenditure would not have occurred without EU membership.   That is a moot point.  Regional policy did not begin in 1973 with membership of the EEC.  For a start the EEC had no regional policies.  But the UK had, and indeed had been providing differential assistance to economically depressed or disadvantaged areas since 1934.  And look at the post-war legislation:

1945  Distribution of Industry Act and the designation of  Development Areas with subsidies available

1950  Act to encourage firms via grants to establish themselves in the Development Areas

1960 Local Employment Act and the creation of Development Districts with subsidies for firms

1963  Extra incentives for firms establishing themselves in the Development Districts

1966 Industrial Development Act created Development Areas with special assistance (grants) for a range of activities

1967 Creation of Special Development Areas with enhanced incentives.

1970 Creation of Intermediate Development Areas with different grants and incentives

[No, this is not lifted from Wikipedia, but from my PhD on policies for employment and income in the remoter areas, completed in the 70s]

Regional policy was very much at the fore of economic thinking in the period before accession to the EEC.  In fact, the EEC only moved towards its own regional policy at the behest of the UK, which at the time was just subsidising continental agriculture and getting very little back.  The Structural Funds were seen as a way of getting something back.  This is not to say that UK regional policy was successful or even correct in its approach.  It was not.  But it was seen as a way of reducing regional inequalities which is also the aim of the structural funds.  So people who today see these subsidies and grants coming into their region are completely wrong in thinking they owe this to the EU.

As with everything associated with the EU, there is a price to pay.  Once the EU gets a little power, it wields it without concession to the needs of the country or the region.  The objective is really to spend the funds allocated to the activity, to have a large number of checks to make sure all expenditure is politically correct, and to ensure that as much publicity as possible is generated to promote the EU as the benefactor.  Whether the activity funded is useful or not is secondary.

Projects requiring  funding  must usually have a value of at least £250 000 – it is not worth a Eurocrat getting out of bed for less – and many run into millions of pounds.   The recipient of the money must either be a public body or a private company undertaking some public function, so it is an exercise in spreading the influence of the public sector and reducing the role of market forces in directing resources to the more efficient firms.  Instead, a whole host of different skills are needed to get hold of this money: ability to penetrate the bureaucratic world which makes the decisions on who is to get it, to have the patience to go through all the forms and leaflets (e.g. English Business Support State Aid Scheme, Full application form guidance,  MCIS assets screen, National eligibility rules,  Procurement law compliance guidance note, Procurement checklist, MCIS procurement screen, National publicity requirements, ERDF logos, National ERDF handbook), a knowledge of how to put forward a proposal in a way most pleasing to the bureaucratic masters, and knowing what buzzwords to scatter throughout one’s application (“sustainable” being a must on every page).

So specialised is the process of applying for these funds that consultants often have to be used to draw up the application. Of course, there is a 50 per cent grant for these consultancy services so a whole new industry has grown up of people who know how to satisfy the bureaucracy.  But of value added from their activity there is none.

There is also a neat little catch that the European Commission has in store, and this is perhaps the main objective of the funding.  Every project must adhere strictly to EU regulations regarding publicity and promotion of the EU.  Any project which fails to promote the EU in exactly the way prescribed by the Commission faces the loss of the entire grant.  You see, it is not the project that is important and whether it achieves anything, it is all about promoting the EU.  With our money.  So outrageous is this that I will devote a separate article to these regulations.

So getting back to our average taxpayer who is paying £20 a month to the EU, perhaps 99 per cent will see no tangible benefit from membership of the EU.  But they are not complaining because they don’t know they are paying.  But there is this very small minority who benefit directly from the grants from the structural or research funds and these are quite vocal because their  honey pot is threatened.  It is to these people that the BBC gives a voice, not the large majority.