Darling drops a bomb

Alistair Darling hit out at David Cameron and George Osborne today for trying to put all the blame for the UK’s participation in the €60bn European bailout fund (the EFSM) onto the previous Labour government.

Darling said:

"When you referred to the discussions that took place in May of last year in relation to the eurozone fund, you gave a somewhat incomplete account of my conversation with the now Chancellor (George Osborne),"

"We did indeed agree that we should do everything we could to keep Britain out of the main part of the rescue fund.

"But in relation to the smaller element [the EFSM] which you refer to, what we discussed was not voting against but abstention, recognising that Britain could have been out-voted - exactly the same thing that the Chancellor referred to when dealing with Ireland.”

It has been known for some time that Darling consulted Osborne before effectively nodding through the deal, but this is the first time the former has gone public with what actually happened during that extraordinarily eventful weekend back in May. Cameron and Osborne may argue that they could have been outvoted and dragged into the bailout fund anyway, but that’s not really the point. By agreeing to abstain - it that's what they did - and essentially condoning the UK’s participation in the bailout mechanism, they can hardly claim that it was all down to the Labour government and that they're therefore innocent victims of a deal struck before their time.

This whole situation is indicative of the Coalition’s approach to some of key challenges facing Europe at the moment – steer clear of controversy by shirking responsibility. Well, with a potential Portuguese bailout looming as well as new budget negotiations on the horizon it’s clear that the government will be forced to engage with the EU and make some decisions soon; they would look a whole lot better if they started taking the initiative.

Pushing for an alternative route for Portugal - a restructuring combined with a limited cash injection so that more of the burden fall on investors and less on taxpayers - would be a good place to start.

EU Treaty Change: back with a vengeance

It's back!

The discussion about Treaty change, that is. As we've noted before, Germany continues to push for treaty change to allow for a permanent crisis resolution mechanism/orderly default procedure in the eurozone. Unable to stomach the prospect of another round of ad hoc bailouts in a few years time, which exposes its taxpayers to yet more unacceptable risks, Germany will next month publish the details of its proposal. The German government might seek to insert the new provisions into the Croation Accession Treaty, set for 2012. The FT has more.

Now, the question that we've posed before is: does the German drive for a Treaty change constitute a threat or an opportunity for the UK's coalition government?

It certainly isn't uncomplicated, but we would tend argue for the latter as any Treaty change at the level of all 27 member states would give the UK the leverage (i.e. a veto) it has lacked ever since it signed up to the Lisbon Treaty.

Although we suspect that this isn't the prevailing thinking in Coalition circles at this point, it would be very foolish for the Coalition not to explore possibilities to get something in return for allowing the eurozone to restructure.

A Pointless Press Release

A press release from the Conservative MEPs has just landed in our inbox heralding Struan Stevenson's heroic defeat of the European Parliament's proposal "to call a moratorium on all deepwater oil drilling". Here is the main text:

A crude knee-jerk proposal before the European Parliament to call a moratorium on all deepwater oil drilling has been rejected thanks to an amendment by Scottish Conservative MEP Struan Stevenson.

The parliament's environment committee had proposed a full moratorium following the Gulf of Mexico incident. However, Mr Stevenson had pointed out that the UK has a two-decades old history of safety despite 315 deepwater wells having been drilled since 1974.

Fair enough, this would have been a ridiculous proposal if adopted, but what the press release doesn't say is that this is all purely theoretical - MEPs have no power to do anything of the sort! As the EP's press release states this was a purely "non-legislative resolution", which would have had no real impact whatsoever.

The EP frequently passes these types of resolutions on the latest 'hot topic', irrespective of whether it has any powers to act or even influence the debate. They are mostly a waste of time and therefore taxpayers money.

We would suggest that in future Conservative MEPs and their media teams spend more time reminding other MEPs of what they’re actually there to do rather than playing along with the game of pretending to be more important than they are.

Which Coalition is tougher on EU: NL or UK?

