We subsidise BAE more than we contribute to the EU every year


1:45 pm - December 1st 2010

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contribution by Tim Fenton

Much is made by the anti-EU brigade of the supposedly huge cost of bodies like the European Parliament. But, in reality, this body costs each EU resident around 3 Euro a year, which at today’s exchange rate is two and a half quid.

The UK’s net contribution to the EU budget for 2010 was 3.3 billion – that’s pounds, rather than euro.

So we pay 55 quid per resident of the UK towards the EU budget. And there are plenty of politicians and hacks out there working themselves into a terrible froth about it. But none of them wants to even raise a peep about our rather larger contribution to the beast that is BAe Systems.

Thanks to our friends at the Guardian, we now know that every UK resident gave 64 notes last year to this apparently deserving cause, the total being nearly four billions.

This is more than the budget of entire Government departments.

Moreover, the total MoD spending required a contribution from each resident of around four hundred pounds.

Yes, the security of the UK is important – crucially so. But does the bill have to be so large? And why aren’t the usual Europhobic suspects on the case of spending that makes our contribution to the EU look rather insignificant?

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Reader comments


A very strange piece of whataboutery.

I see you don’t bother to defend the size of the EU budget.

On BAE I thought you guys liked govt intervention to support jobs?

But, erm, what not end *both* subsidies?!

It’s not simply that the EU demands money but what it does with it such as regulations that themselves have significant costs, (obviously it is not as simple as X regulations = Y costs given that some, (though not all), of these regulations would have to be duplicated by us anyway).

As to the general subsidy point; by all means stop subsidising BAE, (and it’s a joy to hear anyone on the left decrying subsidies), and stop giving money to the EU as well.

3. Anthony Zacharzewski

I’m a true blue-with-ring-of-gold-stars Europhile, but this isn’t a great argument, I’m afraid.

The important unanswered (unasked) question is what we get for the money we spend. Our EU contribution is the table stake for being involved in setting common regulations, getting access to the market, being a bigger global player etc. Personally I think it’s worth it, not least when you see Norway and others having to chuck in hundreds of millions of euros (and subsidising farmers more than the EU does) without having a say in the regulations they eventually have to implement.

By the same token, we spend a ton on subsidising the railways, part of which goes in waste or into Network Rail’s expensively-tailored pockets, but we also get green transport out of it, so I’m a (cautious) supporter.

Admittedly I don’t imagine we get much I’d like for subsidising BAe other than defence jobs, but I’m sure there are more countervailing benefits than I can see. That’s what we’d need to know to make the comparison.

I am not sure how much we spend buying from BAE counts as a subsidy. If they are overcharging us and we could buy the same products overseas cheaper, yet, choose to spend on domestic suppliers to keep defence jobs here that would qualify as a subsidy. Although you can’t just take the whole budget and count it as a subsidy. Presumably we get something in return for the spending. I can’t see how there is an analogy with the EU. We are net contributors to the EU and get a trade deficit in return.

“Our EU contribution is the table stake for being involved in setting common regulations…”

Wow, even a Europhile compares these negotiations to a poker game.

We don’t need to go the Norwegian route anyway. Switzerland pays substantially less to the EU in return for access to its markets.

6. Luis Enrique

yes, since when does buying goods from = subsidizing ?

if you want to compare categories of government spending, why not compare the defense budget to the “EU budget”? We all know part of the defense budget goes on buying planes, ships and bullets.

“and it’s a joy to hear anyone on the left decrying subsidies)”

People on the left (Mark Thomas, CAAT, Anti-war stuff) have been complaining about subsidies to the arms trade for decades.

“since when does buying goods from = subsidizing ? ”

well suppose I am the government. There are printer cartridge manufactures in marginal consituencies. So I spent £2000 per cartridge for each department. The campaign against the cartridge trade complains that this is a subsidy. Are they essentially correct?

9. Luis Enrique

planeshift

alright, directing government spending for political gain and/or paying too-high prices are forms of subsidization. However the Ministry of Defense total spending on military hardware does not equal a subsidy, unless the Ministry of Transport’s spending on construction does, and the NHS’s spending on drugs and equipment does, etc.

and it’s a joy to hear anyone on the left decrying subsidies)

Most subsidies are to corporate vested interests. Large parts of the left have been against them for decades

11. Luis Enrique

Richard W says it better

If we’re going to make pointless and misleading comparisons, shouldn’t we at least try to be consistent? If we’re looking at net contributions to the EU (ie: the gross contributions minus the receipts) shouldn’t we look at net payments to BAE (ie: gross payments minus the value of goods received in exchange)?

