April 20th, 2015
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Why manifestos tell us more about party politics than they do about Britain’s relationship with the EU
April 16th, 2015
By Simon Usherwood
This week’s release of manifestos for the general election is a good opportunity to review how parties are planning to handle the key question of Britain and the EU. Both as political statements to voters and bargaining positions for the almost-inevitable post-election coalition talks, they set out the broad parameters of policy.
As such, it is disappointing to see that this policy remains driven by narrow, party-political interest rather than by a broader sense of what might be achieved.
In all cases, parties have focused on the question of a referendum on membership, something now promised across the board, albeit with some differing conditions. The success of those pushing for a referendum –the Tory backbenches and UKIP in particular – is quite striking and marks a considerable long-term shift in the way that debate has become framed in the UK. Indeed, one could go further and argue that it has become something of a substitute for debate about the EU: it doesn’t matter what you want to reform or develop, because you’ve not given the people a voice.
At one level, there is a strong argument about popular involvement in policy-making. But at another level, politicians seem to be unwilling to talk about what should change and what ‘in’ or ‘out’ should look like. A vote without a debate would be deeply unhelpful.
And this is reflected in the manifestos we have so far. Aside from the referendum question, the Tories, Labour and LibDems all agree that the single market should be completed and red-tape be cut, that national parliaments should have a ‘red card’ mechanism to block EU legislation that the budget needs reform (and, ideally, cutting) and that Euro membership is bad. All of these are long-standing British positions that reflect national trade interests and the eternal struggle for CAP reform. As such, they form something close to the ‘motherhood and apple pie’ of British EU policy: so axiomatically good that they need no real thought or discussion. Just the sort of thing to stick in a manifesto to ‘flesh out’ policy.
Beyond this, other policy positions reflect the rise of immigration as a political issue. While the LibDems and Labour don’t go quite as far as the Conservatives on tightening free movement and access to benefit, it is evident that the debate has been driven by efforts to close down as much policy space to UKIP, rather than by a serious consideration of the economic costs and benefits of a mobile labour force.
Indeed, it’s telling that changes in this area are as close as the parties – particular the Conservatives – come to setting out an agenda for their planned renegotiation. That the main party of government isn’t willing (or able) to indicate what it hopes to achieve in such a process is indicative of how policy on the EU is conceived: party management and biffing your opponents are the order of the day.
As Michael Emerson has pointed out on this blog, there is a wealth of evidence and analysis available to all parties, through the Review of Competences. That no one seems to want to use that, nor to engage in the other major questions confronting the EU, should be a cause for concern. Britain is deeply linked into European society and economy: problems there are problems here too. Muse then on the absence of any mention of how the UK might help the Eurozone to emerge from recession and reform its governance. Whatever the outcome on May 7th, the UK is very likely to have a government that continues to struggle to know what it wants to achieve with its European partners.
Simon Usherwood is Senior Lecturer in Politics in the Department of Politics, University of Surrey. His work has focused on euroscepticism, both in the UK and more widely across the EU. He is coordinator of the UACES Collaborative research Network on Euroscepticism and co-author of The European Union: A Very Short Introduction (OUP 2013).
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April 2nd, 2015
By Michael Emerson
The British government is to be congratulated for the massive and high quality research effort it completed under the name of its ‘Balance of Competences Review’. This most thorough ever, independent enquiry into the workings of the EU saw 1,500 submissions of evidence, leading to 32 volumes and 3,000 pages of analysis with the findings.
But there the congratulations end. The government chose to abstain from drawing any conclusions from this mountain of evidence, despite the fact that the whole exercise was meant to foster ‘evidence-based policy making’. The House of Lords Select Committee on this topic estimated that the total cost of the operation was around £5 million, and questioned whether this expenditure could be justified if no conclusions were to be drawn.
Or course one understands why this bizarre outcome happened. Coalition politics. The Tories and Lib-Dems could not face the prospect of trying to agree the conclusions. However, since the findings were all published, it is up to anyone to draw their own conclusions, which is what a group of researchers at the Centre for European Policy Studies (CEPS) have done.
Actually the findings are very clear and quite fundamental for the shaping British policy towards the EU. One can hope that whatever government is formed after 9 May, it will shape its orientations accordingly.
There are three key words currently being used in the political discourse of Prime Minister Cameron and his Tory colleagues: reform, renegotiation and repatriation. These terms are loosely sprinkled in various speeches without clear definition and even interchangeably. However to define a strategy for resolving the EU question before a referendum, if there is to be one, it is necessary to clarify these key terms:
- Reform is about improvement of EU policies applicable to all member states.
