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Discussion > How Strong is the EU's Case For a Brexit Payment from the UK?

Sep 12, 2017 at 8:10 AM | michael hart

I was not even a teenager in 1973, but remember it being discussed in school. The idea of a Common Market to support food production and avoid the peaks and troughs of supply and demand, and hence price to the consumer, made sense then, and it still does. I was slower to spot how badly the EU was going, but otherwise agree with your post.

Sep 12, 2017 at 12:30 PM | It doesn't add up..
The UK Civil Service has always put self preservation and their own pensions first. I think the Civil Service is intelligent enough to cope with BREXIT, but it is not in the majority of their interests. I hope that there are sufficient with a "can do" attitude, and the "can't do that" attitude is weeded out.

Sep 12, 2017 at 2:10 PM | Unregistered Commentergolf charlie

The EU founding fathers were very ingenious in the way that they implemented their plan to create a Europe wide political entity. They started with the coal and steel union but this rapidly became the Common Market. This customs union meant tariff free trade for members within the union and tariffs imposed on those outside. It also defined the borders of the club and the rules that would govern trade.

The concept of competence was introduced. An exclusive competence meant only the EU has the authority to make the laws, a shared competence means that the nation state has the authority to make laws too, provided any existing or future EU laws have priority. There is a third category where the EU does not interfere. This has all but disappeared.

The EU is in charge of trade. It is illegal for a member state to make its own trade deals. It also has exclusive competence for borders. This means not just Schengen, but the EU borders too. Not many people realise that the EU has full control, if it wishes, over our border with the rest of the world.

When we started on this journey, competences lay with member states for most things. Gradually the sphere of EU involvement expanded and so too did the list of things for which the EU had supremacy. Transport, incorporating air travel, shipping, road and rail, employment law, communications, financial services, food safety, medical supplies and equipment, product specifications, health and safety, customer information labelling, environment, all of these and much more have become fully or partially controlled by the EU. Each and every one of these had EU legislation covering all the major aspects.

The EU internal market is the vehicle for integration and legislative control. The ECJ is the final arbiter. If the EU tweaks, for example, an electrical regulation, most people do not see it as new legislation or integration, but it is both.

This why most of our trade and many of our cross border activities will cease to be allowable on the day after Brexit unless continuity arrangements are in place.

This also helps to explain how the EU now controls almost every aspect of our lives without the public being aware of how it happened. I seriously believe that most of our politicians didn’t see it happen either. When David Cameron asked for an end to ever closer integration, Tusk wrote to the other ministers explaining that this would not apply to the normal evolution of competences. In other words, no change.

Countries desperate to benefit from EU protection, financial stability, political leadership, shared foreign policy and respite from endless military threats will no doubt benefit from EU membership. The UK, I believe, never needed or wanted to be drawn into this undemocratic web of creeping regulation and control. That is why so many voted to leave.

Sep 12, 2017 at 2:54 PM | Unregistered CommenterSchrodinger's Cat

Extracts from The Guardian 20th June 2017

"A large chunk of the money being asked for by the European commission was pledged by David Cameron, when he was prime minister, to the long-term EU budget for the period of 2014 to 2020."

Presumably true? If so, how much are we being expected to pay for the two (?) years we are not in the EU?

"But the EU, with the UK as a member, has also agreed to pay for programmes that will be implemented in the years 2019 to 2025 and possibly beyond, including road, rail and investment projects."

Is it possible for Cameron to have agreed to pay for for costs, so far in advance?

"Brussels further wants the UK to pay up to cover the costs of pension promises to officials and MEPs, and other long-term EU liabilities. If the EU’s loans go wrong, for example, the European commission wants the UK to play its part in covering the losses. These are known as contingent liabilities."

Why should the UK have to pay for EU Loans, or anything else going wrong, and what are these other "long term liabilities"?

Sep 12, 2017 at 5:37 PM | Unregistered Commentergolf charlie

A couple of additional points. I missed fisheries and agriculture as two of the major areas where the EU has exclusive competence. How could I forget the CAP and straight cucumbers?