The Dutch Liberals and Christian Democrats yesterday presented their proposal for a coalition agreement, allowing the two parties to form a minority government (supported in parliament by Geert Wilders' uber-populist PVV party).

The agreement still needs to be approved by the Christian Democrat's party congress tomorrow, but it sheds some light on how people (and their elected representatives) in one of the founding member states have started to think about the European Union.

In fact, the Europe section of the agreement - see here and here - bears striking resemblances to the coalition pact agreed a few months ago in the UK.

For example, the Dutch pact says:

European spending, policy development and transfer of competences to the European level cannot happen unhindered...With the Lisbon treaty...the limits for transfers of national competences to the EU have been reached. In the existing context the EU should function in an optimal way and at the service of the citizen. The attention should primarily go to fiscal soberness, promoting economic growth, improving legal and security cooperation and make external policy more effective.

So just like the British government, the Dutch one promises no more transfer of powers. Incidentally, this could amount to another "obstacle" for German demands for Treaty change in addition to those already possibly existing in Ireland (legal referendum requirement) and Austria (political referendum requirement). Although a Treaty change to introduce a state insolvency procedure may actually win broad support as taxpayers in the Netherlands could stand to gain, and it could make the eurozone fairer.

On the EU budget, the agreement states:

Reform of the EU budget is necessary, meaning that the contributions by the member states need to become more balanced and more transparent. The cabinet will make an effort for a substantial reduction in Dutch contributions to the EU in the negotiations on the upcoming financial perspective.

In fact, incoming PM Mark Rutte has said that the coalition will demand a €1 billion reduction in the country’s yearly €7 billion contribution to the EU budget, in addition to keeping its current €1 billion rebate from the budget in place.

Similar position to the British, although this looks like an even tougher negotiation stance than that of the UK coalition at this point.

In regards to existing EU laws, the Dutch agreement says:

Where national policy is limited by legal borders, the Netherlands will make an effort within the EU or any other context to change treaties, directives or other agreements.

And specifically with regards to immigration and asylum:

The cabinet will take initiatives to adapt EU directives and if there appears to be no alternatives for important measures, in consultation with other member states it will seek to modify the Treaties.

The focus on immigration laws (and an implicit swipe at enlargement earlier in the document) could well reflect the murky influence Wilders will now have over Dutch politics. But it's interesting to note that the Dutch coalition agreement - similarly to pre-election Tory pledges - include the desire to re-negotiate existing laws and powers, including possibly Treaty changes. Also here, the Dutch Coalition agreement seems to go further than its British counterpart.

All in all, the Dutch coalition agreement strikes us as more 'radical' than the Tory-Lib Dem one - who would have thought that a few months ago?

How could the 'referendum lock' be given teeth?

Over at the Spectator's Coffee House blog, we're taking a look at how the Coalition's referendum lock on further transfers of power to the EU could be given real teeth. The lock, which was announced yesterday, has come under criticism from Tory backbenchers for being too little too late.

However, we argue that if the Coalition takes a strict interpretation of 'transfer of powers', the referendum lock could actually prove significant.

Read our take on how this can be achieved here.

The EU's WTD is a spectacular failure - what will the Coalition do about it?

We have looked extensively at the EU's draconian Working Time Directive in the past (see here, here, here, here, here, and here for example) warning that it just won't go away. It is back in the headlines again, after a new survey has highlighted the negative impact it has on the NHS.

The survey of 500 senior surgeons for the Royal College of Surgeons warned that the rules were creating a generation of “clock-watchers” with a “lazy work ethic” who no longer felt personal responsibility for their patients. Among consultants who did comply with the 48 hour limit, 56 percent said they had only done so at the expense of patient safety.

And today we hear of further analysis by the RCS, showing that thousands more patients are now waiting longer than 18 weeks for surgery due to the EU rules. In fact, waiting times had been dropping since the 1990s but the WTD rules for junior doctors, which were implemented last August, has reversed the trend. The proportion of NHS patients having to wait longer than the 18-week target for non-emergency surgery such as hip replacements had almost doubled from 1.5 percent 18 months ago to nearly three percent in March this year.