- Renegotiation is about getting opt-outs or special deals for the UK.
- Repatriation is about deleting competences for the Lisbon Treaty, thereby returning these powers to the member states.
A viable British government negotiating position will have to be based on a justifiable balance between these three types of action. It is precisely on this question that the evidence from the 32 volumes is now invaluable.
The essential finding is that the agenda for reform is wide open and substantial. However the scope for renegotiation is very limited because of the extent of the UK’s existing opt-outs (Eurozone and Schengen) and special deals (notably for the budget rebate). And the evidence came up with not one EU competence for which there was a case for its repatriation, because many of these powers are actually ‘shared’ with the member states, and the actual balance of shares was found to be mostly ‘about right’.
This means that the British government’s strategy has to focus on the reform agenda. Lord Nigel Lawson famously said in 2013 that he had joined the Brexit camp because the EU was ‘unreformable’. The evidence is to the contrary, for the past, present and future.
It should be recalled that Mrs. Thatcher’s nominee to the Commission, Lord Cockfield, was principally responsible for reforming single market policy, by introducing the principle of mutual recognition of standards for traded goods, allowing for less reliance on harmonising legislation, and thus serving as a model case of decentralisation.
Agriculture and fisheries have long been the staple diet of critics of the EU. But agricultural policy has been substantially reformed since the 1990s, with a categorical shift away from production support to income support, such that ‘butter mountains’ are a thing of the past. The fisheries policy was drastically reformed in 2013, such that ‘fish discards’ are now also a thing of the past. In all of these three cases (single market, agriculture and fisheries) UK negotiators were clearly punching above their weight.
Turning now to the present and future, there is an active agenda that is as if tailor-made for UK interests. The single market for services is incomplete, and the UK pushes for action here to cut out obsolete national discriminations. The new digital agenda sees the UK pushing a specific set of priorities, given that national policies in this field are simply not viable. In the recent decisions for EU energy and climate change policies to 2020 and 2030 the UK pushed successfully for what it considered to be the right balance between EU-level objectives and national implementation prerogatives. The financial services sector has seen radical reform at EU and global level since the onset of the Lehman Brothers crisis in 1998. The UK has worked successfully to defend the interests of the City, and in particular to prevent the Eurozone from taking measures that might discriminate against non-Eurozone member states. In the event of secession the UK would become defenceless against actions to tilt the playing field against non-member states.
There was one further question that was not addressed in the Balance of Competences Review, but which is of cardinal importance. What would be the consequences of secession be for British business? Polls of business leaders show overwhelming majorities that fear negative consequences. However the CEPS study adds to the evidence on this topic by looking at the legal consequences of secession. In a nutshell it would be a huge legal mess as thousands of laws of the UK statute book that are presently implementing EU legislation would be instantly repealed on the day of secession, unless the government chose to re-instate them without delay to avoid a legal void. But this then leads into the question what the government would choose to re-instate or not, bearing in mind that any significant repeal of single market law would mean loss of guaranteed access to the single market. The only sound economic option would be to join Norway in the European Economic Area: i.e. stay in the single market as a non-member state without a vote, but this of course would defeat the presumed political objective of secession.
 CEPS published its findings in a book: M. Emerson ed., ‘Britain’s Future in Europe – Reform, Renegotiation, and Repatriation, or Secession’, Rowman and Littlefield, 2015
Michael Emerson is Associate Senior Research Fellow at the Centre for European Policy Studies (CEPS) in Brussels
Why English voters won’t be the only ones to decide Britain’s future: Wales and Northern Ireland spell out clear benefits of EU membership
March 27th, 2015
By Will Cousins
Wales and Ireland finished more or less honours even in the Six Nations rugby tournament. Wales won a tight match between the two sides in Cardiff, while Ireland clinched the title on points difference on a thrilling final weekend. But now that sporting rivalry is out of the way for another year, there is something on which the countries of these teams seem to agree – the vital nature of British membership of the EU.
On Tuesday, the Northern Irish Assembly released a report forecasting that British exit from the EU could cost 3% of Northern Irish GDP, or £1bn a year. While on Wednesday, a parade of Welsh MPs (all of them Labour) lined up to describe the benefits Wales gets from being a part of the EU, and the inherent risks involved in leaving.
