Posted on Sep 02, 2017
Following this week’s Brexit negotiations in Brussels it appears increasingly evident that the EU is desperate for UK cash, and what is being touted as a divorce settlement is in fact more of a ‘bail-out’.
EU lead negotiator Michel Barnier made clear he disliked the first formal British response on Tuesday to the EU’s demands for several years-worth of its current annual EU contributions to cover outstanding commitments to such things as EU staff pensions and future EU grants already promised to developing countries.
A British legal analysis rejecting EU assertions that the bloc’s seven-year financing plans are legally binding on member states, meant London was refusing to pay for any commitments after Brexit, Barnier claimed, a claim somewhat at odds with what May’s government has previously said.
“The settlement should be in accordance with law and in the spirit of the UK’s continuing partnership with the EU”, Prime Minister Theresa May said in a formal letter in March of this year. Presumably M. Barnier would have been aware of this letter.
A senior European official involved in the Brexit talks cautioned that there was little mood among the 27 other states to let Britain off lightly on the money as it will leave a big hole in the Union’s budget that no one wants to fill.
No one wants to fill, or no one can fill?
Despite the impending departure of the EU’s second largest contributor, the European institutions continue to overspend as if there were no tomorrow - which for them, of course, may in fact be the case.
As has been well documented, the European Parliament travels 12 times a year to Strasbourg, at great expense to the taxpayer. Absolutely no work is done there that could not be done in Brussels, however the restaurants are of a higher standard, if somewhat pricey. In fact, restaurants and hotels increase their prices significantly during the weeks when the parliamentary circus comes to town.
A recent increase of 20 per cent in the allowance that staff receive to cover the cost of their week in Strasbourg - known as ‘mission expenses - means they are now entitled to up to €180 (£156) per day to pay for a hotel, as well as a €102 (£94) daily tax-free allowance for unspecified expenses such as meals - many of which are taken in subsidised staff restaurants in the institutions themselves.
Possibly because of this whopping increase, the Parliament has overspent in this area - financial foresight is not a characteristic of the EU institutions - and another £2 million is being demanded to top up the pot.
MEPs themselves are also demanding more cash. An additional £1.2 million is needed to spend on the extravagant fleet of limousines that they need to collect them from their hotels in the morning, and to ferry them to their restaurants after a hard day, lawmaking (MEPs receive more generous daily payments than staff, in this case known as the ‘daily Allowance. Unlike staff, they do not have to account for hotel costs, so they will receive the full payment even if they sleep in their office. MEPs offices have beds and bathrooms. MEPs also receive this payment every day they are in Brussels, not just in Strasbourg).
The Parliament has justified the MEPs limousines citing the need for extra security following bomb attacks in Brussels. However, the bomb attacks took place in March 2016, but the fleet has been growing for decades.
On top of their salaries and daily allowances, MEPs also receive a £46,000 ‘general expenditure allowance’. This is unaccountable, and traditionally was used to top up their personal pensions through the so-called ‘second pension’. British MEP Nigel Farage, who has largely built his political career on criticising EU waste and corruption, was one of the many UK MEPs to take advantage of this. However, this fund is running a horrendous deficit, and official estimates expect the fund to be bust by 2026 at the latest, meaning another un-budgeted for mid to long term liability for the EU
Pensions are a looming financial crisis for the EU. There is no pension fund for staff pensions; retired are staff being paid from member states monthly contributions. When the contributions stop, who will pay the pensions?
According to figures released in 2013, of the £35.8billion needed to meet the EU's total pension liabilities, British taxpayers pay £4billion.
While the average pension is more than £40,000, top EU civil servants can expect a payout of £85,000.
And all this goes some way to explaining why the EU is so obsessed with a Brexit divorce settlement.
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