As is well known, all recent governments, Labour and Conservative, have refused to carry out any kind of cost-benefit assessment of the value to Britain of our membership of the EU - at least on anything like the present terms - on the entirely spurious grounds that the benefits are so obvious as to be not worth trying to measure. This has not, however, stopped others from doing so. All the studies done show that the costs to Britain in economic terms far outweigh the gains. There is also an increasingly strong case for the proposition that, from a political standpoint, Britain would be far better off with some kind of associate status, like that enjoyed by Switzerland or Norway, than as a full EU member. What is the evidence?
The direct economic costs to Britain of our EU membership fall under a number of headings, nearly all of which are relatively easy to quantify, and over which there can therefore be little dispute. Our contribution to the EU budget is currently about £14bn a year gross. We receive back - often to finance projects which would not be our own first choices - about £9bn a year, giving a net cost of £5bn. To this needs to be added a significant number of "off budget" costs, which appear, from the perhaps deliberately difficult to interpret EU and Central Statistical Office accounts, to have amounted to an additional £1.8bn per annum over recent years. Britain's £1.7bn share of the subsidy to EU projects such as the Galileo GPS system is likely to push this figure up rather than allow it to go down. Furthermore, the deal on the EU budget done in Brussels in December 2005 makes it certain that Britain's net budget contribution will rise to a much higher figure by 2013, perhaps £7bn. Add on another, say, £2bn per annum for "off budget" items, and the direct net budgetary cost will come to around £9bn a year.
The other main direct economic costs to the UK of our membership of the EU are the Common Agricultural Policy (CAP), the Common Fisheries Policy (CFP) and excessive regulation. The cost to British consumers of the CAP, measured by the extra costs of buying food from expensive EU sources instead of at much lower world market prices, has recently been running at about £15bn a year. This figure is validated not only by the work of several independent researchers but also by the Organisation for Economic Co-operation and Development (OECD). The CFP costs are more difficult to identify but a recent study put them at £2.5bn, this being the estimated value of fish catch in what were formerly UK waters which is now taken by other EU members. The cost of over-regulation emanating from the EU- arrived at by estimating the costs and deducting the benefits - is now running at something like 2% of our national GDP, or close to £30bn per annum. This figure can be calculated from the government's own Regulatory Impact Assessments and has been recently buttressed by the same percentage cost being attributed to EU over-regulation in Holland. If all these costs plus those to do with the EU budget are added together, they currently total about £55bn a year.
The very high annual direct costs to Britain of our membership of the EU - equivalent to about one third of all income tax collected in the UK or well over one and a half our entire Defence budget or roughly half times the entire cost of the NHS - is not, however, the end of the story. Much of the very heavy current costs of our EU membership falls directly on to our balance of payments - already in heavy deficit - because much of the money goes abroad, thus inevitably depressing the overall growth rate of the economy. The deflationary policies pursued by the European Central Bank, washing over on to our economy, have had the same effect. We are on more tentative ground here, but international comparisons with other Anglophone economies suggest plausibly that our growth rate might have been 0.5% higher per annum than it actually has been if we had not had to bear the burdens of EU membership. If this is correct, ten years of lost growth at 0.5% per annum, cumulate up within just the last decade to more than 5% of the current GDP, currently running at about £1,400bn per annum. 5% of this sum is £70bn. Britain's membership of the EU has indeed been extremely expensive. It is not surprising, therefore, that European countries such as Norway and Switzerland, which are outside the EU, have far higher average standards of living than we do.
If there are large clearly identifiable economic costs to Britain of our EU membership, are there political benefits of sufficient weight to compensate for them? Has EU membership increased our security? Has it increased our capacity to look after our interests in the world? Have EU trade and economic policies helped us to alleviate Third World problems? Have EU policies improved social cohesion and well-being in the UK? Perhaps, in the end, most crucial of all, has EU membership improved our ability to govern ourselves and to make those in charge of what happens to us democratically accountable? It is hard to see positive answers to any of these questions, let alone ones with such clear benefits to us that they offset the economic costs.
The principal argument in favour of our membership in foreign policy terms is that the EU is a bigger player on the world stage than Britain would be on its own, and therefore we have more influence inside the EU than we would outside it. The validity of this argument, however, depends on their being a sufficient degree of congruity between what we want to achieve and what other Member States would like to see accomplished, otherwise we get outvoted and policies which we do not want get pushed through in our name. Unfortunately, on a wide range of issues, this is what has happened. British attitudes on agriculture and assistance to the Third World, on protectionism, energy security, how to cope with globalisation, let alone whether we really want to merge our distinctive nationality into a United States of Europe, are distinctly different to those on most of the continent. In particular, as regards security, we have always favoured working through NATO rather than supporting the EU building up its own independent armed forces. It is hard to believe that current EU defence policy makes much sense against the background of the low levels and poorly administered defence expenditure in the EU. It is also very hard to believe that Britain views and interests concerning world trade are more likely to be heard if negotiations in the World Trade Organisation are conducted by Brussels rather by Whitehall.
A particularly deplorable aspect of our inability to conduct our own trade policy relates to the CAP. Not only is this extremely expensive and wasteful within Europe but the impact that its protectionist policies have had on the Third World has been nothing short of disgraceful, impoverishing millions of poor people who have thus been deprived of any opportunity to trade themselves into a better life. At the same time, current EU trade negotiations on Economic Partnership Agreements, which would open up Third World economies to unrestrained international competition, are all too likely to damage fragile economies. Nor have our efforts to help the Third World with aid been helped by our EU membership. These programmes, now mostly EU run, are exceptionally poorly administered with large sums of money left unspent each year as a result of bureaucratic delays and inefficiency. Corruption also adds to the problems as do the fact that EU aid policies are driven to much too great an extent by the need to secure trade opportunities and to secure political favours rather than to help the most needy.
It is also hard to make out a convincing case that Britain has benefited from EU membership in domestic political terms over the decades since we joined the Common Market in 1973. Concerns over the implications of our membership have done huge damage successively to the Labour and Conservative parties. It is true that some progressive policies have originated in the EU and have then gained general acceptance in the UK. On the other side of the coin, however, many of the ways in which our lives are now regulated by Brussels have caused more irritation than benefit. No doubt the single biggest impact that the EU has had on the British socially recently has been the very large migrations to the UK from Eastern Europe. While these have undoubtedly benefited the better off in the UK, the competition which hundreds of thousands of migrants have engendered, particularly on jobs and housing, have made life much more difficult for those worse off. It is hard to argue that this has not contributed significantly to the widening disparities in wealth, income and life chances in the UK.
In the end, it may be the undermining of our long established democratic traditions which may be the biggest political cost of our EU membership. The EU is not a democratic organisation. Too much power rests with the Commission, the European Central Bank and the Luxembourg Court of Justice, all of whose members unelected. The European Parliament is not really a parliament at all; it is a consultative assembly. The power and sovereignty of national parliaments right across the EU, including of course our own, is being steadily eroded in favour of the Brussels bureaucracy. The gap between a narrow political European elite and the mass of the people is widening all the time, most recently exemplified at Lisbon by the way in which the EU Constitution was railroaded through with no democratic endorsement, because it would almost certainly not have been forthcoming. All the evidence across the world suggests that it is only the nation state which is really capable of running itself in a truly democratic and accountable way. This is why there is such a strong tendency for all peoples who feel that they have their language, traditions and culture in common to want to be recognised as a nation and to be able to run their own affairs. Only in Europe are we moving resolutely in the opposite direction. Against this background, one can only wonder for how long the European Union will be able to stand the test of time.