The common arguments apply, of course. The value of the European Single Market. The power of the EU in negotiating free trade agreements. The invaluable research funding provided by the EU’s Horizon 2020 program. But there are some other benefits that Wales and Northern Ireland have in common, and which deserve to be focused on.
The first is structural funding. One third of the EU’s annual budget goes on the so-called “cohesion” policy- quite simply, redistributing wealth from richer regions of the EU to poorer ones. This is not a top down programme- the money goes to national and devolved governments, and in England local enterprise partnerships, to spend. The money is targeted towards growing the economy, encouraging business creation and creating good jobs in places which badly need them.
Both Wales and Northern Ireland are recipients of large amounts of EU money. For the last funding period, lasting from 2007 to 2013, Wales received £2bn. It is estimated that 30,600 jobs, and 10,400 businesses, were helped into being by this programme. Take the Centre for Nano-Health at Swansea University. £10mn of EU money helped create a world-beating, integrated organisation, employing 50 academic staff, which has succeeded in pulling in an additional £15mn of private sector investment. For the 2014-20 period, Wales will benefit from an additional £2bn.
Northern Ireland will receive €513mn from 2014 to 2020. One example of the advantages EU membership has brought is the glittering new Giant’s Causeway visitor experience, for which Brussels provided one-third of the £18.5mn cost. The Giant’s Causeway is a world heritage site, and in its first six months the new centre attracted 320,000 visitors. Total EU funding for Northern Ireland added up to €2.4bn over 2007-2013, including extensive agricultural support.
There is one aspect of Northern Ireland’s relationship with the EU which makes it unique among the nations of Britain- its shared land border with another EU state. Currently, popping across the border to do your shopping is as easy as anything. I do not suggest for one moment that, were Britain to leave, this comfortable arrangement would be replaced by passport controls and razor wire. But any tightening of the border whatsoever, for example in the form of tariffs, would be deeply damaging to Northern Ireland’s economy.
The Republic of Ireland is a very important trading partner for the UK. In 2013, £26.7bn of British exports went to the Republic. It is also one of those rare countries with which Britain enjoys a trade surplus- in the same year, imports were just £17.5bn. But only 5% of Britain’s exports go across the Irish Sea. For Northern Ireland, however, it is a very different story. In 2013/14, the province’s manufacturing exports totalled £18.1bn. Fully £1.6bn of those, or almost 9%, went to the Republic. What is more, it is a growth market- exports rose 9.9% in that year.
The debate about Britain’s European future can, like so much else in this country, be London-centric. Too little emphasis is placed on those regions which are net beneficiaries of the EU budget. And while the unique consequences of Brexit on Northern Ireland are being loudly discussed in Dublin and Belfast- witness the Irish Prime Minister’s comments yesterday- they have not received nearly enough attention in London. Eurosceptics, in particular, seem unwilling to acknowledge the existence of any problems in this regard, or even to acknowledge the existence of the EU’s cohesion policy. In a week when YouGov showed support for staying in the EU at a record high, perhaps they had better start.
March 16th, 2015
By Richard Corbett MEP
For what looks like a question of fact, this simple point has become a political hot potato. Eurosceptics are keen to inflate the figure as much as possible so they can claim that the UK is “being run from Brussels”: Nigel Farage famously claimed that the figure was “something like 75%”, before being forced to admit that that number was just his own invented estimate.
Of course, the question can be tricky to answer, because a lot depends on what counts as ‘a law’ and what counts as ‘European in origin’. So a few weeks ago, the House of Commons Library did research, doing their best to take into account these difficulties.
The figure they came up with was 13.2%: that’s the proportion of UK legislative acts passed in the last 15 years, both primary legislation and statutory instruments, that refer to the EU or flow from an EU-level agreement. They admitted that this figure was likely to be an overestimate, though, since they counted every single reference to Europe in any law — whether that be a full-blown implementation of a European agreement, or simply a passing mention of the EU in an entirely domestic law, for instance to define a term.
So far, so good. But, a few days ago, the eurosceptic pressure group Business for Britain stuck its oar in and proposed their own answer to the question in a pamphlet audaciously entitled ‘The Definitive Answer’. Their figure? 64.7%
We can look at the details of the research in a moment. But first, whichever side of the EU debate you’re on, please put aside your prejudices for a second and think about this objectively. Which of these two bodies would you say is the more reliable? On the one hand we have a non-partisan, highly respected House of Commons library, saying that a figure of 13.2% is likely generous. On the other hand, we have a eurosceptic pressure group putting forward a figure so high it’s suspiciously close to Farage’s inflated “estimate”. If you came into this with no preconceptions at all, whom would you trust?
