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Article / 20 June 2016 at 11:19 GMT

Truth and lies: Myth-busting in the Brexit debate

First in Business Worldwide. / www.CNBC.com

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Is that a coffee with milk or a cafe au lait? Photo: iStock


By CNBC

The saying goes that "truth is the first casualty of war" and the same could be said of the political debate surrounding the forthcoming UK referendum on its European Union  membership.

Passions and personalities on both sides of the argument over whether to leave the EU or remain in the 28-country political and economic bloc have both divided and confused the nation, with many people unsure of fact and fiction over the benefits and disadvantages of EU membership. Crucially, voters are unsure of who they can trust.

The main points of division among the public are the costs of EU membership, the benefits of such membership to the economy, sovereignty and immigration with widely differing data used by campaigners on both sides. The implications of staying or leaving the EU on the health service, employment, security and trade are also major points of contention.

Here CNBC looks at some of the key issues – EU membership, immigration and sovereignty – to see where the truth might lie.

Cost of membership

The cost of EU membership is one of the most divisive issues in the Brexit debate with the cost and benefits to UK households a battleground between campaigners.

All of the 28 countries within the EU pay into the institution to fund the EU budget which is, in turn, spent on various areas and projects in all EU countries such as creating growth and jobs (the largest share of spending) to security, agriculture and the more prosaic administration of the EU's institutions or more ethereal soft power to promote the EU as a "global player."

The size of that payment that each country makes to the EU budget is largely dependent on the size and national income of the country. The bloc's largest economies – the UK, Germany, France, Italy and Spain, contribute the most money to the EU making them net contributors.

Since 1985, the UK has received an annual rebate from the EU.

In 2015, for instance, the U.K. contributed an estimated £12.9 billion ($18.8 billion) - after an automatic rebate of almost £4.9 billion – to the EU budget, according to government figures, while EU spending on the U.K. was £4.4 billion so the U.K.'s net contribution was £8.5 billion.

Parliament
 Members of the European Parliament take part in a voting session at the European Parliament in Strasbourg, eastern France, on June 7, 2016. FREDERICK FLORIN/AFP/Getty Images

The Vote Leave campaign say that the gross cost of EU membership works out at £350 million a week and that the money could be spend on other priorities such as the NHS. But the UK Treasury has disputed this, stating in a briefing paper on UK-EU economic relations on June 13 that "the rebate is applied before the UK makes its contribution to the EU so the UK doesn't 'send' the gross contribution of £19 billion or £350 million per week.

Once the rebate is taken into account the U.K. "makes a gross contribution equivalent to around £275 million a week in 2014," it said.

Meanwhile, remain campaigners say that despite the cost of membership, the UK gains from its membership in a number of ways that are not easily quantifiable. As the European Commission states on its website, "the UK pays more into the EU budget than it receives from it. However, the net balance does not accurately reflect the many benefits of EU membership. Many of them, such as peace, political stability, security and freedom to live, work, study and travel anywhere in the Union cannot be measured."

Immigration

Immigration is perhaps the  most sensitive and divisive issues when it comes to EU membership. Freedom of movement is a pillar of the EU and the region's citizens have the right to move and reside freely in other member states. Generally, EU citizens also do not need a work permit to work elsewhere in the EU.

The amount of people coming to the UK to take advantage of its buoyant economy and the question mark over benefits that EU migrants can claim in the UK, which has a long-established welfare state like much of western Europe, is a thorny issue, however.

Ahead of the referendum, Prime Minister David Cameron, who leads the remain campaign, met with EU leaders with a series of proposals, one of which was to ban migrants from claiming in-work and child benefits in the UK for four years (a so-called "emergency brake" on benefits) – a proposal that EU leaders conceded but still needs to be ratified by the European Parliament.

Polish shop


Some of the contributions from EU immigration. Photo: iStock

Recent figures on migration from the Office for National Statistics in May showed that total net migration to the UK was 333,000 in 2015 (largely as a result of a decrease in emigration) with an estimated 184,000 people coming from the EU. The figure disputes the claim by the leave campaign that says that "a quarter of a million EU migrants come to the UK every year – (the equivalent of) a city the size of Newcastle."

Newcastle's population is estimated to be around 298,000.

The government said in a briefing on migration in late May that available data suggests there are roughly around 1.2 million British migrants living in other EU countries, compared with around 3.0 million EU migrants living in the UK.

Latest employment statistics from ONS show the estimated employment level of EU nationals (excluding British) living in the UK was 2.1 million in January to March 2016, 224,000 higher than the same quarter last year, the ONS noted.

Many members of the public resent the ability of EU migrants to come to the UK and claim benefits although some digging is needed to understand what benefits EU migrants can claim.
At the moment, EU migrants must have lived in the UK for three months before they can claim any benefits, such as Jobseeker's Allowance, although EU migrants seeking work in the UK are no longer able to claim help with housing costs.

There have been differing claims over how much EU immigrants contribute to the UK economy but there is reasonably recent data about the number of benefit claims made by EU citizens in the UK.

Last year, the Department for Work and Pensions  said that as of February 2015, 5.1 million people were claiming working-age benefits (this excludes certain benefits including housing benefit, in-work tax credits and child benefit) and of those, 371,000 were estimated to have been non-UK national when they first registered for a national insurance number (which allows people to work – and pay tax) and 114,000 were from within the EU (but not UK. citizens).

Despite the relatively low number of benefits claimants, leave campaigners say that public services in the UK are under strain and that immigration cannot be controlled whilst the country remains within the EU. Those in the remain camp point to the economic contribution of EU migrants and say they pay more in taxes than they take out of the UK.

