EU ironies: The Troika meets the Working Time Directive?

Oh the irony. The EU/ECB/IMF troika are now working their ever living tails off to push the Greeks and Portuguese towards more flexible labour markets, and less top-down regulation – and the European Commission is, in parallel, putting pressure on Italy and Spain to do the same. Simultaneously, however, the same European Commission is clinging on like a leech to the most top-down piece of labour market law imaginable (well almost): the EU’s Working Time Directive (WTD).

Well, these twin efforts might now be heading for a clash. Reports floating around yesterday suggested that the EU/IMF/ECB troika wants Greece to do more to flush out its rigid labour market by, amongst other things, raising the maximum number of working days per week to six. The reports are still sketchy - supposedly from leaked emails – so should be taken with a pinch of salt. Still, it paves the way for a pretty weird situation.

The leaked plans suggested the troika would demand the following to boost flexibility of labour arrangements:

• Increase the number of maximum workdays to 6 days per week for all sectors.
• Set the minimum daily rest to 11 hours.
• Delink the working hours of employees from the opening hours of the establishment.
• Eliminate restrictions on minimum/maximum time between morning and afternoon shifts.
• Allow the consecutive two week leave to be taken anytime during the year in seasonal sectors. 

Now the Working Time Directive:

• A maximum working week of 48 hours
• A rest period of 11 consecutive hours a day
• A rest break when the day is longer than six hours
• A minimum of one rest day per week 

In addition, a range of ECJ cases have extended the scope of the WTD even further (sick days spent on holiday can be reclaimed, doctors who sleep on-call are actively working etc).

The latest Troika plans, if true, would not break the WTD it seems, but they’re clearly taking Greece to the limits of what is permissible under EU law – lest they want to push Greece to seek a UK-style opt-out from the WTD (leading to a bizarre scenario, whereby the Commission urges an opt-out from its own rules). One step further and the acquis communautaire would get in the way. In addition, a hardworking Greek who wants to follow the Troika’s recommendations by putting in a six day working week, better be sure to clock out right on time, after eight hours have gone by, or he would be engaging in activities illegal under EU law.

This raises a second question: if the Troika was tasked with working out a competitiveness plan for the entire EU, would the WTD – and many other onerous EU regulations, and the EU budget for that matter – survive?

We suspect not.

Losing Faith In The Commission?

Today's Le Monde has a juicy example of one of the upcoming policy priorities in the European Commission's in-tray. A study* has apparently been submitted to the Commission recommending the introduction of EU-wide standards to reduce the amount of energy consumed by...household electric coffee machines (we kid you not).

The article notes that Barroso & Co. will make a decision on this delicate matter over the next few months. The Commission could either opt for introducing a new regulation or choose to negotiate with producers on a voluntary basis.

We recently noted that the euro crisis, and particularly France and Germany's response to it, has sidelined the European Commission in favour of national governments. Le Monde's front page editorial applies this theme to the coffee machine/energy issue. It concludes,

"That's how things go in a Europe of which the Commission is no longer the engine. But let's reassure ourselves, the aforementioned Commission finds something to do. These days, it bustles about regulating the energy consumption of our electric coffee machines. Our filter and espresso machines are too voracious of kilowatts; we need - we're told - to introduce a new rule as a matter of urgency. Some days, being a European is a matter of faith."

* Update 16:10: Here is a link to the study mentioned by the article. It looks like a huge research project...

'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.

"One-in, One-out" for UK laws but EU're welcome anytime

The Government has today announced that it is to introduce a one-in, one-out system of regulation whereby "When Ministers seek to introduce new regulations which impose costs on business or the third sector, they will have to identify current regulations with an equivalent value that can be removed."

This is clearly a welcome initiative, as it will make regulatory costs (which are too often overlooked in austerity discussions) similar to spending, in that ministers would have to prioritise amongst different pieces of regulation just as they have to prioritise what to spend money on.

But what about rules and regulations coming from Brussels? Our research, based on the Government's own Impact Assessments, shows that in 2009, 59 percent of the annual cost arising from all regulation introduced since 1998, £32.8 billion, stemmed from EU legislation. So that's around £19bn. (Note that this includes all regulations introduced since 1998 - when the government started to produce IAs - which gave rise to a cost in 2009, as opposed to the government's figures which only include new regulations introduced last year).

