Think tanks give lukewarm reception to the Queen's Speech, urging more radical economic measures

By Matthew Barrett
Follow Matthew on Twitter.

Following the Queen's Speech this morning, several think tanks have reacted to the legislation announced (full details of which can be found here). I've collected them below.

8pm update: Open Europe have given their reaction to the proposed European Union Bill:

"The UK government is likely to sell the measure as a guarantee that it will never again be forced to indirectly contribute to eurozone bailout funds - a few papers have already run with that story. At the same December summit, Britain won a political declaration and an EU decision that the article that forced it to contribute to the EU-wide bailout funds, the EFSM, won't be used again (Article 122 - for background, see here and here). However, the legal status of this guarantee is uncertain. It is not part of the treaty change itself, and MPs may argue that a guarantee that isn't anchored in the Treaties could well prove ineffective. After all, the UK has received guarantees before which proved to be pretty worthless (clue: Charter of Fundamental Rights, Working Time Directive). If MPs wake up to the legal ambiguity underpinning the 'guarantee' they may ask for something firmer in return for ratifying the treaty change."

7.15pm update: Nick Pickles, the Director of Big Brother Watch, has commented on the surveillance aspects of the Queen's Speech:

"So there we have it – the Communication Capabilities Development Programme will have it’s day in Parliament. We don’t know what the draft clauses will be or when we will see them, but the Government remains intent on pursuing legislation in the coming session of Parliament. If someone is suspected of plotting an attack the powers already exist to tap their phone, read their email and follow them on the street. Instead of scaremongering the Home Office should come forward and engage with the debate about how we improve public safety, rather than pursue a policy that will indiscriminately spy on everyone online while the real threats are driven underground and escape surveillance."

2.45pm update: The Centre for Policy Studies' Head of Economic Research, Ryan Bourne has commented:

"What’s needed now is for the Government to use the Enterprise and Regulatory Reform Bill to get serious about deregulation and repealing unnecessary legislation, especially for small businesses. This should include reform of employment legislation and the recommendations of the Beecroft report. Unfortunately, the emphasis on being family-friendly will, in some areas, directly contradict this liberalisation. Flexible parental leave, for example, is unlikely to be popular with many employers. In other areas, such as tax reform, planning, infrastructure and energy policy, it’s a case of wait and hope. Though there wasn’t anywhere near enough in the way of growth bills, it was welcoming to see the Government highlight the need to see through pensions reform. Finalising the creation of the single tier pension is a sensible step. This should be undertaken as soon as possible to put the Government in a better bargaining position with the public sector trade unions on pensioner poverty. The decision to continue with the 10 year period of protection for public sector employees approaching retirement will, however, eliminate much in the way of any early cash savings from public sector pensions reform."

The Institute of Directors has commented on a number of the specific measures announced. Simon Walker, Director General of the Institute of Directors, gave his reaction to the Speech overall:

“The Government is right to place deficit reduction and economic stability at the forefront of their programme. However, we need to see them pursued enthusiastically in practice, not just in principle. To restore business confidence, which is the real key to growth, there must be drastic measures to cut costly regulation and continue to tackle the deficit. Tweaking the edges of the system will not be enough – it’s not the number of Bills that matters, it’s what is in them that really counts.”

Continue reading "Think tanks give lukewarm reception to the Queen's Speech, urging more radical economic measures" »

BBC World Service cuts wouldn't be necessary if we cut ineffective EU aid budget

By Matthew Barrett

Open Europe, the European reformist think-tank, has today published a report looking at the EU’s external aid spending. Open Europe examines how much the EU spends and where, in light of spending reviews in Britain, and the new challenges in overseas aid created by recent developments in Africa and the Arab world. Some key findings:

Continue reading "BBC World Service cuts wouldn't be necessary if we cut ineffective EU aid budget" »

"Cameron may well have severely underplayed the UK's hand" says Open Europe

Mats Persson of Open Europe examines David Cameron's performance at the EU summit.

The EU's immediate budget: "Cameron has the support from another 10 countries for blocking the European Parliament’s and the Commission’s ludicrous demands for a 6% increase to the EU 2011 budget, instead settling for a 2.9% increase. But a cash freeze looks very difficult to achieve. To be fair to Cameron, he was effectively handed a hospital pass from Tony Blair, as the main chunk of the budget for the period between 2007 and 2013 was decided in 2005, when Tony Blair lost in negotiations. The UK doesn’t have any real leverage over the annual budget as is decided by majority voting. In theory, Cameron can still achieve a cash freeze if member states and the European Parliament can’t agree on a compromise, in which case this year’s budget is carried over to next year."