Gross contributions to the EU are in the region of £10bn a year incidentally.

You are also forgetting other forms of subsidy not mentioned in the article – export credit guarantees, use of ministers/royals as salesmen, overseas aid conditional on BAE winning contracts for overpriced junk etc.

14. Luis Enrique

planeshift

yes those too, but it doesn’t matter how many forms of subsidy you think of, it will never be correct to describe total spending as a subsidy. an aircraft carrier costs £X billion, what % of that is ‘subsidy’ and what % is cost of aircraft carrier?

why not get it right? see how owen barder has edited his tweet of this to “spend” not subsidize. it’s a matter of changing one word in a headline. The substance is the same, and one avoids coming across as a ignorant and hyperbolic

Good piece.

First it is very true, and second, nothing like welfare for global elites to bring out the tory trolls to defend the rich welfare state.

The same Charlie’s who begrudge a penny going to the poor can’t wait to line up on here to support welfare for rich people. Prince Andrew giving a speech to a bunch of business men and telling them that the press should stop investigating the back handers to get the various deals show how much time the rich have for the rule of law.

We should always remember that these same business man who gorge for the govt teat wish to pay no tax. The plebs should pay the taxes, and be grateful for it. The global elite behaves more and more like the French aristocracy. Their greed and their selfishness gets worse by the day.

Sharpen up your guillotines folks, slavery for the masses is coming.

@14 Luis Enrique: “yes those too, but it doesn’t matter how many forms of subsidy you think of, it will never be correct to describe total spending as a subsidy. an aircraft carrier costs £X billion, what % of that is ‘subsidy’ and what % is cost of aircraft carrier?”

I think that it is even more complicated than that. It would be possible to equip the UK armed forces entirely by purchasing from overseas companies. The UK armed forces/government do not do this for a variety of reasons:

1. Armed forces do not wish to depend solely on a foreign supplier, particularly for consumables. Even if goods are more expensive, it is necessary to buy a proportion from a local supplier in order to maintain a supply chain.

2. Local suppliers argue that they can add value or produce things that are more relevant to UK/European defence requirements. I can think of examples where this argument is fairly solid (armoured vehicles) or pretty dodgy (aircraft).

3. Defence spending allegedly supports technical research. It would be tricky to measure how this subsidy works on our behalf. Some research money goes into the university system from suppliers, other money is spent internally. Even if something useful is discovered, research results may not be available to civilians.

4. Corruption.

To be fair, Tim Fenton doesn’t mention “subsidy” in his article here or in the original on his blog. Another tabloid headline.

Charlieman, may I add a fifth point to your list? Politics.

BAE Systems runs eleven businesses in the UK with substantial numbers of employees (albeit less than there used to be, I guess). Tory troll Labour MP Graham Jones, for example, says BAE Systems is very important to Lancashire.

Sally may be surprised to learn that not all BAE Systems employees are rich.

And in 2008,

Oxford Economics has released a new study dealing with the economic impact of BAE Systems on the UK economy. The report finds that BAE Systems is a substantial contributor to the UK economy. BAE Systems employs 35,000 people with direct impacts including value added of £2.4 billion, exports of £4.1 billion, and a tax contribution of $500 million. However, when indirect and induced impacts are included, BAE’s total economic impact is far greater than this. This work updates the results of past studies conducted in 2005 and 2004.

BAE Systems total contribution to UK employment – direct, indirect and induced – was 105,300 in 2006 … 12% of employment in the North West (nearly one job in eight) in knowledge intensive production sectors is directly generated by BAE Systems.

Who says Labour MPs are above defending corporate subsidy ukliberty?

Sunny,

Who says Labour MPs are above defending corporate subsidy ukliberty?

I don’t know, who?

“BAE Systems runs eleven businesses in the UK with substantial numbers of employees ”

So you are in favour of corporate welfare then, How much should Tesco now get?

sally,

“BAE Systems runs eleven businesses in the UK with substantial numbers of employees ”

So you are in favour of corporate welfare then,

I have no opinion on it.

