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The UK’s budget contributions

How much we pay

In 2015 the UK government paid £13 billion to the EU budget.  Because the EU spent £4.5 billion on the UK, we paid in £8.5 billion more than we got back, or £23 million a day. This is called the ‘net contribution’. The UK’s contribution to the budget changes every year but it has been growing throughout the EU’s history.

The figures in this article are taken from the Treasury’s European Union Finances for 2015. According to the Office for National Statistics (ONS), the Treasury’s report offers the best figures for the UK’s contributions to the EU budget.

The UK rebate

The UK pays less into the EU budget than normal EU rules would require. In 1984, because the UK was regularly paying more into the EU budget than it got out, it demanded to contribute less. The rebate won by Margaret Thatcher’s government ensures that the UK is exempted from paying about 66% of its net contribution the previous year. This rebate was worth almost £5 billion in 2015 and it is applied straight away to the UK’s contribution. If the UK did not get a rebate, then its gross contribution would have been £18 billion last year.

EU spending in Britain

The UK also gets direct payments back from the EU, as do other member states. These funds primarily finance farmers, via the European Agricultural Guarantee Fund, and regional development in poor areas, via the European Regional Development Fund. EU spending on the UK amounted to £4.5 billion in 2015. Taking EU funding and the rebate into account, the UK paid in £8.5 billion more than it got back in 2015. According to the Treasury report, the EU also makes direct contributions to the private sector that are not counted in the EU funds figure. These are estimated to be £1.4 billion, so including these would reduce Britain’s net contribution further, to £7.4 billion.

Incorrect statistics

There are many incorrect statistics being used when it comes to Britain’s contribution to the EU budget. Some argue that Britain pays £55 million a day to the EU. This is based on a figure quoted by the ONS in their 2015 pink book. It stated that the UK paid £20 billion annually to EU institutions. Because this figure includes what UK private households pay to the EU, it does not represent what the government pays as a membership fee. The figure also assumes the rebate is paid to the EU then paid back, whereas actually the rebate is removed from the start – this was an error even once made, but has now corrected.  Others claim that the UK pays £350 million a week to the EU, but this misses out the rebate. Taking the rebate into account, the UK pays just under £250 million a week.

What else we get back

Whilst being in the EU can create jobs, trade and investment, it is hard to tell if these are worth more to the UK than the £8.5 billion it pays into the EU budget. According to the House of Commons Library, there is ‘no definitive study of the economic impact of the UK’s EU membership or the costs and benefits of withdrawal.’  Whilst the UK gets £4.5 billion back in EU spending, it is possible that the UK could spend this money better.