Unfortunately, the Government has decided to duck the uncomfortable question and not include regulations from the EU in the scheme.

This could prove problematic for several reasons.

Firstly, it will limit the impact of the scheme, as it will not cover the bulk of the cost of regulation. As a point of comparison, imagine the Coalition having a series of proposals for how to get the country’s public finances in order, but only having full control of 40% (or less) of the actual budget.

Secondly, ignoring the impact of EU legislation leads to unrealistic expectations of delivery. This, in turn, could undermine the credibility and legitimacy of the Coalition government's entire regulatory reform drive.

Thirdly, and perhaps most importantly, the point of the budgets is to ensure regulatory prioritisation within departments. If so much of the annual regulatory cost originates in the EU – then how much of a real “prioritisation” can actually take place? This is particularly true for departments/agencies such as the DfT, FSA, HSE and DEFRA whose regulatory output is almost completely dominated by EU laws - in come cases over 90% of the cost (see table).


In addition, the Conservative party has been – rightly – a critic of ‘EU overregulation’ in the past. In a speech in May 2009, launching the party’s European election campaign, David Cameron said:

“Our next task is to fight the EU's culture of centralisation and over-regulation. Brussels can be a force for economic dynamism - but too often it acts like an economic millstone.”

Starting off with launching a flagship proposal which doesn't address EU regulation doesn't look too good, and gives the impression that the Coalition Government is in denial over how much impact laws stemming from Brussels has on the UK economy.

But there is another way.

According to negotiation theory, in the interaction between domestic and international (EU) politics, governments strengthen their bargaining power if they can convince their negotiation partners that their mandate from voters and business at home is very restricted – and that they are ready to stick to that mandate.

That is how the Coalition Government should use the one-in one-out scheme.

EU legislation should have to meet the same stringent criteria as domestic legislation (including being signed off by the Coalition's "Regulatory Policy Committee") . At a very early stage in EU negotiations, the UK Government should give its negotiators the authority to reject proposals that do not meet its priorities and threaten to break its own regulatory budget. UK ministers must make clear to their EU partners that they simply do not have the mandate to sign up to a proposal that will break their departmental regulatory budget. This would strengthen the UK's negotiating hand massively.

It would be radical but not more radical than other member states simply choosing not to implement EU laws properly or resisting CAP reform, for example.

An oldie, but a goodie

As readers are hopefully aware, EU regulation has been on our minds for the last few months as we put together our latest research on the ever increasing cost it has placed on the UK economy over the last eleven years. Old habits die hard and we were therefore (rather worrying) excited to come across this remark by the then President of the German Bundesbank, Prof. Hans Tietmeyer, from a speech in London in December 1997:

“Admittedly, the European ideal is sometimes used to mask nonsense. The anecdotes about pointless regulations planned by bureaucrats would fill volumes.”

Considering that EU regulation introduced in the UK since 1998 has cost the economy £124 billion, we can only wonder what Prof. Tietmeyer would say in 2010.

The first sentence is, however, perhaps more significant. This was a remark given in a speech about the introduction of the euro and, in hindsight, may prove to be very prescient.

No one should take pleasure in witnessing the current difficulties in the eurozone, because, after all, they have the potential for much wider repercussions across Europe and the globe, but maybe eurozone leaders could do well to heed the Professor's message: European ideals are not sufficient to paper over fundamental economic realities.

Stark contrasts

From very informative EU news site Euractiv:

France and Germany have apparently set up a 'working group' charged with blocking reform of outlining the future of the EU's Common Agricultural Policy (CAP) after 2013.

And there's little doubt over what the objective is. Following a meeting with President José Manuel Barroso last week, French Farm Minister Bruno Le Maire, bluntly said that "more regulation" will be France's guiding line in negotiations on the CAP.

The negotiations on the EU budget will kick off in November and, according to Euractiv, the Commission is due to table its first ideas on 'CAP reform' in September 2010. The franco-german 'working group' will now tour EU capitals, starting in London before going to Madrid, Rome, Bucharest and Warsaw, in a bid to convince EU partners of the undisputed advantages of the CAP (which, for example, include artificially high food prices, more global poverty, and allowing for non-farmers to be paid not to farm).

