Flooded stadiumWhen any part of Europe is hit by a natural disaster, the country where the disaster strikes can appeal to the EU for assistance – these solidarity arrangements were put in place after the 2002 central European floods. So when parts of the UK were flooded last year it seemed sensible for the UK government to make an appeal to the fund. The government at first seemed reticent to ask for money, but after efforts from Richard Corbett MEP, Denis MacShane and others the request was made, and £110 million cash granted.

Perhaps there was reticience in making the original request knowing what would subsequently happen. If the UK gets more money from the EU budget, the UK in turn gets less money from the budget rebate – the mechanism Thatcher negotiated because Britain has few farmers and does not get much cash from CAP. So rather than giving the £110 million to the flood hit areas, only £31 million will reach the flood victims, as a rather frustrated Richard Corbett points out. The Treasury will pocket the extra £79 million, putting it into its general budget, to make up for the fact that there will be less budget rebate in this financial year.

This smarmy press release from DCLG dresses the whole thing up as extra money, but it a damned scandal. How the hell does the UK think it can – politically – get away with allocating only 1/3 of the money received for the task it’s supposedly intended for? Plus this comes from a government that says it wants the EU to be more relevant. So when the EU is directly helping people in need in the UK the Treasury is siphoning off 2/3 of the cash!

Thing are not helped by the Yorkshire Post that gets its analysis completely wrong on the issue, claiming the European Commission and Tony Blair are at fault. How either are at fault is beyond me, but I suppose you could not get Tories to criticise the rebate as the Iron Lady negotiated it in the first place.

No, the blame for all of this lands 100% squarely with HM Treasury. Do they fear every single Euro the UK gets for any project, knowing the rebate will take a knock? Ludicrous. Plus this is £110 million – decent for flood reconstruction, but a pittance in comparison to the UK government’s budget as a whole.

My apologies if this entry is not entirely coherent (I’ll happily answer questions on the technicalities in the comments) but what the Treasury is doing with this is completely and utterly wrong. I’m seething with anger about it.

22 Comments

  1. I think the flood relief is not so tied, but there cannot have been any idea that this is what was going to happen when the money was first allocated.

  2. Mike Hanlon

    “but you won’t find me arguing for less government.”

    But government always has a tendency to expand. We’ve seen it time and again – it burgeons, people rebel, another party is elected to cut it back.

    If you will never argue for less government, where do you draw the line? I’m no libertarian either, but that sounds to me a very sinister manifesto.

  3. Mike Hanlon

    Y’see Jon, there you go again … trying to diminish the EU’s impact by conjuring up other inevitably also imperfect aspects of government.

    It’s a typical EU-zealot response which can best be described in just two words … cop out.

    Re. bureacracy, and we’re going off the point as regards your original posting now, but we all know the EU works by getting national civil servants to implement its policies. Hence the numbers of “policy-making staff” required at the Commission doesn’t compare to the numbers required in member countries to administer their effects day-to-day.

    Unless you’re suggesting the DWP has 95,000 “policy-makers”? Because by not comparing like-with-like, you risk creating a false impression, Jon. And I’m sure you wouldn’t want that.

    I’d be more interested to learn how many more staff have had to be taken on in national bureaucracies simply to cope with implementing EU legislation … hmmm … not to mention their cost.

    And of course (bringing it further back to the point) those mere 24,000 probably very generously-paid and undoubtedly lavishly-perked Commission policy makers in their comfy offices are all costing money that isn’t going to preventing floods, or compensating their victims. Or providing economic aid. Isn’t it.

    I’m afraid it’s make-your-mind-up time, because the public purse isn’t a bottomless pit.

    National governments are very far from perfect. But my take is: at least we have some semblance of control over them. If more people bothered to hold them to account, rather than spent time fantasising about pan-European government being some kind of solution (probably simply writing the same problems on a far larger, far less accountable scale), I’m sure our continent would be a much better place.