What do you mean you have got no opinion on it.

Why are you writing on this thread then?

I don’t actually think it makes much sense to think of all government spending as a subsidy to the recipients. The key consideration should be are we overpaying to corporates like BAE for what they supply us. The fundamentalist free marketeer should say put it out to competitive tendering and spend the money that way. So what if China or Iran win the contract. It would almost be worthwhile just to get the Daily Mail frothing. Moreover, the unions would be outraged if we did not spend the money domestically. However, defence jobs are a cost not a benefit. So, if we are spending more buying from BAE than from foreigners then BAE shareholders are receiving a taxpayer subsidy but so are the defence workers.

Where the fundamentalist free market ideology breaks down is in the need to maintain a supply chain if you are going to have an independent defence budget. Once the technological know how is gone it is gone for good. Naval shipyards can’t just be closed and reopened when a foreign supplier lets you down. There probably is a fair degree of corporate welfare involved in defence spending. Defence contractors are notorious for inflating the price of products when selling to their domestic governments. Toilet seats costing $2,500 and pens which apparently cost $500 are just some of the absurd rip-offs the patriotic US defence suppliers have imposed on their government.

The Canadians had a similar discussion whether they should build their own jets or buy them from abroad.

http://www2.macleans.ca/2010/09/15/of-jobs-and-jets/

http://worthwhile.typepad.com/worthwhile_canadian_initi/2010/09/building-f-35s-in-southey-sk.html

sally,

What do you mean you have got no opinion on it

Why are you writing on this thread then?

It seems to me it would be impolitic for politicians to risk 105,300 job losses, particularly if those jobs are concentrated in particular constituencies, by suggesting we “entirely equip the UK armed forces entirely by purchasing from overseas companies”. That is why I suggested to Charlieman he might include it in his “variety of reasons” that our armed forces / government don’t “entirely equip the UK armed forces entirely by purchasing from overseas companies”. Put plainly and simply, no sane MP or candidate near such areas would suggest buying exclusively from overseas unless they didn’t want to win the next election.

As for whether or not we should be ‘subsidising’ or ‘spending’ to keep all those jobs, I do not know. I just don’t feel I know enough. What about you? Do you feel you have enough knowledge and wisdom to come to a reasonable opinion?

I also find it interesting that the OP and those who agree with him implicitly suggest (perhaps unintentionally) that we should ‘subsidise’ those jobs – particularly as they are ostensibly on the Left.

(It is but one of many interesting points made in a book Luis recommended that the cost of ‘subsidising’ US jobs in the cotton trade costs the US taxpayer far, far more than the employees get in wages, IIRC, but they continue to be subsidised because it is politically expedient.)

edit:

I also find it interesting that the OP and those who agree with him implicitly suggest (perhaps unintentionally) that we should not ‘subsidise’ those jobs – particularly as they are ostensibly on the Left.

“implicitly suggest (perhaps unintentionally) that we should not ‘subsidise’ those jobs ”

The reason is simple – we are against the arms trade. A subsidy for something socially useful would be supported. The fact that 100,000 jobs – conveniently located in marginals (lesson here for anyone in business) – may be at risk is of course a downside, but as Worstall keeps telling us – the economy creates 1.5 million jobs a year (and destroys more or less the same amount plus or minus half a percent or so).

@23 Richard W: “Defence contractors are notorious for inflating the price of products when selling to their domestic governments. Toilet seats costing $2,500 and pens which apparently cost $500 are just some of the absurd rip-offs the patriotic US defence suppliers have imposed on their government.”

Tut, Richard W, you disappoint me. The ploy of paying fictitious invoices to disguise real purchase intent was revealed to us many years ago in a reliable source, the film “Independence Day”:

“Julius Levinson: You don’t actually think they spend $20,000.00 on a hammer, $30,000.00 on a toilet seat do you?”

That is not to say that rip-offs do not exist. A manufacturer of standard electronic components might produce a run that are encapsulated in a different colour plastic and with a different product code that identify them as military grade. The extra markup for this will be 10 fold. But for the mega-inflated bills, the people signing the purchase order and the people submitting the invoice are both in on the scam for whatever reason.

It Would be genuinely worrysome to lose the deathtec that has defined and enabled us in the last few centuries but we are a busted flush in terms of global influence and subsidising bae beyond all economic reason may one day result in our becoming western europe’s answer to north korea

29. Robin Levett

ukliberty #24:

Do you feel you have enough knowledge and wisdom to come to a reasonable opinion?

