Thinking About Europe Part 2 ...

In the second part of this analysis I want to look at contributions to the EU. You’ll all know about this as it’s the thing Nigel Farage keeps banging on about but I thing he’s missing a trick when he just says “the UK is paying £20m a day”.

That number is true enough but what I really started to get worked up about was how it’s calculated. Any of you know that?

Thought not.

Well here goes. This isn’t as tough a ride as you might envisage so stay with me and then see what you think.

The EU budget contribution is calculated by adding three things together.

Gross National Income – this is the biggest slice and it’s a bit of a weird calculation (you’ve all heard of GNP right – well it’s not that). GNI is all the stuff that’s in GDP but then you deduct debt interest payments and a few other bits and pieces. That means that the more you owe the lower it goes; if you are Greece or Spain this takes you down to the basement. Before I move on, one thing that IS in there are exports – the EU charges companies for being successful in exporting outside of the EU. GNI makes up around 65% of the levy.

Import Duties – the EU is pretty anti imports. Because it applies social policies to protect wages and benefits it is inefficient. It knows and accepts this as a price worth paying for social cohesion. It therefore erects a barrier around itself by taxing imports. So the more goods you bring in from outside the EU, the more you pay. Import Taxes make up around 14% of the levy.

VAT – we all pay VAT on just about everything we buy. Interestingly if you buy something from outside the EU (where there is no VAT) the EU charges it anyway. The EU then takes part of the VAT revenues countries receive through VAT Returns. Simply, the more vibrant an economy and the more trade it does internally, with other EU countries and outside of Europe, the more it pays. VAT makes up about 16% of the levy.

Other – the EU also makes money from it’s deposits (interest), fines to member states for late payments and payments from non-EU organisations like the EFTA members. Others makes up the remaining 5%

See it wasn’t so complicated. Every member state makes contributions based on these numbers.

Once it’s collected that money it then spends it.  When you take off the bits and pieces there are three main ways in which it is spent.

Administration – this is Nigel Farage’s other baby. The EU currently spends 6% of the budget running itself. There are a lot of them and this chews up about €50 billion but, in the scheme of things 6% isn’t that bad – it’s better than the UK government manages.

Common Agricultural Policy – traditionally the biggest spending item. Basically this is a payment made to farmers so they don’t have to modernize their methods to keep up with the rest of the world. It allows medieval systems of family inheritance of land to continue across much of Europe. It amounts to 47% of the budget but, to be fair it is reducing (much to the disgust of the French).

Regional Support – this is the one that’s going up. The EU already spends 30% of its budget on investment programmes in the member states and this will increase (as CAP comes down) to around 36%. This fund is designed to promote infrastructure projects and to level out the disparities between member states.

So, when you add up all the bits for the levy and then take off all the money countries get back through the revenue items you end up with Nigel Farage’s £20m a day as the UK net Contribution. And remember this is after a specially negotiated rebate of almost 40% to take account of our ‘internationalism’ in financial markets.

In 2011 we were the second biggest net contributor at €7.255billion (we paid €13.8b in and got €6.5b back mostly through the CAP), only beaten by the Germans who put in €10.994billion. There is quite a significant difference between us however. Germany has held the purse strings to the regional development funds for a number of years and the infrastructure projects undertaken invariably involve German companies and (more importantly) German support funding. If you’ve been to Athens recently you will probably have ridden on the German engineered and build tram system which ended up with the Greeks €40million in debt to the Germans even after they’d paid for everything.

The dice are loaded, by the way the contributions are calculated, against countries whose business is international. Remember you get taxed for importing but you also get taxed for exporting outside the EU. Countries like Poland, Greece, Hungary and Portugal who have virtually no trade beyond the boundaries of the EU pay very little and then become prime beneficiaries for the CAP and regional support budgets. Poland received €11billion in net receipts from the EU in 2011, Greece €4.6billion.

The regional funds are also loaded against us. Europe is divided by how poor the regions are (an arbitrary EU measure and as the UK is one region we are categorized as very prosperous) and the ‘poor’ countries can access the Regional Support funds for their projects by contributing 5% themselves. For the UK to access the fund our contribution level is 50%.

Then let’s talk about the Common Agricultural Policy. This mechanism is used to protect Europe’s farmers from outside competition. What it has actually done is kept European farmers inefficient. In 2011 the UK contributed (net of all rebates to UK farmers) €8.7billion to European farmers who then compete on supplying the UK market with their products. WE buy Irish pork because it receives massive subsidies from the EU and our own pork farmers can’t compete – and we pay for that!