But quite apart from the issue itself, note the contrast between the franco-german approach to CAP negotiations and the UK Government's approach to the ongoing talks on more EU supervision and regulation of the financial markets - proposals with huge implications for the UK economy. We doubt that there were 'working groups' from the Treasury touring Europe to win support for the UK's position as these proposals were concieved (indeed many of them are still in the process of being worked out). It's widely acknowledged that Whitehall has struggled in putting its mark on the negotiations - despite the UK being home to by far the most important financial centre in Europe.

In fact, even the House of Lords EU select committee criticised the UK Government for being "behind the ball game" in the negotiations.

Perhaps the UK could learn a thing or two from the French here - at least when it comes to influencing the EU agenda at a much earlier stage, particularly in policy areas that are so significant for the UK economy.

How many of our laws are made in Brussels?

Okay, so we've asked this question before on this blog. But it's one that just keeps coming back. The question has eluded politicans, journalists, opinion-formers and others since the dawn of time (or 1973, to be specific).

Libertas, the new pan-EU party standing in the European Parliament elections, are claiming that 80% of our laws are made in Brussels.

Meanwhile. on Tuesday, German liberal MEP Jorgo Chatzimarkakis repeated the frequently cited claim that 85 per cent of all laws come from the EU - and said it was even higher in eastern Europe.

The eloquent MEP Dan Hannan notes on his blog that "The figure cannot be repeated too often. Remember, when a candidate next solicits your vote, that four out of every five laws are proposed in Brussels by bureaucrats...There is no reason to believe that it would be lower in Britain."


For what it's worth, we're not convinced by this figure - as we've explained before.


It's taken from a reply by the Parliamentary Undersecretary of the German Parliament, Alfred Hartenbach, given on 29 April 2005:

In den Jahren 1998 bis 2004 wurden insgesamt 18 167 EU-Verordnungen und 750
EU-Richtlinien (einschließlich Änderungsverordnungen bzw. -richtlinien)
erlassen.

Im selben Zeitraum wurden auf Bundesebene insgesamt 1 195 Gesetze
(davon 889 im BGBl. Teil I und 306 im BGBl. Teil II) sowie 3 055
Rechtsverordnungen (einschließlich Änderungsgesetzen bzw. -verordnungen) verkündet

Essentially, from 1998 until 2004 18,187 EU regulations and 750 directives were adopted in Germany. During the same period the German Parliament passed in total 1,195 laws (as well as 3,055 "Rechtsverordnungen" - which are like Primary and Secondary legislation) .


Former President Roman Herzog and Luder Gurken of the Centrum für Europäische Politik famously used these figures to calculate that 84% of all German laws originate in Brussels. The logic:


750 (directives) + 18,187 (regulations) = 18,917 EU legislative acts
1,195 (Gesetze) + 3,055 (Verordnungen) – 750 (directives) = 3,500 German legislative acts


= 84%.

The 750 directives were substracted as they require seperate implementing laws in Germany (assuming a directive/implementing law ratio of 1:1).


Now, these figures no doubt give an important indication of the huge influence the EU has over national legislation, but to conclude that 4 out 5 laws originate in Brussels is probably a step too far. Germany, for instance, is a federal system, meaning that the individual Lander has substantial powers to legislate autonomously. The many laws adopted on the Lander-level would have to be included in any all laws count, which isn't the case here. In addition, this count says nothing about the nature of the laws.


It's also important to keep in mind that the EU's powers are mainly regulatory, as opposed to budgetary. This means that most issues that relate to spending and taxation (health bills, crime bills, educational reform, pensions, welfare, etc) - the "wallet" issues if you will - are mostly beyond the realm of the EU, but must also be included in any count that includes all laws.


Recently we took a long, hard look at this issue when we combed through more than 2,000 of the UK government's impact assessments for regulatory proposals. The exercise confirmed the limited value in comparing EU laws and domestic laws without any sense of their relative impact and importance.


However, this excercise also confirmed that the EU is without doubt the main driver of the cost of regulation in the UK - 72% of the cost of regulation over the last ten years is EU-derived. In terms of absolute proportion, we estimate the figure to be around 50%. This means that the EU now has huge regulatory powers. What's more, in terms of relative impact - which is what matters - its powers over regulation exceed that of the UK government. But this was not a measure of the proportion of all laws coming from the EU.