The EU's longer-term budget: "Where the UK really has leverage is over the long-term EU budget, from 2014 and onwards (the EU budget is usually negotiated in seven years periods). Here, the UK has a veto and in terms of the EU budget, is what the Coalition really needs to start thinking about.  On the Today Programme this morning, William Hague said that Cameron had achieved a principal agreement with other member states that the post-2013 EU budget must reflect austerity in EU countries. Though it’s encouraging that the Coalition is thinking strategically about the looming post-2013 EU budget negotiations, Tony Blair’s deal to give away part of the rebate in return for vague promises of CAP reform (which never materialised) shows that such deals have rarely worked for the UK. This can therefore hardly be described as a diplomatic victory."

Merkel is getting her way on new €urozone powers: "It also appears as if Merkel’s push for a Treaty change is gaining momentum. As Open Europe has argued for a long time, Merkel is fiercely determined to achieve Treaty change in order to transfer risks associated with eurozone failure away from German taxpayers. According to Merkel herself, EU leaders now agree in principle to a limited Treaty change to insert a “permanent crisis mechanism” for the eurozone (there’s speculation that this could achieved through one of the Lisbon Treaty’s ratchet clauses, which would be a massive legal stretch in my view). Details will be discussed today and there’s still much to play for, but his could turn into a huge victory for German diplomacy."

Cameron has said he'll give Merkel her Treaty changes without UK referendum: "According to German Die Welt, Cameron has agreed to back Merkel's demand for a treaty change, reportedly assuring Merkel that he will secure the passage of a new treaty through the UK Parliament without a referendum. In return, Cameron would get  the “mere” budget increase of 2.9%, and presumably the vague agreement stating that the EU budget post-2013 must reflect austerity in member states."

Overall assessment of Cameron's negotiations strategy: "If true, Cameron may well have severely underplayed the UK's hand, missing the opportunity to get real concessions in return for treaty change. A one-year 2.9% as opposed to 5.9% budget increase, though important in face of budget cuts at home, is pocket change in comparison to what Cameron could have achieved with the leverage that suddenly was handed him."

Mats Persson of Open Europe defends the Coalition's referendum lock

By Tim Montgomerie

Although Open Europe's Mats Persson concedes that the Coalition has disappointed Eurosceptics so far he argues that the referendum lock announced yesterday by Europe Minister, David Lidington, should not be dismissed. On a blog for The Spectator's Coffee House he explains why:

"New crises, situations and politicians’ egos will always drive the need for another treaty and further integration. For example, German Chancellor Angela Merkel has repeatedly called for a new treaty to fix the eurozone*, likely to spill over to Britain in one way or another. The threat of the UK’s referendum lock could be an important strategic asset to argue that a repatriation of powers is the only way the British electorate would agree to the changes. If negotiated intelligently, the net effect would be more powers for Westminster and less for Brussels."

Mr Persson continues that it is vital that Mr Lidington's lock covers a range of possible transfers of power:

• "Any decision to opt into measures in Justice and Home Affairs be subject to the referendum lock, or at the very least, an Act of Parliament. This would mean that the Coalition cannot opt in to, say, an amendment to the European Arrest Warrant, giving the ECJ the final say over this law, unless the people, or the Parliament, agree...
• Every use of the Lisbon Treaty’s ratchet clauses or other articles, which involve handing over control to Brussels - subject to a strict definition...  should be covered by the referendum lock or an Act of Parliament. This would neutralise the “self-amendment” provisions in the Lisbon Treaty."

Read the full blog.

* ConservativeHome hopes that Chancellor Merkel pursues a Treaty that builds deeper fiscal integration among Eurozone member states. Closer fiscal union is necessary for monetary union, as Eurosceptics have long argued. The price of agreeing to the new Treaty should be a substantial renegotiation of the UK's own relationship with Brussels.

Britain will not be able to stop EU ministers ganging up to impose damaging new rules on City of London

By Tim Montgomerie

A new report from Open Europe exposes the risk to the supremacy of Britain's financial services industry by a transfer of regulatory powerto the EU:

1. Broad EU powers: "The new European supervisors will be granted binding powers over national regulators in seven broad areas and will be given the mandate to interpret, apply and enforce provisions in over 20 separate EU laws."
2. EU powers likely to grow over time: "The supervisors are also likely to become more powerful over time, with several proposals already in the pipeline to extend their powers. The Commission and the European Parliament have also vowed to create an EU-based resolution fund for banks “in the longer term”, although that has so far been resisted by member states."
3. Britain won't be able to block anti-City measures: "Crucially, the voting structure within the supervisors is heavily biased against the UK. Most decisions will be taken by simple majority, meaning that the UK would have the exact same voting strength as all other member states despite being home to the bulk of the EU’s financial services industry. This would give the UK highly limited ability to block measures it disagrees with."
4. Regulatory confusion: "In many areas, splitting key supervisory powers between national and EU regulators risks creating more, not less, confusion about who exactly is responsible for overseeing the financial markets, who makes decisions and, crucially, where accountability lies. Ambiguity over where ultimate responsibility lies has often been identified as one of the key failures in the UK’s ‘tripartite’ regulatory system."

