Andrea Leadsom MP: The EU - we need reform and better regulation

Andrea Leadsom is the Member of Parliament for South Northamptonshire. Follow Andrea on Twitter.

As I argued in the first article of this three-part series for ConservativeHome, the Fresh Start Project (FSP) believes that the UK’s national interest requires meaningful reform of the EU.

The EU is facing a crisis of competitiveness. The Eurozone crisis is a major factor in this. But so, too, are over-regulation and the unintended consequences of EU laws. Both, in their different ways, result in the UK paying an unacceptable price.

There is a danger that the mere mention of the phrase "over-regulation" leads to eyes glazing over.  But make no mistake: negotiating over tedious directives might not seem like the stuff of diplomatic legend. However, the reforms that the UK needs to secure will play a huge part in determining whether or not we fulfil our economic potential during the next crucial period in which the world seeks to shake off the post-crisis years.

That’s why the FSP is proposing a series of fundamental reforms to EU regulations to help a Conservative Government in its core mission of making the UK the most business-friendly place in the world. Our proposals will add to the work of the business-led Task Force recently launched by Government to identify the EU rules which are holding back UK businesses, and which should be abolished or reformed. We welcome this initiative, and will be working closely with the Task Force's Chairman, Michael Fallon MP.

Amongst the most important of the reforms we seek are those concerning Social and Employment Law. The case for pan-European labour law has always been weak. Member States have different labour traditions. They should be free to decide which laws are appropriate for their own labour markets. They should also have the flexibility to change their laws to meet changing employment conditions. But EU regulation and the EU decision-making process currently prevent this.

The acute threat posed by the continuation of this situation surely is obvious – a generation of young people who will be lost to the labour market. Youth unemployment in the Eurozone now averages close to 25%. It reached 62% in Greece last year. The UK’s position is somewhat different, though no less worrying. The Working Time Directive (WTD) and other EU Social and Employment Law have caused the NHS, for example, acute problems.

The FSP’s Manifesto for Change makes the strong case for returning competence over Social and Employment Law to Member States. Crucially, we have allies across Europe on this issue. German business organisations, for example, favour allowing Member States and regions to “compete” for labour, in much the same way as the Lander do now within Germany.  And it's interesting that more than half all EU member states already have an opt-out to the WTD – so, why not repatriate decision-making altogether under subsidiarity rules?

The FSP also supports the Prime Minister’s call for a more flexible EU. It’s vital that Member States are protected from regulations that they do not support. We are especially concerned about Eurozone “caucusing”, where Eurozone “ins” use their in-built majority to impose rules on its “outs”. In this context, the EU’s determination to secure a cap on bankers’ bonuses relative to salaries, easily manipulated and therefore not supported by the UK, marks a worrying new development, especially since there are over 40 further Directives and measures looming whose purpose appears to be constricting, rather than supporting, financial services.

This plainly is economic nonsense. The City of London’s massive expertise should see the UK leading the European charge to sell to the BRIC and other fast-growing economies the financial services they need to prosper. The FSP believes that the only certain way of protecting our critical industries is to allow Member States to apply an emergency brake on new rules. If other Member States wish to press ahead with measures affecting banking and financial markets they could do so through enhanced co-operation, but without weakening how the Single Market brings benefits to all.

Turning from economic to home affairs, flexibility should also be the guiding principle in the area of policing and criminal justice. There can be no doubt that the threats from international terrorism and organised crime demand effective co-operation at EU and international level. But this does not need to be at the cost of the transfer of sovereignty to a supranational authority.

The UK can be a strong and effective EU partner in the field of policing and criminal justice without ceding national, democratic control. That’s why the FSP has proposed that the UK opts out of all of the laws which it is free to under the “bloc opt-out”, and, negotiating separately, to opt out of all other laws in the field of Justice and Home Affairs. In our view, negotiating an international treaty between the UK and the EU will ensure equally effective operational cooperation, without the twin threats to British justice of the ECJ jurisdiction and the potential for unwelcome changes to Directives under Qualified Majority Voting.

The issues of migration and access to benefits are highly emotive. For the avoidance of doubt, I support the right to free movement within the EU – it has been of benefit to the UK economy and those UK citizens who choose to live and work in other parts of the EU. And I warmly welcome the huge progress the Government has made in reducing migration from outside the EU and reducing access to benefits for those from within the EU intent on abusing our system.

However, the FSP believes that Ministers need to go further. It’s unfair to the British taxpayer to pay child benefit for children who do not live in the UK. It is also inexplicable that migrants are able to get free healthcare here, without having contributed to the system. Member States need total discretion, again under subsidiarity, over the operation of their benefits systems, including tightening rights of residence so that benefits are not paid to those who do not, and have not, contributed to the Member State. Here, too, there is much support from other Member States.

There will be those who say that seeking the sort of reform which the FSP advocates is just banging our heads against a brick wall, since our approach is doomed to fail. I say – categorically – that these doom-mongers are wrong. There has already been meaningful EU reform achieved through the existing structures. For example, the recent agreement of the European Parliament to “regionalise” the Common Fisheries Policy is both a step in the right direction and a clear example of how subsidiarity can be applied effectively.

Likewise, the recent agreement on the overall size of the EU’s Budget within the Multiannual Financial Framework was an important first step - at a time when Member States are making significant cuts to domestic spending, it is vital to reduce the overall level of EU spending.

But the FSP believes that we should go much further in reforming the EU Budget – far too much is spent on agriculture and on the unnecessary recycling of regional spending among wealthy member states. Restricting access to Structural funds to only those member states with 90 per cent of less of average GNI per head of the EU would reduce the budget by 15 per cent, and importantly, leave the UK free to pursue our own regional policies away from the often illogical EU priorities.

Drawing these different strands together, it’s time for the EU to adopt an entirely different approach – one geared directly to the world we live in, as opposed to the bureaucratic maze that those in Brussels seem to inhabit. There are significant benefits in cooperating in certain policy areas, in deepening and widening the Single Market, and in leading the world to establish global free trade. But the principle of ever-closer union is flawed.

As the Dutch government recently argued in its own Subsidiarity Review, a better principle is “Europe where necessary, national where possible”. The UK clearly has allies in its drive for reform. And it is in the UK’s vital national interests that we take the opportunities to implement them. The EU must be reformed so that Member States have the flexibility they need to thrive in the global race.

The Fresh Start Project’s “Manifesto for Change” published in January 2013 was written by Conservative MPs Gutto Bebb, Nick de Bois, Therese Coffey, George Eustice, Mark Garnier, Chris Heaton-Harris, Gerald Howarth, Andrea Leadsom, Charlotte Leslie, Tim Loughton, David Mowat, Neil Parish, Priti Patel and Dominic Raab.