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?

'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.

Waking up to 'Europe'

Parliament’s stance against the ruling by the European Court of Human Rights to give prisoners a vote has again inspired UK commentators to take a closer look at ‘Europe’.

The right of prisoners to vote is an ECHR issue – not an EU one (the ECHR is not an EU institution as we're always keen to point out). However, it’s right to consider the influence and mission creep of the ECHR in the same discussion as the influence of the EU itself - for a whole range of reasons. As we’ve argued before, on rights legislation the two are now linked and both suffer from an inherent tendency to expand their own powers into new areas. And in terms of the politics and perception of it all, for most people in Westminster and beyond, there’s little difference between the EU and the ECHR, making it extremely difficult to unbundle the issues in media and political discussions (and given that even senior judges have a difficult time unpicking the patchwork of human rights legislation that exists in Europe today, the blurring of the ECHR and the EU in public perception is more rational than what EU communication-types and others realise).

And there has been no shortage of hard-hitting commentary.

Here’s James Forsyth in the Mail on Sunday:

The Tories try to keep their newly hardened Euroscepticism under wraps when dealing with their Lib Dem colleagues, who remain committed to the European project. But even the Lib Dems have been shocked at how much influence Brussels has on decisions that should be taken at a national level. Nick Clegg was appalled when officials told him that the EU wouldn’t allow VAT to be set at a local level.

And here’s Fraser Nelson in a strong post on the Spectator’s coffee house blog:

Europe was easier to characterise as a fringe issue, not so now….Cameron thought he’d have to play along, even though it made him “physically sick”. But in perhaps the most useful thing the House of Commons has done for two decades, it decided otherwise last week in a free vote. And what are the judges of Strasbourg going to do? Invade?

A healthy precedent was established last week. Britain has rejected that old argument that we have no choice. We do. Parliament is sovereign. We can reject as many Euro laws as we like: from Brussels, Strasbourg or both.

Meanwhile, Tim Montgomerie takes a swipe at Ken Clarke on Conservative Home:

The fact is the Conservative Party is largely united on Europe. The vast majority of Tory MPs and activists, from the Prime Minister down, believe that unelected European judges and bureaucrats have too much power. Given the nature of the Coalition and the economic priorities, significant repatriation of powers may not be possible in this Parliament but we must prepare a manifesto for the next General Election that attempts to address that. So long as Ken Clarke is a significant player in the Conservative Party there is little chance of that happening. I sometimes wonder if he stays in government to prevent the party fulfilling its Eurosceptic instincts

Inevitably, there will be more court rulings from the ECHR and the ECJ (one coming up on pensions for example) - in addition to new Directives and Regulations from the Commission - which will be percieved as interfering in national areas where they don't belong. This isn't the last clash we'll see, but it's a signifcant one.

And hats off to Parliament. This time, MPs did their job.

This is why the EU Bill should be amended

The Government on Friday published an annual report that reveals which, and how many, EU crime, justice and immigration laws the UK signed up to between December 2009 and December 2010.

The report states (p4) that the Coalition Government has opted in to eight new EU justice and home affairs laws since coming to power in May 2010, including the hugely controversial European Investigation Order, a new "IT Agency" to oversee the EU's vast crime and immigration databases (with start-up costs of around €113m), and granting United States' authorities access to European citizens' banking data under the so-called SWIFT agreement.

These are all transfers of power from the UK to the EU but Ministers were free to sign up to them without any democratic checks - Parliament had no say.

The Coalition has said it wants to operate a case-by-case policy of deciding whether to opt in to new EU justice and home affairs laws. Well last week's report shows what that policy amounts to in practice. Of 13 decisions whether to 'opt in' or not, the Government opted in 8 times. That's an opt in percentage of 62%.

The Government's record so far would suggest then that the UK will continue to play a major part in the EU's ever-expanding role in justice and home affairs. But under the current EU Bill, Parliament and voters have no say over the steady steam of laws that are transferring power over British justice and immigration policy to the EU level.

This is why amending the EU Bill is so important. Allowing the status quo to continue simply widens the democratic deficit between the Government and the general public on these crucial issues. Crime, justice and immigration are important to people and voters do not expect their Government to have free reign to hand over powers to the EU in these areas.

We hope that as many MPs as possible make their voices heard when these issues are debated tomorrow and that they impress on the Government the need for Parliament and voters to have more say over this crucial aspect of the UK's relationship with the EU.

Is the Miliband amendment a trap?

The EU Bill's referendum lock is today coming before Parliament, with its different parts debated and voted on between today and Wednesday (see here, here, here, here, here, here and here).

At the eleventh hour, Labour leader Ed Miliband has tabled an amendment that would effectively remove the opportunity for a judicial review of any decision taken by Ministers and Parliament, amid concerns that the power of Parliament might in future be weakened at the hands of judges.

