Some common sense from the Commission

Here's an encouraging proposal:

As we reported in our press summary yesterday, the European Commission has announced plans to revise its Byzantine state aid rules, potentially making life a bit easier for local and regional authorities. Currently, local bodies have to comply with the EU's jungle of rules, designed to ensure fair competition on the Single Market, even when subsidising or contracting out small projects such as swimming pools, playgrounds or crèches - which is just silly (and which adds unnecessary costs for taxpayers).

But, under the new rules, the Commission would lower the threshold on public procurement rules which - or so we hope - would let local authorities off the hook for public tenders for small-scale public services. As the competent EU Commissioner for Competition, Joaquin Almunia, put it.

"Our state aid rules currently apply also to local services organised by very small municipalities. It seems quite obvious to me that among these services, there are some that will have little impact on trade between member states and little potential to distort competition. I think that we need to adjust our scrutiny here and focus it on the cases that have a clear impact on the single market."

That makes sense. An official quoted over on Euractiv was even blunter:

"Most people [in DG Competition], they are not happy having to deal with a state aid complaint against a Dresden swimming pool. To be honest, it's more a pain in the ass than anything else, because they know very well that these matters should not be dealt with in Brussels."

The Commission says it wants to revise the regime in November (which it can do without asking member states or MEPs, since the EU has exclusive powers over this area). This is exactly the type of common sense that we want to see from Brussels.

But we need more of it - much, much more.

Incidentally, Open Europe will soon publish a list of examples of EU laws and measures that we feel should be revised on similar grounds. So watch this space.)

The Great Euro Gamble

In today's Wall Street Journal we argue,

"When European Union leaders forged their monetary union without a full political and economic merger, they gambled on two vital factors: That economic forces could be kept in check, and that national democracies could be managed.

Over the past 16 months, we have been reminded time and again exactly how big and how irresponsible those gambles were. Sunday's was arguably the strongest reminder yet, courtesy of the anti-euro True Finns party that may hold the balance of power in the next Finnish government. Paris, Berlin and Brussels seem not to have factored Nordic populism into their grand plans for the euro. But ultimately the euro zone is about politics, and politics remain as local as they ever were."

We go on,

"The True Finns' success will not change European politics overnight, and the party may not even succeed in blocking Finland's participation in future bailouts. But, irrespective of what we think of the True Finns, the election does highlight how powerfully a euro-zone crisis can contribute to shaping national politics. Euro bailouts were also an important issue in Slovakia's elections last year, and helped to deliver a new governing coalition that refused to take part in Europe's Greek bailout. That government only reluctantly kicked in later to help create the temporary bailout fund that euro leaders are now looking to replace after 2013.

This year the True Finns asked voters to consider the same question that Slovaks did last year: Why should they work harder and retire later to pay for the mistakes and wasteful habits of southern European governments? This "triple-A populism" has proven a powerful force in a number of countries with sparkling credit ratings, including Germany. Writ large, this weekend's Finnish elections are a rebuke of one of the euro zone's central, and fatal, conceits: that political ambition can trump economic and democratic realities."

Looking at EU leaders' gamble on being able to keep economic forces in check, we note,

"Markets have now finally woken up to the fact that Greece and Germany are poles apart; it is time for EU leaders to do so as well. Ireland, Greece and Portugal have made all too clear that economic forces can rarely be predicted, let alone contained.

Some particularly federal-minded EU leaders took this as a pretext to push even harder for a full-fledged fiscal union. Former European Commission President Romano Prodi wrote in an op-ed in the Financial Times last May that "When the euro was born everyone knew that sooner or later a crisis would occur. . . . I was warning years ago that, through no one's fault in particular, extraordinary events could occur that would force joint co-ordination of fiscal policies."

That sentiment spurred EU leaders to take their next major gamble, which was even riskier than the first: They bet that once they did start to effect robust economic and political union, national voters and parliaments would play along and vote the "right" way. So last year, when the EU elites decided to break their own treaties and turn the euro zone into a de facto debt union, they forced taxpayers in some countries to take on the liabilities of foreign governments in other countries—without the possibility of voting these governments out of office. But taxpayers are now showing signs of revolt. "

We conclude,

"Will EU politicians' second gamble turn out as ill-judged as their first? Time will tell. But one thing is clear. The political price that European leaders are paying to keep their flawed project afloat continues to rise."

