Britain earns billions from EU, says Brussels

BRITISH business makes billions of pounds from being in the European Union, EU officials said yesterday. The European Commission was said to be 'furious' at allegations that Britain has lost heavily from membership, and officials were preparing a co- ordinated onslaught on the claims.

The cost of European membership is expected to come under attack at the Conservative Party conference this week. A projected rise in the British contribution to the European budget may provoke a fresh battle within the party.

Articles in the weekend newspapers referred to a cumulative loss to Britain of hundreds of billions of pounds from EU membership. But by the end of the decade, at least five countries will be paying more per head than Britain to the European Union, British and European sources said yesterday. Germany and the Netherlands among existing members, and Sweden, Austria and Norway among prospective new members, should be paying out more per capita than Britain. France and Italy will also be paying sums close to what Britain is paying.

Reports in the Sunday Telegraph and other newspapers claim that membership had cost the British more than pounds 4,000 each over the past 21 years. The total price for membership was pounds 235bn, it claimed. That number comes from adding the total budget contribution of pounds 30bn, along with the costs of the Common Agricultural Policy (CAP), and the expenses involved in complying with EU legislation.

British and EU sources yesterday attacked the figures as 'nonsense'. The CAP has been reformed, the wheat mountain has been cut in half and beef stocks are falling, officials said. Calculating the cost requires making 'what-if' assumptions about policy if Britain had not joined the EU.

The cost of running the EU is going up, and so is Britain's contribution to it. But calculating how much requires a set of political assumptions. The European Foundation, a London-based think-tank founded by Bill Cash, the Euro-sceptic Conservative MP, says Britain will pay pounds 197m a week to the EU in 1996-97 - enough to give every pensioner in the country an extra pounds 20 a week.

But that is the gross figure for contributions. After Britain has received back funds from Brussels, and after the British rebate, the figure is closer to pounds 68m a week.

The Foundation says that payments will rise by 44 per cent a year until 1997, but this is misleading. The basis that the Foundation uses for the increase in gross contributions is from pounds 7.4bn in 1994-95 to pounds 10.3bn in 1996-97. Contributions were higher in 1993-94, according to figures in the Chancellor's annual report, because they fluctuate, making the increase suspect.

Britain is expected to pay about pounds 8bn a year in contributions to the EU this year, and to receive about pounds 4.5bn, making a net contribution of about pounds 3.5bn. But it will then get a rebate of about pounds 2bn, making a final net contribution of about pounds 1.5bn. That sum is expected to be higher by the end of the decade, with a net contribution of nearer pounds 2bn by 1997.

Those who have attacked the figures claim that the rise is because of new spending, arising from massive assistance programmes agreed in 1992 for the EU's 'poor four' - Spain, Ireland, Greece and Portugal. But the rise is partly because of growth and inflation. By the end of the decade, the 1992 decisions will mean that Britain is paying about pounds 250m more than it would otherwise have been paying, British officials estimate - a much smaller increase than the sceptics claim.

EU officials focus on the net economic benefits to Britain of being in the European Union. They say that the UK banking sector's trade suplus with Europe tripled between 1982 and 1991, to 1.22bn ecus ( pounds 1bn), while the business services and consultancy sector shifted from a trade deficit to a surplus of 349m ecus. Overall, the single market has added 1.5 per cent to Europe's economic output, they say - about 83bn ecus. Even if British business had only picked up 5 per cent of that, it would still be worth 4bn ecus.

Large amounts of the cash spent in southern Europe go directly to construction and consulting firms from Britain and the other northern countries, British and EU sources point out.

Nevertheless, the figures produced by the European Foundation leave unanswered questions about the EU budget. Luxembourg, Denmark and Belgium - three of the richest states in the EU, and much wealthier than Britain per capita - continue to get large sums from the EU; Luxembourg, Europe's richest country, is also the second largest recipient of EU funds per head after Ireland.