The regulations grow like bindweed. Health provision like the NHS is not covered per se. However, employment law brings us the working hours directive which limits hospital doctors' hours. We are not allowed to test English language skills when recruiting doctors from the EU. Then we have control of products including all medical equipment. Medical implants are controlled separately. The French have been delegated the competence to test products for implant. Remember the breast implant scandal? Then we have drugs, medicines and all pharmaceuticals, clinical testing, etc. By the time you take these into account it doesn't leave much.

You can look up the competences on EU websites. The ones currently becoming EU competences (also called creating the single "xxxx" market) are digital, energy and financial.

Sep 12, 2017 at 5:40 PM | Unregistered CommenterSchrodinger's Cat

golf charlie:

"Extracts from The Guardian 20th June 2017

"A large chunk of the money being asked for by the European commission was pledged by David Cameron, when he was prime minister, to the long-term EU budget for the period of 2014 to 2020."

Presumably true? If so, how much are we being expected to pay for the two (?) years we are not in the EU?

Is it possible for Cameron to have agreed to pay for for costs, so far in advance?"

To which my answer is that IMO this is not true. It is the central point in my first post, which started this thread. It is worth reading the EU's Position paper "Essential Principles on Financial Settlement," which is to be found here:

As I have pointed out, one short paragraph in the EU's position paper, following on from the general principles, and being under the heading “Methodology for calculating the United Kingdom obligation vis-à-vis the Union budget” contains the sole legal argument advanced in the position paper, and is as follows:

“Through its approval of the successive Multiannual Financial Frameworks (MFFs) and the Own Resource Decision (ORD), the United Kingdom committed to fund a share of the Union obligations defined by the ORD rules in all its dimensions. In particular, through the adoption of the basic acts (legal base), each programme has been allocated a reference amount to be spent according to a financial programming over the period 2014-2020.”

The suggestion is, in effect, because the UK agreed to a budgetary methodology, and under that methodology, to budgets covering the period 2014-2020, then the UK is obliged to make all the contributions that would follow from the application of that methodology and the implementation of the budget to its end date of 2020.

This is not the same as the Guardian (and EU) claim that "A large chunk of the money being asked for by the European commission was pledged by David Cameron, when he was prime minister, to the long-term EU budget for the period of 2014 to 2020." I believe they are being economical with the truth.

Sep 12, 2017 at 7:17 PM | Unregistered CommenterMark Hodgson

The question of what the Brexit payment should contain is best answered by the lawyers and the accountants. I'm sure there are plenty of both on both sides.I suspect the EU list of demands can be sorted into three categories, "Go whistle", to quote Boris, maybe on a good day and OK, that's fair.

The ridiculous claims should be rejected, the fair obligations should be honoured and the intermediate category should be thought of as goodwill, depending on a number of other factors.

The other factors are things like this: We may wish to remain party to scientific frameworks and other EU initiatives. For example, the scientific framework known as Brite Euram was open to non-EU countries such as Switzerland. There are policing and intelligence communities and agencies such a Interpol that we should continue to support.

This extra expenditure can amount to significant sums but it could be money well spent. It offers another negotiating ploy since the EU will be desperate for any money it can recover and it could be in its best interests to secure voluntary contributions rather than alienate the UK by making outrageous ones.

Much of this will involve horse trading after the main deals have been struck, which underlines the stupidity of the EU trying to enforce negotiation by numbers as though each aspect of leaving is compartmentalised. How can we agree an Irish border protocol without any discussion of trans border trade?

Sep 12, 2017 at 8:30 PM | Unregistered CommenterSchrodinger's Cat

Sep 12, 2017 at 8:30 PM | Unregistered Commenter Schrodinger's Cat

I couldn't have put it better myself - thank you.

Sep 12, 2017 at 9:03 PM | Unregistered CommenterMark Hodgson

Sep 12, 2017 at 8:30 PM by Schrodinger's Cat

Sensible comments, but in your last paragraph, you describe their actions as stupid. For anyone wanting a fully functioning win-win agreement, it would be stupid, but they don't want that at all. For them, that outcome would be a disaster!

Hence their current behaviour.

Sep 12, 2017 at 10:56 PM | Unregistered CommenterRobert Christopher

Mark Hodgson & Schrodinger's Cat

Thank you for the clarifications and elaborations. The EU does seem to be depending on "goodwill" from the UK, to delay their cash flow crisis.

