Why Vote Leave - Part 8: Reform

In the run up to the referendum I intend to post a blog each Sunday detailing the reasons why Britain will be better off outside the European Union. These posts will cover the following topics: the economy, influence, democracy, security, the environment, cost, and reform.

"Britain is better off inside a reformed EU", so says David Cameron. There's every possibility that he's right of course, we'll just never know because a reformed EU isn't even remotely on offer. Preceding this referendum, the PM embarked on a renegotiation with European leaders in an attempt to get better terms for the UK's membership of the European Union. Back in 2013 when Cameron gave his Bloomberg speech in which he promised this referendum, he also set out what he saw as the issues with the EU and what areas he wanted to reform. The PM spoke of the growing frustration of the EU, with it seen as something done to people, rather than something acting in their interests, with decisions taken further and further away from them. He spoke of how the EU "must be able to act with the speed and flexibility of a network, not the cumbersome rigidity of a bloc. Not weighed down by an insistence on a one size fits all approach." He acknowledged that there was no European 'demos', and that "power must be able to flow back to member states not just away from them. It was promised by European leaders a decade ago. It was put in the treaty but it has never been properly fulfilled."

After winning the election, Cameron was given a mandate to go and seek those reforms. On the Marr show in January last year he affirmed his ambition for wide-ranging 'full on' treaty change. The Bloomberg speech also mentioned exemptions for small businesses from EU directives, changes to the working time directive and repatriation of social and employment law - the latter a 2010 manifesto pledge. But with every subsequent reveal it appeared that he was asking for less and less from our European partners. All those exemptions he'd mentioned at Bloomberg were dropped from his negotiations. He didn't even ask for them. Cameron made no attempt to reform free movement, instead opting to focus on in work benefits for migrants. This seemed to be somewhat of an own goal as prior to making it a flagship proposal of his renegotiation it was an issue that barely anyone mentioned.

The Conservative manifesto said: "We will insist that EU migrants who want to claim tax credits and child benefit must live here and contribute to our country for a minimum of four years." It also proposed a "new residency requirement for social housing, so that EU migrants cannot even be considered for a council house unless they have been living in an area for at least four years".
Cameron also wanted to prevent EU migrant workers in the UK sending child benefit or child tax credit money home. "If an EU migrant's child is living abroad, then they should receive no child benefit or child tax credit, no matter how long they have worked in the UK and no matter how much tax they have paid."
Cameron had to compromise on the welfare aspect of his renegotiation quite considerably. The four-year 'emergency brake' on in-work benefits wasn't so much an 'emergency brake' as a light feathering of the throttle, with benefits being phased in over the four years. Cameron failed in his original demand to ban migrant workers from sending child benefit money back home.
The final agreement Cameron secured mentioned no changes to social housing entitlement as they were yet another area he'd dropped before preliminary negotiations began.

So he went from seeking wide ranging reforms and full-on treaty change, to requesting a minor tweak in welfare provisions for EU migrants and even then he had to compromise on that. The vague semantic changes he's been promised about 'ever closer union' and a proposal to reduce the regulatory burden are so vague as to be inconsequential. Moreover, these changes haven't come into force yet, with the PM merely stating that the commitment to these reforms is legally binding. This itself has been shown to be completely false. So there's no guarantee that the pitiful reforms Cameron did manage to secure will ever come into force anyway.

Of course, the fact that the renegotiation has all but been dropped from Remain campaign literature belies how insubstantial it is. Despite this, there's an overarching argument from the In camp that the EU isn't perfect, but we should stay in anyway to help reform it and change it. But if all we can secure is a minor tweak to welfare - itself not guaranteed - when one of it's largest members is threatening to leave, how can we possibly expect to enact the sort of reforms Europhiles claim they want once we've voted to remain fully committed to the project? Indeed, there's evidence to suggest that we could in fact exert greater influence for reform from outside the EU. Australia, by building coalitions on international forums managed to secure greater reform to the EU's CAP than any member state has managed from within. There have been numerous calls for reform throughout the EU's history, yet it has still marched inexorably onwards towards it's stated goal of federalisation.

Because of course none of this means that there won't be changes in the EU. This referendum is not a vote between leaving and maintaining the status quo. There are clear plans to continue towards full political and fiscal union. The Five President's report details the steps to be taken over the next few years to complete this amalgamation. Whilst mainly dealing with the Eurozone, there are several areas in which it specifically pulls in all 28 members, both Eurozone and non-Eurozone countries, particularly in the area of fiscal and banking union. And then, on top of this, there's the talk of tax harmonisation across the Union, as well as a consolidated EU military force. There's no such thing as a qualified Remain vote. Brussels will take a UK vote to stay in the EU as an endorsement of these plans. Given that they're being talked about openly, we cannot plead that we didn't know that that was what we were voting for. Plus thanks to Qualified Majority Voting, we're all but powerless to stop it. 70 times the UK has voted against EU legislative proposals, and 70 times we have been defeated. This is precisely why we should leave. We are on a fundamentally different path to our allies on the continent, and no amount of aspiration to reform the EU will change that.

