Beware of fibs in Euro-sceptic clothing

Membership of Europe isn't adding pounds 20 to your food bills or ruini ng the economy, says John Lichfield
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The Independent Online
The BBC Nine of Clock News informed us the other night that the higher price of food inside the European Union costs the average British household an extra pounds 20 a week.

If true, this is a stupendously scandalous figure. We should leave the EU immediately.

The figure was broadcast to the nation as part of a two-minute survey of the costs and benefits of EU membership by Peter Jay, the BBC economics editor, former British ambassador to Washington and a man of considerable prestige and eminence.

But consider for a moment the implications of the number (as Mr Jay presumably did not). The average British household, according to the Government, spends a total of pounds 31 a week on food. Can pounds 20 of this really be the fault of Brussels? If the BBC is right, 66p of every pound we spend on food should be blamed on the margin by which EU farm prices are higher than "world" prices. Put another way, if we were outside the EU, the average British family would need only pounds 10 a week to feed itself.

There must be another explanation and there is: Mr Jay's figure is absolute nonsense. Based on the only recent detailed study of the subject, by Erasmus University in Rotterdam, a more accurate figure would be pounds 3.69 a week extra per household.

This is nothing for the EU to be proud of. It implies that our food costs are something like 12 per cent higher than they might be if the Common Agricultural Policy did not artificially support farm prices. If one includes the cost to the British taxpayer of sustaining CAP subsidies it adds another pounds 2.88 per household. This gives a grand total CAP charge on British households of pounds 6.57 a week: significant enough, but less than one third of the BBC figure.

My point is not to defend the CAP. It is no longer the voracious, money- eating and mountain-spawning monster of the Eighties but further retrenchment and reform is needed (and planned). My point is to issue a health warning about all figures used by Euro-sceptics - and some used by Euro-fanatics - on the costs and advantages of EU membership.

The pounds 20 figure used by Mr Jay has been current in Euro-sceptic circles for years. Its provenance is a mystery. It was never remotely accurate. It has been handed down from Teddy Taylor speech to Daily Telegraph editorial until it has assumed the force of canon law.

Another egregious example is the number that has been quoted for the past eight years as the annual amount lost from the EU budget by fraud. At the risk of breaking the journalistic brotherhood's vow of silence, I can reveal a startling fact. This figure - pounds 6bn - was invented from fresh air by members of the Brussels press corps when the European Commission refused to give them a precise number (largely because no one truly knows). It has been used by the British press ever since; it has no basis in reality. The real figure could be higher, but it is most likely far less. The proven figure is just over pounds 1bn a year.

Beef war or no beef war, we have been engaged for years in a propaganda battle in which the Euro-sceptics have generally had all the best lines. The European Union is far from perfect; no political institution is. But it is remarkable how much the attitudes of even intelligent, Euro-positive or Euro-realistic people in this country have been shaped by dubious Euro facts. (Some of the blame for this must fall on the European Commission for failing to counter the most egregious falsehoods more vigorously).

Mr Jay's report on Monday evening contained two other doubtful claims. He said the British net contribution to Europe - the difference between our payments to Brussels and EU spending in Britain, including Lady Thatcher's hard-won rebate - was running at pounds 3.5bn. This was based on a misreading of incomplete figures for 1995-96. The British government puts the figure at pounds 2.9bn and this is likely to be revised downwards. In 1994, the last year for which final figures are available, the UK net contribution was pounds 897m or roughly pounds 16 a head. Five other EU countries made higher per capita net payments than we did.

In any case, the figures are not so huge. England's net contribution to Scotland - the difference between Scottish taxes and UK government spending in Scotland - is running at pounds 7bn. (Perhaps it is time for England to leave that Union too) .

Mr Jay also implied that Britain was getting a raw deal in its trade with the other EU countries. He reported that in 1994 we ran a trade deficit of pounds 7.5bn with the rest of the EU but had a pounds 6bn trade surplus with the rest of the world. Implication: we should trade more with the world and less with the EU.

The 1994 figures are a misleading snapshot taken from a sequence that tells quite a different story. In the 21 years of British membership of the EU, up to 1994, our combined deficit with the rest of the world was 50 per cent worse than our deficit with Europe. Deficits are in any case only a small part of the picture. The deficit with the EU - though real and something we should seek to cure - represents a small proportion of our combined trade with our European partners: now running at about pounds 78bn in and pounds 74bn out. Over 43 per cent of all our exports of goods and services now go to the EU. Since 1975 they have grown by seven and a half times; our exports to the non-EU have grown by two and a half-times. What really matters is the volume of economic activity, and the pace of export growth, not the marginal deficit.

Economic and political arguments for and against the EU are used dishonestly by both sides. For the diehards of both camps, the core argument is political, not economic. Would Euro-sceptics still be against EU membership on nationalist grounds even if it was manifestly causing great prosperity in Britain? Would Euro-federalists be for EU membership on peace, security and romantic grounds if it was manifestly causing great economic suffering? Sometimes one suspects that the answer would be yes in both cases.

In truth, the EU is not causing us great economic suffering or vast prosperity. The figures are not as conclusive as pro-Europeans would like, but they are, overall, encouraging for those who believe Britain's best future, economically and politically, is with Europe. The numbers are nowhere near as negative as the Euro-sceptics - and the BBC TV news - would like us to believe.