A bizarre evening in the House of Lords

In case you missed it (and chances are that you did), last night's debate in the Lords on the Government's proposed EU Bill and 'referendum lock' was a bizarre affair, with many of the peers literally being all over the place. For a while there, it reminded us of some of the debates we've come across in the European Parliament - in many cases, what was said didn't actually correspond to anything taking place in the real world, nor any shade of public opinion.

We have looked at the 'referendum lock', which we're broadly in support of, on several occasions and argued that it would have been a much better 'lock' if it had incorporated the transfer of crime, justice and immigration laws - the Coalition has said it will continue to make its decisions to 'opt in' to these new laws on a case-by-case basis (and it continues to do so in roughly two-thirds of the cases it has the opportunity), rather than via a formal mechanism that could give MPs and the electorate some control over these transfers of power.

But back to the debate. A sign that something is broadly hitting the right note is when it is attacked from both sides. The Bill has been attacked for both preventing any future EU integration and as a sell-out by those who feel it won't stop the transfer of powers to Brussels (many of these people's real problem with the 'referendum lock' is that it doesn't roll back the existing transfers of power, which it was never designed to do) . Now, surely, both cannot be right.

Former Tory Minister and Conservative peer Lord Deben was seemingly having a particularly bad day, suggesting that the Government was pandering to "head-bangers". He added that he was "ashamed" of the Government's plans to hold referendums on whether to approve new EU treaties or major changes to existing ones and promised to vote against the legislation "again and again and again" unless changes were made.

The irony of an unelected peer being "ashamed" to consult the British people on major transfers of power to the EU (including the unelected Commission and unelected ECJ) - seems to have been lost on the noble Lord Deben. This is the full quote:

I do not believe in referenda in any circumstances. They are wholly unsuitable in a parliamentary democracy; they are a foreign invention used by people for ulterior motives; and they have never been part of the sort of society in which we live. I am ashamed that my Government have brought this forward.

Er, out of touch? The argument that the Bill would lead to referenda being held on every minutiae of EU policy seems to have gained credence amongst the peers discussing it yesterday. The only problem is, this argument is absolute nonsense, which anyone who has followed just a bit of EU politics over recent years would realise.

The Bill only covers transfers of competence under a new treaty or through changing the existing treaties - some of the major the "passerelle" clauses will also trigger a referendum. But there are a lot of stuff that won't trigger a public vote, because of what the EU already can do within its existing legal framework.

To get an idea of the kind of action that the EU can take without touching the Treaties, take the creation of the eurozone's €60bn temporary bailout fund, the EFSM. The hugely controversial decision to reinterpret EU law, through a qualified majority vote, and ignore the existing "no bail-out" clauses in the Treaties did not require a treaty change and therefore wouldn't have been caught by the lock. Or take the creation of three new EU financial supervisors, with binding powers over national authorities - again, that decision was taken by a qualified majority vote. A Treaty change wasn't even on the cards.

Rather than trading in hyperbole, Peers should focus on the meat of the Bill and seek to improve it, so that some trust can be restored in politics. Realising that European and British politics have moved on since the 70s/80s/90s (take your pick) would be a good place to start.

Incidentally, if ever you thought that the Lords were more mature than their counterparts in the Commons and less susceptible to ‘Punch and Judy’ knockabout, check out these comments from Lord Kinnock (whose family we’d point out earned a tidy £10m at taxpayers' expense during and after its stint in Brussels) directed at UKIP peer Lord Pearson:

My Lords, when the noble Lord, Lord Pearson of Rannoch, says that he wants to stick to his guns, I am inclined to hope that he goes very near to the muzzle of those guns-indeed, just in front-because that would be a suitable location.

Now that’s not very nice, is it Neil?

Downing Street goes for much needed shock therapy

With the eurozone destined for years of navel-gazing, as it struggles through the current sovereign debt and banking crisis, the UK is actually very well placed to push for EU reform. Its own economic challenges aside, Britain now has a chance to use the debt and competitiveness predicament facing several European countries and the EU as a whole as a springboard to get Europe back on the road to growth.

In other words, this could be turned into a benign crisis for those of us who are in favour of a growing and competitive Europe (it's hard to argue that Europe doesn't need reform when several countries are on the verge of bankruptcy).

Encouragingly, Downing Street has moved today to try and push this agenda, with a new initiative entitled "Let's choose growth" - and there's lots of good stuff in there (and the format is refreshingly innovative and easy to grasp, including this You Tube clip). Besides the proposals to liberalise the single market further, by creating a common market for digital and service industries and calling for deregulation, there also seems to be an emphasis on 'shock therapy'. Cameron and Co have made it plain to EU leaders that standing still is not an option as the rest of the world moves on.