Why Vote Leave - Part 7: Costs

In the run up to the referendum I intend to post a blog each Sunday detailing the reasons why Britain will be better off outside the European Union. These posts will cover the following topics: the economy, influence, democracy, security, the environment, cost, and reform.

One of the most prevalent issues pertaining to the UK's membership of the EU is the cost of that membership and whether or not it represents good value for money. This debate has been muddied exponentially between the various use of gross and net figures, the amount of EU expenditure in the UK, the fact that as a net contributor we fund that expenditure, the cost of regulation, what's seen as EU waste and so on. It's difficult therefore to cut through the hyperbole and come to a conclusion as to whether the vast sums we send each year to Brussels constitute value for money.

Let's start with UK budgetary contributions. Vote Leave's headline grabbing figure of £350 million a week is only partially accurate. It is based off of the UK's gross contribution to the EU budget which, last year, was £17,8 billion. However, this does not take into account the UK's rebate, worth £4.9 billion last year, or public sector receipts worth a further £4.4 billion. So the actual cost of UK membership in 2015 was £8.5 billion. This itself is no small sum, but it's indicative of Vote Leave's incompetence that they opted for the gross figure, leaving themselves open to accusations of being misleading, rather than the net figure which few would argue was inconsequential. The UK's net contribution to the EU budget for the period of 2009 to 2014, taking into account rebates and receipts, was £48.6 billion.

So whilst Vote Leave's figure is somewhat misleading, there's no denying that we are a substantial contributor to the EU budget.

Now, opponents of the Norway option claim that despite not being in the EU, Norway still pays around the same for access to the single market. This is just as inaccurate as Vote Leave's £350 million claim, if not more so. Norway's expenditure relating to the EEA consists of several factors. Firstly there is the 'Norway Grants', aid paid by Norway as a form economic rehabilitation of post-Communist countries. These amounted to around €804 million from 2009 to 2014. Most importantly, this money is not paid to the EU.

There are also EEA grants, for which Norway provides 95% of the funding. This brings the total to €1.8 billion for that 5 year period. EFTA contribution to EU programmes affecting the EEA amounted to €1.7 billion, with Norway providing roughly 96% of the cost. Norway also participates in several EU programmes, including Horizon 2020 and the Erasmus research programmes, as well as participating in 26 EU agencies, relating to health, research, and eduction amongst others.

Norway's contributions are the price paid for a service, and funding is not one way. Norway's net contribution over the period was €620 million, or €90 million per year. Applying this on a pro-rata basis to the UK upon rejoining the EFTA, we would contribute approximately €2.5 billion a year. A large part of this would be for continued participation in many of the same programmes and agencies that we currently enjoy. Finally Norway pays roughly £7 million a year towards the EFTA budget. The UK's contribution in total then, on a pro-rata basis, would be roughly £2.36 billion a year. A saving of nearly £6 billion a year on our current contributions. So whilst being a member of the EEA does involve costs, it still represents a potential 75% haircut on our current financial obligations. Especially with news today that the EU could well be looking to increase our contributions after a Remain vote.

But it's not just the UK's contributions to consider when evaluating how the EU handles it's finances. The EU itself is extremely wasteful, and incredibly opaque when it comes to it's expenditure. Take for example MEP's expenses. European Parliament members can garner huge sums, tax free and without proper scrutiny, on top of their £60k salary in the form of grants and allowances. This doesn't even take into consideration the amount that can be claimed in expenses.

Then there's the travelling circus that once month sees the European Parliament decamp from Brussels to Strasbourg at a cost of around £130 million. This includes loading 5 trucks up full of plastic trunks, that once contained files and papers, but have now been rendered obsolete by email and the internet. It's a perfect example of the EU's general inertia and reluctance to reform it's procedures.

So not only will leaving the EU mean we will pay significantly less for market access, whilst still having - arguably a larger - say over the rules, it will also mean that we can spend money much more wisely, giving greater value to taxpayers.

Why Vote Leave - Part 3: Influence

In the run up to the referendum I intend to post a blog each Sunday detailing the reasons why Britain will be better off outside the European Union. These posts will cover the following topics: the economy, influence, democracy, security, the environment, cost, and reform.

One of the main objections to leaving the EU, especially via the 'Norway option', is that it would remove our influence, both on the world stage and also over the rules that apply to the European single market. This belies an ignorance of how globalisation is affecting the formation of global regulations.