As RCS President John Black put it, “To say the European Working Time Regulations has failed spectacularly would be a massive understatement.”

In total, the WTD costs the UK economy between £3.5 and £3.9 billion every year (at a time of austerity) - making this the costliest EU law on the UK statute book. This also makes it one of the more conspicuous examples of an EU regulation which continues to generate heavy costs year on year but that still remains unaddressed. It's also a blow to those who claim that EU social policy is effectively dead.

The combination of the rules for on-call time, compensatory rest and the 48-hour limit has for years imposed heavy burdens on public sectors and business across Europe (in Sweden, the Netherlands and Germany for example) - without sufficient benefits in return. Trying to centrally plan how the working week should be organised for 27 different countries (with different healthcare systems, labour market models etc.) was always bound to spell trouble.

And very few European governments particularly like the WTD (the European Parliament is a different story). At least 15 member states are currently using the opt-out from the 48 hour working week to get around the on-call time/rest rules. But because of the difficulties in changing EU laws once agreed, the WTD remains in place despite all the costs and evidence.

The question now is: what will the Coalition government do about this spectacular failure? We have argued before that the UK should seek a comprehensive opt-out from EU social and employment policy, along the lines of what the Tories envisioned in opposition.

There are a range of reasons why this would be a sensible policy. Although we won't repeat all the reasons here, it would, for example, be consistent with the Coalition's pledge to cut costs and bring decision-making powers closer to communities, business and families. It would also be the only way to ensure that the UK (and other countries) won't lose their opt-out from the 48-hour working week - which is continuously coming under attack from the European Parliament and narrow interests in Brussels.

Losing this derogation would increase the annual cost of the WTD to the UK economy to between £9.2 billion and £11.9 billion - a ridiculous amount at any time, but particularly now.

In 2007 - what now feels like a century ago - David Cameron said that

“It will be a top priority for the next Conservative government to restore social and employment legislation to national control."

The Tory election manifesto then toned down this rhetoric quite a bit:

"We want to restore national control over those parts of social and employment legislation which have proved most damaging to our businesses and public services. For instance the application of the Working Time Directive on the NHS."

This pledge, in turn, was dropped from the Coalition agreement, which merely states,

"We will examine the balance of the EU’s existing competences and will, in particular, work to limit the application of the Working Time Directive in the United Kingdom."

Quite an evolution...

A spokesman for the Department of Health was quoted in today's Telegraph, saying:

“On the European Working Time Directive, the Health Secretary will support the Business Secretary in future negotiations on its revision, including maintenance of the opt-out.”

Not exactly the toughest statement, but better than nothing. Having dropped its pledge for repatriation, the Coalition Government needs to make the renegotiation of the WTD an absolute priority; it would save an awful a lot money and be consistent with the Coalition's pledge to scrap unwanted laws. To fail to deliver in even this, the most obvious area of EU renegotiation, would leave a very bad taste.

And here there are allies to be found around Europe - it's just a matter of going to work.

The coalition government must stand up for EU reform

In the Telegraph today, we argue:

Europe is in desperate need of reform in order to become more democratic, economically dynamic and modern. The Con-Lib government has the potential to become a powerful force for such reforms. But it must have the courage to stand up for these changes both abroad and at home. In the end, this would benefit Europe, Britain and the coalition itself.

Read the full article here.

What does the Con-Lib coalition offer on Europe?

As we detailed in our press release today – the Con-Lib coalition Government deal on Europe has some things which reform-minded people, such as ourselves, can be happy about, and some things to feel a twinge of disappointment over. A basic summary of our thoughts on the matter is here:

The Conservatives have retained their pledge for a ‘referendum lock’ – guaranteeing that any future transfers of power to the EU be subject to a referendum – which is welcome, and could give citizens the sense of ownership over EU policies that has been missing in recent years.

They have watered down their pledge for a UK Sovereignty Bill – saying instead only that they will “examine the case” for such a Bill. However, since it was never crystal clear how such a Bill might work in practice, we aren’t particularly vexed about this one.