We can certainly see the appeal of this amendment from MPs' point of view, as it appears to strengthen Parliament. However, the bigger risk is that it - for all practical purposes - simultaneously waters down the referendum lock. MPs should therefore think twice before supporting this amendment.

For what it's worth, here's our take:

- Ed Miliband’s amendments to the EU Bill centre on the creation of an “EU referendum committee”.

- This Committee of 19 members would be comprised of MPs and Lords (but not Ministers) who would make recommendations on whether to hold all referenda provided for in all the various sections of the Bill.

- The recommendations would be put to both Houses of Parliament for approval of the Committee’s decision on whether to hold a referendum or not.

- While the creation of an ‘independent panel of Parliamentarians’ to decide on referenda may sound appealing, the Committee’s recommendations would override the Bill’s clauses which would automatically provide for referenda on decisions identified in the Bill, which are the key safeguards against power being handed over from Westminster to Brussels. Only “significant transfers” as decided by the committee and voted on in Parliament would qualify.

- Therefore Labour’s amendments could well have the effect of raising the threshold for holding referenda on transferring powers to the EU.

- Should the government of the day hold the balance of power in the proposed “EU Referendum Committee”, there would be nothing stopping a new EU treaty or treaty change being pushed through Parliament by the government. This could see a repeat of what happened to the Lisbon Treaty, which, as we all remember, was pushed through Parliament, without a public vote, despite the three major parties pledging a referendum on the treaty.

Update on the EU Bill - the Government's response to JHA opt ins

Earlier today, the Government released a statement setting out what it intends to do on the Justice and Home Affairs 'opt-ins' and the crucial 2014 choice between more or less EU control (see here, here, here and here for more from us on this).

On the 'opt-ins' the Government seems determined not to include any language in the actual EU Bill that would require it to get Parliamentary approval before it can opt in to a new EU law in crime, policing and immigration. Instead, it says that this should be addressed separately with the details to be decided at a later stage. Crucially, only the proposals generating a "particularly strong" interest could, possibly, be put to Parliament. In the Government's words:

in circumstances where there is particularly strong Parliamentary interest in the Government’s decision on whether or not to opt in to such a measure, the Government expresses its willingness to set aside Government time for a debate in both Houses on the basis of a motion on the Government’s recommended approach on the opt-in.

From the looks of it, this is not a strong enough safeguard. The big question is who decides what counts as "particularly strong" interest. We remain convinced that in order to avoid situations where future EU proposals in Justice and Home Affairs are debated at the convenience of the Government (which is the case at the moment), all opt ins should be subject to Parliamentary approval (there are pragmatic ways to deal with minor proposals, without throwing the baby out with the bathwater).

On the crucial 2014 choice, the Government clearly commits to putting this to a vote in both Houses. This is encouraging, though again, they should put that into writing in the EU Bill, so that it would be beyond doubt. A political agreement/commitment can be altered, which we all know too well when it comes to EU matters. The statement reads:

Parliament should have the right to give its view on a decision of such importance. The Government therefore commits to a vote in both Houses of Parliament before it makes a formal decision on whether it wishes to opt-out. The Government will conduct further consultations on the arrangements for this vote, in particular with the European Scrutiny Committees, and the Commons and Lords Home Affairs and Justice Select Committees and a further announcement will be made in due course.

In other words, there's much to play for here. Are MPs paying attention?

More on the referendum lock

Some more from us on the referendum lock...

On Conservative Home, Open Europe chairman Lord Leach argues in favour of tweaking the EU Bill to strengthen democratic controls over the key areas of EU law that we've highlighted.

We also have a piece on the Spectator Coffee House blog.

Just one quick additional thought: the "more or less EU" choice that the Coalition will face in 2014 potentially involves some 100 or more EU laws and measures. The Government must decide to either accept or reject these en bloc. 100 laws! Imagine if the government had to decide in one go whether to adopt 100 domestic laws, regulations and measures. And if we then were told that this was not going to be debated in Parliament...?

You can see why this choice matters and the EU Bill needs to be amended to allow for this to go through Parliament.

When will this register in Westminster?

Your new man in Brussels

The UK will soon have a new man in Brussels - Jon Cunliffe who will take over from Kim Darroch - to represent the country in the endless behind-the-scenes negotiations that form the backbone of EU decision-making.

In the Mail on Sunday James Forsyth commented:

...it is encouraging that David Cameron is about to make the tough- as-teak Jon Cunliffe Britain’s new ambassador to the EU.

Intriguingly, Cameron is appointing someone who has never worked in the Foreign Office.

Cunliffe is not your typical Sir Humphrey. He didn’t go to Oxbridge and took his economics degree at night-school. Even more unusually, he enjoys saying No to foreigners.

But Douglas Carswell isn't impressed. On his blog, he writes:

Predictably, the spin behind Cunliffe’s appointment is that he is “tough as teak”, a man who likes saying “no” to foreigners. Those who brief the press attach great importance to the fact he’s not from the overtly federalist Foreign Office.

