Why Labour’s flawed EU policy won’t achieve what business wants
ED MILIBAND’S speech yesterday was a welcome intervention in the EU debate. But it didn’t go nearly far enough to address the deep-rooted concerns British businesses have with the EU.
The Labour leader claimed the Prime Minister’s pledge to hold an In/Out referendum after renegotiation created business uncertainty. But that’s nothing compared to Miliband’s strategy, which would mean businesses spending the next five years looking over their shoulder, aware that a referendum could appear at any given moment, as EU leaders scramble to shore up the failing euro.
All the evidence points to UK firms supporting a thorough renegotiation followed by a public vote. A representative poll of 1,000 business leaders by YouGov last year found 66 per cent supported an In/Out referendum, with 26 per cent opposed; a survey of 4,000 members of the British Chambers of Commerce found that 77 per cent of businesses supported a referendum, with 14 per cent against. Multinationals may shout the loudest, but SMEs account for 99 per cent of private sector firms in the UK, 60 per cent of private sector employment and half of all turnover. They too must be heard.
The reason companies support a referendum is simple: business leaders want to see the terms of our EU membership changed to help them better compete on the global stage, and for those changes to be put to the people to end the uncertainty forever.
The fundamental flaw in Miliband’s approach is that, while making promising noises about the need for change in the EU, he is tinkering around the edges. We have heard about EU reform before. European leaders have discussed creating a Single Market in services for decades, and have claimed they support greater powers for national parliaments, but with little movement. And don’t forget the Lisbon Agenda of the early 2000s, which was intended to make the EU more competitive, but which has since been roundly ignored. A referendum commitment gives the EU an incentive to actually make the changes it promises.
Business wants to return to a relationship with the EU that is focused on trade – not politics. Firms want the large quantity of punitive EU regulation reduced, and to see powers returned from Brussels to Westminster in areas like taxation, waste, and employment and social regulation.
We also need to know how a future Labour government will protect our financial sector from measures like the Financial Transaction Tax – which could cost UK pension savings over £3.6bn – and the Alternative Investment Fund Managers Directive (AIFMD), which the Regulatory Policy Committee warned last week would cost UK businesses £1.3bn each year.
Instead of talking about small changes, business is crying out for big ideas that could make a real difference. The Prime Minister’s Business Taskforce, made up of independent, leading-lights in UK industry, couldn’t have put it clearer when it warned that, as a result of EU red tape, “fewer inventions are patented, fewer sales are made, fewer goods are produced and fewer jobs are created”. We need to talk about how we can reduce the burden of EU rules on the small companies that do not export to the EU, and how we can slash the costs of EU environmental laws on UK firms.
We have a once-in-a-generation chance to change the EU’s direction. The Eurozone crisis has shown the flaws at the heart of the European project. Across Europe, political leaders are waking up to the need to alter how the EU works. For the first time in decades, Britain’s vision of a more competitive, deregulated, trade-focused Europe has a receptive audience.
If we’re to get the changes UK business wants, to enable it to go out into the global marketplace and compete with the fast-growing economies of the Far East and South America, we need our leaders to be bold and clear about their vision for Europe. Crucially, that process needs to be backed up by a referendum.
Matthew Elliott is chief executive of Business for Britain www.businessforbritain.org