In a somewhat cynical move, the new Government has also made it clear that the UK will not join, or plan to join, the euro over the lifetime of the next Parliament. Since we would have sooner seen Bill Cash say “I agree with Guy (Verhofstadt)”, than a political party recommend joining the euro in the next 4-5 years, the euro question was effectively neutered anyway.

Rather disappointingly the Conservatives appear to have shelved their plans to elevate the position of Europe Minister to Cabinet – this would have promoted the importance of the European Union in UK politics and shown that the Government was ready to become more engaged and forthright in promoting the UK’s interests in Europe.

The new Europe Minister is David Liddington – and not Mark Francois who has shadowed the position since 2007. While we hope David Liddington will approach EU reform with the tenacity that is required, it is a disappointment that the continuity Mark brought to the role over recent years (amid ever-changing appointments on the Labour benches) will not be maintained under the new Government.

The Conservatives have also dropped their pledge for an opt-out in criminal policy, and instead said they will approach any new legislation in justice and home affairs, and whether or not to opt-in, on a “case-by-case basis”. This is clearer a great deal closer to the position of the Lib Dems, who have favoured much more EU integration on justice and home affairs matters than any other party.

The coalition agreement has also dropped the pledge to seek an opt-out from the Charter of Fundamental Rights, and for the repatriation of powers in social and employment policy. Instead, the agreement only reads: “We will examine the balance of the EU's existing competences and will, in particular, work to limit the application of the Working Time Directive in the United Kingdom.”

This is a touch disappointing, as we have previously argued that this is an achievable, and desirable goal – giving the important impact such legislation has on the UK economy (and which is set to cost £71 billion over the next decade).

However, a key concession on the part of the Lib Dems in the coalition agreement would seem to be this pledge that: “We agree that there should be no further transfer of sovereignty or powers over the course of the next Parliament.”

While the Lisbon Treaty transferred a huge number of competences from member states to the EU, it is clearly a welcome step that the Government has committed to no new transfers of power over the next five years.

If interpreted strictly, this pledge has the potential to be very radical indeed, with Angela Merkel stepping up her calls of late that some kind of Treaty change is desirable to strengthen the rules of the eurozone. The Commission's new proposals, set out on Wednesday, do suggest that the possibility of further transfers of economic competence to the EU may be on the horizon.

The Greek crisis has meant that commitments to no more ‘institutional change” for ten years are all well and good, but countries such as Germany need some reassurance that the rules of monetary union will be toughened up and German taxpayers won’t be called on to bail out other eurozone countries who have run into financial difficulties.

Therefore a strict pledge that no more powers should be transferred to the EU/or if they are they should be subject to a referendum, presents the Government with the opportunity for the leverage in negotiations it needs, e.g. on the EU budget.

Is the Con/Lib agreement a good deal?

Well, some of the most important bits from the Conservatives’ Europe policy are still in there – notably the referendum lock and a pledge to transfer no new powers to the EU.

It is a disappointment to see a weakening in their stance on social and employment policy and justice and home affairs, but all marriages need compromise and given the gulf that lay between the two parties on the question of Europe, there is reason not to be too glum.

While the Europe issue may be a ‘sleeping dog’ at the moment – rest assured that the preparations for a full-throttled push for a European economic government will mean that the question of new transfers of powers are not far off.

Where would a Lib Dem/Tory pact leave the EU?

So both Gordon Brown and David Cameron have extended an offer to the Lib Dems to begin talks to see whether some sort of coalition, however loose, could be agreed upon to form a Government. But Nick Clegg has said that it is for the Conservatives, as the largest party, to try and form a workable majority first.

Speaking earlier today David Cameron clearly opened the door to a potential coalition with the Lib Dems. There has also been speculation that senior members from the Lib Dems could be offered roles in a Conservative-led government in return for their party's support. However, Cameron also set out the manifesto pledges that his party would not be willing to compromise on, including pledges on immigration, defence and the commitment that "[no] government should give more powers to the European union". According to reports, Mr Clegg and Mr Cameron have already spoken this afternoon and agreed to explore possible deals.

