Richard North, 26/05/2016  
 


One can fully understand the sharp reaction of Vote Leave to the publication of the Institute of Fiscal Studies' report on "Brexit and the UK's public finances". For in that report is written two passages which identify clearly why their campaign has failed to dominate the economic arguments, neutralising them as contentious issues and taking them out of the fray.

Firstly, we see the Institute write that the more we can replicate current access to the single market – for example, by membership of the EEA – the lower the cost of exit will be. By contrast, it says, the further we move from that model – for example, relying on World Trade Organisation (WTO) rules – the greater the cost.

Then, as we highlight in the graphic above, we see it observe that: "Key Brexit campaigners seem to have ruled out any deal that would involve membership of the European Economic Area (EEA), like Norway".

This, of course, was the whole point of Flexcit, one about which we almost weary of writing. But the simple fact is that, to protect the UK's economic position in the first instance, we had to preserve our participation in the Single Market. And here we see the IFS confirm what we've now been writing about for several years.

However, the problem came in October last year when Cameron flew to Iceland specifically to diss the "Norway model". Despite its attractions, we had the idiotic Dominic Cummings agree with the Prime Minister, sternly declaring: "Vote Leave does not support the 'Norway option' for Britain". After we vote leave, he said, "we will negotiate a new UK-EU deal based on free trade and friendly cooperation. We will end the supremacy of EU law".

When Farage joined in, saying "I don't want a Norwegian deal", followed by Richard Tice of Leave.eu, Douglas Carswell and then John Redwood and Ruth Lea, Cameron had achieved a clean sweep of the noisemakers, and effectively taken the "Norway option" out of the game.

The IFS suggests that part of the reason for these "leavers" rejecting the option was because the UK would likely have to make a significant contribution to the EU budget, but it was as much the case that it would also require continuation of freedom of movement – something to which Farage, in particular, was opposed.

With that, though, the main campaigners are determined to proceed without a plan and cede the economic argument – with Vote Leave relying on the offset from the EU contributions, claiming to save £350 million a week from the EU budget contribution.

This pretention, though, is badly damaged by the IFS, which reminds us that this figure is ignoring the rebate, which "is clearly inappropriate". It is equivalent, says the Institute, "to suggesting that were the UK to leave the EU and not make any financial contribution to the EU’s budget then remaining EU members would continue to pay the rebate to the UK". With brutal simplicity, it concludes: "That is clearly absurd".

Yet, still the Muppets in Vote Leave don't get it. In a bizarre press statement they claim that the rebate is "a discretionary grant which the European commission can pay to the UK if it so chooses". The organisation adds that: "There is no obligation on the commission to pay it", and then seeks sustenance by citing out of context a remark by George Osborne at the Treasure Select Committee (see para 15) – a remark which in itself was disputed.

So totally without foundation are their claims that there is no easy way to describe such crass ignorance. Originally agreed by Margaret Thatcher as the Fontainebleau Abatement in 1984, the rebate relies for its legal base of Articles 311 and 312 of the TFEU and is firmly locked into EU law. It is not in any way a discretionary matter.

It is now firmly entrenched in the budgetary system, having in 2004 become the Generalised Correction Mechanism for all Member States, after a Commission Proposal (COM(2004) 501 final/2).  Currently, it is given force by Council Decision 2014/335/EU "on the system of own resources of the European Union", implementing the European Council decision of 7-8 February 2013. This concluded that the then existing correction mechanism in favour of the United Kingdom was to continue to apply.

This Decision is augmented by Council Regulation (EU) No 608/2014 of 26 May 2014 "laying down implementing measures for the system of own resources of the European Union", and by Council Regulation (EU) No 609/2014 also of 26 May 2014 "on the methods and procedure for making available the traditional, VAT and GNI-based own resources and on the measures to meet cash requirements" (Recast).

Vote Leave, however, have got themselves into a typical bind, trying to defend the indefensible because one of their "stars" is committed to an error and cannot row back from it - as we had with Johnson and his three-fingered banana clusters.

In this case, we have Dominic Cummings who is insisting on using the £350 million figure, come what may - even after having been challenged on it during his session with the Treasury Select Committee. Presumably on the basis that there is no such thing as bad publicity, he believes that the controversy plays into Vote Leave's hands. Despite that, almost everyone around him is telling him that the false claim just detracts from the argument. It is certainly giving the BBC endless opportunities to point out the error.

Such is the notoriety of the £350 million claim that it has even spread to the New York Times giving an international dimension to Vote Leave's stupidity, further degrading the credibility of the leave campaign. And with nowhere else to go, Vote Leave supporters are reduced to whingeing on the sidelines, having already destroyed the best and only counter to the IFS report.

Thus will they find in good time that the wages of stupidity are defeat.






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