EU referendum: What, when and why?

1.

How the EU began

The European Union grew out of a desire for peace in a war-torn and divided continent. Five years after World War II ended, France and Germany came up with a plan to ensure their two countries would never go to war against each other again. The result was a deal signed by six nations to pool their coal and steel resources in 1950.

Seven years later a treaty signed in Rome created the European Economic Community (EEC) - the foundations of today's European Union. The UK was one of three new members to join in the first wave of expansion in 1973. Today the EU has 28 member states with a total population of more than 500 million.

2.

Which countries belong to the EU?

The EU has grown steadily from its six founding members to 28 countries. Belgium, France, Germany, Italy, Luxembourg and the Netherlands signed up to the EEC, or Common Market in 1957. Britain, Ireland and Denmark joined in the first wave of expansion in 1973, followed by Greece in 1981 and Portugal and Spain five years later. Eastern Germany joined after unification and Austria, Finland and Sweden became part of the EU in 1995. The biggest enlargement came in 2004 when 10 new member countries joined. Romania and Bulgaria joined in 2007 and Croatia was latest to sign up in 2013.

3.

How does the EU work?

There are four key institutions which work together to run the EU - the European Commission, the European Parliament, the European Council and the Court of Justice. Watch the video to find out how they all fit together and what they do.

4.

What does it all cost?Tree map of EU budget showing contributions by country as %

The UK's estimated net contribution in 2015 was £8.5bn - according to Treasury figures. Each country receives money back from the EU to support development and other projects. The UK also gets a rebate, or money back, on its contribution, because much of the budget is spent on agricultural subsidies and the UK does not gain nearly as much as other countries like France. After all repayments were taken into account in 2015, Britain contributed about 12.6% of the entire EU budget. Germany paid the largest share, 21.36% and France was the second-biggest contributor at 15.72%.

5.

How does the EU spend its money?

The EEC started out as a trading bloc - with free movement of goods and services within the Common Market - now its interests include reducing regional inequalities, preserving the environment, promoting human rights and investing in education and research.

The EU is Britain's biggest trading partner. British citizens are free to work in any EU country and EU funding is spent on supporting farmers, boosting jobs in the UK, redeveloping rundown areas, and grants for university research. The EU has contributed to cheaper travel by challenging monopolies and boosting competition. It has reduced the cost of mobile data roaming and set water quality standards in Europe.

But giving subsidies to farmers led to over-supply of some crops and so the EU was forced to rethink its agriculture policy.Critics say the EU has taken too much power from the UK government, its regulations are costly to the British economy and without them, Britain would be able to sign other trade deals with growing economies like China and India. They also say that the EU wastes taxpayers’ money on excessive bureaucracy - citing MEPs monthly trips to Strasbourg which cost 180m euros (£136m).

UK and the EU: Better off out or in?

6.

Why is there a referendum?

The British government has promised to hold a referendum on EU membership before the end of 2017. There have been growing calls for a vote on whether to stay or leave the union, as it has grown and become more powerful.

In the past, the UK has chosen to opt out of some key EU decisions, like the single currency or euro and the Schengen Treaty, which relaxed border controls. Prime Minister David Cameron wants Britain to stay in the EU, if certain changes are made to the rules - including lower benefits paid to migrants and greater protection for states not in the eurozone.

Critics believe Britain is being held back by the EU, gets little in return for the money it pays in and would be better taking back control of its borders.

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What is happening?

The Conservatives' election manifesto promised to hold a referendum (a nationwide vote) on whether or not the UK should stay in or leave the European Union by the end of 2017. They won the election so it's all systems go.

What is a referendum?

A referendum is basically a vote in which everyone (or nearly everyone) of voting age can take part, normally giving a "Yes" or "No" answer to a question. Whichever side gets more than half of all votes cast is considered to have won.

What is the European Union?

The European Union is an economic and political partnership involving 28 European countries (click here if you want to see the full list). It began after World War Two to foster economic co-operation, with the idea that countries which trade together are more likely to avoid going to war with each other. It has since grown to become a "single market" allowing goods and people to move around, basically as if the member states were one country. It has its own currency, the euro, which is used by 19 of the member countries, its own parliament and it now sets rules in a wide range of areas - including on the environment, transport, consumer rights and even things like mobile phone charges.

When will the EU referendum happen?

The one thing we know for sure is that Prime Minister David Cameron has said it will happen by the end of 2017. The most likely times of the year for referendums are generally May or September, and some people - including, it is said, the prime minister himself - think it should be held as soon as possible. There had been suggestions that it could be held in May 2016, to coincide with elections in Scotland, Wales, Northern Ireland and London, rather than waiting for 2017 - but the government has ruled that out and June or September 2016 are now seen as most likely. Here is a full rundown of the likely dates and key events.

