Annual European Union Finances Statement

(Limited Text - Ministerial Extracts only)

Friday 3rd March 2023 Written Statements

[The Chief Secretary to the Treasury (John Glen)]

I am today laying before Parliament, “The European Union Finances Statement 2022 on the implementation of the Withdrawal and Trade and Cooperation Agreements’” (CP 759). This is an annual publication and the 42nd in the series.

This year’s edition is the second in the publication series to cover the UK outside the EU. It continues to include an updated government estimate of the financial settlement on withdrawal from the EU, which can be found in annex A, contributing figures in Chapters 2 and 4, and annex C outlines the cumulative payments with their constituent parts, along with HM Treasury’s forecast.

This year’s edition follows the model of the previous edition, based on the European Scrutiny Committee’s recommendations on how to present the information. The cut-off date for reporting for this publication is 31 December 2022, as these statements will continue to be published every calendar year. The focus of this statement remains the implementation of the withdrawal agreement and the trade and co-operation agreement.

Similar to last year, the statement separates backward-looking reporting on the payment of net liabilities made by the UK from HM Treasury’s forecast of outstanding liabilities. Chapter 2 gives a breakdown of the April and September 2022 invoices received from the EU, and their payment during that calendar year, of £5,030,023,023.

Chapter 3 of the statement provides detail on the verification arrangements that HM Treasury has undertaken. HM Treasury works with the European Commission and its implementing partners to ensure their systems and controls over financial reporting are suitable for the specific requirements of the withdrawal agreement. Chapter 4 breaks down forecast outstanding UK net liabilities to the EU from January 2023, providing a point estimate of £13.2 billion (€14.9 billion) of the total outstanding net liability to the EU.

HM Treasury estimates that the current net value of the financial settlement is £37.9 billion. This estimate is within the original estimated range of £35 billion to £39 billion and shows a material reduction against last year’s estimate of £42.5 billion. This is primarily due to the decrease in the estimation of the UK’s share of liability for EU pensions. Taking into account the financial settlement with the EU, the Government have determined how £14.6 billion of spending by 2024-25 can be allocated to their domestic priorities, rather than be sent in contributions to the EU.

HM Treasury has presented a reconciliation to the methodology adopted in previous years to enable comparison on a consistent basis. This is provided in annex A, along with an explanation of some the principal assumptions underpinning forecast methodologies prepared for different purposes.

This statement reports on the status of EU programme association in Chapter 5.

[HCWS599]