Addressed to sally…

@10 Sunny,

“Most subsidies are to corporate vested interests. Large parts of the left have been against them for decades”

Is there any hope the left is ever going to work out the correlation between corporate vested interests and the big state that the left always seem to support?

You see something’s killing the chickens, and all you ever want to do is give more power to Mr Fox the chicken-coop guard.

It is the state which enables the corporate vested interests. Indeed, historically the state and the vested interests have been essentially the same people.

It was the free trade movement that challenged this cozy stitch-up between the British oligarchy and the British government. Protectionism and mercantilism are policies which support vested interests at the expense of everyone else. And yet, when people call for genuine free trade, they are attacked by the left for supporting vested interests!

31. Leon Wolfson

@5 – And the Swiss get considerably less access. Several million working-age British people would come back here as a direct result, and a LOT of retirees as well…

@31,

err… why? Are you seriously suggesting Spain etc would expel all British citizens if we left the EU? Has the Spanish government, or any other, ever said this? Or are you suggesting all the Brits will be ethnically cleansed? Or what?

33. Leon Wolfson

@32 – I’m suggesting that standard immigration rules will be applied.

Of course they’re not going to let a favoured position stand for nations whose government has withdrawn from the treaties which established that favoured position, especially when the nation is busy setting up barriers against foreigners itself.

@ 33,

“Of course they’re not going to let a favoured position”

There’s no ‘of course’ about it. You’re just making an emotive statement, which you cannot back up. Those who are calling for us to leave the EU are not calling for an end to trade and co-operation with our neighbours, nor are we calling for ethnic cleansing of EU nationals, nor should we expect other EU states to implement such a policy against our nationals.

@33 cont.

besides, ‘standard immigration rules’ are that people can come and go between the UK and the EU countries. There’s no reason for this to change on our part. The aim would be to leave the EU in an amicable way. If such a thing is unthinkable, it really drives home the necessity to leave as soon as possible!

36. Leon Wolfson

@35 – You’re assuming no ill will. You’re assuming no attempts by countires to capitalise on the situation to Britain’s detriment. You’re assuming a bunch of additional treaties which would be necessary if those people were NOT to have to leave….

Piles and piles of assumptions. The EU would have every reason to give us, at best, the status of Norway, having to implement 70-80% of EU law with no say in it. And I don’t believe they’d give us anything nearly as good, especially considering our non-participation in Schegnen – Ireland would not be able to keep the CAP, so there would be an external barrier there as well…

(And Scotland would leave and join the EU itself, and…)

37. Leon Wolfson

CAP? Er, I mean CTA.

You mean we spend money on British firms and jobs?
More than we shovel down an Ill-deserving, ungrateful, European black hole?
Oh dear…never mind!

Why not an article on the suspected 20,000 polygamous Muslim ‘marriges’ with countless benefits being paid to multiple wives, homes and children of Muslim men in the supposed secular/christian, 21st century, uk?

@36,

“You’re assuming no ill will. You’re assuming no attempts by countires to capitalise on the situation to Britain’s detriment.”

Well, to an extent I’m assuming that our leaving the EU could be achieved without a trade war, which would benefit neither side, certainly not the rest of the EU, with whom we have a trade deficit.

Besides, as I said above, if it really is the case that Britain leaving the EU is, or will soon be, tantamount to the Southern states leaving the USA in 1861, then the EU really has gone too far! Therefore, the ‘ill will’ which you conjure with is an added reason to leave now.

Personally, I have no ill will towards the people of the other EU countries. I don’t even have particular ill will towards Brussels, but only for the British political establishment which has implemented the EU agenda over the heads of the British people.

40. Leon Wolfson

@39 – The ill-will is nearly-entirely our fault. Britain has been unpleasant and obstructive to many EU measures,.

And “over our heads”, right. That would be the EU parliament, doing a MUCH better job of defending my rights than Westminster

Also, do remember that the ECHR is not an EU institution.

@ 40:

“The ill-will is nearly-entirely our fault.”

Yeah, bloody Brits, going around and making the second-biggest net contribution to the EU budget. Outrageous!

“And “over our heads”, right. That would be the EU parliament, doing a MUCH better job of defending my rights than Westminster”]

How?