Sure enough, a quick skim of BfB’s pamphlet immediately rings some alarm bells. Having liberally applied the word “definitive” throughout their press release, they admit on page 5 of the actual pamphlet:
“It is immensely difficult to accurately quantify the impact of EU legislation.”
Indeed, the approach BfB used so to get the 64.7% figure is far from uncontroversial. They take the House of Commons interpretation of ‘EU-influenced’, but quietly remove the caveats. Then they add to this every directly-adopted European regulation, on the pretext that these all represent “laws in force in Britain” even though they haven’t passed onto the statute books via Westminster.
This is bizarre. European regulations are typically focused, technical, and highly limited in scope. They apply to specific corners of the European market, such as olive growers and tobacco farms. Plenty of them are specific to the EU’s internal operations. Many are time-limited, meaning they expire every year and have to be renewed. In order to generate their 65% figure, BfB has had to count every renewal of every regulation as a full-blown ‘law that applies in the UK’.
I suppose you could factor in these kinds of regulations. But then you would have to do the same on the UK side, and count every local parking regulation, traffic control order, clause of the Anglican church’s ‘canon law’, and so on. After all, these are technically ‘laws that apply in the UK’, using BfB’s tendentious interpretation. I haven’t done the maths, but if you really want to see how many of these there are in Britain, legislation.gov.uk will tell you. To put it mildly, there are a lot. Somehow I don’t think the figures will come out looking very eurosceptic-friendly if we go down that road.
Finally, I want to try to inject a note of sanity into the debate, by suggesting that the question is an odd one to ask anyway.
Firstly, EU rules are not imposed on us by some alien power. We are Europe: we agree shared policies with our European neighbours on issues where we have overlapping or mutual interests. We make agreements at European level when we recognise that acting at national level would be less effective. And all new EU laws are approved by national ministers in the EU Council (accountable to their national parliaments) as well as by directly elected MEPs.
Secondly, what good, really, is crude law-counting? If the UK passed just one big law a year that implemented all our miscellaneous European agreements, would eurosceptics then be happy to say that only 0.1% of UK law was European in origin? No. What matters is not the number of individual legal titles, but the content of those titles.
Thirdly, it’s not like we wouldn’t bother making laws if we didn’t agree them at European level. We’d just make them in a different place, with less effect.
And finally: what really counts as a “law in force in Britain”? Forget the EU for a moment. Suppose you run a business in the UK and you want to sell windscreen wipers to Germany. Technically, only UK regulations apply. But of course there are also German regulations, and you had better follow those too, or else you can’t sell your products. Now suppose you want to expand your business to the Netherlands, or Portugal, or Poland. Again, none of the rules of those countries technically apply to your business in Britain. But from your point of view, they may as well do. When it comes to windscreen wipers, you are de facto governed from abroad, and there’s nothing you can do about it.
Now suppose 28 countries were able to get together and agree to replace their 28 different sets of windscreen wiper regulations with just one shared set. Suppose they set up a democratic system consisting of elected governments and elected parliamentarians to debate and agree that shared set. And suppose that shared set, once duly agreed, could enter into force across the entire European market in one go.
In that scenario, would we really complain that a UK windscreen wiper law had gone out the window and a European windscreen wiper law had come in, nudging that terrible percentage from 13.1 to 13.2? Or would we rather celebrate the fact that a regulatory burden had been lifted, and trade had just been made a little freer for everyone?
March 11th, 2015
By Will Cousins
The rebirth of the car industry is one of Britain’s great business stories. From the ashes of the long death of Rover, a new industry has emerged- making volume and luxury models, SUVs and sports, Formula One racers and vans. From Bridgend to Sunderland, and from Essex to Merseyside, 730,000 people are employed in the industry. It accounts for 4% of British GDP. Incredibly, Britain now produces more cars than France, despite the fact that our industry is entirely foreign owned.
The sector is dependent on EU membership. In 2013, 77% of British cars were exported, and 49% of them went to the EU. That adds up to £22.8bn. Some manufacturers are here purely because of the European market- 71% of cars manufactured in Nissan’s plant in Sunderland go to the EU, compared to just 19% sold in the home market. Access to the Single Market is vitally important for foreign manufacturers, as is the ability of the UK government to support them in the Brussels corridors of power.