Yet the idea Cunliffe’s appointment means a change of approach is balls. If anything, it confirms that it’ll be EU business as usual.

It was Cunliffe who negotiated the Stabilisation Mechanism deal leading to the ECOFIN meeting in May, whereby Britain accepted enormous liabilities to try to prop up the Euro. He thereby managed to make us part of the Euro debt union, if not the currency union.

What's clear is that the importance of this position - the UK's Permanent Represenative to the EU - hardly can be overestimated...

When the driving force of policy is not to cause a fuss

Over on his blog, the WSJ's Iain Martin is today making clear what he thinks of Cameron's performance at the EU summit last week, and the Coalition's Europe policy more widely:

Cameron’s priority on Europe has been, as it has been throughout his leadership, that it shouldn’t flare up and cause him a problem. In coalition with the Lib-Dems, he now has even more reason to avoid the issue. Around him are former Euroskeptics, such as William Hague, who are prepared to go along with the European project (as currently constituted) in return for a quiet life and the perks of office.

But it’s been obvious for a while that the tectonic plates are shifting in the EU. The sovereign-debt crisis was only dealt with because Germany agreed to underwrite the temporary arrangements put in place to allow for a bailout. Angela Merkel was always going to come back and demand that permanent arrangements be put in place, and that other members of the single currency start to play by German rules...

...Last week Cameron indicated that Merkel could get the changes she wanted to Lisbon, etc., in return for… er, nothing. This is what happens when the driving force of a policy is the desire to not cause a fuss.

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?

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.

Managing expectations over an English breakfast

David Cameron has today participated in his first EU summit and has secured a preliminary assurance (assurances are never quite for certain in EU politics) that Britain will not have to submit its national budget to the Commission before it goes to the UK Parliament. At the same time, sanctions for violating the Growth and Stability Pact will primarily apply to countries in the eurozone. The actual proposal for an ‘EU economic government’ (which some EU leaders still insist on calling it) won’t be tabled until October, so there’s still a bit to play for – particularly on whether some of these proposals will be based on Qualified Majority Voting (meaning no veto for Cameron) or unanimity. The Commission, which initiates the legislation, has arbitrarily changed legal basis before, so nothing is for sure.

But this is definitely a fight that David Cameron can win – which is probably why the he chose to focus on it in the run-up to the summit. The draft conclusions (which helpfully are always available on the Danish Parliament’s website a few days before the Summit but still not through the UK Parliament - will that change now?) made this clear. As ever, managing expectations is key in politics. The pre-budget report, which is published in December in the UK, offers a convenient way out for the UK government and is the item that presumably will be ‘peer reviewed’ by the Commission and other national treasuries.

In fact, this has turned out to be the most uneventful EU summit in years – the most exciting event appears to have been that Commission President Jose Manuel Barroso served Cameron an English breakfast in order to make him feel at home (was Fredrik Reinfeldt served Swedish oatmeal?).

But remember, it’s been a very dramatic Spring and it’s hard to rival the drama of the “Super Weekend” back in May, when the ECB lost its independence and European taxpayers became liable for some €500 billion in eurozone bailout loans.

You have to give Cameron and George Osborne credit though. They’re in a very awkward position, simultaneously having to maintain peace within the coalition, keeping their backbenchers at bay and convincing their European partners that they’re not the devil incarnate. So far they’ve managed that balancing act exceptionally well. How long that will last is a different matter – as Benedict Brogan points out in today’s Telegraph. A number of run-ins are looming – the EU budget, UK taxpayers’ exposure to the bailout package and regulations to rein in the City.

Under the surface, of course, there are issues in the summit conclusions that should worry the Cameron government. The conclusions call on EU leaders to adopt the AIFM Directive “before the summer”. As we’ve noted before, for various reasons, passing this directive in a flawed form would land a blow to the UK economy and national interest.

The conclusions also call for “the Council and the European Parliament to rapidly adopt the legislative proposals on financial supervision to ensure that the European Systemic Risk Board and the three European Supervisory Authorities can begin working from the beginning of 2011.”

This proposal gives three new EU supervisors the power to overrule national regulators on financial oversight and technical standards. The Council and European Parliament are currently working out the details in negotiations. The Council’s version is significant (and transfers some supervisory powers from the UK to Brussels) – but the European Parliament’s proposal is potentially dynamite. It would create an effective single European regulator, located in Frankfurt with the power to make decisions over the recapitalisation of banks, for instance. According to the proposal, the FSA would be an “agent” of this new supervisor - not the other way around. By any definition, this would mean a transfer of powers.

It probably won’t be as bad as the EP’s draft but it will be very difficult for the UK to compltetly hold its position on these proposals – a legacy left by the previous Government.

Indeed, there are many EU summits to go before the UK’s coalition experiment is over and they will certinaly be tougher than this one.

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.