Most data show that, fiscally, EU migrants make a net contribution to the UK In 2014, economists at UCL (University College London) said that EU migrants made a net contribution of £20 billion to UK public finances between 2000 and 2011. That claim was disputed by pressure group Migration Watch UK, however, which said in its own research in May that EU immigrants cost the UK taxpayer £1.2 billion in 2014/15.

Remain campaigners note that free movement within the EU has many benefits for UK citizens that are often under-appreciated. "In the EU you can find work, holiday and retire without visas, and study abroad on the Erasmus program, offering you and your children even more ways to get on in life," its website states, adding that thousands of jobs could be affected if Britain voted to leave.

UK Treasury data showed in December 2015 that 3.3 million UK jobs – out of a total 33.8 million jobs across the UK – are directly and indirectly linked to export activities from the UK to other EU countries.
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The UK National Health Service is under strain but this patient
and her nurse can see the funny side. Photo: iStock



Sovereignty

Another key area dividing the UK over EU membership is the issue of sovereignty – the right and power of a governing body to govern itself without any interference from outside sources.
The idea of the U.K.'s sovereignty being threatened by Brussels has ignited the British imagination and indignation over the years, with media stories (many apocryphal) about EU bans on anything from "bendy bananas" to conker games in the U.K.'s school playgrounds.

Claims that the EU is a nanny-state too keen on issuing petty directives are playing no less a role in the Brexit debate now, with "outers" sure that a vote to leave would end the EU's "damaging laws and regulations," particularly those affecting British businesses. Supporters of the EU say that regulations and laws have helped to raise consumer standards, health and safety practices and workers' rights, however.

One of the key political pillars of the EU has been for the bloc to work towards "ever closer union" and members are meant to commit to eventually join the single currency area, something that Brits have never been keen on and more so recently given the recent euro zone crisis.
When trying to extract EU reforms in order to encourage UK voters to remain in the bloc,

Cameron managed to secure a commitment from the EU that regional treaties should recognize that "the U.K. is not committed to further political integration into the EU" but eurosceptics generally remain unconvinced.

Cynicism towards the EU is nothing new, despite the UK being instrumental in the founding of the bloc after World War II when Winston Churchill called for a "United States of Europe" to guarantee peace and stability.

Since then, however, and perhaps due in no small part to being an island nation, Britain has always had something of a "one foot in, one foot out" approach to Europe and has always been reluctant to relinquish power to its mainly Brussels-based institutions.

Crown


The Imperial State Crown is carried from the Houses
of Parliament on May 18, 2016 in London, England.

As such, the somewhat ethereal idea of "sovereignty" is a hot potato for many voters and even the leave campaign's motto is "vote leave, take back control."

In fact, much of the leave campaign's focus and rhetoric is on authority, autonomy and control and "taking it back" when it comes to immigration and borders, money or laws.

On the flip-side, remain campaigners say that a vote to stay in the bloc equates to a "better economy, better leadership and better security" and that "the UK has more control over its destiny by staying inside organizations like the EU."

Leave campaigners say that Britain would be better off alone and could establish its own trade deals and partnerships with other nations, including the EU. Others say that there is no guarantee of that and a number of countries, such as the U.S. have warned the UK not to expect any "special treatment" if it goes it alone.

Divided Britain

Despite the data and various arguments for and against remaining in the EU, most agree that no-one can be exacting or certain how the UK.'s relationship with the EU – or the wider world -- will or won't change after June 23.

Mujtaba Rahman, head of Europe at research consultancy Eurasia Group, said in a note earlier in June that the issues dividing – or uniting – the public into the two remain or leave factions were uniform.

"Remain supporters are more likely to cite what is 'better for jobs, investment and the economy'. Leave supporters are more likely to cite the need to achieve a 'better balance between Britain's right to act independently and the appropriate level of cooperation' as well as the need to 'deal better with the issue of immigration'," he said.

While many feel confused about the mixed messages bombarding them about EU membership, others don't feel well informed at all about any of the issues that the vote involves and politicians on both sides have been accused of scaremongering, spreading mis-information and engaging in personality politics.

In early June, only 24% of voters said they felt "well" or "very well" informed about the EU referendum, according to BMG Research polling released by the UK's Electoral Reform Society.
The polling, which was released on June 7 (the deadline to register to vote) showed that the number of people who feel well informed about the referendum has hardly changed since February, when 16 percent reported feeling "well" or "very well" informed about the vote, despite months of campaigning from both sides.

The deputy chief executive of the Electoral Reform Society, which called for the EU debate to focus on "politics, rather than personalities" said that the research was worrying. "The fact that under a quarter of the public feel well informed about this referendum – despite months of campaigning - is deeply worrying news," Darren Hughes said.

"Voters have been completely left in the dark on what the real issues at stake are in this referendum – instead they've had a debate dominated by personality politics, party spats, and name-calling. The tone of the debate has been overwhelmingly negative, turning voters off from the conversation. The public want to hear about the issues and policies that affect them, but instead have been subjected to a Westminster parlour game."

"We need to have a grown-up, positive referendum debate in these final weeks that really speaks to voters – and inspires them with a vision of what Britain would be like remaining or leaving the EU," he said.

— Edited by Martin O'Rourke

CNBC is a recognised world leader in business news, providing real-time financial market coverage and business information to more than 340 million homes worldwide. Visit CNBC.com for more financial news and information.



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