This also means that the likes of Denis MacShane - who like a stuck record keeps repeating that only 9% of all UK Statuatory Instruments (or SIs) are based on EU laws - are way off mark. There are at least four reasons for why these people are wrong:

1) They do not seperate between budgetary and regulatory legislation, therefore comparing apples and oranges.

2) They also compare apples and oranges in another respect: Directives are usually far-reaching measures with a big impact on the economy. SIs, in contrast, can cover a variety of issues, including public administration – for example a road closure or changing arrangements for parish elections.

3) EU Regulations (as opposed to Directives) usually don't give rise to a new UK law but are directly applicable. Therefore, most EU Regulations are not included in the 9% figure.

4) One Directive does not mean one SI. The Motor Vehicles Regulations in 2007 implemented four different Directives, for instance, making a one-for-one comparison tricky.


Where does that leave us? Well, having actually done the work, we stick to our findings:

72% of the cost of regulation in the UK is EU-derived. A shockingly high figure that needs no exaggeration whatsoever - just urgent attention.

Sounds familiar

In a rant in the Yorkshire Post Richard Corbett MEP churns out his familiar and tired old claim that critics of the European Union such as Open Europe are "anti-Europe".

Great to see we have MEPs who want to engage in a grown-up debate.

His particular beef is our report about the escalating cost of EU regulation - which he claims is "one-sided and misleading propaganda" - despite the fact that it is based on information from more than 2,000 of the Government's own Impact Assessments.

However, we note with much amusement that every single one of his suggestions about how to improve things are lifted straight from our report.

Corbett: "At Westminster, we could improve parliamentary scrutiny of EU legislation by having a more effective European Scrutiny Committee and departmental select committees more focused on EU legislation."

Our report: "There also needs to be real-time scrutiny of EU proposals at Westminster, with a bolstered new committee system... Every Departmental Committee should become far more focussed on EU legislation."

Corbett: "We could establish a Danish-style mandate system whereby Ministers have to appear before committee ahead of negotiation in the EU Council, to explain their position, allowing Parliament to help shape the position of the Minister."

Our report: "One proposal for reform would be to make the system more like the Danish or Swedish models, where Ministers set out their negotiation positions to the Committee ahead of European Council meetings, and gain its approval."

Corbett: "The Government could also increase transparency by introducing an 'audit trail' for each new legislative proposal. "

Our report: "One of the simplest reforms the UK Government could pursue is to publish proper ‘audit trails’ for each new legislative proposal."

Corbett: "In a bid to finally end the debate about how much UK law emanates from the EU, the Government could follow the Swedish and Polish governments and draw up a definitive list of laws that originate from legislation or decisions made at EU level."

Our report: "If we want to achieve accountability in regulation, we need to know who the regulator actually is. That means finding out where and how our laws our made. In October 2008 Mark Harper attempted – unsuccessfully – to pass a Bill in Parliament which would have required a Minister to certify on a Government Bill or a Statutory Instrument whether or not it was a result of a decision of the EU."

On this last point, of course Corbett neglects to mention that this very sensible proposal was voted down by his own Labour friends in Westminster when the Government whipped them to oppose it back in October.

Mandy's mixed message on regulation

As part of a statement regarding measures to help businesses cope with regulation, Lord Mandelson has today announced that the Government is going to shelve its plans for regulatory budgets, which would have seen departments having to account for the cost of, and therefore restrict, the new regulations they produce.

In our report on the cost of regulation to the UK we welcomed the Government's plans for regulatory budgets as one way of stemming the increasing flow of regulation, although we did question how departments would cope with the fact that the most costly regulations actually come from the EU and are essentially out of their control.

According to PA, Mandelson said his reason for pulling the plug on these budgets is due to the "economic situation" and he pointed to the need for new regulation "in response to the current banking crisis".

However, with financial services regulation acounting for only around 5% of the cost of all regulation introduced in the last ten years, it would seem that the Government is throwing the baby out with the bath water.


Given that Government budgets tend to be 'flexible' at the best of times, introduction of the budgets would be unlikely to jeopordise any new financial services regulations, which the EU/UK propose in the coming weeks/months.


What is important is that the Government continues to recognise the importance of quantifying the cost of regulation, plus the fact that the vast majority of regulations impact on small and medium sized businesses. Backpeddling on plans to introduce these budgets gives the wrong signal to businesses struggling to cope with the recession.


Mandelson also announced that, "The Government will also be working closely with EU partners to further embed the EU better regulation agenda and to ensure the current pressures on business are taken into account when new European regulation is being considered."