If anyone should be listened to on this issue, it is the manufacturers themselves. Most recently, the President of Ford Europe told the Today programme that EU membership is “critical” for Britain. In the past couple of years, these sentiments have been expressed by the CEO of Nissan, the UK chief executive of Hyundai, the head of sales of BMW and the UK managing director of Honda.
The best point was made yesterday by, rather surprisingly, Matthew Elliott of Business for Britain, described by the New Statesman as the “in utero” Out campaign. He told the BBC’S Daily Politics show that: “it is fair to say that the car industry would face 10% tariffs”. This is the rate applied to Japanese manufacturers.
It should not have escaped anybody’s notice that Japanese manufacturers base themselves in Britain to avoid tariffs. By basing their manufacturing operations here, they can export to the rest of the EU unhindered. Were we to leave, they could not. Elliott said, in the same programme, that were a referendum on EU membership to be held today, he would vote to leave.
To blithely support leaving the EU in full knowledge of what it would mean for a vital strategic industry, for so many peoples’ livelihoods, and without having any plan for dealing with it, is extraordinary. Business is coming to realise that Britain’s anti-Europeans are not impartial rationalists; they want us out at any cost. If they show so little consideration towards such a big industry, why should smaller ones feel any confidence in what they are selling?
You can watch the clip here: Rudd and Elliott on European arguments
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March 5th, 2015
By Will Cousins
In many modern car plants, such as those which have thrived across the UK in the last few years, a vehicle will roll off the production line every sixty seconds. Business leaders do not speak up for EU membership quite so regularly, but recently, that has seemed to change.
On Monday, the Ford Motor Company’s boss in Europe, Jim Farley, told listeners that “being part of the EU is critical for business.” One-third of Ford’s engines are manufactured in the UK- that’s two million a year. The company employs 14,000 people at manufacturing and research centres in Basildon, Bridgend, Dagenham and Halewood. Mr Farley said that he “really hopes” the UK does not leave the EU.
The reaction to his comments among eurosceptics has been instructive. On social media, they pounced on the fact that Mr Varley did not explicitly say that Ford would pull investment from the UK if we left the EU. If nothing else, this demonstrates how little confidence they have in their own case- the fact that a multinational has not raised the possibility of pulling out of the UK is regarded as a victory. Of course foreign car manufacturers would not up sticks and leave the moment Britain left. But the fact that they are so unequivocal about the benefits of membership is striking.
Volume car manufacturers, like Ford, are in Britain in order to sell to the EU. If eurosceptics do not understand this, they were clearly not listening to the talk given by industry expert Dr John Wormald, at a conference last month attended by many of the leading lights of the anti-European movement. Japanese cars face a 10% tariff when exported to the EU. Domestic European manufacturers, particularly in France and Italy, are having a difficult time. Would their governments really allow cars made in Britain to be sold across the EU, tariff-free, if the UK left the EU? Of course not. They would take the opportunity to eat our lunch.
It isn’t just the motor industry which is worried by the prospect of a Brexit. Siemens, the German engineering giant, employs 13,760 people in Britain. It is currently investing £310 million in a new plant in Hull, to manufacture offshore wind turbines. Surely no project could fit in better with the government’s intention to “rebalance” the economy, and stimulate a “march of the makers.” Manufacturing jobs, in the green energy sector, in the North of England- what more could you want?
That question might be academic if we leave the EU. The project’s director, Finbarr Dowling, told the Hull Daily Mail today companies like Siemens could “think again” about investing in the UK, were we to leave. His comments were unequivocal: “Look at the benefits we have of inward investment into this country. We are very much part of that European family and we want to continue like that. When I look out, all to the east is Europe, so we want to be able to export to Europe and we have a better chance of doing that if we are in the union.” This is far from the first time that Siemens UK has expressed its fears about the possibility of Brexit.
Let’s move from Hull to London, and from manufacturing to financial services. The Lord Mayor of London, Alan Yarrow, has spoken of London’s role as the financial capital of Europe. He put the key point very well in a speech on Monday: ““We have the leading international financial centre of the world: that cannot live on a hinterland of 65 million people. We are and will continue to be the financial centre for Europe because we’ve got 600 million people sitting on our doorstep.”