Presumably David Cameron's "Inner Circle", including some Civil Servants know what was said to him when he asked the EU for some gesture of goodwill in the run-up to Brexit.

Sep 12, 2017 at 11:29 PM | Unregistered Commentergolf charlie

"Jean-Claude Juncker has confirmed the EU will pursue a policy of ever-continuing expansion, create its own army, and force constituent countries to open their borders and join the beleaguered Euro in an speech which will only serve to confirm the decision of every Brexit voter. In his ‘State of the Union’ address to the European Parliament this morning, Juncker restated the EU’s commitment to an expansionist set of policies to further erode the sovereignty of member states; a platform which Remainers will find difficult to explain away."

He confirmed that the EU will create a ‘European Defence Union’ by 2025 – that is, an EU army:

“And I want us to dedicate further efforts to defence matters. A new European Defence Fund is in the offing. As is a Permanent Structured Cooperation in the area of defence. By 2025 we need a fully-fledged European Defence Union. We need it. And NATO wants it.”

If the EU anticipates needing to DEFEND itself, where is the offensive threat? The UK? More likely the streets of Europe.

Losing the UK's Armed Forces may be part of the "other liabilities" the EU want to be compensated for. Did the EU expect to be able to call on Aircraft Carriers, Nuclear Submarines, Gibraltar, Commonwealth Countries etc?

Sep 13, 2017 at 11:04 AM | Unregistered Commentergolf charlie

Minty: when will you accept that there is no “hard” or “soft” Brexit: Brexit is Brexit. We all went to the polls in June 2016 with that knowledge given to us; we were warned time and time again, often in sepulchral tones, but always a warning as to what it meant – leaving the EU meant leaving the single market and the customs union; leaving the EU meant restrictions on movement. We are only being told that there are these varying shades of grey, none of which really exist, by those in power who, by hook or by crook, want us to remain. Thus, they wield the threatening club of doom within the European market should we want to avail ourselves of the world market; these are the words spouted by the BBC and others in the mainstream media, most of whom are fully committed to remaining in the cosy club of elites; those in business who fear being alone (which seems ironic, considering how so many started), wield their money, and burden us with slow, protracted procedures within the courts in their desperate attempts to derail the will of the majority.

I had no trouble with the referendum; I ignored the doom-mongers of both sides and applied a simple question: did I want my country to be run by an elected bunch of incompetents, over whom I had the opportunity of ousting every few years or so; or did I want this country to be run by an UNelected elite of incompetent foreigners, most of whom are hostile to us and our ethos, none of whom I will never have any opportunity of ejecting from office.

That made my choice quite simple. Now, we just have to press Mrs May to effect the will of the majority, and to get this country independent of such malign influence that the EU holds over and against us. We owe the EU NOTHING! However, I am prepared to waive the debt of history that Europe owes us, and leave on amicable terms.

Sep 13, 2017 at 12:45 PM | Registered CommenterRadical Rodent

RR. I beg to differ. The question put to the public was "Should the United Kingdom remain a member of the European Union or leave the European Union?" These 16 words mean what they say on the tin, nothing more, nothing less, the rest is Tory manoeuvring and internal disputes. It said "European Union" nothing else. There are numerous european institutions we wish to stay with. Did the referendum differentiate between institutions? - other that the European Union itself, of course not.

Sep 13, 2017 at 1:20 PM | Unregistered CommenterSupertroll

That may have been the wording on the paper, Minty, but we were constantly barracked about what that meant – appearing as often as they could, all the political leaders were constantly haranguing us with warnings as to what that actually meant: it meant we would leave the customs union, leave the single market, and prevent (or at least give some semblance of control over) free movement. Yet we still voted to Leave; we wanted out; we wanted no truck with the "single market" (whatever that might mean); we wanted to be free of the customs union; we wanted some control of our borders again.

Perhaps you should consider the words of Jean Monnet, one of the founders of what was to become the EU, on the 30th April, 1952:

Europe’s nations should be guided towards the superstate without their people understanding what is happening. This can be accomplished by successive steps, each disguised as having an economic purpose, but which will eventually and irreversibly lead to federation.
If that does not give you cause to pause, I have no idea what could.

