The Foreign Secretary and the UK Statistics Authority: £350 million explained
21st Sep 2017
Over the weekend, Boris Johnson wrote in the Telegraph:
“And yes – once we have settled our accounts, we will take back control of roughly £350 million per week. It would be a fine thing, as many of us have pointed out, if a lot of that money went on the NHS”.
This is wrong, as we factchecked this week.
The UK Statistics Authority wrote to the Foreign Secretary calling this a “clear misuse of official statistics”. Mr Johnson wrote back accusing the Authority of a “complete misrepresentation” of what he said.
Here, we look in detail at the facts behind both sides’ letters.
Who claimed what
“I am surprised and disappointed that you have chosen to repeat the figure of £350 million per week, in connection with the amount that might be available for extra public spending when we leave the European Union.”—Sir David Norgrove
“You say that I claim that there would be £350m that “might be available for extra public spending” when we leave the EU. This is a complete misrepresentation of what I said and I would like you to withdraw it.
“[What I said] is very different from claiming that there would be an extra £350m available for public spending and I am amazed that you should impute such a statement to me.”—Boris Johnson
As you can read above, Mr Johnson’s original claim doesn’t say there would be an extra £350 million available for public spending.
Similarly, the statistics watchdog’s letter doesn’t say he did either.
But both sides do seem to suggest more than they actually say.
“Take back control of huge sums of money—£350 million a week—and spend it on our priorities, such as the NHS”—Boris Johnson, ITV referendum debate, 9 June 2016
“£350 million a week which we currently do not control, and which as I said just now ... could be spent on our priorities such as the NHS...
“...£350 million, as I explained until I was blue in the face last year, that is what the UK contributes to the EU budget.”—Boris Johnson, Good Morning Britain, 27 April 2017
So it’s not surprising that anyone would impute this statement to Mr Johnson based on the current and previous instances of the claim, all of which are inaccurate to different degrees.
Who confused what
“This [Boris Johnson’s claim] confuses gross and net contributions”—Sir David Norgrove
This wording is unclear. The problem with Boris Johnson’s claim is that it confuses the role of the rebate—because of this discount we don’t send or owe £350 million a week to Brussels. The value of the rebate is deducted from our contributions before the money leaves the UK, as the Treasury points out. £250 million a week is what we actually pay.
But it doesn’t confuse what we send to the EU with what we get back. The claim is about control, and it’s legitimate to exclude the money we get back because that isn’t fully under the UK’s control at the moment.
“It also assumes that payments currently made to the UK by the EU, including for example for the support of agriculture and scientific research, will not be paid by the UK government when we leave.”—Sir David Norgrove
Mr Johnson’s claim doesn’t obviously assume this, because he hasn’t said the whole sum of money will be available for public services. If he had said this explicitly he would need to assume a lot of current EU spending in the UK would be moved to spending on general services.
Of the £250 million a week we send, about £90 million is spent by the EU in the UK. The other £160 million goes to other countries.
Where the money goes
“As for the balance of the £350m, it of course disappears around the rest of the EU, and is spent as the EU sees fit in other countries.”—Boris Johnson
The UK pays more money to the EU budget than it gets back.
The money that comes back is mainly through payments to farmers and for poorer areas of the country such as Wales and Cornwall. These ‘public sector receipts’ are forecast to be around £4.5 billion in 2016, or around £90 million a week.
The EU also makes payments directly to the private sector, such as research grants. In 2014, these were worth an estimated £1 billion, so including them could reduce the UK’s net contribution further still.
All of the money the UK gets back isn’t fully under our control, even though it is spent in the UK. The rest of the money is spent across the EU.
Most of the EU’s budget is spent on growth, jobs and promoting agriculture in member countries.
“Once we leave the EU we will take back control of all such UK-funded spending.”—Boris Johnson
As Mr Johnson points out, once the UK leaves the EU it won’t have to contribute to the EU budget long-term, so eventually we will have control over what is spent in the UK.
There is talk of a ‘Brexit bill’ to be paid in the years shortly after Brexit, and the Treasury has said that funding for many EU-backed projects (agreed before we leave the EU) will be guaranteed by the UK government after Brexit.
“It [the rebate] only forms part of the EU’s financing arrangements with the agreement of all other EU member states. We do not control it ourselves.”—Boris Johnson
Other EU member countries cannot change or get rid of rebate without UK’s agreement.
The rebate is “de facto a permanent mechanism” according to the European Parliamentary Research Service, because its removal would need the agreement of all member countries, including the UK. Similarly, the rebate needed the unanimous agreement of member countries to be set up in the first place in 1984.
The value of the rebate in any given year is calculated using a formula agreed by member countries, based in part on the value of the UK economy and receipts from VAT. It’s calculated a year in arrears—in other words the UK’s economic performance from the previous year determines the size of the discount for the current year.
“What is beyond doubt is that, upon withdrawal, we will have complete discretion over the £350m per week and that huge sums will indeed will be available for public spending on priorities such as the NHS.”—Boris Johnson
There’s no guarantee of how much extra funding, if any, will be available to spend on public services after the UK leaves the EU.
If you care about how much will be available, you also need to care about the wider economic impacts of Brexit, not just the membership fee savings. That depends on the deal we will do with the EU and what impact that will turn out to have on our economy.
During the referendum, economists on both sides of the debate predicted that changes to trade and other areas would have a far bigger economic impact than regaining the UK’s EU membership fee, and most forecasts said that impact would be negative.
Brexit is still likely to cost the UK public finances more than it will save overall, according to the Institute for Fiscal Studies, based on forecasts from the Office for Budget Responsibility.
If that plays out it means whatever savings we make from the membership fee would be outweighed by the wider economic impacts of leaving.
Who controls the money
“To give you an example: when I was mayor of London I thought it would be a good idea if we persuaded the commission to spend £8m on the Emirates cable car ... the decision was [the European Commission’s]. Control was in the hands of the Commission, not the UK.”—Boris Johnson
This is right. The Emirates Air Line cable car in London did receive £8 million in funding from the European Regional Development Fund (ERDF).
The ERDF is one of several EU funds aimed at promoting jobs and growth across member countries. The EU sets restrictions on how the money can be spent, but organisations which control the spending in member countries have flexibility on how the money is used within these limits.
According to documents from the Greater London Authority (GLA), Transport for London applied for ERDF funding for the cable car project through the GLA. This was then approved by a committee in August 2011 and then by the Mayor—at that time Mr Johnson—in September that year. The funding then had to be submitted to the European Commission for final approval. We’re looking into what the rules are for getting EU approval for these types of project.
The Mayoral Decision approving the funding points out that until the European Commission agreed the funding was not guaranteed. This approval from the Commission was granted in July 2012.