In the UK we import a lot of food from outside the EU as we have a broader international taste than many EU countries. All that food is taxed and it was estimated that in 2011 each UK household paid £324 more for its food bill than it would if we were outside the EU.

So those are the numbers. I have said nothing about administration, I think all of us know that’s completely out of control. One fact though. In 2011 236 eurocrats at the EU Commission, 59 in the EU Parliament and 43 in the EU Council earned more than David Cameron. Says it all on that one I think.

The EU has carefully constructed its budgets and the way it returns the money to the member states with two constructs at its heart.

First, it is important to invest in infrastructure to ensure that all of Europe has the same chance of competing and by doing so engineering wealth transfer from the rich to the poor nations.

Second, countries will be penalized for trading outside of the EU, whether importing or exporting; the EU seeks to internalize the market so that prices and economies can be regularized.

Basically, the EU plan is that in (say) 50 years everybody in the EU will earn about the same and enjoy the same standard of living. Nice as that theory might be it does mean the EU is seeking the ‘average’ and the middle ground is always the worst place to stand.

Whilst many bang on about EU bureaucracy the real concern for me is the social strategy that suggests we turn our backs on the rest of the world (because they’ve got it wrong?), realize that ‘free trade’ is the enemy and hunker down in our little club and be average.

Britain has never aspired to be average. The mind numbing work of the EU Parliament moves inexorably to swallow all of us and encourage us to accept its wealth distribution strategies.

I told you the numbers would be hard, but we’re through them now. Next chapter will be about what we might do if we left!

Thinking About Europe....

I’m just a musician.

I’ve never really tried to understand politics as, to be frank, I think the world goes on just the same no matter what they do (more or less). I have rarely asked for any help from the State but when I have it has helped me just fine. I believe that we should look after the poor not only here but everywhere if we can, and I think most politicians are pretty fair minded and have broader perspectives on things than I do.

In the same vein, I rarely take notice of what ‘ordinary’ people think about the songs I write (I do value the opinions of other musicians however) and don’t get involved in the politics of music. I write songs, judging by the success I’ve had I must be ok at it – so I just carry on.

For the same reason I leave those with a taste for it to get on with politics.

But my industry has changed. X-Factor has made folk without any training and, in most cases ability, believe they can be pop stars (almost universally they can’t) so it occurred to me that the reason I find politics more compelling than I once did must be because that’s become a broader church too.

In older times politicians were drawn from the working classes and the professions; now it seems to be a career (not one of our main party leaders has ever had a proper job) which must mean that the old standard that said you need to have lived a little before you open your mouth and talk about politics has gone out of the window.

So if that’s the case I decided that maybe I needed to do a bit of reading and understand stuff a bit better. So I did……..

And the first big thing I decided I needed to understand was the EU in or out debate.

I am a Europhile. I’ve lived in France, Spain and Italy in my time and loved them all. I’ve also spent a lot of my career living and working in the USA and I love that too. But there is a stark difference between the two.

Europe is ostensibly a socialist group of nations; they believe in equality and use statute to create it. The USA sticks to its maxim of being the land of the free, fears socialism as “back door communism” and tries to stay out of people’s lives as much as it can.

As somebody who tried (and failed) to start businesses in France and Spain and tried (and succeeded) to start a business in the USA, I can tell you that the way the state deals with entrepreneurs on either side of the pond is very different.

It seems to me that the UK sits somewhere in the middle. We like some of the ideals of socialism (the NHS is the shining example) but loath the bureaucracy.  And then there’s our history to contend with……

Before the Normans arrived Briton was an exceptionally well respected trading nation, known for its artisan goods and its rare metals. Then William arrived and for the next 400 years we stopped looking anywhere except across the channel at Big Brother. The Hundred Years War stopped all that and for a period of 500 years we stood on our own two feet and, for large parts of that, dominated the world; at the very least we punched above our weight.

When we joined the Common Market things began to change on the ground and, after Maastricht it would completely swing away from us towards the federal Europe model that the member states seem to want.

Margaret Thatcher seemed to know Maastricht was a bad omen for Britain, nearly walked away and later wrote that signing the treaty was her biggest regret. She worked hard to foster the ‘special relationship’ with the USA even as it fell away. No longer could Britain negotiate trade agreements of any kind, that was a job for Brussels and they weren’t interested.