Banks outside the Single Market do not have the passport to provide financial services in the Eurozone. Outside the EU, the UK government would have no power to decide the direction of EU-wide financial regulation, as this recent House of Lords report made clear. Few people in the City can see the attraction of cutting ourselves off from our largest and most important export, and incentivising foreign banks to set up shop in Frankfurt or Paris instead of London.
Yarrow, pointing to a recent YouGov poll that showed a 10 percentage point lead for staying in, describes Brexit as “unlikely.” We agree with him, but businesspeople would be unwise to sit back and assume that it is impossible. On the economy, voters respect the opinions of business leaders. The best way to safeguard the exports and investment which create jobs and growth in Britain is to speak up, loud and clear, about the benefits for business of being in the European Union.
February 24th, 2015
By Will Cousins
Assuming the worst of your own circumstances, and imagining everybody else to have it better, is probably part of human nature. But it is not an effective attitude to take politically. Those who want Britain to leave the European Union have been casting around for an alternative- any alternative- to our current situation. But the truth is that the grass is no more lush and plentiful on the other side of the fence.
That is according to Vidar Helgesen, the Norwegian Minister for Europe. Mr Helgesen, a conservative politician, gave a speech organised by British Influence in which he said that Norway had to adopt most EU legislation, but was locked out of the decision making bodies. He said: “I have a hard time seeing the UK, with your global ambition, dedication and contributions, being comfortable with such an arrangement.”
Norway is not, of course, a failure- it is richer than any EU state with the exception of Luxembourg. On the face of it, copying the Norwegian model might seem attractive. But special factors are at play. Norway’s population of just five million have the good fortune to own Europe’s largest oil reserves. This advantage can hardly be copied. The truth is that their success has come despite their position outside the EU.
The European Single Market is a thing of immense value. It provides for totally free trade among a market of 500 million consumers, with a GDP of £10 trillion. Movement of goods, services, capital and people are all free. Regulations are standardised across the EU, so that businesses need only abide by one set of rules, whether they are exporting to Dublin or Dubrovnik. The worst position any country could be in would be just outside the EU, dependent on exporting to it, but suffering the great disadvantage of not being in the Single Market.
Norway, as a member of the European Economic Area (along with tiny Iceland, and tinier Liechtenstein), has access to the Single Market. But only EU states get to decide on the rules which govern that market. Norway is stuck in a position of regulation without representation, waiting for EU member states to decide something, and then having no choice but to implement it. It is true that the European Commission must “consult” Oslo. But no other EU institution need do so, meaning that Norwegian diplomats have trouble even following what goes on in Brussels, let alone influencing it. According to the Norwegian government itself, the country must adopt 75% of EU legislation.
But doesn’t Norway avoid having to pay billions to the EU, and retain some freedom of action? Up to a point. Norway pays subsidies to poorer regions of the EU, which add up to £78 a head every year. It has to pay for any European programmes in which it wants to take part, without having any power over how they are run. And while Oslo is free to negotiate its own free trade deals, the absence of the EU’s negotiating heft makes the terms distinctly unfavourable.
Any country that wants access to the Single Market must accept the principle of the free movement of people – indeed, Norway has more immigrants as a proportion of the population than Britain. Those eurosceptics who are motivated by concerns about migration should beware of a solution that means accepting the free movement of people, but having no control whatsoever over EU migration policy.
Eurosceptics, by and large, realise that glorious isolationism is not a practical policy. Believing the EU to be bad, they cast around instead for other multilateral alternatives, or for a new deal with the EU that somehow allows us to retain all of the benefits and none of the drawbacks. It should not surprise anybody to learn that this option is non-existent. Instead of gazing over the garden fence, Britain must recognise the benefits of EU membership, and fight to make it better still.
February 23rd, 2015
By Will Cousins
Anti-European rhetoric seeks to divide business. Large PLCs in London, they say, might be pro-European. But small businesses in the rest of the United Kingdom are drowning in/being throttled by “Brussels red tape,” and as such they want to leave the EU unless it is changed beyond all recognition. Fortunately, new evidence is coming to light which utterly refutes this argument.
Last week, a survey of 4,000 businesses by the North East Chamber of Commerce (NECC) was released. It showed an overwhelming majority of 58% of businesses wanting to stay in the EU, against a mere 11% who want to leave. This is exactly the same proportion as that found by the CBI (a target of Eurosceptic vitriol)- 11% for leaving, 78% for staying in.
