Truth behind TaxPayers’ Alliance’s EU attack ad

British-flag-and-European-flag The TaxPayers’ Alliance (TPA) today release an attack ad featuring foreign farmers, fishermen and bureaucrats with cash to burn, accordian music in the background, and a sinister voice bemoaning the “costs” of the EU. Their claim that the total cost is £2,000 per Brit is so misleading that Left Foot Forward has lodged a complaint with the Advertising Standards Agency and urges readers to do the same. The true net contribution is closer to £15 per person per year.

You can complain to the Advertising Standards Agency here. To save time you can use this model complaint.

The following is a point-by-point fact check:

Claim: The EU’s Common Agricultural Policy costs £10.3 BILLION a year

Wrong.

The £10.3 billion figure comes from the TPA’s own ‘Food for thought’ policy document which arbitrarily tacks on unquantifiable factors like “social welfare costs” (which the TPA put at £317 million), “regulatory burdens” (£264m) and “duplication of food safety agencies” (£5m) to the actual CAP budget (page 5). The TPA have also, failed to subtract the amount British farmers receive back from the CAP, which in 2006 was €4.3 billion (£3.9bn).

The TPA also fail to quantify the alternative to CAP, namely a separate agricultural policy for each country with France trying to out-subsidise everyone else in favour of its farmers; protectionist barriers emerging across Europe; and extra costs from divergent regulations and standards. This could raise the increased food prices above the £5.3bn attributed to the TPA.

Taking all this into account, the TPA have exaggerated by at least £4.5bn.

Claim: The EU’s Common Fisheries Policy costs Britain £2.8 BILLION each year

Wrong.

The figure of £2.8 billion comes from the TPA’s “The Price of Fish” document and, once again, factors in a whole series of tenuous external costs. They admit, for example, that their figures for “unemployment in the fleet”, “decline in communities”, “damage to recreational fishing” and “loss of comparative competitiveness” among others are only “estimates”, (pages 6-7). The Federal Union have previously dismissed these figures.

The entire fisheries budget for 2009 is only €900 million (£810 million) (p.3).

As with CAP, the TPA ignore the €137.8m (£124m) the UK will receive from the CFP via the European Fisheries Fund from 2007-2013 (page 27).

Indeed, the TPA ignore the fact that the decline of fishing is due to the decline of fish stocks, which would have happened anyway without the Common Fishing Policy (and arguably even more, if it weren’t for the CFP’s quotas).

Claim: Each EU MEP costs the taxpayer £1.8 MILLION (€2 MILLION) each year

Wrong.

The TPA get this figure from an Open Europe ‘study‘ from June this year, which appears to include £1.3 million worth of pension contributions for every MEP every year.

These are the actual facts:

An MEP’s pre-tax salary is €91,984 (£82,785) a year.

Pension contributions (at 3.5 per cent of the salary) are €3,219 (£2,897) a year.

They are entitled to a general expenditure allowance of €50,424 (£45,382) a year.

They can claim an annual travel allowance for official travel to a third-party state of €4,148 (£3,733).

They have a maximum staffing allowance – for staffing costs – of €210,480 (£189,432) a year.

Assuming that MEPs claim the full amount, this adds up to €360,000 (£324,000) a year, leaving a shortfall of £1.5 million, which no realistic amount of travel expenses and attendance allowances could account for.

Claim: Extra administration is costing EU companies £500 BILLION a year in lost earnings

Misleading.

It is unclear where this figure comes from but it only takes into account one side of the equation and ignores the significant benefit of EU regulations. Most EU legislation is about agreeing common rules for the common market. By having one set of rules and technical standards for 27 countries – instead of 27 different and divergent rules – EU legislation reduces costs for businesses and consumers alike.

For example:

a firm can register a trademark once, valid throughout the EU, without having to go through 27 different sets of national rules, form-filling and fee paying.

a lorry taking British exports to Italy used to need over 20 documents to present at frontiers – thanks to EU legislation this is now down to one.

the Payments Services Directive is expected to deliver more than €28 billion per year of savings to European consumers and businesses from the costs of trans-border transactions.

the proposed Directive on Energy Efficiency in Buildings was described by the Association for Conservation of Energy as “Invest €8bn. Get back €25bn“

Of course, some regulation imposes costs on businesses – deliberately so where this will save public money or protect consumers or the environment.