Now, there are lots of things to say about this deal or no-deal. Quite clearly, although many European countries find this type of political uncertainty business-as-usual following a national election, pro-longued uncertainty over who governs this country is in no one's interest. Certainty is particularly important for cleaning up the public finances and injecting confidence into the markets (which are struggling to come to terms with the debt crisis and contagion effect facing the eurozone).

Much will happen before all is said and done, and other governing arrangements might triumph in the end - but just a note on what a potential Lib Dem/Tory coalition might mean for the prospects of EU reform, and the UK's relationship with the rest of Europe:

While electoral reform and the economic recovery will be the key issues in such an arrangement, the EU is clearly a dividing line between the Lib-Dems and the Conservatives, with Nick Clegg still committed to joining the euro in the long-term, favouring a common EU immigration policy and calling for further integration in justice and home affairs. Should the two parties agree to a coalition arrangement, especially if involved a Lib Dem cabinet position, the Conservatives could naturally find it more difficult to push through some of their key policy pledges on Europe. In particular, the Conservatives might fail to get support in Parliament for their flagship policy of a 'referendum-lock' - a law that would require every future transfer of power to the EU to be subject to a referendum in the UK (also 'the sovereign bill' might suffer but it's unclear how meaningful such a bill will be in practice in the first place).

The Conservatives and the Lib Dems could also clash on whether the UK should opt in to the EU's growing number of initiatives in immigration, policing and security policy. Over the next five years, there are a range of key decisions a UK government must take in justice and home affairs, as the Lisbon Treaty drastically accelerates EU integration in this area. Ambitions to opt out of some parts of EU employment law could also be complicated by a Lib Dem/Conservative arrangement.

Needless to say, none of this will go down well with Tory back-benchers or grass-roots.

Other key areas, such as the upcoming negotiations on financial services legislation (in particular the AIFM Directive, set for May 18) and talks on the EU budget, will not necessarily be profoundly affected by a coalition arrangement, since all three main parties tend to broadly agree on substance (although perhaps not on strategy and tone).

However, it's clear that the Lib Dems are out of step with the British public on the EU. Quite apart from the possible merits of a coalition in other areas, it would be most unfortunate if the Conservatives allowed a deal with the Lib Dems to kill off future momentum for EU reform. As we've argued before, Europe is changing - with the eurozone cracking and people across Europe seriously starting to question whether the current model for European integration is sustainable (most people already know it's not democratic) - the long-term prospects for a UK government to find allies and change things in the EU for the better are greater now than in any time in recent history.

Cameron should therfore stand firm on his ideas for EU reform in the talks on a possible coalitionwith Nick Clegg.

Too much information Denis

In the category “too much information”, we bring you a story from former Labour Europe Minister and über -europhile Denis MacShane. Keen as ever to convince the world that a Tory victory in the general elections will end Western civilization as we know it, he apparently shared the following - somewhat disturbing - tale with Italian newspaper Il Sole 24 Ore:

When [David Cameron] was running for the party’s leadership, I met him accidentally in the locker room of the House of Commons, while we were having a shower. I had gone jogging, while he [David Cameron] was back from a bicycle ride. I told him: ‘David, once you become a leader you have to give up one of the ideological pillars of your party, like all great statesmen do. Margaret Thatcher and Tony Blair did. I wish you will get rid of all those suspicions towards the EU’. He stared at me and said: ‘My dear Denis, I’m much more Eurosceptic than you may think’.

Okay, we get it. Europe should brace itself for the most isolationist Western leader since James Monroe (slight touch of irony there).

But did we really need to know about the shower, Denis?

Hysterical and one-sided

It's always amusing to witness journalists and politicians with euro-enthusiastic tendencies having a go at parts of the British press for being biased on Europe, while at the same time being guilty themselves of some seriously one-sided and dubious reporting.

