The Treasury Select Committee (TSC) has delivered its report
on Brexit, or to give the full title, “The
economic and financial costs and benefits of the UK’s EU membership”
. The result is far reaching, leaving a few questions unanswered.

At times, observers might feel that the committee has been
uneven in the level of zeal applied in forensic questioning of witnesses. The
final report provides a balanced analysis of competing claims. In effect, it
becomes a usable reference document for those who seek clarity in EU finances.

The committee is made up of 11 parliamentarians, broadly
reflecting a balance of the political parties in the House of Commons though
not necessarily the range of opinions within each party. The report is
presented as unanimous which is a credit to all members in addressing the
outcomes impartially.

The first target for clarification comes from the Leave
campaign’s assertion that the EU costs the country £350m per week. The TSC
identify that this is the gross contribution, not including the abatement or
“rebate” and ignoring the expenditure re-allocated by the EU in Britain.

The correct net figure is therefore around £110m per week.
Whilst significantly less, this leaves the Leave campaign with a manageable
figure to use, an amount equivalent to the annual spend of a small clinical
Commissioning Group such as Scarborough and Ryedale for a year or a monthly
figure equivalent to the annual spend on health by a larger CCG such as the
Vale of York.

The report also highlights that a British government, rather
than the campaigners, would have to decide how to re-allocate the £167m per
week that is currently decided by the EU.

The last main area of criticism for the Leave camp surrounds
the burden of EU rules, the independent Open Europe think tank having
calculated the 100 most onerous being £33bn per year according to their
original evaluation. A later reviewed estimate is that £12.8bn or so of savings
could be achieved with repeal.

The Remain side received criticisms of their own, largely
aimed at Treasury claims of being £4,300 worse off. For those who felt that
George Osborne had an easy ride at the hearing, the result is stinging.

The Treasury study did not include the potential upsides of
Brexit in their modelling. As such to paraphrase, the basic assumptions showed
an element of bias.

Given some of the assumptions made, there are uncertainties.
The rigour of the model was not tested by sensitivity analysis.

The limitations of the Treasury’s approach are exposed by
some counter-intuitive results from their analysis, buried in the appendices.

The final figure of £4,300 should not be used by the Remain
campaign. Similarly, the £3,000 figure generated by the CBI does not specify an
alternative trade model to be compared with.

The Treasury received further criticism over a later report,
that relating to short term effects in the event of a Leave vote. That report
was ultimately released a mere couple of hours before ‘purdah’ and not within
the time scale that had been advised to the TSC by the Chancellor.

The TSC forcefully conclude by saying “it is to be hoped
that scrutiny and transparency have not in this case been subordinated to the
imperatives of the Number 10 ‘media grid’.”

Osborne has received further criticism over his evidence on
extra demands from the EU and the rebate. The committee found that Osborne’s
evidence was “not supported by the facts”.

There are a number of other observations. There are
competing claims over prices, whether they would rise or fall industry by
industry. Of course, much depends on the policy of the government of the day,
whether reciprocal tariffs are imposed or not and to what extent Brexit would
affect patterns of trade between countries.

The claim that import costs would rise by £11bn is dependent
on assumptions; we would still buy the same good from the EU if tariffs were
imposed, we would maintain tariffs on imports from outside the EU and we fail
to strike a trade deal with the EU.

By the same token, Common Agricultural Policy (CAP) support
may be continued in a different form, therefore it can not necessarily be
claimed that food prices will fall by £400m.
The OECD suggests CAP food price support costs consumers £10bn.

On jobs, the TSC found that although 3 million jobs may be
linked to EU trade, those jobs were not dependent
on EU trade. Such claims should be careful over use of language.

As would be expected, the TSC heard evidence from the Bank
of England. Efforts were made to explore the effect on exchange rates and
interest rates in the event of Brexit. Uncertainty in the markets may be more
likely to delay interest rate rises. Sterling
might fall, as would the Euro, the effects mutually offsetting each currency
with regards to EU trade.

The Bank of England witnesses were also to put risks into
some sort of perspective. Brexit may be an internal risk but there are greater
risks to economies in a global context. Indeed, there are also further risks
that may be associated with a Remain vote. These include bank liquidity in the
Eurozone and further EU reform which may undermine the Bank of England’s
ability to ensure monetary stability.

The committee were broad in their approach. Several
questions were explored in detail. It is acknowledged that there is plenty of
uncertainty, both with a vote to Remain and a vote to Leave. These largely
extend to the nature, scope and timing of trade deals.

Other avenues, some overlapping trade, related to foreign
investment, financial services, global markets and immigration.

There are of course some potential limitations to the
report. Whether certain exclusions were made in the interests of unanimity is a
question for the committee.

Whilst the TSC has been able to explore and make
recommendations from British representatives and institutions, some
international organisations were unrepresented. These include the IMF, whose
Managing Director, Christine Lagarde, is on record for thanking the Treasury
for its help in compiling the IMF report. Other organisations, such as the Institute of Fiscal Studies, were not called.

Notably, a further IMF report has been brought forward to
the week before the referendum. During hearings, the TSC have noted the change
in timing from previous years.

Perhaps surprisingly, there was no exploration of the funds
that might be raised by imposing tariffs on EU imports, new found freedom over
being able to set VAT rates with its own implications on price levels and
competitiveness. Other policy angles, such as Minford’s free market model were effectively
marginalised.

Despite any criticisms of the report and, on occasion, an
apparent lack of even-handedness of ferocity of questioning, the TSC have
produced a balanced document. Certainly, there are some omissions but the final
result is one which has been presented as unanimous.

The range and detail is a tribute to the TSC themselves. The
variety of media comment from MPs concerned following publication gives each
their own angles to argue, with different weight given to the different
components according to their own views.

They have highlighted some of the key statistics in a
balanced way, despite the majority being Conservative and a different majority
being apparently pro EU. The strongest criticism is for the Chancellor with
rebukes for others who have used questionable data.

Those involved on the committee have provided an example of
parliamentary democracy of which Britain can be proud – for as long
as the Select Committee system lasts.