This chart should be all the motivation Europe needs. As you can see, by 2050, only Germany and the UK are predicted to remain among the world's economic elite, and they will only be hanging on to the bottom two rungs of the ladder.

The rise of the likes of China, India and Brazil is inevitable but this is no excuse for Europe to give up. The big question however is whether the UK and other like-minded governments, such as the Scandinavians, the Dutch and the Czechs, will be able to keep the eurozone's attention long enough to make the point.

For this to happen, the British government needs to roll up its sleeves and get down to business: form alliances (cultivate, cultivate, cultivate the Scandies, new members - and the biggest prize of them all - Germany), horse-trade, manage the European Parliament, convince through pursuing best practice at home (such as the 'Better Regulation agenda', and a strong, healthy economy), on EU proposals get in early and get in low - but be tougher and shrewder when negotiations get rowdy.

Downing Street should be given credit for raising its game on EU reform. But now it must show it can turn a catchy pamphlet into concrete action.

'Can't touch this': Vince's MC Hammer moment

Business Secretary Vince Cable today announced a plan to ease the burden of regulation on small businesses in a bid to boost the economy. The plans would include a three-year break for small businesses from new regulation in addition to scrapping plans for extending parents' right to request flexible working and scrapping new rights for time off to train. The government has also vowed to review some 22,000 existing government regulations on business, with ministers forced to justify maintaining any that are challenged.

Now this is all welcome stuff, but the government has managed to completely ignore the regulation factory numero uno - that is Brussels - instead opting for a "can't touch this" approach.

When it comes to business, the EU is the main driver of regulatory cost in the UK. EU regulations do come with benefits, we don't deny that. But a lot of it is unnecessary or overly burdensome.

We can argue about the counterfactual (i.e. would the regulations have existed in the UK anyway), but what becomes clear during exercises like these is the extent to which the UK (and other member states) have lost control over their own regulatory reform agendas, as a huge number of laws are now locked in at the EU level. Changing an EU law requires re-negotiation and agreement amongst 27 different member states and the regulation-obsessed bunch that is the European Parliament.

Despite the fact that scrapping or amending unnecessary EU regulations could save the UK billions of pounds each year, and generate billions more in various dynamic effects, the Coalition has chosen to look the other way.

The problem with this approach is the familiar dilemma: you can leave EU regulation alone, but EU regulation will never leave you alone. The recent extension of the Gender Equality Directive by the ECJ to ban price differentiation between men and women should serve to illustrate this point (a ruling expected to cost the UK insurance industry an additional £1 billion).

We've been looking at the cost, proportion and impact of EU regulation in greater detail than most (see here, here, here, here, here, here for example). Just a reminder of our latest report on the topic: based on 2,300 of the Government's own regulatory impact assessments we've estimated that in 2009, 59% - or £19.3 billion - of the total cost of economic regulation (introduced since 1998) in this country stems from EU legislation. Cumulatively since 1998, EU laws account for £124 billion, or 71%, of the total cost.

And here are a few graphs showing the regulatory cost stemming from the EU to the main departments dealing with business regulation:

It's hard to better illustrate why any attempt to tackle regulation that doesn't focus on the EU level simply isn't credible. We would be lying if we said that the Coalition's refusal to engage with EU regulation doesn't frustrate us. In fact, we'll soon publish a list of EU laws that the Coalition must seek to re-negotiate. So do watch this space.

" A step backwards for transparency"

The bulk of the cost of regulations in both the UK and Europe stem from the European Union, as we've showed in our extensive research on the subject. But this isn't even the end of the story.

Many key decisions on the actual substance of EU laws and regulations are being taken during an uber-opaque process called “Comitology”. As we've noted before, Comitology involves special committees consisting of Commission and national experts deciding on how EU legislation should be implemented - usually behind closed doors - after the proposal has been agreed by national governments and the European Parliament.

The Lisbon Treaty - the document, if you remember, that would lead to more transparency in Europe - is introducing new rules for the Comitology procedure, effective from 1 March 2011. The new rules were meant to improve and simplify the system, but are now universally acknowledged to have made the situation even worse (we explain why here).

Political consultant Daniel Guégen, who is one of the foremost experts on this topic, makes the slightly worrying observation that as a result of the reform, power in Brussels “is shifting from the political level to the bureaucratic level.”