  4. At least a libertarian position is intellectually coherent, and I have respect for people with those views.

    However I am not a libertarian myself – far from it. I believe in government, a powerful state, but management of state power has to be effective and efficient. So I’ll consistently argue for better government – locally, nationally and in the EU – in this blog, but you won’t find me arguing for less government.

  5. “you are not going to convince me that a national government is going to do these sorts of things any better…”

    So if governments will only do such things in a crappy manner why not not have them done by governments? You know, use markets instead?

  6. Yes, I do want those areas to get the best possible aid, and as much of it as possible… But national governments do not exactly have a shiny and perfect record doing that stuff either. I have no more trust in national governments doing that more cheaply or effectively than the EU.

    As for administration – the Commission has 24000 staff (inc. 4000 translators and interpreters), and a normal Directorate General about 250 main policy making staff. Compare that to Westminster and it’s a small bureaucracy where even a department like BERR alone has more than 4000, and one like DWP more than 95000.

    But anyway, I can throw whatever arguments out that I like and I am not going to manage to convince you that the EU is not some nasty, large, expensive and corrupt conspiracy and – equally – you are not going to convince me that a national government is going to do these sorts of things any better…

  7. Mike Hanlon

    A ‘mere’ 1.08% of EU GNI. Wow, doesn’t that sound tiny!

    But hold on … doesn’t that actually equate to an incredible £60bn a year – by most people’s (and public services’) standards, a ‘useful’ amount of cash.

    The “majority” of which EU spending, let’s not forget, auditors are annually unable to explain to norms of proper accountability.

    I’m afraid that trying to diminish the billions a year that the EU costs (and what could otherwise be achieved with those billions) – by comparing it to larger sums or trotting out tiny percentages doesn’t really cut it by way of justification.

    You mention aid for poorer regions – worthy spending indeed. But it seems to me that we could help poorer regions much more effectively if money from governments were passed directly to projects, perhaps via embassies in the countries chosen for aid, probably in partnership with other national embassies in those countries.

    Rather than first pay it into that obviously extremely leaky central EU pot, for it to reach the areas where it’s needed about two years later minus the EU’s expensive administration costs. All those shiny glass buildings and subsidised lunches don’t come cheap y’know …

    Surely you want those poor regions to get the greatest possible benefit of the limited funds countries have available for such aid?

  8. Sorry, but you don’t seem to understand the difference between the budget and regulatory burden… The cost you’re talking about is regulatory burden, not the budget.

    As for Verheugen – he got his way on packaging sizes, eventually, after annoying loads of Commission officials by behaving stupidly.

  9. “what the hell has quince jam got to do with the EU budget?”

    What, you think that part of it wasn’t spent on writing the “Jams, jellies, marmalades and sweet chestnut purees directive”?

    This is where the money gets wasted and as Gunther Verhuegen has said, these regulations impose a cost of some €600 billion a year across the economy.

    Time to leave if we cannot achieve perfection by destroying it.

  10. And, sorry, what the hell has quince jam got to do with the EU budget?

    Further, that rule on quince jam would have been decided using the co-decision process and while it’s conceivable that the UK government was outvoted under QMV it for sure had its chance to influence the process. It’s not some evil monster in Brussels trying to stamp on plum jam producers…

    It’s also not fair to say that the EU is doing these sorts of things contrary to the wishes of the UK government – the UK government legislates that it’s compulsory for any bike (even a £2000 racing one) to be sold with a bell on it, so it’s not as if the UK is really a great de-regulator in the face of some Brussels onslaught.

  11. “Brown’s £2.7 billion payment to taxpayers”

    A very Statist assumption isn’t it? That taxpayers don’t get their wallets picked to tune of £2.7 billion a year is a payment to them? What, you think the money blongs to the government, not the citizenry?

    And as to the comparison with other spending….well, don’t you think that the tax money raised from the citizens of the UK should be used for the benefit of the citizens of the UK?