In England particularly (I can’t speak for the Welsh, Scots or Irish as I have no idea what their views are) we see the legislation coming out of Brussels as invasive, somehow against the British spirit of free trade and tough competition. Secretly I think we also look at countries that we’ve spent most of our history at war with (either fighting them or saving them from each other), and resent the fact that they can now pass laws that effect us, even if our own MEP’s oppose them.

Most of the concessions won by Thatcher were given away, first by Blair and then, at increasing pace by Gordon Brown. Almost everything in EU Law is now decided by majority voting and we are not able to sway those votes like we once could – too many poor, hardline socialist nations have now joined and they see the world very differently.

Now all of that stuff is pretty obvious and well known. But I had decided I wanted to ‘do the detail’ and that is far from easy.

All three major parties are run by people who want us to stay in Europe. Sure the Conservatives have a lot of MP’s who want out, but the party line is still ‘better in than out’. That means that the debate and the facts surrounding the debate are weighted that way. UKIP are a lone voice and whilst Nigel Farage is a sound bite driven sort of fella he simply doesn’t have the taste for the detail and, even if he did, he doesn’t get the platform to spout it.

We know that Nick Clegg would take us into the Euro and is a supported of the United States of Europe concept. David Cameron seems to want to negotiate a trade biased deal and keep out of the EU political mire. I have absolutely no idea what Ed Milliband wants and I can’t find anything he has said that indicates where the Labour Party stands.

We can dismiss Clegg. He will never get what he wants as he’ll never win an outright majority. We can also dismiss Cameron’s position as the other EU member states will never agree to it. Sure we could move from UE membership to be members of EFTA (European Free Trade Association) like Norway and Iceland but that’s really a place for those queueing to get in and has draconian conditions regarding acceptance of EU laws (without representation) which would be totally unacceptable to the British public – hence why I say Cameron is dreaming.

The Labour Party has a history of ceding power to Europe. Tony Blair (an EU fan) gave away our opt outs so that majority voting became the norm on almost everything. He also surrendered almost all of the rebate Thatcher had fought for. So, in the absence of any words from the current leadership (I think it’s too much of a hot potato) I’ll assume they think much as Blair did.

To my mind this leaves us in no mans land – to be honest I think we are there right now. The Eurozone is marching towards federalism with enthusiasm and those outside the Euro all seem to be planning to join. Except us of course.

Over here the vast majority of people (surveys suggest) have had enough and want out. The politicians, in their quiet corners, secretly say we are simply uninformed and need protecting from ourselves. But here’s the thing…

What if it’s THEY who are uninformed? What if THEY are guilty of looking through blinkers and only seeing a future in Europe? What if they are missing the point of being British, with all the baggage that involves?

So I sunk myself into statistics, forecasts, books that were pro-EU and ones that were against. I read it all and my conclusion?

I believe we are being conned by our politicians (no surprise there) but I cannot for the life of me work out why!

In all the reading I have done I could not find one solid good reason why we are in the EU. It doesn’t fit us, the rest would prefer us not to be in it (whilst they fear the consequences) and it currently makes financial and economic nonsense for the UK (or should I say England given my earlier caveat).

I know that you lot have the attention span of a gnat so I’m not going to bang on and run you through the statistics I found right now. I will do it later but for now I just wanted to say that after my research I’ll be voting in whatever fashion I have to, to get us out. After that I can return to my true voting preferences but this is way too serious a mess to be diverted by mere politics.

We need a referendum, we all know what the result of that will be, and we need it soonest, not pushed into the distance.

If the Conservatives had won the last General Election we would have had that referendum and would now be in exit mode, unraveling the legals and negotiating other trade agreements, I also think we would be out of recession as a result (the EU is contracting as a trading group and has been for the last 5 years – our required reliance on it as our partner of choice is keeping us in recession)

Did you know the office of statistics answered a question last year that was forced upon them and admitted the cost of merely managing the constantly changing EU rules and regulations costs the British tax payer £1.2billion a year – that’s just the management, it takes no account of the effects on business. Bet you didn’t know that; and there’s a whole load more numbers where that one came from.

I now know where I’ll be voting, for the rest of you……. think on.

More ramblings from this idiot

Can’t say that I know much about international politics (just like most of you I would suspect) but I do wonder about our preoccupation with the way other folk live.

Two nights ago I listened to a programme on Radio 4 that was reviewing how things are these days in Basra. Almost everybody they talked to said things were better under Saddam. These were not politico’s or the like, just ordinary folk like you and me who try to get on with their lives in whatever setting they are given. Whilst William Hague and Barak Obama shout about how wonderful the freeing of the people of Iraq from the yolk of totalitarian government is, those same people see it differently.