Even the European Commission concurs. Mario-Paulo Tenreiro, who is responsible for institutional questions at the Secretariat General of the European Commission (exciting job), says:

I must admit that for the general public the new rules are a step back for transparency...Hundreds of thousands of decisions will be taken by these Treaty articles every year.

Apart from the complexity and opaqueness of the new rules, Euractiv reports that the reforms are also causing legal uncertainty. According to Wolfgang Heusel, director of the Academy of European Law (ERA), this means that "courts will have to have the last word" on how EU legislation should be implemented.

Does this matter? Absolutely! As much as 50% of the actual substance of all EU rules is decided during the comitology stage after the law has already been agreed by Ministers and MEPs, according to Dutch academic research. So we're not talking about fixing little details.

Are the Coalition and other governments around Europe keeping up? We fear not.

Ahead of the last General Election, Ken Clarke (then Shadow Business Minister, now Justice Secretary) managed to give an entire key note speech on regulation and how to improve it, without mentioning the EU once.

Il faut le faire, as the French say.

A step backwards? Hardly

In an interview with the FT, Nick Clegg today declared that the Coalition Government would not use the negotiations over a new EU treaty to repatriate powers from Brussels to London. "We are not going to reopen this issue of the repatriation of powers. We are not proposing to go backwards", he said.

Well, we kind of suspected that was the Government's position already, but "not going backwards"?! That's an utterly silly comment - it belongs to a time when the EU debate was divided between arch-eurosceptics harking back to the British Empire and European federalists equating more EU integration with "progress".

Europe and UK politics have both changed however (clue: the coalition itself). Clegg's assertion is a bit like saying that the Coalition's drive for more localism - which the Lib Dems champion - is somehow a reactionary move. Bringing back powers from Brussels to the UK means bringing decisions closer to people. That, Nick, is not a step backwards by your own definition - on the contrary.

The interview wasn't all nonsense though. Clegg did suggest that the UK's willingness to passively wave through an EU Treaty change, must be matched by reforms to the budget and changes to some of the EU's more counterproductive habits.

He said,

There is no interest for the EU in getting entirely on the wrong side of public opinion on this budget issue...They have got to get real. You can’t make these budget decisions in a political vacuum.

He also lashed out at the EU's “summit inflation” which left EU policymakers “chasing their tails”.

That's sensible stuff. But the question now is: having given away its veto over Treaty change, how does the Coalition plan to deliver in the post-2013 EU budget negotiations?

Talking about EU reform as a "step back" is probably not the smartest way of doing things. Not least since many member states would make the same argument about any change to the EU budget.

A one-year cash freeze to EU budget won't cut it Mr. Cameron

The news in today's Guardian and Mail is that David Cameron is thinking of doing a deal on the proposed new EU treaty. The reports suggest that Cameron will back the new treaty in return for his demands for a cash freeze to the 2011 budget.

We're not convinced that Treaty-change-for-less-cash is a line that the Government will pursue in the end. But if true, Cameron and his Government risk a mutiny not only from the Tory backbenches but the public at large. And it would be completely justified.

The prospect of a new treaty is rightly seen (and not just by us) as a once in a generation opportunity to renegotiate the UK's relationship with the EU and actually repatriate some of the powers the Conservatives promised they would less than a year ago, or pursue a number of other reforms - for example giving real powers over EU policy to national parliaments.

A one-year cash freeze on the EU budget simply doesn't cut it. Sure, the European Parliament's demands for a 6 percent increase are outrageous and have understandably attracted the headlines recently. But what about 2012 and 2013? There is nothing stopping MEPs, the Commission or even other member states demanding similar increases in these years and there would be little the UK could do about it.

And even the next EU budget period, the the one that starts in 2014, is best negotiated seperately. The UK already has its rebate as leverage in those negotiations. Making horse-trades involving Treaty changes is giving EU partners a 'two for the price of one' deal.

But besides this practical reason, the prospect of yet another 'behind closed doors' EU deal could be politically disastrous. After promising to repatriate powers, Cameron cannot shirk the first, and possibly only, realistic opportunity to do so.

It would certainly make his accusations of "betrayal", levelled at Labour and the Lib Dems for their backtracking on a referendum on Lisbon, look pretty hypocritical.

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?

the future's bright, the future's orange?

The winning party in the Dutch elections, the VVD, has some interesting things to say about the EU on its website. Its leader, Mark Rutte (pictured right) is favourite to become the country's new PM and may prove to be an interesting ally for EU reformers, depending on how much the VVD's rhetoric is watered down by coalition arrangements.