And is it any wonder? A conference in London last Wednesday, attended by very prominent anti-Europeans, concluded that the best option for Britain would be to leave the EU and trade with it under the World Trade Organisation rules. This would mean that our exporters would face the EU’s common external tariff. The tariff on cars is 10%. Think about Nissan’s plant in Sunderland, the greatest industrial powerhouse in the region. Most of its cars are sold to the EU- how would it cope with such a rise in cost? Nissan is one of those big, foreign companies that hold a special place in Eurosceptic demonology. But what about supply chains? Car companies like to source their parts as locally as possible. Small, privately owned engineering firms would be hammered if Nissan got into trouble.
Further south, in Teesside, chemicals are a dominant local employer. The North East Process Industry Cluster employs 35,000 people directly, and another 190,000 people indirectly. It produces 50% of the UK’s petrochemicals, and 35% of pharmaceuticals. The EU tariff on chemicals is 5%- how do eurosceptics expect the industry to cope with that? Leaving the EU would achieve nothing more than the shipping of jobs, investment and scientific expertise in the chemical industry to Germany.
Foreign direct investment is also vital for the region. Siemens, the German industrial giant, employs 2,000 people in the North East, mostly in high-skilled energy sector jobs. Denmark’s Grundfos makes pumps in Sunderland; Germany’s TyssenKrupp makes parts for the automotive sector in Aycliffe; Hitachi is investing £5.8 billion in a new factory near Durham. Without access to the EU Single Market, many of these sorts of investments would become uneconomical.
It is also true that the North East benefits from the EU’s regional policy. Over the next six years, the region will receive £1 billion from Brussels, allocated to projects in infrastructure, small business support, digital and trade support.
Of course business does not want the EU to stand still. As the NECC’s Ross Smith put it: “Our members feel passionately that reform, rather than further integration or outright withdrawal, is most likely to deliver business and economic benefit to the UK.” Business wants the EU to change, along the lines of our Business Manifesto for Reform: completion of the Single Market, more free trade deals, greater competitiveness and less regulation. The good news is that this is happening. Just yesterday, for instance, Britain’s EU Commissioner Jonathan Hill outlined his plans for a Capital Markets Union across the EU. This will make it easier for small business to get funding from non-bank investors, such as venture capital and crowdfunding.
As the general election gets ever-closer, business minds are being focused by the possibility of a referendum on EU membership. All the evidence we see is that business wants to stay in the EU and work to make it better. And that is as true of small manufacturers on the Tyne and the Tees as it is of big banks by the Thames.
February 11th, 2015
By Will Cousins
Two interesting reports have been produced recently that cast doubt on the common claim that Britain is being strangled/smothered/drowned in “EU red tape.” Anti-Europeans hurl around wild estimates of the proportion of British laws originating in Brussels, some as high as 80%. In this view, the only thing anybody seems to do in Brussels is come up with more pointless regulation to load on British business.
So it might surprise you to learn that the proportion of acts exclusively implementing EU decisions is 1.4%. The proportion of UK statutory implements referencing EU law in any way was 12.9%. And as the Labour MEP Richard Corbett has pointed out, the vast majority of these “simply mention the EU or define an EU term for UK purposes.” This is according to a report by the House of Commons library, which is completely non-partisan and has no campaigning agenda whatsoever. In total, an average of 13.3% of UK legislation is EU-affected.
But not only does Brussels legislate less than you think; it legislates less than it did. Democratic Audit, another non-partisan think tank, shows that the number of EU-adopted acts across Europe has fallen precipitously in recent years. From a high of just under 250 in 2008, it had fallen by just 100 in 2013. The legislation passed is also less weighty that it was, having fallen from 500 million words in 2009 to 150 million in 2013.
This has not all happened by magic. The EU is coming round to the British view that less is more, that Brussels should act where it can make a real positive difference, but not tinker for the sake of it. The new Commission President, Jean-Claude Juncker, put it well: “Citizens expect the EU to make a difference on the big economic and social challenges… they want less EU interference on the issues where Member States are better equipped to give the right response at national and regional level.” And Juncker is not just talking the talk. The Commission’s agenda for 2015 proposes 23 new initiatives, of which just 14 are legislative, and withdraws 80- in stark contrast to previous years.
Britain has long struggled to make the EU more open and business-friendly. We are succeeding in that goal. If we left the EU, we would still have to abide by a great deal of its regulations if we wanted access to the Single Market- just look at Norway, which implements around 75% of EU legislation. Do we want to help make the rules, or do we want to have them made for us?
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