The business section of the Sunday Telegraph carries a dire prediction, with officials floating George Osborne will fold this week over the new EU hedge fund regulations. They claim he was given a "hospital pass"; basically, set up as the patsy for Labour’s failure to block it.
There is a lot of truth in that, and it certainly demonstrates the vacuity behind declarations about how wonderful and necessary QMV is. It also highlights the need to change so much about the terms in which Britain sits within the EU treaties (more on that anon).
But what is also very concerning is the evident quasi-official line, more akin to the FCO’s wash-out position than that of the historically more robust Treasury. Assessing that the UK lacks a blocking minority, the explanation goes that "we don’t want to be in a position where we squander any negotiating capital we have for the future on an issue it doesn’t appear we can win." A fear from past form is that the UK may even be set simply to register an abstention.
This all sets a poor precedent for the new Government. It continues the longstanding civil service tradition of attempting to hide defeats at Council of Ministers’ meetings by the expediency of not voting against them at all. As Alice in Wonderland measures go, it is one of the more shameful tactics to have emerged from ministerial red boxes over the years.
So what should Osborne do in such circumstances? He should let sunlight in.
He should indicate first off that he will be voting against the measure, and shall be frequently explaining to foreign investors (in particular during his next visit to Wall Street, and to the US State Department) that it was not Britain’s idea.
He should also indicate that he would interpret the directive, when it is incorporated into UK law, in a way that best suits the national needs. If that is not how the directive is actually written, then tough.
Since the UK is reportedly home to 80 per cent of the hedge funds concerned, he should state that he considers it a matter of vital national interest. That won’t help with the veto (the principles behind the now redundant Ionnina Compromise notwithstanding). But it will send notice that countries backing any tough line can expect reciprocal treatment when state aid for their own ‘essential services’ (coal mines, steel mills, airlines and computer giants, for example) comes under legal challenge.
Given the amount of time that the ECJ is currently taking to review cases, the issue will likely take years to go through the Luxembourg Courts. If he has the nerve, he could leave his own ‘hospital pass’ for his successor. And if he gets back in, and the Luxembourg court rules against, he could and should just refuse to pay any fines issued.
As the Italian Government can tell you over their milk fiasco, these embarrassments have a habit of sorting themselves out – and Rome isn’t even a key net contributor.
It may not be communautaire. But then neither is the economic brigandage that’s happening in Brussels this week.
Chances are, however, that with their rival across the Channel continuing to flourish under home-made law rather than communal shackles, the host countries for the other 20 per cent of the EU market will soon be subject to some ferocious lobbying to undo their collective suicide bid. A legal review in five years’ time may in the event prove a redundant threat.
A big question naturally is the position of the Liberal Democrats. More particularly, it rests on whether Mr Cable would dare to catch the Circle Line from Westminster down to the City and explain why he was not prepared to stand up for the national interest. I suspect he has a preference to write his own proposals rather than cut and paste them, even where they hail from Brussels.
These newspaper leaks tend to emerge just prior to big meetings, in order for some small concession to be sold as a triumph wrung by superior statesmanship, and an ounce of honour salved. Even so, we are facing a major crunch decision. So, will Mr Osborne set the tone for how the country is to be run over the next five years, and instruct the civil service as to who’s in charge? Or will he, as the Sunday Telegraph’s Business Editor suggests, yet "snatch defeat from the jaws of defeat"? It is, on several levels, a telling week ahead.