One of the most conspicous examples is when we caught the Independent - at the height of the debate about a referendum on the Lisbon Treaty - reprinting a Foreign Office briefing note on the Treaty almost word-for-word, but without any attribution that the FCO was the source. (Compare the Foreign Office briefing here to the Independent article here). A newspaper simply printing what the government tells it word for word is not considered quality journalism in most places.

On Friday, the Independent’s John Lichfield got a bit over excited about the prospect of a Conservative government 'spooking' Europe. Quoting a couple of French politicians, a Spanish MEP and a second-hand “source in Ms Merkel's Christian Democratic Party” he predictably got stuck on the idea that Europeans these days live in perpetual fear of the Conservatives coming to power. A potential Conservative government is now up there with global warming and terrorism as the greatest threats to humanity (we made up that last part).

The discussion about the Tories in Europe has always verged on the hysterical – and few people outside the bubbles in Brussels, Paris and Westminster pay much attention to it. But what’s arguably worse, at times it comes across as outright ignorant – despite all the lofty talk amongst commentators for the need to increase the quality of the discussion on the EU.

For example, Lichfield makes a song and a dance over the Tories’ manifesto, which spells out that the EU should be an “association of states”. In mainstream European politics, Lichfield claims, to talk about the EU in this way is “unhelpful” and is “reopening an argument that Britain lost more than 50 years ago.”

Er, say what?

That argument is alive and well around Europe – in fact, it is increasingly moving back to the fore. The German Constitutional Court used this exact phrase in its explosive ruling on the Lisbon Treaty to make clear its view on what the EU is and what it should remain (Verbindung souverän bleibender Staaten). Also the Swedish governing Moderate Party – which is at the mainstream of the mainstream of European centre-right politics – is using very similar wording to describe its vision of the EU (mellanstatligt samarbete).

It does take knowing a couple of languages, but the information is quite clearly there for anyone interested in a quality report. But then again, the need for such reporting only applies to one side of the argument, doesn't it?

Threat or opportunity?

The German-led calls for an IMF-style bailout fund for the EU have caught most people on the hop, including the French, and the lack of detail suggests that the practicalities are only now being worked on inside the German Finance Ministry.

French officials have said that there are two fundamental issues still up for debate: whether the European Monetary Fund would cover only the eurozone or all of the EU's 27 member states, and whether the EU treaties should be amended to create the fund. Plainly, there is a long way to go before the EMF gets off the ground and the current debates are highly speculative.

But as far as the first question goes, if the proposed EMF were to include all 27 member states, rather than just the eurozone, this would obviously have significant implications for the UK as British taxpayers would be asked to underwrite other EU governments’ debts. It would also draw the UK into a system of EU 'economic government' that would potentially give the EU greater powers to interfere in monitor the Government's handling of the economy.

For both of these reasons, any UK government is likely to stay well clear of any participation in the EMF.

The second issue, over whether an EMF would require treaty change, is far from clear but there are a few hypothetical scenarios.

Paris appears cautious about any proposal for an EMF that would require treaty change. French Finance Minister Christine Lagarde reportedly said that "Other avenues should be explored" that are in line with the existing Lisbon Treaty. This suggests one of those creative legal EU solutions which confuses everyone (possibly involving the Lisbon Treaty's ratchet clause which allows for amendment of the Treaty without it being considered an actual treaty change).

However, Chancellor Angela Merkel yesterday made it clear that she thought that the creation of a bailout fund would certainly require changes to the EU treaties. "Without treaty changes we can't form such a fund," she said. And given that it would amount to a breach of the current 'no bailout' rules in the treaties, it is hard to argue with her.

Commentators are already suggesting that new EU treaty negotiations would present both Labour and the Conservatives with big problems. Gordon Brown promised MPs that after Lisbon there would not be any institutional changes in the next Parliament:

I can confirm that, not just for this Parliament but also for the next, it is the position of the Government to oppose any further institutional change in the relationship between the EU and its member states. [Hansard, 22 October 2007]

Similarly, the Conservatives announced last year that they would give voters a referendum on future transfers of power to the EU.