But today's announcement undermines any attempt by the UK to lead by example at EU level in tackling the increasing flow of EU regulation affecting businesses across the EU. The UK and the EU need more, not less, robust processes to cope with burdensome regulation.

Clueless II

During a debate on a different topic in the Commons yesterday our Europe Minister Caroline made a very bold claim indeed. She said:

"Over the past few years, we have seen some huge reductions in regulation in the European Union."

Can she - can anybody - back that up with any proof? Probably not, because the evidence would suggest that it simply isn't true.

Here at Open Europe we spent an arduous 6 months trawling painstakingly through more than 2,000 government impact assessments dating since 1998 to get a grip on the number of regulations, and the proportion and cost of those coming from the EU. We also took a long, hard look at the EU's so-called 'Better Regulation Agenda', and found that what small efforts had been made to scale back the mountains of existing legislation, these had been swamped by the tsunami of new regulations being introduced every year.

In fact, since the Commission launched its ‘Better Regulation Agenda’ in 2005, the annual cost of EU legislation across the bloc has gone from €108 billion to over €161 billion – an increase of 50%.

To add a couple of other relevant factoids:

- In 2008 alone the cost of regulation for the EU-27 was €269.5 billion. This is up from €229.6 billion in 2007 and €183.4 billion in 2006.

- Between 1995 and 2004 almost 11,000 new legal acts were added to the acquis communautaire.

- Overall, the cost of EU legislation has gone up steadily year-on-year over the past decade. In
2008 alone, EU legislation dating from 1998 cost the UK economy £18.5 billion – up from £12.2
billion in 2005.

These are figures which even the Commission's own Director for Better Regulation, Programming and Impact Assessment Marianne Klingbeil did not argue with at an event on this subject organised by Open Europe in Brussels this week.

So where on earth does Flint get the idea that there have been "huge" reductions in regulation?

In our report we make several proposals for reform, but this government has no chance of reducing the burden of regulation if it won't face up to the problem in the first place.

Why the source of regulation matters

The European Court of Justice yesterday delivered a controversial ruling on the EU's Data Retention Directive, which went largely unnoticed in the British media. The law requires telecoms operators across the EU to keep phone and internet data for up to two years, for the purpose of fighting terrorism and crime.

The UK, alongside Ireland, France and Sweden, tabled the proposal back in 2004. However, the Commission changed the legal base of the directive - from justice and home affairs to the single market. In EU law, single market issues can be agreed in the Council of Ministers by qualified majority voting, while issues relating to justice and home affairs must be subject to unanimity.

The proposal was therefore agreed in the Council by majority voting, contrary to what the countries tabling the proposal had envisioned.

Ireland was particularly unhappy about this and asked the ECJ to rule that the decision had been made on the wrong legal base.

To little avail, it turns out. The ECJ essentially said in its verdict yesterday that differing rules between member states on data retention would distort the single market, and in the Court's mind it followed that the directive must be an issue for the single market.

Why is this shift important?

Well, we came across this issue when combing through 2,000 impact assessments, for our latest publication on EU regulation.

The impact assessment for the proposal noted that, although proposing the Directive, the UK government did not know what legal base the Directive rested on by the time it was transposed into UK law.

In other words, up til yesterday the Govenrment had no idea whether it in future could be outvoted in the EU on such a fundamental issue as data retention. This is curious, not least given the fundamental importance of the issue vis-a-vis individual liberty.

The Irish government is not happy, neither is the Swedish. As Svenska Dagbladet puts it, "The ruling means that the Swedish government will end up with a law which it doesn't really want" - despite originally tabling the proposal.

Examples like these are unhelpful for those who say that most laws now sourced to the EU would have been introduced anyway - such as Michael Connarty did on the Politics Show in reponse to our report showing that 72% of the regulatory cost in Britain is EU-sourced.

"Probably 90%", he said, of all regulations now attributed to the EU would have existed in the UK anyway, critisising us for including "everything that may at any time have touched a desk in the Commission".

Apart from it being somewhat strange that the Chairman of the European Scrutiny Committee is criticising us for scrutinising EU legislation, his claim is worryingly arbitrary. First, our estimates are based on what the Government's own impact assessments told us about the source - and no IA we came across said anything about commission desks.