One woman said that the after effect of the toppling of Saddam was a rise in Islamic extremist thinking, she said she could no longer go out on her own and, given that she doesn’t chose to wear the garb of the extremists which is designed to make women second class citizens, she wasn’t even safe during the day.

When George Bush invented the Iraq threat and suckered the United Nations and Tony Blair into believing him, he didn’t give any thought for the people who lived there. Neither did his tiny mind compute the wider effects of what he did. We know the Yanks wanted the oil (ironically they don’t need it anymore because of embracing fracking across the States) and getting that flowing was about all they bothered to do. Then we imposed Western Style democracy onto the country.

The ‘liberation’ of the Iraqi people caused a stir across the Middle East and we’ve now seen the fall of Mubarak, Gaddafi and, anytime soon, Assad. Our leaders shout loudly applauding the ‘rebels’ and ‘freedom fighters’ who fight to overthrow these dictators, but what is actually happening?

In Libya, Islamic militants are now setting their positions, Christians are being killed and the laws are being changed to make anything other than Islam illegal. In Egypt the Muslim Brotherhood take power and within three months the people are back on the streets as a form of military dictatorship re-emerges. In Syria, Islamic fundamentalists seem to be winning their war against another dictator but they have no interest in democracy and are imposing Sharia Law in the outlying areas of the country causing people to flee the ‘liberated’ areas in greater numbers than they flee from Assad.

I wonder if it ever occurs to the clowns who advise US Presidents and British Prime Ministers that maybe, just maybe, the Muslim faith cannot handle our particular sort of democracy.

It seems that Islamic states need strong, dare we say despotic, leaders who will crush the discontent that exists in Islam between everyday people and the sectarian leaders. All of these countries: Libya, Iraq, Egypt and Syria were safe places for everyday people to live under the old regimes. Sure there were secret police (we have those here remember – hello SOCA) and if you put your head above the parapet it would more than likely get cut off, BUT you could walk the streets, have a coffee with your friends, go to work everyday and buy stuff. That’s no longer true in any of these countries it would appear.

In the past we imposed our laws and values on other nations. Here in Britain we do seem to love to meddle in other people’s business, and history always shows it ends in tears. Sure you’ll always find somebody who will tell you Rhodesia was a wonderful place and look at it now, but the fact is it was a fantastic place for the colonial rulers not the every day folk. Now, with its Western Democratic model it’s not a good place for anybody it seems.

It’s true that we value democracy, although there’s a big debate to be had about just how much ordinary people actually influence anything in the UK anymore, but why should we assume it’s a one size fits all model.

Would the Chinese be better off with democracy? No doubt Mr. Cameron would think they probably would and I’m sure the socialists would insist it would be better – but would it? They do say the Chinese have a personality which instinctively mistrusts democracy, who knows.

We have meddled in the affairs of other countries, in the case of the Middle East, countries where their daily lives bear hardly any similarity to our own, and we do so in the name of ‘progress’. And because we don’t understand that daily life is about ordinary people doing ordinary things, we fail.

In a few years Libya, Egypt, Iraq and Syria may well all have political systems similar to Iran’s. Will WE feel safer then? Of course we won’t and our politicians will bleat on about the ‘threat’ these countries pose to us.

Why don’t we just stop meddling in things that don’t concern us?

We no longer have an Empire and I doubt Great Britain figures large in the everyday conversations of Libyans or Iraqis.

Maybe it’s time to accept that military and diplomatic intervention in the affairs of others is no longer our job. Maybe we should stop judging others and get on with becoming a world trading giant (which we won’t while we openly criticise China and India).

Personally I’d rather hear what our politicians intend to do for us rather than what they think about some other place.

We have rising Islamic militancy in this country. Reports of Muslims trying to impose Sharia Law over here, Pakistanis still forcing their daughters to marry men they don’t know and mutilating them for some obscure ‘religious’ reason. Can we put our own house in order? Can we start to address the problems that mulit-faith is bringing to these shores. And can we try to be honest about it?

Perhaps the leafy suburbs of the stockbroker belt ,where all our politicians seem to come from these days, don’t have those problems – but they will, and sooner than they think.

My point?

Well I don’t think democracy and Islam go together. In the Middle East it will dislocate and fall again. Here our lack of willingness to address it will crumble our own society of we’re not careful.

It isn’t racist to say not everything fits together as we’d like it to. Is it?

Politics from this dummy