However, depending on how this plays out, an EMF that didn't include the UK could actually present the UK with a sizeable bargaining chip, particularly a future Conservative government. Treaty change would require the Government's consent, whether the UK is involved in the EMF or not. In other words, this could be an opporunity for an incoming Conservative government.

The Conservatives have said they want to renegotiate areas of the UK's membership, notably opt-outs from costly EU employment regulation and intrusive justice and home affairs legislation. In addition, an incoming UK Government has a lot of work to do on the EU budget and the single market issues, including financial legislation.

There is possibly a deal to be done here – the Tories could say "if want to go ahead with the EMF and closer economic integration of the eurozone you need to give us something that we want in return." In Cameron's own words, it would be the ideal opportunity to argue and demonstrate "that European integration is not a one way street and that powers can be returned from the EU to its member countries".

The tricky issue is of course that the Conservatives' promised - or at least are now percieved to have promised - that any siginficant treaty change leading to further integration would trigger a referendum in the UK. And the establishment of an EMF would be a big change, as it would create a whole new EU institution and a lender of last resort at the EU-level. This, in turn, is a clear step towards fiscal federalism, regardless of whether the UK takes part.

At the same time, if not involving Britian at all, the argument can be made that it does not involve a transfer of powers from the UK to the EU per se. Indeed, if put in the right context, it could be presented as a method of regaining powers from the EU, by taking the creation of EMF 'hostage' in EU negotiations.

The critics were quick to say that Cameron's policy was unrealistic and undeliverable, but if the proposal for an EMF gains speed he may be presented with an early opportunity to prove them wrong.

If all the pieces fall into place, he should take it.

2010: a better year for Europe?

Happy New Year - some thoughts on 2009 and the new year ahead from us over on Conservative Home.

Only a blanket opt-out will do

Over at Conservative Home today we lay out our response to David Cameron's announcement that he will bring control over social and employment policy back to the UK. This is the most welcome aspect of his new 'Europe policy', but on close inspection, his language suggests he is not contemplating going as far as he should in order to make this a success.

You can read the article here and post your comments:
http://conservativehome.blogs.com/platform/2009/11/mats-persson-the-conservatives-are-right-to-focus-on-eu-social-policy-but-only-a-comprehensive-optou.html

Repatriating EU social policy

Ahead of David Cameron's announcement on Conservative policy on Europe, Open Europe has today published the first in a series of papers about what a future Conservative government should prioritise, now that the Lisbon Treaty has been ratified.

In about two hours time Cameron is expected to announce that he will seek to 'repatriate' social and employment legislation from the EU, and promise a referendum on any future transfers of power. Open Europe argues that, if the Conservatives are serious about repatriating powers to member states, then social and employment policy is exactly the right place to start.

However, in order to achieve a strong negotiating mandate and fully address the current problems with EU social policy, the Conservatives must announce a referendum on reform of the status quo. A referendum on future transfers of power will do nothing to address the substantial costs already arising from EU legislation, nor the lack of democratic accountability in this area.

EU social and employment laws have had a massive impact on the UK economy, accounting for 25 percent of the total cost of regulation in the UK over the past decade. Looking ahead, UK laws derived from EU social legislation will cost the British economy more than £71 billion between 2010 and 2020, even if no new laws are passed in that time.

In the briefing paper, Open Europe sets out how the Conservatives should go about achieving repatriation in practice. This includes seeking a strong mandate from voters to strengthen the UK's negotiation position in Brussels, through a referendum on reform.

The potential election of a new Conservative government will coincide with the opening of EU budget negotiations, where discussions will be held about how much each country should pay into the EU over the period 2014 to 2020.

The UK has a veto over these negotiations, and should be prepared to use it to fight for a package of reforms which must be fleshed out between now and the election. A major feature of such a package should be repatriation of social policy.

This package of reforms should be put to the British people in a referendum, with a question along the lines of: "Are you in favour or against withholding agreement to the EU budget until the European Reform Package has been adopted?"