There are also substantial benefits from trade linkages with the EU. A recent report by Oxford Economics shows that trade with the EU is in excess of £400 billion (52% of the UK’s total trade in goods and services).

Claim: VAT fraud in the EU costs us £80 BILLION a year

Misleading.

This is not a “cost of the EU” – it is fraud against EU Member States by criminals that the EU is helping to combat. Without the EU, VAT fraud would still exist.

Claim: Today the EU costs you TWO THOUSAND POUNDS a year

Wrong.

Even the house journal of the TPA, the Daily Express, puts the cost of membership at only £257 a family. In August, in an article featuring a quote from none other than TPA Campaign Director Mark Wallace (and taken apart by Left Foot Forward), the paper reported that Britain’s annual contribution to the European Union stood at £6.4bn.

But this takes no account of EU expenditure in the UK. The European Commission’s EU budget 2008 (Annex 5) shows that the biggest net contributor was Germany, which paid about €7.8 billion more into the 2008 EU budget than it received. By contrast, the UK made a net contribution of just €993 million. This works out at £15 per person – less than 1 per cent of the TPA claim.

The total EU budget for 2008 was €116.5 billion, which represents 0.94 per cent of the EU Gross National Income. Research suggest that “over ten years, the Single Market has boosted the EU’s GDP by €877 billion. This represents €5,700 of extra income per household.”

Conversions carried out at the rate €1 = 90p.

Chris

In the interests of ‘truth’ and fairness, what are the figures for 2009 and 2010, and why was 2008 so much lower than in preceding years?
http://www.shamik.co.uk Shamik Das

Good question. The figures for 2008 are the latest available figures, and were published on September 22nd this year.
Katherine

A glorious article – and exactly what this website should be doing.
http://www.taxpayersalliance.org Clifford Singer

Excellent rebuttal.

The TPA ad is based on research by Lee Rotherham. Here’s an account of some of his previous “research”:
taxpayersalliance.org/news/paris-hilton-britains-best-performing-mep
Chris

Ok.There’s an answer from Ian Pearson on the 2010/11 contribution here.

http://www.theyworkforyou.com/debates/?id=2009-07-14c.150.4

Along with a ludicrous straw man from Peter Bone.

He says: £6.5 billion, or about 6.5 times the figure you quote. Based on your calculations, that’s about £100 per person, or using HMRC figures (www.hmrc.gov.uk/stats/income_tax/table2_1.pdf – pdf) £235 per working age taxpayer.

That broadly ties in with your suggestion that the TPA’s figures don’t stack up. However; clearly there is a wider issue here. Who is to say that £2,000 per person / taxpayer isn’t cheap? It might or might not be good value overall.

I would argue that you have let your base position (ie in favour of EU membership) affect your point, and that you’re in danger of misquoting figures to support your position as well.
http://fabulousblueporcupine.wordpress.com Alix

Just for completeness, are we certain that the arbitrary unquantifiable factors tagged on to the CAP budget by the TPA at item 1 are indeed (a) arbitrary and (b) unjustified additions? It doesn’t look good for the TPA, certainly, but surely they can’t have been stupid enough to make up these numbers as they liked without offering some justification, however feeble. Perhaps needs addressing.
http://www.taxpayersalliance.com TPA

Shamik,

We have posted a comprehensive response to your report here:
http://www.taxpayersalliance.com/eu/2009/11/response-to-left-foot-forward-on-the-costs-of-the-european-union.html

We’re glad you’ve joined the Great EU Debate!