Why wasn't the referendum held earlier?

When David Cameron announced in January 2013 his pledge to hold a referendum, a key element was that he would seek to make changes to the way the European Union works - or at least the rules covering the UK as a European Union member. Only once this renegotiation of British membership had been completed would he put the new arrangement to the public vote.

What did other parties think about the idea of a referendum?

During last year's election the Lib Dems and Labour both said they did not want a referendum unless there were plans to transfer more powers from the UK to the EU. The SNP also opposed a referendum. The UK Independence Party and the Greens both backed a referendum. As already mentioned, the Conservatives won the election and the necessary legislation has gone through Parliament so parties' focus is not on whether to hold a referendum, but which side to back.

What will the referendum question be?

The question is always crucial in any referendum. The original 2013 suggestion from the Conservatives was: "Do you think that the United Kingdom should remain a member of the European Union. Yes or no". Some people thought this phrasing leaned too far towards the status quo (the current state of affairs) and the Electoral Commission, which has to approve the question, said it was not clear enough and proposed: "Should the United Kingdom remain a member of the European Union or leave the European Union?" Downing Street and MPs have accepted the amended wording. Read more: Does the wording of a referendum question matter?

Who will be able to vote?

British, Irish and Commonwealth citizens over 18 who are resident in the UK, along with UK nationals who have lived overseas for less than 15 years. Members of the House of Lords and Commonwealth citizens in Gibraltar will also be eligible, unlike in a general election. Citizens from EU countries - apart from Ireland, Malta and Cyprus - will not get a vote.

What are the main changes David Cameron hoped to make?

Mr Cameron set out the four key ways he wants to change the UK's membership of the EU in a letter to European Council president Donald Tusk in November:

Integration/Sovereignty: Allowing Britain to opt out from the EU's founding ambition to forge an "ever closer union" of the peoples of Europe so it will not be drawn into further political integration. Giving greater powers to national parliaments to block EU legislation. The UK supports a "red card" system allowing member states to scrap, as well as veto, unwanted directives.

Competitiveness: To extend the single market and cut down on excessive regulation - commonly known by critics as "Brussels bureaucracy".

Benefits: Restricting access to in-work and out-of-work benefits to EU migrants. Specifically, ministers want to stop those coming to the UK from claiming certain benefits and housing until they have been resident for four years. But the European Commission, which runs the EU, has said such a move would be "highly problematic" and the focus has now turned to the UK having an "emergency brake" which could stop in-work benefits to EU migrants for four years.

What changes has he been offered by EU chiefs?

European Council President Donald Tusk has put together a draft deal ahead of the February EU summit where the UK's renegotiation demands are set to be debated.

Mr Cameron got some of his demands but had to compromise on others.

Sovereignty: The PM has secured a clear legal statement that the UK is not committed to further political integration and that the phrase "ever closer union" cannot be used to integrate the EU further. But it is not yet clear when or how this will be incorporated into the EU treaties. He has also got new powers for national parliaments to club together to block new EU laws but the thresholds are pretty high before those powers can be used.

Benefits: The prime minister got an "emergency brake" on welfare payments to EU migrants. But it is not clear how easy it will be to pull that brake or how long it will last. In-work benefits of EU migrants will be curbed for four years if other countries agree, they will be gradually restored the longer they stay in the UK. EU migrants will be able to send child benefit back home, but would get a lower level if the cost of living in the country where the child is is lower. Mr Cameron had wanted to block all of it.

Security: The PM has got some unexpected gains, making it easier for countries to stop terror suspects coming into the country even if the threat they pose is not imminent. There will also be a crackdown to stop people using sham marriages and other loopholes to gain access to the EU. Read more: What PM wanted v what he got

Is that the final deal?

No - other countries will still have their say, and more negotiations are planned ahead of the summit where they are due to be discussed on 18-19 February.

Why is a referendum being held?

Britain had a referendum in 1975 shortly after it had joined the EU, or the Common Market as it was then called. The country voted to stay in then but there have been growing calls, from the public and politicians, for another vote because, they argue, the EU has changed a lot over the past 40 years, with many more countries joining and the organisation extending its control over more aspects of daily lives. David Cameron initially resisted these calls but in 2013 he changed his mind.

Who wants the UK to leave the EU?

The British public are fairly evenly split, according to the latest opinion polls. The UK Independence Party, which won the last European elections, and received nearly four million votes - 13% of those cast - in May's general election, campaigns for Britain's exit from the EU. A fair number of Conservative MPs - and several Labour ones - are also in favour of leaving. There are two main campaign groups. Read more about them.

Why do they want the UK to leave?

