Richard North, 10/07/2021  

The media collective seems to be making a complete mess of its reporting of the so-called Brexit "divorce bill" currency, possible assisted by the No 10 spokesman who does not appear to understand what is going on.

As we left it yesterday, I thought we'd managed to bottom the story, with the Commission producing an "estimate" for the total sum it expected to be paid, and with the current down payment for this year, at £5.8 billion having been settled.

There are two outstanding components to this "divorce bill", the pensions, etc., liability and the so-called reste à liquider (RAL), and the text of the Withdrawal Agreement makes it clear that there are two separate mechanisms for determining the respective liabilities.

As to the pensions, etc., the Agreement specifies that "the United Kingdom shall contribute to the liabilities as they are recorded in the consolidated accounts of the Union for the financial year 2020 in 10 instalments starting on 31 October 2021".

There can be no dispute here that the 2020 consolidated accounts set out the definitive figure, which represents the UK's liability. That is what the two parties have settled in the Withdrawal Agreement (Article 142, paragraph 5).

However, when it comes to the reste à liquider - defined as "contingent liabilities" in the Agreement - the procedure set out is different (Article 143). Initially, the EU's unpaid commitments, as of 31 December 2020, had to be set out by 31 March 2021, on which basis the payment for 2021 was decided. This, we understand, has already been paid.

Then, on the same date each following year, the process is repeated "until the amortisation, expiry or termination of the financial operations" – expected to be in 2027, with some adjustments made thereafter.

But, as we pointed out yesterday, the actual figure paid each year will be reduced by any amounts recovered by the Union from defaulting debtors or related to undue payments, and any net revenue resulting from the difference between financial and operational expenses. In advance, these amounts are not known, and are unknowable. Therefore, at this stage, there can be no way of determining the total net payments that the UK will have to make.

And yet, what should be a non-story appears to have been given legs by the insistence of Commission spokesman Balazs Ujvari that the report (on the consolidated budget) "is final and the calculations were made in line with the withdrawal agreement".

Ujvari then goes on to say that, "the report stated that the sum was "€47.5 billion, which the United Kingdom is going to have to pay into the European Union budget over the course of the next years".

Having regard to what the UK government is saying – about this figure being an estimate, and looking again at the Withdrawal Agreement, I have an idea where the problem lies. In essence, we're dealing with a situation not dissimilar to the historic controversy over the UK's budget contributions, as between gross payments, and payments after the deduction of the rebate.

What seems to be the case here is that the payments which have to be made by the UK are separated from the reimbursements made from funds paid in, with the UK's proportion paid as and when they are remitted. Thus, in a technical sense, the UK will have to pay €47.5 billion, but it will get some of that back, so the figure does not represent the overall net payment.

Where the UK government seems to be going wrong is in asserting that the liability figure (of €47.5 billion) is an estimate. From the Commission statement, it appears that this is a precise statement of the UK's share of the EU's "contingent liability".

Thus, the confusion stems from equating liability with the net payment. The two are not necessarily the same thing, and the UK government estimates that the total amount paid will be a lot less than its liability.

If this is actually the position, though, the average reader would have no chance of working this out from the report in the Telegraph, which goes for the lurid headline: "Britain and Brussels clash over £40bn Brexit divorce bill". This is augmented by the sub-heading: "Downing Street refuses to pay the final cost and claims the EU is overcharging the UK by nearly £2bn".

That assertion is, of course, nonsense, not least because the payments are made in annual instalments and only this year's payment is due – which has actually been paid.

Nevertheless, this is not going to stop the Telegraph inventing "a fresh row" to keep its gullible readers entertained, stoking up a controversy which simply does not exist. And it achieves this by retailing for the first time the government statement that we published yesterday.

This had a No 10 spokesman saying that "We don't recognise that figure, it's an estimate produced by the EU for its own internal accounting purposes," adding: "For example, it doesn't reflect all the money owed back to the UK, which reduces the amount we pay. Our estimate remains in the central range of between £35 and £39 billion and we will publish full details in Parliament shortly".

The core error, therefore, seems to come with this spokesman apparently failing to recognise that the liability figure is a "correct" statement, and simply pointing out that the net payments are expected to be lower.

That might leave any responsible journalist to pick up the mistake, and explain to readers what is going on. But such a thing does not seem to exist in this world, and especially not in the Telegraph. Here, journalists James Crisp and Harry Yorke can't resist stoking the fire.

Obviously have rung round for some quotes from tame Tory MPs, they report that "Tory backbenchers urged Boris Johnson to stay firm in the face of Brussels".

One obliging stooge, David Jones, deputy chairman of the ERG, blathers: "This is typical of the European Union, pushing this stuff out in a bid to up the ante and to stoke animosity". Megamouth Andrew Bridgen than adds: "It comes as no surprise that the EU wants to screw every penny out of us and the bill is going up and up", asserting that "the row" would lead to calls for the UK to "walk away" from the Withdrawal Agreement.

Then Theresa "two-brain cell" Villiers is enlisted to tells us that: "Throwing around excessive figures like these does not demonstrate a realistic or constructive approach from the EU. Pragmatism and mutual respect, not posturing, is what is needed".

On top of this, we have a typically issue-illiterate piece from Matthew Lynn, who actually argues that for the "vast sum" we are paying, "we should be asking for more in return than the very thin, zealously over-enforced trade deal we have right now". This dribble clearly betrays the author's lack of understanding of the basis of the "divorce bill", yet it passes for informed commentary.

It would help if we actually got a better standard of reporting elsewhere, but you will look in vain. The Guardian has the UK at "loggerheads" and even Deutsche Welle can't resist churning out the UK government line.

If things follow their normal course, we are seeing another myth in the making. In the absence of a corrective, the narrative of another "row" will be established, and those who wish to believe that we are dealing with a rapacious, grasping EU, will have their prejudices comfortably reinforced.

Stepping back from all this, one notes that lorry drivers must submit to periodic competence tests to prove that they are safe on the roads. I cannot avoid the passing thought that it would be of inestimable value if journalists were required to take equivalent tests.

Also published on Turbulent Times.

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