Best,
Matt
dunc

If you’re complaining to the ASA, be sure to link the complaint to how the advert would mislead people into buying a book. That’s the product being sold in the advert. It may be worth ammending Step 5 on the model compaint to reflect this.
http://twitter.com/jphf/status/5914978271 JPP

RT @OtherTPA: RT @leftfootfwd: TaxPayers Alliance attack ad claims EU costs you £2k – it is really £15. http://bit.ly/3kpjxE
http://twitter.com/markpack/status/5924941662 Mark Pack

TaxPayers’ Alliance to screen myth-laden EU video attack | Left Foot Forward http://bit.ly/7mBVMe
http://twitter.com/kaicee/status/5937837933 Karin Christiansen

RT @leftfootfwd: TaxPayers Alliance attack ad claims EU costs you £2k – it is really £15. http://bit.ly/3kpjxE Complain to the ASA http: …
http://www.timworstall.com Tim Worstall

“It is unclear where this figure comes from”

No, it isn’t unclear. It’s from Gunther Verheugen: the costs of EU regulation are around €600 billion a year and the benefits of the Single European Market around €140 billion (that latter from my all too fallible memory, apologies).

As Verhuegen was, at the time he made the statement, the Commissioner in charge of regulation about the single market, we can take that to be a reasonably accurate figure.
http://www.timworstall.com Tim Worstall

A further thought: “The true net contribution is closer to £15 per person per year.”

Given that CAP costs a household of four £25 a week in higher food prices this is obviously nonsense by you.

And as to this:

“The TPA also fail to quantify the alternative to CAP, namely a separate agricultural policy for each country with France trying to out-subsidise everyone else in favour of its farmers;”

Rank idiocy. The alternative to a hugely expensive policy is not another hugely expensive one: it is to have none. The New Zealand option, Daisy and Farmer Giles get along on their own. And just for giggles, you do understand that if France decides to subsidise its farmers out of French taxpayer’s dosh, you do realise that this makes us richer? We get cheaper food subsidised by the French taxpayers. And the problem with this is?

(You might say that this will screw British farmers but then so what? Since when has it been left wing to prioritise the interests of capitalist producers above those of proletarian consumers?)
http://twitter.com/euromp_arlenemc/status/5972682345 Arlene McCarthy MEP

RT @leftfootfwd: TPA attack ad claims EU costs you £2k – it's really £15 http://bit.ly/3kpjxE Complain to the ASA http://bit.ly/nwgR1
http://twitter.com/jamescowley/status/5972720810 James Cowley

RT @EuroMP_ArleneMc: RT @leftfootfwd: TPA attack ad claims EU costs you £2k – it's really £15 http://bit.ly/3kpjxE Complain to the ASA h …
http://twitter.com/kevpeel/status/5972806997 Kevin Peel

RT @leftfootfwd: TaxPayers Alliance attack ad claims EU costs you £2k – it is really £15. http://bit.ly/3kpjxE Complain to the ASA http: …
willstraw

Tim,

Thanks for your comments. A few points:

1. Verheugen, like TPA, wrote purely about the costs and not about the benefits. This is accounting innumeracy

2. As we made absolutely clear, we are not seeking to defend CAP which is distortionary, harms developing world producers, and raises our prices. We would love to live in your utopian world where there were no producer subsidies but it is not realistic. CAP was created as part of the Treaty of Rome in 1957 to bring together the race-to-the-bottom subsidies of competing European countries. If CAP were scrapped tomorrow, there is no guarantee that other European countries would not introduce their own subsidies. This uncoordinated approach could raise food prices even higher.

3. The “rank idiocy” is thinking that EU costs are binary. They are not. We need a strong voice in Europe in order to reform the costlier elements.

Best wishes,

Wukk
http://www.timworstall.com Tim Worstall

“1. Verheugen, like TPA, wrote purely about the costs and not about the benefits. This is accounting innumeracy”

Err, as I wrote above, Verhuegen gave us both the costs and the benefits. Have a look again: there are two figures there, no?

“If CAP were scrapped tomorrow, there is no guarantee that other European countries would not introduce their own subsidies. This uncoordinated approach could raise food prices even higher. ”

What have you been smoking? If the Germans subiside the production of German food this makes German food cheaper for us to buy. If the French subsidise French food this makes French food cheaper for us to buy.

How would the Germans and the French subsidising food production make food more expensive for us?

“3. The “rank idiocy” is thinking that EU costs are binary. They are not. We need a strong voice in Europe in order to reform the costlier elements.”

