The UK switching from EU membership to an economic free trade style agreement with EU countries could save annually net contributions up to £10 billion a year, with an EFTA membership of up to £8 billion a year savings. Since joining the EEC/EU, the UK has made net cumulative financial contributions of over £130 billion, and also had a cumulative trade deficit of over £400 billion – hardly a win-win agreement. In fact a trade deficit is more than an export of jobs; it involves less jobs paying income tax, lower government tax revenues in VAT, council tax, corporation tax and more. So a win-win agreement could result in a more even trade balance and more tax revenues for public services.
How would you spend it? If we said the current money returned is spent similarly to now, then the net contributions have an opportunity for used in a different way.
Here are a number of options:
1) Not borrow the money in the first place, to give to the EU, so reducing the national debt and interest. An obvious choice. It seems giving money to other EU countries, where people avoid paying taxes, and corruption in government spending, is not a good reason for UK taxpayers to make up the shortfall, since the solution in better behaviour is already within the EU country if they wish to improve.
2) Evenly spread the money across all government spending departments, e.g. education, health, environment, defence, pensions etc. It doesn’t seem right that the UK has been paying £ billions to the EU, including to Greece, where people have been retiring at 50 in sunny weather, while in the UK the government has not had enough money to give elderly extra winter fuel benefits to keep warm.
3) Give aid to Eastern European countries – continuing as now
4) Give aid to Southern European countries – continuing as now
5) Increase foreign aid budget – give money to the rest of the world
6) Or more focused use of the money e.g.
6.1 Reducing student tuition fees and outstanding loans
6.2 Increasing winter fuel payments to the elderly
6.3 Increase thresholds before people pay tax
Looking at this option in more detail:-
6.1) Currently there are around 250,000 new graduates a year in the UK ,with on average £35,000 debt, from tuition fees and maintenance grants. Before political union, i.e. moving from EEC (only economic relationship with European countries) to EU, there were no tuition fees. Tuition fees started in the 1990s. The amount of annual student debt is around £8.75 billion. If tuition fees were halved and outstanding loans gradually paid off in half, this could be done with the ‘Leave EU’ savings. In the summer of 2015, there was around £73.5 billion outstanding student loans. Since half could be paid off, i.e. around £4 billion a year, then it could take 10 years to pay off half outstanding loans, of £37 billion.
6.2) There are around 12 million elderly people who receive the winter fuel allowance, varying between £100 to £300. So an extra £50 could mean another £600 million a year. Easy to afford with the ‘Leave EU’ savings.
6.3) Increase threshold before people pay tax by £500 costs the Treasury around £2 billion a year. So this is also feasible with the ‘Leave EU’ savings.
It is also worth being aware that a reduction in regulations across the economy could be like a tax cut for business, and help the economy grow. Similar to a cut in fuel prices or reduction in interest rates. Since estimates of the cost of regulations have a range from 3% to 10% of the economy, the benefits could be considerable. This could lead to more tax revenue, so allowing even bigger reductions in student fees and outstanding loans, so freeing up younger workers purchasing power to be spent in the economy and not paying off debt, so helping create more jobs.
In conclusion, the windfall of around £10 billion savings from ‘Leave EU’ options is an opportunity, that can improve lives across all age groups in the UK, and help create better standard of living for millions.
For more information on the EFTA, European Free Trade Association option, see www.efta.int
For EFTA powerpoints, see: here or here
For the Bruges group.s polling showing 71% support for re-joing EFTA as opposed to 29% for stayting in the EU, see here
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