@40

“Britain has been unpleasant and obstructive to many EU measures,”

More EU mythology. Can you back it up with examples? Would you care to compare our government to the French government on this question? I think you’ll find the French have been far more obstructive.

43. Leon Wolfson

@43 – It’s not only *governments*…

@41 – Let’s start with their opposition to measures which are going to weaken the perception of copyright among European youth and hence directly attack the rights I need to make a profit, while the British government takes hard-line stances…

There was something really weird on the BBC this afternoon when the BAE job losses where announced. There was a guy who looked and sounded exactly like David Davis, even the caption read ‘David Davis’ whilst he was speaking. However, although this guy was speaking in the same cadence as ‘our’ David Davis, the words coming out of his mouth where completely garbled. Had it bean ‘our’ David Davis, his speech would have been about private business knowing best, government not picking winners, living beyond our means, people being paid too highly and therefore uncompetitive in the World economy. Instead this guy (the one that looked exactly like David Davis) was talking about ‘us’, looking through the figures. He wants an MP to ‘look through the figures!!!!!!!’. The arch free marketer and deregulator in chief now believes in State intervention to the extent that an MP should be allowed to look through the books to see if the board of BAE systems have made ‘a mistake’.

Funny that, eh? Funny how when jobs are ‘lost’ in every other industry the answer is to move on and shut the fuck up? Right up until it is their own constituencies that are in the mire and State subsidy is immediately thrown onto the table.

Surely the MP for the area should be demanding that some temp agency company should be drafted in to find these people gainful employment in retail or whatever?

I wonder how many of the people who lost their jobs today voted for ‘austerity’ last year? I wonder if those in their late fifties where looking for ‘workfare’ for the unemployed last year? I wonder if they still think like that?

Just a thought.

@ 43:

“Let’s start with their opposition to measures which are going to weaken the perception of copyright among European youth and hence directly attack the rights I need to make a profit, while the British government takes hard-line stances…”

Yes, let’s start with that. And then let’s continue with…?

@43 – I’ve given an example of a major issue. You’ve dismissed it. Well, not bothering to discuss with-evidence with you any more, then.


Reactions: Twitter, blogs
  1. Liberal Conspiracy

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  5. Oliver Cooper

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  33. Owen Barder

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  35. Matthew Greenall

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  38. Carl Baker

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  41. Martyn Everett

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  42. Patrick Corbett

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  45. Mabon ap Gwynfor

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  59. Peter

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    RT @libcon: We subsidise BAE more than we contribute to the EU every year http://bit.ly/eTSKOK

  62. Paul Hardcastle

    RT @libcon: We subsidise BAE more than we contribute to the EU every year http://bit.ly/eTSKOK

  63. David Smout

    RT @libcon: We subsidise BAE more than we contribute to the EU every year http://bit.ly/eTSKOK

  64. Collis Gretton

    We subsidise BAE more than we contribute to the EU every year | Liberal Conspiracy http://t.co/P73L6up via @libcon

  65. Dick Wolff

    RT @libcon: We subsidise BAE more than we contribute to the EU every year http://bit.ly/eTSKOK

  66. manishta sunnia

    RT @libcon: We subsidise BAE more than we contribute to the EU every year http://bit.ly/eTSKOK

  67. RCT UNISON

    RT @libcon: We subsidise BAE more than we contribute to the EU every year http://bit.ly/eTSKOK

  68. Carol Clarke

    RT @libcon: We subsidise BAE more than we contribute to the EU every year http://bit.ly/eTSKOK

  69. sarah king

    RT @libcon: We subsidise BAE more than we contribute to the EU every year http://bit.ly/eTSKOK

  70. Spir.Sotiropoulou

    We subsidise BAE more than we contribute to the EU every year | Liberal Conspiracy http://t.co/R4QsL9r via @libcon

  71. Sam Hardy

    RT @libcon: We subsidise BAE more than we contribute to the EU every year http://bit.ly/eTSKOK

  72. Top Politics Tweets

    RT @libcon: We subsidise BAE more than we contribute to the EU every year http://bit.ly/eTSKOK

  73. zahra

    So if my film gets £ from the #UKFC or #NFM (both govt) they get a stake in my film. Does the govt own a stake in BAE? http://bit.ly/hs1IUs





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