Open Europe Research Director Mats Persson said:

"Given the substantial economic impact of these laws, the Conservatives are absolutely right to make EU social policy a priority. There is a strong practical, economic and democratic case for repatriating powers in this area."

"If the Conservatives succeed in bringing back powers over these policies, it doesn't mean scrapping every workplace right going - it means giving Westminster back the power to keep, scrap or amend these important laws to better suit the UK's individual economic circumstances. This would cut costs and bring these decisions much closer to the people - where they belong."

"Employment policy is best decided nationally, where it reflects different traditions and labour market models, which have evolved as a result of decades of democratic discourse in individual countries. The Conservatives would not be alone in Europe in arguing that centralised rules for such fundamentally different labour markets just don't make sense."

"That said, they will need a powerful mandate for negotiation in Brussels, and holding a referendum on a list of reforms, such as repatriation of social policy, is by far the best way to achieve it. UK voters must get a say on the future of the EU - a mere 'manifesto mandate' simply will not cut it."

Click here to read the briefing:
http://www.openeurope.org.uk/research/eusocialpolicy.pdf

Cameron must pledge a referendum on EU reform

President Klaus has signed the Treaty and David Cameron is expected to make an announcement at 4pm tomorrow about what he will do next.

There's zero chance he will call a referendum on the now-ratified Lisbon Treaty (to come into force by 1 December), but he must still pledge to hold a referendum on reform of the EU. A referendum on future treaties simply will not cut it, since Lisbon allows for EU integration to take place without the need for further treaties, and a mere 'manifesto mandate' to EU reform is woefully inadequate - poll after poll shows the vast majority of voters from all parties want to be consulted.

Yes, it was Labour and the Lib Dems who got us into this mess by reneging on their promise of a referendum, but the Tories must now do the right thing and give the British people a say on what is feasible and realistic - a package of reforms which they could seek to lever in using upcoming negotiations on the EU budget.

If you haven't seen our press release today, here's our take in a nutshell:

Following President Klaus' signature of the Lisbon Treaty today, Open Europe calls on the British Conservative Party to now pledge to hold a referendum on reform of the European Union.

The potential election of a new Conservative government will coincide with the opening of EU budget negotiations, where discussions will be held about how much each country should pay into the EU over the period 2014 to 2020.

The UK has a veto over these negotiations, and should be prepared to use it to fight for a package of reforms which must be fleshed out between now and the election.

This Reform Package should be put to the British people in a referendum, with a question along the lines of: "Are you in favour or against withholding agreement to the EU budget until the European Reform Package has been adopted?"

Tomorrow, Open Europe will publish the first in a series of papers looking at which policy areas the Conservatives should propose to tackle, and how. The first paper will look at EU social and employment policy, which currently accounts for a staggering 25 percent of the total cost of regulation in the UK.

Open Europe Director Lorraine Mullally said:

"Now that Lisbon is a done deal, the Conservative Party must pledge to hold a referendum on EU reform. They must not follow Labour and the Lib Dems and go back on their promise to give people a say on the future of the EU."

"The public are crying out to be consulted. The Conservatives should now announce a referendum on a package of meaningful EU reforms which they should draw up carefully over the next weeks and months. Linking their ideas for reform to the EU budget, a Conservative government could be in a strong position to work with key allies in Europe for a better, more democratic and modern European Union."

"A simple 'manifesto mandate' for these things will not be enough - people want their long overdue say, and the Conservatives should give them it. A strong mandate from the people will strengthen the Conservatives' position in Europe when the time comes."

The third way

The blog is likely to go quiet for a few days as we head up to Manchester for the Conservative Party Conference. Should be an interesting few days, especially with our fringe event on what the Tories should do about Europe scheduled for Wednesday.

For our take on what they should do about the referendum/Lisbon mess, see here for the 'third way' option:
http://conservativehome.blogs.com/platform/2009/09/lorraine-mullally-.html

Would welcome your comments here!