Sep 13, 2017 at 1:30 PM | Registered CommenterRadical Rodent

Supertroll, the wording was for Yes or No. It was not multiple choice, select what you want. You might have thought in a Democracy, the UK Electorate might have been asked before, but it did not happen in many other countries either:


National referendums on the European Union (2004)
Czech Republic Cancelled; never held
Denmark Cancelled; never held
France (55%) (with 69% turnout)
Ireland Cancelled; never held
Luxembourg (57%) (with 88% turnout)
Netherlands (62%) (with 63% turnout)
Poland Cancelled; never held
Portugal Cancelled; never held
Spain (77%) (with 42% turnout)
United Kingdom  Cancelled; never held

"A referendum was expected to take place in the United Kingdom in 2006 to decide whether the country should ratify the proposed Treaty establishing a Constitution for Europe. However, following the rejection of the Constitution by similar referendums in France in May 2005 and the Netherlands in June 2005, the UK vote was postponed indefinitely. The question was rendered moot when the constitution was superseded by the Treaty of Lisbon, which Parliament ratified in 2008 without holding a referendum."

This was after the EU's near disaster with Maastricht:

"A referendum on the Maastricht Treaty was held in France on 20 September 1992. It was approved by only 51% of the voters. The result of the referendum, known as the "petit oui", along with the Danish "No" vote are considered to be signals of the end of the "permissive consensus" on European integration which had existed in most of continental Europe until then. From this point forward issues relating to European integration were subject to much greater scrutiny across much of Europe, and overt euroscepticism gained prominence. Only France, Ireland and Denmark held referendums on Maastricht ratification."

The EU was forced on the many, by just a few. Call it Fascist or Communist Dictatorship if you like. But it is not Democracy for the people.

Only now are we finding out why the EU needs the UK. These vast sums of money were not mentioned by Remainers prior to BREXIT. Was that because Remainers had been kept in the dark too?

Sep 13, 2017 at 2:20 PM | Unregistered Commentergolf charlie

RR. What exactly do you have against a european superstate IF IT WERE TO BE demoncratic and respecting of regional differences? The Romans managed a good bit of it, as have, much later the USA. I know you voted against the lack of democratic accountability in the EU, but now you seem to have switched tack and are arguing against assembling a larger european political entity. I wonder if there were people thinking as you did before the original thirteen U.S. states combined. Those states differed enormously in religion and origin (almost half were german speaking).

Sep 13, 2017 at 3:14 PM | Unregistered CommenterSupertroll

RR. What exactly do you have against a european superstate IF IT WERE TO BE demoncratic
Sep 13, 2017 at 3:14 PM | Supertroll

It already is.

Sep 13, 2017 at 3:35 PM | Unregistered Commentergolf charlie

Sep 13, 2017 at 3:14 PM by Supertroll

Where are you going to find a democratic super state? :)

A collection of regional political entities using democratic methods would not be called a superstate.

The bubble has burst; the emperor has no clothes; the EU has peaked and we are set to have a period of Continental squabbling because no-one has the whip hand and they won't be subsidised by British money. Germany is still strong, but it is weaker than it was, and that is what matters. It isn't what the lawyers say - it is what the people want, and they don't want to be in abusive, controlling relationships.

Sep 13, 2017 at 5:14 PM | Unregistered CommenterRobert Christopher

GolfCharlie. All the complaints here are that the EU is not democratic whereas many also seem to be against the entire concept of a more united Europe whether it be democratic or not. I suspect the non-democratic elements in Europe will intensify with our departure; increasing size of the whole institution; and speeding up the imperative for integration might together make the whole institution unwieldy. Then Brexiteers will exclaim that the EU was even less democratic than was first thought. But it would have been our departure that removed the brakes.

Sep 13, 2017 at 6:01 PM | Unregistered CommenterSupertroll

We owe the EU NOTHING! However, I am prepared to waive the debt of history that Europe owes us, and leave on amicable terms.

Sep 13, 2017 at 12:45 PM | Registered CommenterRadical Rodent

Well.... I think they did help drive down the cost of alcohol in the supermarkets, if only because we had to lower our alcohol duty (taxes, that is). I am sure we will remember that the next time we are trying to get the United States on board with helping clear up their mess.