Secondly, as the Data Retention Directive shows, once tabled, an EU proposal can take on a life of its own. Legal bases and objectives can change, or worse, governments can be outvoted or subject to complicated backroom deals, with the final product bearing little resemblence to the original proposal.

Fact is, the changed legal base of the Data Retention Directive means that the UK Government has lost siginficant control over its own proposal.

And that's why knowing the source matters.

Regulations row

In case you missed it, Open Europe Research Director Mats Persson was on the BBC Politics Show on Sunday, discussing our new research, which puts the cost of EU regulations at £106.6 billion over the past ten years.

Also on the programme were Labour MPs Gisela Stuart, and Michael Connarty, Chairman of the European Scrutiny Committee.

Mr Connarty wasn't too impressed by the findings, saying they were meaningless because "If the EU didn't exist, most of the regulations would be in law in this country anyway". He went on to say that "When it [a proposal] eventually becomes a regulation... people ignore the fact that we want it or we had it in the first place."

While it may be the case that, in some instances, EU legislation is not unwelcome, there are two important points to make here. Firstly, although the UK might have wanted a proposal originally, that doesn't necessarily mean that that would still be the case once it has made its way through the lengthy European legislative process.

Secondly, it is fundamentally important to understand where legislation has come from - otherwise how can we possibly think about attempting to de-regulate? As Gisela put it on Sunday: "I think you need to look at where legislation is made, who's responsible for what and whether it's been properly assessed of what the kind of impact and what are sometimes called the unintended consequences of legislation are, so I think to rubbish a report that just looks at the decision making process seems strange to me."

Mr Connarty may well not be interested in looking at the decision making process and understanding where legislation comes from, especially considering he voted against a Bill back in October to require Statutory Instruments to state whether they were the result of a decision made in the European Union or not.

Mr Connarty went on to suggest that if the EU did not exist, "probably 90% or more of those regulations would still exist because we need them." We are not quite sure where he has plucked this figure from.

If he finds time to read our report, he will see that about 50% of the number of regulations introduced in the UK in the last ten years originate in the EU, yet these are responsible for over 70% of the cost of regulations , suggesting that EU regulation imposes a higher burden on the UK economy than domestic legislation does. The Working Time Directive is only one example that springs to mind of an EU regulation that would not exist without the EU. If the rest of the 10% is like that one, it would be a very costly minority indeed...

EU zombies react to credit crunch

Sainsbury's is challenging the EU to ditch its strict rules on the shape and size of fruit and veg, after it was told that a plan to sell Halloween 'zombie brains' cauliflowers, 'witches fingers' carrots and 'ogres toenails' cucumbers, as alternatives to sweets and chocolate, could result in individual employees being prosecuted under EU regulations.

A Sainsbury's spokesperson said:

"We have been struggling to fit a square peg in a round hole for too long now when it comes to conforming to the more controversial elements of the EU regulations. We're not allowed to use up to 20 per cent of what's produced in this country and in the current crunch climate, we cannot continue to waste this much food before it even leaves the farms. Buying wonky veg would have saved cash-strapped Britons up to 40 per cent on some items such as carrots. It not only saves money, it also reduces waste and supports our British farmers."

But don't worry - according to the Observer "The clamour for cheaper vegetables during the credit crunch has forced the EU to re-examine the regulations".

Except that, they only want to change the rules for 26 varieties. Oh, and the changes won't come into effect until July next year, by which time we could all be growing our own.

Great timing

Europe is heading for a recession. The UK is experiencing the biggest jobless rise in 17 years. Barclays has predicted that there could be 150,000 fewer SME's in England and Wales by early 2010 - a prediction that was made before the financial crisis went all out.

The response of the European Parliament? To pass a law that will reduce jobs and impose more red tape - in particular for small businesses.

The Temporary Agency Workers Directive will give 'temps' the same pay as permanent staff after only 12 weeks of employment - a drastic change compared to the present arrangement in the UK. The CBI originally argued that the 'qualification period' should be 18 months, and estimated that the proposal could cost Britain 250,000 jobs.

There are lots of issues on the table here, but the main one is no doubt the disastrous timing. If anything, small businesses need breathing space to find a way through the rough times ahead. But the nature of business has never been the EP's strongest area - only 14% of MEPs have any business experience whatsoever.