And there we disagree. It’s unreformable thus we should leave.
http://twitter.com/1966simong/status/5975089193 Simon Arnold

RT @leftfootfwd: TaxPayers Alliance attack ad claims EU costs you £2k – it is really £15. http://bit.ly/3kpjxE Complain to the ASA http: …
George

Lovely piece of switch selling at the end.

“The total EU budget for 2008 was €116.5 billion, which represents 0.94 per cent of the EU Gross National Income. Research suggest that “over ten years, the Single Market has boosted the EU’s GDP by €877 billion. This represents €5,700 of extra income per household.”

So, one year (2008) costs €116.5B. TEN years boosted the EU household income by €877B.

Averaging out, that is an “increase” of €87.7B per year for a cost of €116.5B (in 2008) i.e costing €28.8B more than you claim is “generated” A DRAIN.

“This represents €5,700 of extra income per household.” and how much did it cost to generate this “Extra income”of €570 per year (averaged). Using those figures above (€877B ‘earning’ €5,700 per household gives 158.95 Million households) Yet 2008 COST that same household €732.

2008, spent €732, ‘generated’ €570

The EU costs us Money and no manner how you cut it it’s all about concentration of powers away from the people.
themurf

@ Tim Worstall

At the moment we’re subsidising European Food. Which makes European food cheaper for us to buy.

Why do you want to raise the prices of fresh food for British end consumers?
http://twitter.com/johnlegrys/status/6105736419 John Legrys

RT @leftfootfwd: TaxPayers Alliance attack ad claims EU costs you £2k – it is really £15. http://bit.ly/3kpjxE Complain to the ASA http: …
http://www.timworstall.com Tim Worstall

“Which makes European food cheaper for us to buy.”

Sadly, no, it doesn’t. The system of subsidy is so gloriously insane that it actually makes food more expensive for end consumers.

We can test that particular point. If food were cheaper then we would not have tariff barriers against food from outside the EU. Wouldn’t need them, for the subsidised food we produced inside would be cheaper than what could be imported. We also would not have export subsidies, so that EU produced food could compete in the world markets. For the subsidies would make the food cheaper than the world price and thus export subsidies would not be needed.

Now, what is it that we actually have? We have high import tariffs to stop all that non EU food flooding the market and we have high export subsidies so that EU food can be sold outside the EU.

Therefore we must conclude that food inside the EU is more expensive than outside it. Thus, CAP makes food more expensive, not cheaper.
http://www.leftfootforward.org/2009/12/happy-christmas/ Happy Christmas! | Left Foot Forward

[...] November 20th: Truth behind TaxPayers’ Alliance’s EU attack ad [...]
mdc

If you take off from the tax bill money that the government in question spends in the UK, the UK government tax bill is £0, right? Right…?
http://bonissac@yahoo.co.uk bill w

Much as I endorse the rebutal of misinformation in your aricle, i must however raise a question that bothers me greatly, one I wish your correspondnts could answer/address.
Namely why the left has no proposition to seek a clear mandate as too our relationship with the EU, there appears little doubt that I like many Others do not radically oppose the idea of close european entity, however the current EU, does not represent this ideal. The questions for example on how the EU is audidted seems to go unanswered, as do other issues.
I believe the left must take a lead in having clear mandated policy on europe. I think we should advocate a call for a referendum specifically on europe to establish a democratic mandate through which we can move forward.
I believe this not only as it would resolve our relatonship with europe but would also strengthen our demcratic standing, putting forward a clear desire to involve the electorate, in direct contrast to the centerist/right wing movements at work in the country today.
I say have faith in the power of the people to get behind clear policies, a little trust will not go amiss
http://twitter.com/wdjstraw/status/10714011056 Will Straw

@EvanHD TaxPayers' Alliance numbers on "cost of EU" are completely spurious http://bit.ly/3kpjxE
http://twitter.com/southenddavid/status/10714308384 David Carrington

RT @wdjstraw: @EvanHD TaxPayers' Alliance numbers on "cost of EU" are completely spurious http://bit.ly/3kpjxE