Sep 13, 2017 at 7:08 PM | Unregistered Commentermichael hart

These vast sums of money were not mentioned by Remainers prior to BREXIT. Was that because Remainers had been kept in the dark too?

Sep 13, 2017 at 2:20 PM | Unregistered Commentergolf charlie

Fair comment. The price demanded for leaving apparently dwarves the amount that Brexiteers claimed, or the amount the EU was prepared to admit we are paying. As with all these things, the numbers don't match up.

Sep 13, 2017 at 7:22 PM | Unregistered Commentermichael hart

As with all these things, the numbers don't match up.

Sep 13, 2017 at 7:22 PM | michael hart

Could be why the EU is so accepting of Climate Science.

Sep 13, 2017 at 7:37 PM | Unregistered Commentergolf charlie

Although I think I have demolished the EU's claim for an additional payment from the UK when (if) we leave the EU, it might be worth looking at what they want from us, as set out in their Position paper "Essential Principles on Financial Settlement" of 12th June 2017.

The first part is as follows:

"The Union obligations [to which the UK is expected to pay] stem from:

(1) The Reste à Liquider ("RAL") from the successive Multiannual Financial Frameworks during which the United Kingdom was a member of the Union;
(2) The financial programming for the period between the date of withdrawal of the United Kingdom and the end of the MFF 2014-2020;
(3) The liabilities as recorded in the consolidated accounts of the Union which are not balanced by corresponding assets, i.e.:
a. Pensions and other employee benefits,
b. Provisions,
c. Financial liabilities not related to borrowings,
d. Payables and accrued chargesother than RAL.
(4) The contingent liabilities disclosed in the consolidated annual accounts;
(5) The specific costs related to the withdrawal process."

Looking at these in turn:

1 & 2 overlap, and are different aspects of the same thing, being based as they are on the essential claim that because the UK was an EU member participating in the budgetary process, we must be liable for our share for the whole budget period whether or not we remain a member. I think, if I understand it correctly, that "The Reste à Liquider ("RAL")" represents what Supertroll referred to in the golf club analogy - of being a member of the club when it was agreed that the club house should be rebuilt or improved. Do you still have to pay for the improvements even if you cease to be a member? This is how the EU describes the concept of "Reste à Liquider ("RAL")" here:

"What is the "reste à liquider" (RAL)?
The RAL is the sum of outstanding commitments, commitments agreed to but that have not yet translated into payments. Long term budgetary commitments lead to the existence of amounts of commitments remaining to be paid out (RAL). The phenomenon is similar to when a contract is signed, e.g. to build a house, the commitment is being made, but the construction company will only be paid according to the progress of the work.

Where necessary and in line with the regulations, the Commission makes so called de-commitments (annulations of outstanding commitments). As long as there are multiannual programmes approved in total, but paid for in several subsequent years, RAL is quite normal and to be expected.

The so-called "potentially abnormal RAL" which concerns so called "dormant" commitments in respect of which no payment has been made for the last two financial years, as well as old commitments that have been in the budget for at least five financial years, form only a minor part of the overall figure. These cases are monitored carefully and usually prone to early de-commitment.

The best way to ensure the reduction of the overall RAL is to ensure good implementation of payments, particularly in the big spending projects of cohesion policy. The Member States who have the responsibility for management of most of the EU funds have an important role to play in this. Currently the payments claims sent to the Commission by Member States are accelerating. The Commission needs the appropriate payment appropriations to reimburse Member States. Otherwise the RAL would increase."

The 3rd part of the claim ("The liabilities as recorded in the consolidated accounts of the Union which are not balanced
by corresponding assets") seems to me to be a complete try-on. To the extent that liabilities are not balanced by assets strikes me as entirely the problem of the continuing EU and not an issue for the UK. If the EU has not arranged for assets to cover liabilities, that is an illustration of its incompetence, and we should not have to pay for that. Pensions and other employee benefits should be fully-funded. If they are not, that really is the EU's problem as the employees in question are EU employees, and nothing to do with the UK if and when we leave.