In campaigners often cry that we need to be at the top tables in order to influence the rules, and I couldn't agree more. Their error is in believing that the EU is the top table, when in fact there are a whole host of global regulatory bodies that we don't have access to because of our EU membership. When engaging on the world stage, we our bound by the 'common position' of the EU, meaning we are unable to independently present our case and protect our own interests. We do not have a seat at the biggest top table - the World Trade Organisation - because our EU membership obliges us to outsource our trade policy to the EU. The other top table, the UNECE, is the regulatory body from which the EU derives much of it's regulations. Non-aligned states as well as EFTA members all have input and influence at this level, helping shape the direction and scope of regulations before they are adopted. We, as EU members, are again obliged to adopt the common position of the EU, meaning our interests our watered down by 27 other member states before they are presented at the top table as part of a combined EU negotiating position.

Not only that, but there are times when the EU not only waters down our negotiating position on the international stage but actively undermines it. As a brief summary of one example, the International Maritime Organisation (IMO) had set up a correspondence group to address the impact of environmental regulations on the yacht building industry in relation to vessels of under 500gt (gross tonnage) in size. There was concern from a number of countries and organisations that these yachts could not be built to comply with the regulations within the specified time frame, as the existing technology was not yet suitable for installation due to constraints on space, design restrictions and significant cost impact. This posed a severe threat to jobs and revenue in one of the industry's most commercially vibrant sectors. The UK, working with other European partners, produced a paper for submission to the IMO proposing to extend the deadline for the application of these regulations to vessels under 500gt by three years. The UK's proposal had the backing of several member states and the European Commission was fully aware of it's importance to those members. Here's what happened next, direct from the government's own balance of competences report:

It was at this point that the Commission claimed competency and set about requiring the UK and other Member States to withdraw all support for the proposal. From this point on the Commission refused to consider the merits of the industry’s proposal and Member States were threatened with infraction proceedings if they did not adhere to the Commission’s competency. Both the MCA and the UK’s permanent representative to the Commission worked hard to push the UK’s position, but to no avail.

The only opportunity the Commission offered to contest this decision was if the Council of Ministers voted that Member States would retain competency on this matter, knowing full well that this issue could not be brought before the Council within the timeframe prior to the MEPC65 meeting.

Owing to this decision by the Commission, the UK and its partners had to find an alternative IMO member (from outside the EU) to submit the paper on its behalf. While the UK was able to secure the support of other IMO members to undertake this submission, the Commission’s position still meant that the UK and other member states were unable to support or vote on the proposal at MEPC65. The Commission had, in effect, rendered 27 votes at IMO redundant.

So far from amplifying our voice at the global level, the EU actively undermined our position and then removed our vote. With friends like these...

Also this week, In campaigners have cited the abolition of roaming fees across the EU as a prime example of why we are better off in. Putting aside the argument that the inevitable price rises phone companies will implement to offset costs mean that those that stay at home will now be subsidising those who travel through higher phone bills, it is also inaccurate to credit the EU with this accomplishment. It owes much more, again, to global initiatives instigated by the International Telephone Users Group and the OECD - the former having published a report on the issue 17 years ago. A host of international organisations, including the WTO, set about forming policy which resulted in India committing to removing roaming charges in 2013, shortly followed by African countries and Latin America. You can read more about it here, suffice to say that the EU has been much slower to implement the abolition of roaming charges and has also had it's implementation criticised as unambitious.
Two examples then, of how regulations are increasingly made at a global level. By leaving the EU (a place where we have little to no influence, having lost the vote all 72 times we have set our face against EU policy, despite having increased our opposition to EU rules in recent times) we can cut out the increasingly superfluous middleman and wield our influence, as the 5th largest economy in the world, on the global stage.

All of this is best summed up by Article 34 of the Treaty on European Union:

1. Member States shall coordinate their action in international organisations and at international conferences. They shall uphold the Union’s positions in such forums. The High Representative of the Union for Foreign Affairs and Security Policy shall organise this coordination.

In international organisations and at international conferences where not all the Member States participate, those which do take part shall uphold the Union’s positions.

2. In accordance with Article 24(3), Member States represented in international organisations or international conferences where not all the Member States participate shall keep the other Member States and the High Representative informed of any matter of common interest.

Member States which are also members of the United Nations Security Council will concert and keep the other Member States and the High Representative fully informed. Member States which are members of the Security Council will, in the execution of their functions, defend the positions and the interests of the Union, without prejudice to their responsibilities under the provisions of the United Nations Charter.

When the Union has defined a position on a subject which is on the United Nations Security Council agenda, those Member States which sit on the Security Council shall request that the High Representative be invited to present the Union’s position.

An enormously far reaching provision that means that on the world stage, Britain is not a sovereign nation. Obliged by it's membership of the EU to adopt the position of the Union and uphold it's interests, even if that comes at the cost of the UK's own interests. This is precisely why we will be better off voting to leave.