Half of EU budget could be scrapped

29 May 2009

Half of EU budget could be scrapped

Half of the EU budget could be scrapped if no more money were spent on agriculture or on regional development in rich member states and if development cooperation returned to being organised nationally. These are some of the points in an economy plan presented today by SP lead candidate Dennis de Jong. "The Netherlands' contribution to the EU could in this way be reduced by €2.5 billion per year," says De Jong.


As regards agricultural spending, the SP proposes that no more subsidies should be paid which go directly to multinationals or to firms such as Schiphol airport or confectionery company Mars. Farmers' incomes could be better supported by a quota system. As things stand, the structural funds for regional development go to a large extent directly to rich member states which could manage very well without it. The SP wants to see a system under which a few relatively poor member states can continue to make use of this development money, because in the end development can be much better managed at national level. Research shows that in this respect the EU is much too bureaucratic and wasteful. "Brussels interferes to far too great an extent in matters that we could handle better ourselves at national level," says De Jong. "We need to put an end to pushing money around from pillar to post in an enormous and exhausting bureaucratic rigmarole."

The SP's economy plan is accompanied by a list of the Top 5 examples of Brussels wastefulness, such as the continuation of subsidies for adverts for chicken, long after the bird flu crisis which had provoked a drop in consumption had passed, and the monthly to-and-fro of the European Parliament's Members, members' assistants, and officials between Strasbourg and Brussels. Below, the SP lays out its ideas for tackling these problems.


The SP manifesto for the European elections is quite clear about the fact that much of the European Union's budget is misspent. The SP's proposals would not only lead to changes, but to savings of €65 billion per year on the European Union budget.

Top 5 examples of Brussels' crazy spending

For example, promoting the eating of chicken as a response to the fall in consumption in the wake of the bird flu scare. Public money was used for this campaign, which took place long after consumption had already recovered. In fact the campaign is still going strong, three years later.

It will cost millions. Member states will have to adjust their own systems in order to harmonise everything. And it's called ‘Inspire’. It's a cripplingly expensive Information Technology project whose goal is to create 'an infrastructure for spatial information'. In plain human speech: if you're in Leiden, Lincoln or Leinster you'll be able find out what the composition of the soil is in Cantezala in southern Italy. Handy or what?

Every month the European Parliament relocates in its entirety from Brussels to Strasbourg. France once demanded an important European institution and this was the absurd result of negotiations over that. Clearly the Council of Europe and the European Court of Human Rights, both of which have their seats in Strasbourg, are not sufficiently important. The cost per year of this circus was €200 million, even before the latest round of EU enlargements.

Anyone who thinks that EU farm subsidies exist to support farmers in their hard lives would be surprised to find that firms such as Shell, food giant Nestlé and chemical concern DSM have been their biggest recipients over the last few years. The Queen of England and her son Prince Charles also know how to milk the system, receiving €710,000 between them in 2008 alone.

A navigation system covering the whole world, based on thirty satellites – what a good idea! If GALILEO, the European GPS, had been developed twenty years ago, it would indeed have been a good idea. In the meantime, however, GPS has conquered the world market. European corporations, who were to pay two-thirds of the costs, understood this so well that they withdrew from the project. This was a smart move, unlike that of the EU, which decided to pick up the tab for the entire cost. Just how much that will eventually amount too is still far from clear. A blank check for a project which stands no chance of success.

This 'Top Five' shows how much there is to be gained from a bit of good European housekeeping.
And this is by no means all that can be saved.

Less Brussels, More Savings

A critical look at the structural funds, Europe's Common Agricultural Policy (CAP) and EU development policies shows that € 61.1 billion ($86.1bn./£53.3bn) annually could be saved on the European budget, not counting the savings on bureaucracy which would also ensue.

The total EU budget for 2009 amounts to around €133.8 billion ($188.6/£116.8). Of this, by far the largest part, 85%, goes on the various 'funds'. In reality, this means money is simply pumped unnecessarily around, as the member states hand over the money only to receive it back at local, provincial and national level in order to finance projects. Local and regional authorities lobby in Brussels in order to get some of this money, keeping an army of officials busy assessing programmes and projects beforehand, and how well the money has been used afterwards. Pumping money around in this way gives rise to an enormous bureaucracy.

In the last few years the Netherlands has carried 4.7 percent of the costs of the EU budget, almost a twentieth, a total of around € 6.3 billion ($8.9bn/£5.5bn). After its 'no' vote on the European Constitution, the Netherlands demanded a reduction of a billion euros, bringing the total contribution down to € 5.3 billion, but the SP estimates that this could be reduced by 48.5 percent, almost half, a yearly saving of €2.5 billion. The SP stands for less Brussels and a more efficient EU!