They believe Britain is being held back by the EU, which they say imposes too many rules on business and charges billions of pounds a year in membership fees for little in return. They also want Britain to take back full control of its borders and reduce the number of people coming here to work. One of the main principles of EU membership is "free movement", which means you don't need to get a visa to go and live in another EU country. They also object to the idea of "ever closer union" and any ultimate goal to create a "United States of Europe".

Who wants the UK to stay in the EU?

David Cameron wants Britain to stay in the EU, once he has got some powers back from it. He has so far refused to say whether he would start calling for Britain to leave if he does not get what he wants from the other EU leaders, saying instead that he "rules nothing out". The Labour Party, SNP, Plaid Cymru and the Lib Dems are also in favour of staying in. As mentioned above, according to polls, the public seems pretty evenly split on the issue.

Why do they want the UK to stay?

They believe Britain gets a big boost from EU membership - it makes selling things to other EU countries easier and, they argue, the flow of immigrants, most of whom are young and keen to work, fuels economic growth and helps pay for public services. They also believe Britain's status in the world would be damaged by leaving and that we are more secure as part of the bloc.

So would Britain be better in or out?

It depends which way you look at it - or what you believe is important. Leaving the EU would be a big step - arguably far more important than who wins the next general election - but would it set the nation free or condemn it to economic ruin? Here is a rundown of the arguments for and against.

What about businesses?

Big business - with a few exceptions - tends to be in favour of Britain staying in the EU because it makes it easier for them to move money, people and products around the world. BT chairman Sir Mike Rake, a recent CBI president, says there are "no credible alternatives" to staying in the EU. But others disagree, such as Lord Bamford, chairman of JCB, who says an EU exit would allow the UK to negotiate trade deals as our country "rather than being one of 28 nations". Many small and medium-sized firms would welcome a cut in red tape and what they see as petty regulations, but a lot hangs on what deal Mr Cameron renegotiates. The British Chambers of Commerce says 55% of members back staying in a reformed EU.

Business for New Europe is a coalition of business leaders who support the UK's membership of the EU and "oppose withdrawal to the margins".

What are the rules likely to be for campaigning?

The Electoral Commission will be in charge of making sure it's a fair contest. It will select a designated lead campaign for both the "leave" and "remain" sides. The official campaigns will get access to a grant of up to £600,000, an overall spending limit of £7m, campaign broadcasts, free mailshots and free access to meeting rooms. Other groups are free to run their own campaigns but they will be limited to a spend of £700,000 if they register with the Electoral Commission and will have to report the source of donations. If they don't register with the Commission they will be limited to spending less than £10,000. The Electoral Commission has published a guide to the rules.

How much can the parties spend?

The spending limit for political parties depend on the percentage of the vote they received at the general election. The Conservatives have the highest spending limit - £7m - because they got the most votes at the general election. Labour is limited to £5.5m, UKIP £4m and the Lib Dems £3m. The SNP, Greens, Plaid Cymru and other parties that got less than 5% of votes cast in May will be limited to £700,000.

So who is going to be leading the rival sides in the campaign?

This has yet to be decided - but here are the main groups of either side of the argument.

Britain Stronger in Europe - the main cross-party group campaigning for Britain to remain in the EU, headed by former Marks and Spencer chairman Lord Rose. It is seen as certain to get the official Electoral Commission designation to head the Remain campaign.

Vote Leave campaign - A cross-party campaign that grew out of Business for Britain, headed by former Conservative chancellor Lord Lawson. Key figures include former Conservative adviser Dominic Cummings and Matthew Elliott, who ran the successful 

Leave.EU - Funded by UKIP donor Arron Banks and other business people, with the backing of longstanding Eurosceptic groups - it has been vying for months for official designation with Vote Leave.

Grassroots Out - A new outfit which emerged at the start of 2016 following in-fighting between Vote Leave and Leave.EU. Founded by Conservative MPs Peter Bone and Tom Pursglove and Labour MP Kate Hoey.

The watchdog is expected to make its decision on which group will head the Leave campaign within weeks of the referendum date being announced. It will judge each applicant's merits on the basis of a range of criteria, such as level of cross-party support, campaign tactics and organisational capacity.

By law, the watchdog does not have to choose a lead campaigner for either side if it thinks none of the groups make the grade, although this would be a highly unusual and controversial move.

There are a string of other organisations campaigning either for or against EU membership, as well as groups of MPs. UKIP leader Nigel Farage is certain to play a prominent role in the leave campaign, regardless of which leave campaign gets the official designation.

David Cameron has vowed to campaign for Britain to remain in the EU "with all my heart and soul" if he gets what he wants from his renegotiation with the other member states, and is likely to take part in any TV debates which take place.

Former Home Secretary Alan Johnson is leading Labour's own campaign to stay in the EU but says he will not share a platform with David Cameron.