The party's website reads:

The VVD doesn’t want a "European superstate". We want a Europe that functions. Therefore, we don’t need a Constitution, but an EU which limits itself to its core tasks and offers solutions for the 21st century. The solutions of the former century were about agriculture and regional subsidies. In this century it is about climate and energy, asylum and migration flows and fighting terrorism. Therefore we need to go back to what we have: the current Treaties (the Treaty of Nice).

Pretty bold stuff - abolishing the Lisbon Treaty is something the UK's Conservatives wouldn't dream of posting on their website. The party is also committed to reducing the country's contribution to the EU budget, offering a "half price EU", with Rutte recently stating that he sees EU budget negotiations as "the crowbar for reform" and that the "whole system of structural and cohesion funds is largely circulation of money."

He added, "Europe is not a kind of idealistic project. I'm not awake every morning with 27 stars and a European flag over my head. For me, Europe is a pragmatic project that gives us many benefits and should remain so."

Rutte's comments illustrate that the UK media's obsession with portraying David Cameron as an outsider of the EU mainstream are a fallacy. Bar Rutte's opposition to EU expansion, there is a lot that a Conservative-led coalition government could work with here, particularly when it comes to the crucial budget negotiations that will begin in the near future.

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.

Cash cow

On his CAP Reform blog Jack Thurston has a story that illustrates one of the many reasons why reforming the EU's wasteful and protectionist farming policies is so difficult. The post centres on Henrik Høegh, Denmark's newly appointed Farming Minister, who is a long-time recipient of EU farming subsidies.

Since 2000, he has received a whopping €604,787.00 from the Common Agricultural Policy and his son and daughter are also thought to be receiving EU cash. Indeed, Høegh is not the only farming minister to have been in receipt of EU subsidies.

In an outright conflict of interest, Mr Høegh is now responsible for signing his own subsidy cheques, but also, as a member of the EU’s Council of Agriculture Ministers, deciding on the future of the CAP.

As Thurston concludes: "With the long-term future of the CAP currently under debate, can the Danish people be confident that Mr Høegh will be pursuing the public interest rather than his own private profits?"

Kick-start

Open Europe has a short article in this month's edition of Parliament Magazine, detailing how the Spanish EU Presidency could contribute to getting Europe's economy back on track. We argue:

Instead of trying to make economic underperformance illegal and centralise more powers in Brussels, the Spanish Presidency should kick-start the new Lisbon agenda by empowering Europe’s businesses to create real jobs and growth....The threat to Europe’s overall competiveness arises not from a lack of binding targets or Commission powers, but from over-intervention and rules that de-incentivise growth, innovation and job-creation. Growth cannot be legislated – it receives its thrust from individuals, businesses and communities. Designing the right environment for these actors is therefore absolutely vital to unleash Europe’s potential and talent. And here the Spanish Presidency can help by resisting the temptation to pursue activist and mis-targeted regulatory policies.

It concerns the EU’s very existence

An issue facing those who want to constructively question the path of EU integration - the kind of democratic opposition that is desperately lacking from EU politics, most notably in the European Parliament - is that EU enthusiasts automatically portray any criticism as a parochial attack on the entire EU project rather than rationally facing up to the EU's failings (which, ironically, is a hugely counterproductive tactic as seen in most polls).

But it is a lot harder for people to simply put their fingers in their ears when a former German President and a former Dutch EU Commissioner say that the EU is getting things wrong. Last Friday, Roman Herzog and Frits Bolkestein, accompanied by the Director of the German based Centre of European Policy think tank Luder Gerken, made their case in the German press for why the EU needs to change or risk "complete collapse".

Herzog made a similar splash in 2008 when he argued that something had to be done to "Stop the European Court of Justice", calling the EU a "mammoth institution" - an article which recieved widespread attention from all sides of the debate (and served to heat up the debate in Germany).

The latest article, entitled "The EU is harming the European ideal", takes a broader look at the EU and argues that the greatest challenge it faces is existential. And the three luminaries aren't pulling any punches:

"It concerns the EU’s very existence: the EU must win back support for its existence, which it has lost from many citizens and even from many parts of the economy. Without this endorsement there is a risk of permanent damage to the people’s acceptance of the fundamental principle of European integration with immeasurable consequences for the EU, including the possibility of it completely breaking down."