More than 35 percent of the EU budget goes on the structural funds. By means of the European Social Fund (ESF) and the European Regional Development Fund (ERDF), the EU has set itself a goal of supporting its poorest regions. This is in itself a noble cause - except that it does not work effectively, because the greater part of these funds is not actually spent in the poorest member states. The total ESF budget for 2007-2013 is €76 billion ($107bn/£67bn ), of which about a third, €26.4 billion, is spent in the poorer, newer member states, € 9.7 billion of this in Bulgaria and Romania, the poorest and newest of all. This leaves €50 billion for the rest. The ERDF budget for the same period is €308 billion ($434bn/ £269bn), of which around €120 billion goes to the older, better off member states. This money could, in the SP's view, be better spent at national level, which means an annual sum of approximately € 24.2 billion which does not need to go through Brussels at all. Because spending is currently intended to cover a total of twenty-seven member states, enforcement of the rules, and accountancy, are complex. Indications are that in a number of member states a good deal of fiddling has taken place. One such indication is that the European Court of Auditors has failed to approve the bookkeeping for these funds for the last fourteen years. By limiting the number of countries which can benefit from the funds, in the first instance to the two poorest member states, Romania and Bulgaria, and possibly in the future to other new entrants in urgent need of aid, surveillance would be simplified and the chances of the moneys involved being put to good use, and correctly accounted for afterwards, would be enhanced.

In the EU budget, €7.7 billion ($10.9bn/£6.7bn) per year goes on the costs of the institutions required to run the structural funds. It is difficult to estimate how much of this could be saved on officials, but concentrating on a smaller number of member states could certainly lead to a reduction in their numbers. Concentrating the funds would mean that Dutch local authorities, provincial councils and the national civil service would no longer need to pay officials to lobby for funds in Brussels. In addition, offices in the Netherlands which currently spend their time dividing the spoils of Brussels moneys could be closed. It is difficult to put the potential savings into figures, but the fact that slimmed-down structural funds would lead to a major reduction in bureaucracy is obvious. For the period 2007-2013, the Netherlands received €1.7 billion from these funds, almost a quarter of a billion a year. In the future, the Netherlands should pay these costs for itself, while paying less into the EU budget.


Export subsidies and income support payments in agriculture must be abolished. The existing European Common Agricultural Policy (CAP), which primarily favours multinational corporations, has led to large-scale overproduction and to the dumping at very low prices of surpluses on to the world market. The SP is for this reason against any extension of quotas and in favour, where necessary, of a reintroduction of quotas on products for which they have been withdrawn. This would give farmers a decent price for their produce, while ensuring that there is no overproduction and that supply is reduced. The chance that an honest price for farmers would lead to higher prices in the shops is small. The price received by farmers for their products represents only 20% of the total price to the consumer. The small farmer who manages the landscape should receive compensation sufficient to cover costs. The total agricultural budget for 2009 is estimated at almost €54.7 billion ($77.1bn/£47.8bn). A large part of this, around €37.8 billion, goes on direct support to farmers. Export subsidies for grains, rice, wine, sugar, dairy products, poultry and livestock, meat and eggs, amount to around €550 million. Last year Dutch farmers received about 3% of this direct support, around €113 billion, part of which should be devoted to covering the costs of socially responsible farmers who carefully manage the landscape.


European development policy is marked by delays, expensive bureaucracy and a high incidence of fraud (7% of the budget goes on development aid, but 21% of all fraud enquiries at EU fraud investigation service OLAF are linked to development projects.) In addition, the European Commission is notoriously slow: where donors, in general, pay on time in 35% of cases, the comparable figure for the European Commission is 14%. Worse still, whereas in the majority of cases only 3% of donors are more than a year late coming up with the money, in the case of the European Commission the comparable figure is 21%! Lastly, because of the portion of the 0.8% of national GDP which the Netherlands spends annually on development aid which is given to the European Union, our country is at the same time giving away important influence on the organisations in the field. The fact is that much of the development money spent by both the Netherlands and the European Commission goes to international organisations such as the United Nations and the World Bank, and with these organisations our country would have a great deal more say if it represented itself, rather than having to go through the European Commission.

The SP is in favour of a more efficient development policy, one capable of translating the 0.8% of GDP which we spend on it into help for more people. In addition, if the Netherlands had control over its own development monies, we would garner more influence in international organisations and a bigger share of the money involved would end up in the coffers of the development projects themselves. Lastly, a national approach would give the Netherlands and like-minded countries, such as those of Scandinavia, as well as Switzerland, Canada and in some respects the UK and Germany, the ability to establish development projects on an ad hoc basis.

The EU spends a total of € 2.4 billion on development, € 0.2 billion on promoting democracy and human rights and a billion on humanitarian aid and stability, a grand total of €3.6 billion. The only terrain on which the EU offers added value as a donor is in the extension of technical assistance in relation to regional integration: Europe's experience can in this case be shared with developing countries. This is a matter, however, of offering technical assistance, which can be done for a minimal outlay. Whether humanitarian aid (roughly a billion euros) adds such added value at the European level is doubtful. The European Commission acts as a 28th donor - and not in a transparent and efficient manner. Here also the SP would like to initiate a debate. As for the rest, our message is 'put an end to the Brussels bureaucracy and keep aid national'.

Dennis de Jong, Number One on the SP list of candidates for the European elections

You are here