Budget 2010 - Treasury Contents

Supplementary written evidence submitted by HM Treasury

  1.  The Treasury Select Committee (TSC) asked for more detail on why "net expenditure transfers to EU institutions" are £4.5 billion higher in 2010-11 than in 2008-09.

  2.  There are a number of factors that can influence the size of the UK's contribution and as a result contributions can be volatile from year-to-year. It is worth noting that UK contributions in 2008-09 were relatively low. In 2007-08 net expenditure transfers were £5.4 billion, some £2.3 billion higher than in 2008-09. The full recent run of numbers is as follows:

£ billion2007-08 2008-092009-10 2010-11

UK Net Expenditure Transfers to EU Institutions 7.6

  3.  Net expenditure transfers consist of Gross National Income (GNI) based contributions less the UK abatement.

  4.  In 2008-09 there was a particularly large £1 billion one-off reduction in UK contributions, due to revisions in VAT and GNI data for all EU Member State for earlier years and due to the return of significant levels of budget under spend. This is a key reason behind the fall from 2007-08 to 2008-09.

  5.  There are a number of factors underpinning the increase in spending in 2010-11. They are:

    — programmed rise in the size of the EU Budget over the course of the period 2007 to 2011; and

    — an increasing share of resources being allocated to the New Member States, a reallocation of resources that the Government supports.

  6.  The UK supports enlargement, which will create new trading opportunities and new jobs. That is why the December 2005 agreement on the EU Budget set out that the UK's abatement will be "disapplied" over time on non-agriculture spending in the New Member States. This is the mechanism by which the UK maintains its Budget abatement while supporting the enlargement of the EU. The estimated extra costs of the December 2005 EU Budget agreement were provided to the House of Commons in answer to a question by the Member for West Dunbartonshire on 20 December 2005.

31 March 2010

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