Saturday, March 28, 2015

Nigel Farage will cost the UK up to £146 billion a year, but so what?

Nigel Farage's Ukip economics is predicated strongly on two funding sources:  savings from leaving the EU, and the savings from cutting our aid budget.

So does Kippernomics stand up?

EU membership

Ukip assert that we pay £55million a day or £20 billion/y for our EU membership. 

This is indeed what we pay to the EU - our membership fee, gross.

However, the EU also gives us money back again, and the difference between these two figures is the net cost.

The excellent Full Fact site has looked at the figures, and find that taking into account money paid back to the UK, the net cost is about £33m/d or £12bn/y.

Government figures deal exclusively with money flows between Government and the EU, and their net cost for 2013 is £8.6bn/y.

And then there is the CBI's assessment of the cost/benefit of EU membership. Their conclusion is that the net benefit of EU membership to the UK economy is somewhere between £62 and £78bn/y. 
Call it £70 billion. 

To be absolutely clear, the Confederation of British Industry is saying that we stand to lose £70,000,000,000 every year if Nigel gets his way.

You really would think, wouldn't you, that some economist or political commentator would have picked up on this fact. But no. Why not? Because, of course, the CBI is a know-nothing leftist bleeding heart liberal greenie organisation...oh wait...they are what?...OK. Right. OK, the answer is, Because.

Anyway, the Open Europe think-tank says Britain would only lose £56bn/y if it left the EU, so the CBI is wrong.

So let's be generous to Nigel, and assume, for the sake of argument, that leaving the EU would make us £12 billion/y better off. 

Aid budget

Ukip also want to cut our aid budget, currently £10.3bn a year, by 85%. This will yield about £8bn/y.

So between socking it to EU bureaucrats and Ethiopian tribespersons, Nigel has raised £20bn/yr.

What will he do with that lovely £20bn/y?

Nigel has a habit of saying "We leave the EU and with the money we save, we will do X"
X being:
  • an extra 40% on defence annually. This would cost £19bn per year.
  • double prison places to enforce zero tolerance on crime. This would cost £4bn per year.
  • abolish inheritance tax. About £3bn a year.
  • Abolish National Insurance. This would lose around £50bn a year in revenue
Net cost of UKIP policies:     £76 billion/y
Net benefits ditto              :    £20 billion/y
Net hole in Nigel's stocking: £56 billion/y
Unless, of course, the CBI is right, in which case the net cost of Nigel's aspirations is £146 billion/y

But who cares? He is against immigration, he hates the EU, he smokes fags and drinks beer, and these are all character traits that tabloid editors and right wing libertarian commentators feel good about, so leave the poor guy alone.

See also: Thinking of voting UKIP? Read this first.

    1 comment:

    Bill Rigby and Shan Oakes said...

    Hi Richard,

    I see your point - maybe he should be left alone to wallow in nostalgia - for a world which never existed