Why the £50bn ‘divorce bill’ offer is a good move

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December 4, 2017 by Paul Goldsmith


People in the UK just don’t understand what negotiation is. Let me help them. In a negotiation, both sides go in with what they want, and eventually accept what they need. The aftermath of a good negotiation, particularly one that then has to be implemented successfully, should see either a ‘win-win’ situation for both sides, or at the very least both sides feeling an equal amount of small disappointment at what they had to concede.

So it is with the reported offer Theresa May will be making today to Donald Tusk of an arrangement to settle Britain’s ‘liabilities’ as they leave the EU. I put that word in speech marks as a House of Lords Committee has confirmed that Britain actually has no legal obligation to pay anything into the EU should it leave without a deal. This is because Article 50 was drafted without any mention of the need to pay a divorce bill, indeed without mention of any obligations at all. Article 70 of the Vienna Convention on the Law of Treaties thus says that since the Treaty the UK is withdrawing from (The Treaty on European Union – better known as the ‘Lisbon Treaty’) makes no mention of money, the UK owes nothing legally.

This actually gives the UK considerable leverage. In fact it is just about the only area of this negotiation in which the UK does have leverage. The offer May will be making includes the money it would have paid into the EU until end of the current EU budget period (fair enough), plus some pension liabilities that will extend into the future. It adds up to about £2 billion a year over 25 years – a long way from the obligation to pay £20 billion a year (minus rebate and EU grants) the UK currently pays. The money will be conditional on the completion of a successful trade deal or agreement around the customs union and single market between the EU and the UK. This means that unlike previous offers, the EU cannot simply swallow the offer and move on as if nothing has been offered (see Speech, Florence (Sep 2017)!). If no deal is made between the UK and EU, the EU may not get that £50bn, and its negotiators will need to explain to the nation states why they are going to have to stump up the money instead.

The reaction in the UK ranges from the ridiculous to the, well, ridiculous. Some Brexiters are talking of people ‘going nuts’ about having to pay anything into the EU in future. But a successful negotiation was never, ever going to involve the UK not having to pay anything in return for a deal, and to pretend otherwise is ridiculous . Some Remainers are ridiculously comparing the £50bn over 25 years to the £20bn a year they were perfectly happy to pay to Remain in the EU. They should be happy that the Government is now engaging properly with the demands of the EU, which was an important step.

There will be more concessions to come, and the Government is in sore need of a proper communicator to explain them to the nation. In the absence of one, we do need people on both sides of the debate in the UK and of the negotiation with the EU to get real about their demands.

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