    “While I dislike the money that the EU spends on CAP, the rest is very worthwhile”

    Typically federast crap perhaps?

    Writing a law that makes it legal to add the apple geranium leaves to quince jam but makes it a criminal offence to add the same to plum or gooseberry jam is “very worthwhile”?

  12. While I dislike the money that the EU spends on CAP, the rest is very worthwhile – helping poorer regions boost their economic growth, development aid etc. Plus all of that is 1.08% of EU GNI.

    Look at it another way: Brown’s £2.7 billion payment to taxpayers is more than the UK’s net contribution, as is the amount the UK spends each year looking after its nuclear waste. Further, a large UK department like DWP has a larger budget each year than the entire EU budget…

    So, Mike, your line is typical eurosceptic crap.

  13. Mike Hanlon

    To put it in context, that £31m isn’t even two day’s worth of our net annual contribution to the EU budget.

    So let’s not miss the elephant in the room as regards the detrimental impact on public services (such as flood prevention and compensation) that the scale of our EU contributions must be having.

    I think the direction of the ‘siphoning’ is clear.

  14. Can’t quite believe that there are people (well, two of them) not able to appreciate your entirely justified anger on this.

    I suppose we should just be grateful that Mr Darling didn’t get his grubby little mitts on the whole lot.

  15. @Jack – thanks for the observation… Very interesting.

    @Boing Boing – and I suppose I’m not metaphorically an idiot then?

  16. One of the reasons why DEFRA (the department responsible for flood defense) is so strapped for cash is the €300 million fine the Commission imposed on the UK for failing to pay out around €3 billion in EU farm subsidies on time in 2005/06.

    The Rural Payments Agency royally fouled up the implementation of a new and complex method of calculating farmers’ entitlements to the new ‘decoupled’ CAP payments.

    The Treasury has agreed to cover the fine from within the national reserve, but it is punishing DEFRA for its failings. Hence lots of early retirement packages and budget cuts for DEFRA agencies like Natural England.

    The sooner the UK rebate is replaced by my idea of compulsory co-financing with variable co-financing rates, related to per capita income, the better. I have an article forthcoming on this idea where I’ll set it out in greater detail.

  17. boing boing

    They are only actually going to “get” 31 million “extra” out of the EU for this. Thats just the way the budget and the rebate works. So where do you want the rest of the spending to come from?

    This whole self-righteous piece is a joke. In reality there is no money “from” the EU – we pay in 2 pounds for every pound we get back. If you really want to spend more money on flood victims without raising tax or cutting spending then you could start by cutting our net contribution. But you are not in favour of that.

    You are not “seething” about this unless you are literally an idiot. You simply want to extract some propaganda value from the decision. But really, this is pathetic.

  18. We’ll not get rid of CAP without leaving: which is, of course, an excellent reason to leave.

  19. Agh, get real.

    I don’t think anyone would have imagined that 2/3 of the cash would not be spent on flood aid, as I don’t think there’s actually a precedent for this because most of the time the way the EU money is spent is stipulated very precisely when the cash is granted…

    So if, for example, a European Social Fund project bid in Northern Ireland is a success, the UK gets more cash from the EU budget, but HMT cannot get 2/3 of the money because the ESF rules mean the cash has to be spent on that project.

    The flood relief is not so tied, and hence HMT can get away with it, but – seriously – there cannot have been any idea that this is what was going to happen when the money was first allocated.

    Get rid of CAP and get rid of the rebate and then all this wouldn’t happen anyway.

  20. So the problem then is with the Council and the EP not understanding their own budget rules then?

  21. The problem is that the EU has given £110 million for flood recovery aid. If the flood had been anywhere else, in any other country, that’s exactly what the people would have received.

    If the Council and EP had known this when the request was made would they have granted that cash? I think not.

  22. Nett income is £31 million. £31 million is being spent. The problem is what?

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