Neither does it help that the EP may vote to scrap the UK's opt-out from the Working Time Directive, whose extension the Government supposedly got in exchange for accepting the Temp Directive in the first place. Talk about a potential double-whammy...

Anyhow, the TUC is happy - and one can hardly blame them. John Monks, its General Secretary is quoted on PA:

"The passage into law of today's directive means that opponents of more rights for temps have now lost, and the UK cannot now opt out of better rights for agency workers."

He got that right.

CBI turns against new EU treaty

A few extracts from CBI Director General Richard Lambert's speech at an event organised by pro-euro groups Centre for European Reform and Business for New Europe, 18 June:


“After talking to hundreds of companies around the UK in the last twelve months here’s my view on how British business views treaty changes, which are going to be discussed this weekend. The fact is the subject almost never comes up. Most companies I’ve talked to think it’s pretty much irrelevant. The reasons for that are pretty plain – if they think of treaty change at all they think of it more in terms of risks than opportunities. They see few potential benefits for business and some potential hazards.”

“And some business people ask the question: do we need these treaties anyway? The failure of the draft Constitution has not has catastrophic consequences, the eurozone economy has been rising at its briskest pace over the last nine months for the first time in some years… the union continues to function, despite the accession of twelve more countries over the last three years. The institutional framework continues to operate, the European Court has not collapsed into chaos, laws get passed, decisions get made. So the question people ask is: isn’t just this all just a total waste of time, a distraction from the real big issues which the union has to face: the current failing trade round, budget reform, energy security and climate change”

“But being on the margins of the treaty change debate does not mean that business is detached from European debates as a whole – far from it.”

“Until the matter is resolved one way or another, the treaty debate is not going to go away. Europe’s leaders will just go on gazing at their navels, engage in endless - and sometimes irritable – internal debate, ignoring the big issues and opportunities that Europe is facing in the big world.”

“The decisions to be taken over the weekend – if a deal is struck among the member states – those decisions will be intensely political in character and there is no political consensus in British business about what kind of trade offs and compromises might be acceptable next weekend, or about how far Mr Blair and Mr Brown could go without promising a referendum. No consensus – so I’m not going to go down that road this morning.”

“The conclusion is that there is a window of opportunity here – but it’s not as a result of treaty change, but through the shifting courses of European politics. For business I think that means getting more involved in European debates where they matter. Being clear about what would make the single market effective, being clear that its member states who need to raise their game and being clear about where we want Europe to act and not to act.” Focussing on those areas where collective action will do more to further Europe’s position of the global stage than if we just go plodding along in our own merry way. I think it’s these issues that the business community really needs to get stuck into, and let’s hope that this will be possible once the dust that is probably going to be raised in the next few weeks has started to settle.”


This is a major blow to the Government. The CBI previously campaigned for the euro, and the Government were hoping that they could hide behind the CBI on the new version of the constitutional treaty. But it looks like the CBI has wisely decided to steer clear of taking flak for the Government. Given that the new version of the text would still cut Britain’s power to block legislation by 30%, and inevitably mean even more costly EU regulation – it is not surprising that the CBI members have “little zeal” for the new version of the constitutional treaty.

Holding us back

Back in March some of the UK's leading brewers joined us in criticising the EU for passing a regulation which banned the Crown stamp from British pint glasses and replaced it with the CE mark.

Now the Wiltshire Times reports that this EU regulation has forced a local brewery to abandon plans to sell its new organic beer in Biopack corn starch compostable glasses at the "green" Sunrise festival because they didn't have the correct EU stamps.

Just another in a long line of examples of how the EU's constant drive towards ever greater harmonisation stifles innovation and enterprise in its member states. Isn't this exactly the sort of thing the EU promised us it would sort out through its Lisbon and Better Regulation Agendas?

Exposing the euro myths

When confronted with statistics about the burden that EU regulation places on UK businesses and voluntary bodies (at the last count it was over £38 billion since 1998) a classic Commission response is to blame it on national parliaments and civil servants "gold-plating" EU laws. (Gold plating in this context is when national politicians or bureaucrats add to EU regulations to make them even more cumbersome)

So I was surprised when at a seminar hosted by the Industry and Parliament Trust both David Arculus (former head of the Better Regulation Task Force) and Rick Haythornthwaite (Head, Better Regulation Unit) both agreed that problem of gold-plating was actually a bit of a white elephant red herring.