There is a footnote against "provisions" as follows: "E.g. provisions for the decommissioning of the Joint Research Centre nuclear sites." Assuming that is an ongoing EU decommissioning project whose ongoing nature would exist whether the UK leaves or not, again it seems to me that that is entirely the EU's own issue.

Similarly "Payables and accrued charges" are footnoted thus: "E.g.: own resources payables." I confess I am none the wiser.

The fifth item ("The specific costs related to the withdrawal process") seems to be the fairest of the lot, and is explained by another footnote: "This should include, for example, the costs related to the termination of contracts for housing agencies that have to move as a consequence of the withdrawal, the costs related to the move itself and the costs related to installation in the new location."

It seems fair enough at first blush, but there is a counter-argument, to the effect that just because the UK is leaving the EU, the EU doesn't have to relocate staff and close offices in the UK on the day we leave. UK law has a well-recognised principle which obliges the party seeking compensation to mitigate their loss, so the obvious response (if they didn't expect the UK to pay all the costs) from a well-run and financially-concerned EU would be e.g. to wait until the lease on its UK building expires and relocate then, which gives much more time to plan ahead and reduce the costs of the exercise. After all, the EU has plenty of offices and staff in non-EU countries, so why the need immediately to relocate staff based in the UK?

The good news (to meet another point raised by Supertroll) is that they do say:

"The amounts for items (1), (3) and (4) should be extracted from the consolidated accounts of the Union established at the time of withdrawal and audited by the Court of Auditors.
The amounts for item (2) should be extracted from the latest updated financial programming."

Audited EU accounts - now there will be a novelty!

Sep 13, 2017 at 7:58 PM | Unregistered CommenterMark Hodgson

…a european superstate IF IT WERE TO BE demoncratic… [sic]
And therein lies the rub, Minty… (BTW, like the typo that GC picked up on. An unintentional error? Or your attempt at humour, again?) Assuming it was a typo, I will contest that the EU is NOT democratic; we are being ruled by an unelected elite, who cannot be held to account; when caught with their hands wedged firmly in the till, the Commissioners happily admitted that they were corrupt: “So, what are you going to do about it?” they challenged. In typical EU way, nothing was done, and the likes of Kinnock continue to enjoy their huge tax-free incomes with absolutely no accountability. No wonder they want to protect themselves; no wonder the likes of Juncker, Barosso, von Rompuy, et al want to keep such activities concealed. The popinjays in the echo-chamber of the European Parliament, whom we have elected, are but window-dressing, with no authority whatsoever over the commissariat that is beavering away behind the scenes, ensuring that the freedoms that our ancestors sacrificed so much for that we have enjoy for decades – or, in the UK, centuries – are slowly being chipped away. They read George Orwell’s most famous 2 books not as warnings of what would happen, but as instruction manuals for what they want it to be.

What we have, now, cannot be changed, from within or without; there are simply too many vested interests in maintaining the status quo. IF you do want a European superstate, you will need to rip down the present edifice, sterilise the ground, and rebuild, with the proper checks and balances that the founding fathers of the USA were wise enough to establish – aided, undoubtedly, without interference from political lobbying, press harassment or baying mobs screaming for their own special treatment. It is unlikely that what was established by the score or so who set up the US constitution will ever be able to be replicated in today’s mad world.

Sep 13, 2017 at 11:10 PM | Registered CommenterRadical Rodent

World's banks to EU .."The Euro is going down the tubes , how are you going to cover the $Xbn shortfall ?"
EU "Don't worry we've got it covered"

EU to UK "We need to pay us $Xbn or we'll break yer fingers"

Sep 13, 2017 at 11:22 PM | Registered Commenterstewgreen

Audited EU accounts - now there will be a novelty!

Sep 13, 2017 at 7:58 PM | Unregistered CommenterMark Hodgson

I'm glad you said it first, Mark!
I think part of the UK's problem is that we never really had sufficient people up to playing the dirty political game that was required merely to stand still in the EU, never mind succeed. We ought to have a few more people with nous from the City, able to pull a bit of financial wool over peoples eyes to maybe approximate a fair Brexit deal?

Sep 14, 2017 at 12:38 AM | Unregistered Commentermichael hart