June 28, 2017 by Paul Goldsmith
‘£350m to the NHS’ is one of the most controversial political slogans ever. Some say it was the ‘lie’ that duped people into voting Leave. Others say that it was just an example of what could be done with money that wouldn’t have to be paid to the EU anymore. Andrew Dilnot from the UK statistics authority wrote to the Leave campaign and called it ‘misleading’. Dominic Cummings, the strategic mastermind behind the winning campaign, says he will defend it to his dying day. In the course of writing our book, my co-author Jason and I found ourselves talking about the pledge in the picture more than almost anything else. Here’s what we found:
First of all, you have to split the slogan into two. The first part is the £350m a week figure, and the second part is the ‘let’s fund the NHS instead’ bit. Let’s talk about the first part first.
Britain weren’t members of what was then the European Community (EC) when the way the EU budget was funded was set. It was 1969 and it had been indicated that their application would be accepted, so then PM Harold Wilson asked if the UK could be involved in the negotiations and was unsurprisingly rebuffed.
The way the EC was funded was thus set in two ways: some of it would be through the tariffs (import taxes) collected from countries outside the EC when they tried to export into the trading bloc. It didn’t matter who imported the products, be it the UK importing lamb from New Zealand or Spain importing beef from Argentina, the tariffs were collected by the country that imports then sent to Brussels. The other part of the EC budget was from 1% of VAT receipts. The UK didn’t even have VAT when it joined, and had to change from the purchase tax (also called a luxury tax) to VAT, which, by the way, is far more difficult to target just at higher income customers.
Anyway, the recipients of the EC budget tended to be countries with large agricultural sectors, such as France and Italy, which both had over 20% of their economy in the agricultural sector. The UK, which had only 3% of its employment in agriculture, and thus had to import 50% of its food and raw materials, was therefore a contributor to this budget. At one point, in the late seventies, during its major economic struggles, the UK was the 7th largest country in terms of GDP but the 2nd largest contributor.
Margaret Thatcher spent the first five years of her premiership trying to get a ‘rebate’ on this contribution, and eventually succeeded in achieving a rebate of 66% of the VAT contribution. This rebate was never put into a treaty, and is voted on every seven years when the next budget is agreed. It was also reduced in 2005 when Tony Blair agreed it was unfair for the poorer Eastern European accession countries to be effectively subsidising the UK’s budget rebate.
Anyway, as the EU Referendum campaign approached the yearly contribution to the EU was £20bn, meaning around £350m a week. But of that amount, the rebate never actually leaves our shores (so there goes the ‘we send £350m’ argument) and then money comes back in the form of support for farmers, and subsidies and grants for a number of things. So actually the real net figure is about £10bn a year, or around £175m a week being sent to the EU. A clear cut case of the figure being wrong, right?
The Leave campaign argue that the ONLY figure that is definite and set in stone is the £350m a week that has to go to the EU. The rebate isn’t in any Treaty and has to be voted on every 7 years when the budget process occurs, and British PMs have often had to make compromises over the Common Agricultural Policy in order to maintain the rebate. Secondly, the subsidies and grants and money that comes back from the EU is at the whim of a Brussels bureaucrat, as opposed to being decided upon and distributed by the UK, or even local government.
The bit of the slogan about funding the NHS is just as controversial. This is partly because very few of the politicians leading the Leave campaign had previously shown much interest in the NHS. The CEO of Vote Leave was Matthew Elliott, who had led the Taxpayers Alliance beforehand, who are not big fans of spending on public services, like, say the NHS.
The Leave campaign argue that the language used here is very important. They were making the point that if the UK weren’t paying the money to the EU it COULD be spent on whatever we wanted to spend it on, our own priorities, like, for instance the NHS. They never once actively promised the money would be spent there. Remain campaigners aren’t buying that of course, and many Leave voters said that they genuinely thought £350m a week would go to the NHS the next day.
Remain campaigners like to use the £350m a week to NHS slogan as the reason they think the referendum result was inappropriate. They say it was won on a lie. My school had a highly prominent Remain campaigner who has been Europe Minister and had written books on the subject claim that the £350m/NHS must be a lie because it hasn’t materialised yet, despite this particular person being well aware that until Britain has actually left the EU the budget contributions still have to be paid, so of course that money can’t be spent on the NHS. So, a lie for a lie?
Somehow, the slogan on a bus drove the Remainers so mad that they were the main reason it disseminated so widely. A member of the Leave campaign remarked once that they had originally through that the Remain campaign would simply say ‘whatever the figure we sent to the EU, it’s a membership fee and we get ten times as much back etc etc. That would have neutralised the whole issue. Instead the Remain campaign spent so much time going on about how it was a lie that Leave found in focus groups that their voters were saying that they had only found out about the £350m a week the UK sent to the EU because the Remakn had told them about it!
Perhaps we will never all agree on the slogan on the bus, but hopefully I have persuaded you it it not as clearcut as you think.