Rick Haythornthwaite said that he had looked into the issue but found "limited evidence that there had been significant burdens imposed by gold-plating". Similarly David Arculus said, "we could not find much evidence of UK parliament deliberately gold-plating EU law."

Haythornthwaite was also sceptical about the latest EU deregulatory fad - to attempt to cut "administrative burdens"(the amount of forms that regulations require businesses to fill in). The EU Commission recently announced that it intends to cut these burdens by 25%, but as Haythornthwaite implied, this is just a minor issue: "The big price is the policy cost".

Other interesting snippets: they blamed part of the problem on the plethora of regulators in the UK (the average hospital has to comply with rules from 42 different regulators). Blair and Brown are said to both privately be keen on establishing a one-in-one-out rule for business regulation. And both Arculus and Haythornthwaite called for a significant strengthening of parliamentary select committees - particularly the European Scrutiny Committee (as we have also argued).

More email banter with Corbett

-----Original Message-----
From: Richard Corbett MEP
Sent: 09 February 2007 17:13
Subject: Re:

Thank you for your email from earlier today.

Interesting that you found my reference to the lies and hypocrisy of "eurosceptics" as a reference to you, and I take it that it is now official that Openeurope is a partisan eurosceptic outfit.

Granted, I had not looked at your report on the Financial Services Action Plan in which you say (and I will have a look) that you are specific about some pieces of legislation which you do not think are worth keeping. If so, I am sure you will agree that this is the
exception rather than the rule in the bulk of general eurosceptic criticisms about European legislation.

Interestingly, this very morning, I read in a newspaper belonging to the Economist group, the headline "The EU's Financial Services Action Plan has been one of the more successful exercises in European integration", so there are obviously different perspectives on this one.

I am not sure why you think I am kidding when I say "a large proportion"of EU regulation is designed to cut bureaucracy: I did not say "all" EU regulation. Obviously, some legislation pursues other purposes. To take a topical example, the Commission's proposals this week on cutting emissions from cars is one that primarily pursues an environmental
objective - though I hope you would agree that it would make sense to have a common standard in our common market on this point rather than 27 different ones?

I would also be interested to hear your views on the question in my blog piece (delighted you are reading it!) on trade marks and whether you agree with the idea that it would be useful to consolidate and codify EU legislation.

I stand by my comment that it is rather simplistic to say that the EU has "imposed" unwanted and unnecessary legislation on member states when it is the member states themselves, in the EU Council, which approve or not the legislation in question, and when a very large majority (if not unanimity) is required to adopt such legislation. This is quite contrary to the impression that eurosceptic newspapers are all too willing to promote, that it is the European Commission that imposes legislation.

As to the idea that something will slip through because Gordon Brown was away for the birth of his son, this allegation beggars belief in that, if a minister cannot go to a meeting of the Council he is always replaced by another minister and Britain would certainly not have been
unrepresented.

As to the takeover directive, you may recall that this fell on a tied vote in the European Parliament. Had some of the eurosceptic conservatives who were in the building but not present at the vote been there to support their party's official position of supporting the
directive, it would have been adopted.

All that being said, thanks for sending me your comments. I do welcome comments and I do respond to all comments received. I'm off to have my cup of tea now!

Best wishes,
Richard Corbett MEP

-----Original Message-----
To: 'richard@richardcorbett.org.uk'
From: Open Europe
Subject: RE:

Many thanks for your speedy reply. Never let it be said that MEPs aren't listening.

In fairness, it's in a piece which is about us and a report we did. Or is it "the lies and hypocrisy" of some other group that is making you feel nauseous? In which case we accept your apology unreservedly. :-)

Yes of course - when Brown was away he was replaced by Paul Boateng at short notice. There was then a snap vote, despite him requesting that there wasn't one. That was the point at which MIFID was laden down with all kinds of protectionist and unnecessary requirements, and those who wanted real market opening spent the rest of the process trying to recover lost ground.

The car standard for emissions is an interesting case in point. Leaving aside the question of the meaningfulness of the "average" targets that are now being discussed, and imagining that we really were going to set a "hard" environmental target - would that work?

Are we going to stop cars with worse carbon-mileage coming into the EU from outside? If not, aren't you just going to relocate production of all these types of vehicles to outside the EU?

Re: comments on your blog - is that a no?
Best wishes