In today's City AM Allister Heath forecasts a future where EU ministers gang up to pass rules that damage London's pre-eminent position as Europe's financial centre:

"One of the problems with Gordon Brown’s idiotic tripartite regulatory system was that powers and responsibility were divided; it is absurd, therefore, that the coalition is willing to sign up to a similarly fudged solution on a European level. Nobody will be in charge. Worse, EU regulators will take decisions but it will be national taxpayers, not Brussels, that foot the bill. Countries won’t have a veto over decisions by the supervisors – they will only be able to appeal those with a “significant or material” impact on public spending. But supervisors’ decisions will only be overturnable by a majority vote in the Council of Ministers. So one can easily imagine everybody ganging up on the UK to punish the dreaded City."

George Osborne, who travels to Brussels today to approve the EU plans, insists the UK will still control day-to-day financial supervision.

> A PDF of the full report can be downloaded here.

Open Europe says Tory regulatory policy must focus on EU red tape

A new report from Open Europe, reported in today's FT, warns that 72% of the costs associated with regulation are coming from the EU.

Here are the key findings:

• Regulation has cost the UK economy £176 billion since 1998. Of this amount, £124 billion, or 71%, had its origin in EU legislation.
• The annual cost of regulation in 2009 stands at £32.8 billion.
• We estimate the benefit/cost ratio of EU regulations at 1.02, while the ratio of UK regulations is 2.35. In other words, for every £1 of cost, EU regulations introduced since 1998 have only delivered £1.02 of benefits, meaning that it is 2.5 times more cost effective to regulate nationally than it is to regulate via the EU.

On the Conservatives, Open Europe declares:

"The Conservatives have proposed a series of fresh regulatory reforms that are innovative and could cut the cost of regulation. However, the Conservatives have chosen to focus their regulatory reform agenda almost exclusively at the domestic level. This, in turn, could lead to contradictory or undeliverable policies since a potential future Conservative government will only on average have full control over 28% of annual the cost of regulation. The Conservative Party needs to make it a priority to set out how they intend to apply their domestic reform proposals to the EU decision-making process."

The report - which you can read in full here - sets out thirty ways to cut red tape.

The top 100 most costly EU regulations

Open Europe recently published a list of the 100 most costly EU regulations. See this PDF.

Four directives account for 53% of what will be an £184bn cost by 2020:

1. The Working Time Directive, to cost the UK economy £32.8 bn by 2020;
2. EU's Climate Action and Renewable Energy Package, to cost the UK economy £28.2 bn by 2020;
3. Energy Perfomance Certificates for buildings, a.k.a Home Information Packs, to cost the UK economy £20.2 bn by 2020;
4. Temporary Agency Workers Directive, to be implemented in 2011 and set to cost the UK economy £15.6 bn by 2020.

More here.

Cameron's failure to call referendum on Lisbon will add to cynicism towards EU

"Tory "renegotiation" is a slogan not a policy" (PDF)

Author: Gerry Frost

Publication date: November 2009

The author claims that David Cameron's decision to rule out a referendum on the Lisbon Treaty was not a surprise and will only increase the level of cynicism with which the British public view the European Union and politics in general.

EU's regional obsession threatens nation state

"Good money after bad" (PDF)

Author: Keith Boyfield

Date of publication:October 2009

The author criticises the European Union for spending over 35% of its expenditure on regional development grants and by doing so undermining the nation state model.

The damaging impact of the EU Emissions Trading Scheme

"The Expensive Failure of the European Union Emissions Trading Scheme"(PDF)

Author: Matthew Sinclair

Publication date: October 2009

The report is highly critical of the European Union Emissions Trading Scheme (ETS) which according to the author has increased the cost of energy for households, businesses and other organisations. The report estimates that the ETS cost British consumers nearly £3billion in 2008 alone and that the total cost to European consumers since the implementation of the ETS could be as high as £67billion. The report claims that the ETS is a particular burden on the poor and the elderly as it is raising their energy bills and it should be abolished.