They argue that the loss of public support for the EU is a direct result of over-regulation and the one-size-fits-all nature of EU policies:

"The loss of this endorsement stems from an almost all encompassing impression that Brussels legislates regardless of the people’s wishes and of long established traditions and cultures, constantly introduces rules and regulates things that could be regulated at least as well at the regional or national level."

They note that the EU institutions cannot be relied upon to enforce the subsidiarity principle because they are only interested in extending their powers:

"The European Court of Justice will do nothing to enforce the principle. The Court also has an interest in a constant expansion of its areas of competence. The same is true for the European Parliament."

It is therefore up to national governments, parliaments, the media and the public to be the "guardians" of subsidiarity:

"National governments must finally develop a culture of categorically saying No to the horse trading and alliance brokering in the Council of Ministers, when the suggested legislation contravenes the principle of subsidiarity or goes beyond the EU’s areas of competence."

These are not exactly observations coming from the fringes of society. Concern over the EU's democratic deficit does not mean that one cannot at the same time recognise the need for the EU, in one form or another. Herzog, Bolkestein and Gerken cannot be accused of being "anti-European" - the article demonstrates genuine concern for the EU's continued existence - and it would be dangerous to ignore them.

They are voicing the concern of a huge number of European citizens who feel that EU integration has continually been allowed to breach acceptable limits and, as Herzog et al argue:

"European integration is only feasible if the public is also involved. We are a long way away from this, perhaps further away than ever. And if European citizens ever reject the EU in its entirety, we risk creating a mountain of political rubble of historic proportions."

Exactly. When will the EU establishment start to open its eyes to the problems that citizens all across Europe can see?

The top 100 most costly EU regulations

Open Europe has today published a list of the top 100 most costly EU regulations, detailing the annual cost of the laws, the cumulative cost of them by 2020, and the article base in the Lisbon Treaty for each regulation . We estimate that these laws will in total cost the UK economy a staggering £184 billion by 2020. To put that figure in context: for the same amount, the UK Government could abolish the country's entire budget deficit and still leave the Exchequer with some £6 bn. All cost estimates are based on the UK Government's own impact assessments so the figures are instructive.

The top four items on the list account for almost £97 billion - or 53% - of the total cost of the 100 regulations by 2020. Looking at these four laws clearly illustrates the enormous, and often overlooked, potential for the UK economy to save money by making a few key regulations less burdensome. Notably, cutting down the costs of these regulations could happen without any of the stated benefits being lost in the process.

1) The Working Time Directive, to cost the UK economy £32.8 bn by 2020: This Directive has been widely criticised for being overprescriptive, impractical and generally out of touch with reality - particularly as it applies to the NHS. Merely changing the on-call time and compensatory rest rules entailed in the WTD could save the UK's public sector millions - if not billions - of punds every year.

2) The EU's Climate Action and Renewable Energy Package, to cost the UK economy £28.2 bn by 2020: As we've argued before, the EU could find a much more cost-effective way to achieve carbon emission reduction by setting overall targets, and then allowing for individual member states to decide for themselves how best to reach them (as opposed to the current micromanaging approach). This would hurt the economy less and provide a more credible alternative to follow for countries outside Europe.

3) Energy Perfomance Certificates for buildings, a.k.a Home Information Packs, to cost the UK economy £20.2 bn by 2020. Again, this cannot possibly be described as the most cost-effective way to achieve reductions in carbon emissions from the residential sector.

4) The Temporary Agencey Workers Directive, to be implemented in 2011 and set to cost the UK economy £15.6 bn by 2020: When he was Business Secretary, John Hutton warned that this Directive could consign "literally thousands of people to benefit dependency" (this was in 2007, before Gordon Brown was outnegotiated in a horsetrading deal involving the UK's opt-out from the EU's 48 hour working week. The Government is now trying to defend the Directive).

Making these laws less burdensome or tailor them to better fit the UK is not easy - but it certainly isn't impossible. Neither is avoiding repeats of these laws. But this does require a far tougher and smarter approach to EU regulations/negotiations than that employed by the current government. See here for our ideas on what such an approach should entail (chapter 5).

An excellent place to start would be for an incoming UK government to opt out altogether from the articles in the EU treaties which give rise to EU's social legislation (articles 151 to 161 as amended by the Lisbon Treaty). With correspondng domestic reforms, this could instantly reduce much of the cost stemming from, for instance, the Working Time Directive and the Temporary Workers Directive.

At a time when every penny is needed to close a massive public deficit, surely cutting the cost of regulation should be a top priority for the next government?

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."