The Stoiber report: a milestone in the fight against EU red tape?

Edmund Stoiber presents his report

Today saw the publication of the final report of the "High Level Group on Administrative Burdens", i.e. an EU taskforce charged with cutting red tape and easing its impact on businesses. The group - chaired by former CSU leader and state Premier of Bavaria, Edmund Stoiber, was put together back in 2007, so its final report has been a long time coming.

As we have been going on about the costs of EU regulation long before it became fashionable - compiling the first ever overall cost figure for EU regulation based on UK government impact assessments in 2009 - this has been a report we have been eagerly anticipating.

The report contains a number of recommendations, some at the EU level and some at the national level. The key EU level recommendations include:

• Adopting a new EU Action programme and strengthening existing EU programmes for reducing overall regulatory costs such as REFIT, as well as setting a net target for reducing regulatory costs and publishing annual statements of the total net cost or benefit of new legislative proposals,
• Setting a net target for reducing EU regulatory costs,
• Introducing a system of offsetting new burdens on businesses stemming from EU legislation by removing existing burdens from elsewhere in the acquis,
• Rigorously applying the “Think Small First” principle and competitiveness test to all proposals, with SMEs and micro-businesses be exempted from EU obligations as far as possible,
• Developing a common EU methodology to measure regulatory costs and benefits and making the evaluation of all EU legislation compulsory on the basis of this in order to measure actual outcomes against original objectives before any proposals for revision or new legislation are made,
• Declaring a political commitment to focus only on those interventions which are indispensable at the EU level and which add the greatest value compared with national or regional action,
• Empowering an independent body to scrutinise the Commission´s impact assessments before the legislative proposal is adopted by the Commission and to assess the evidence base and costs and benefits supporting legislative amendments by the European Parliament and Council before the legislation is adopted.

The report estimates that were all these to be adopted, businesses in the EU could save up to €41bn per year on top of proposals already adopted by the Commission and European Parliament with an "annual reduction potential" of €33.4bn.

Overall, the recommendations are very welcome and reflect many of the proposals that we have been championing for some time - for example, we first proposed an independent impact assessment board with "real teeth" back in 2009. The report also overlaps with David Cameron's business taskforce report published last year, albeit the Stoiber report does not explicitly call for the adoption of a 'one in, one out' principle when it comes to new regulation. Also, the report does not address big questions like the extent to which the EU should be involved in social and employment policy and the impact of the European Court of Justice in increasing the costs of EU regulation via the back-door as has happened most notably in the case of the Working Time Directive (which the report does not mention). 

Nonetheless the report - together with the nomination of Frans Timmermans as Commissioner for better regulation in a generally reform-orientated Commission - is indicative of a cultural shift within the Commission away from regulation as a process in of itself towards securing concrete outcomes and addressing business concerns. It is certainly, among other things, a nod to concerns raised around the EU and the UK in particular about the EU's tendency to over-regulate and impose excessive costs on businesses and consumers. 

In fact yesterday's Guardian reported that Stoiber explicitly referenced the need to keep the UK on board, and in presenting the report he argued - as passionately as it is possible to when discussing EU regulation - in favour of an EU that is less obtrusive, heavy-handed and opaque. He also admitted that in the past, many politicians and EU officials had seen any EU-level regulation - regardless of its desirability or suitability - as a means to advance the 'EU cause', but that such thinking was now history (although we would say it hasn't completely gone away).  

Overall, it is clear there is a real opportunity to create a more enterprise and business-friendly single market. However, as ever with EU reform the challenge for the new Commission and for national governments will be to translate the rhetoric into concrete action. The fact that the Commission President Barroso has seemingly rejected one of the proposals already - for an independent impact assessment board is concerning.

.@BarrosoEU doesn't support idea of independent body to control impact assessments. "Commission is sufficiently independent & strong."
— Jarno Hartikainen (@JarnoHa) October 14, 2014

This suggests the Commission is nervous about independent scrutiny of its cost estimates for new EU regulation. An independent IA board would be better at catching out harmful proposals - such as the infamous olive oil jug ban - and delivering more measured verdicts on politically contentious issies such as the proposed FTT, where major problems with the Commission’s proposal emerged after it had been tabled and undergone an internal impact assessment. The Commission's resistance suggests that despite much progress, there is still some way to go.

The Balance of Competences may not set pulses racing but EU's impact on NHS is a crucial issue

This afternoon, while the nation's attention is focussed on other matters, the government has released the first tranche of reports coming under the 'balance of competences review'. In total, six reports have been presented, of which health is the most interesting and politically significant. This is because although the EU Treaties make clear that health is primarily a national competence, the cumulative impact of EU laws on the NHS has been considerable, and in many areas largely detrimental. The report (somewhat diplomatically) states (on p.10) that:

"Concerns were also raised about various cross-sectoral EU legislation which has a significant impact on the delivery of healthcare in the UK. Many of these concerns related to proposals around data protection and the Working Time Directive (WTD) – neither of which were specifically designed with healthcare in mind."

The main issue is the impact of the EU's Working Time Directive - passed as a 'health and safety' measure, but in reality a politicised piece of social legislation - which has imposed significant additional cost burdens on the NHS as well as messing with the ability of junior doctors to learn effectively on the job. To re-cap quickly, the original Directive imposed a cap of 48 working hours, but this was then followed by a couple of rulings from the ECJ (see here for more details) which made a bad piece of legislation a lot worse by creatively interpreting its provisions concerning on-call time, further limiting the amount of time staff could spend actively looking after patients.

The Royal College of Surgeons has estimated that the WTD has led to a loss of 400,000 surgical hours per month, while the BMA has calculated it has led to the equivalent of the loss of up to 9,900 doctors. The total cost of the Working Time Directive to the UK economy currently stands at over £4bn every year, much of which falls on the NHS which has to employ additional staff - many of them locums. A recent Telegraph investigation found that many of these locums were being paid up to £2,000 per day to provide cover.

Aside from the (huge) direct financial cost, there is also the issue of trainee doctors not being able to gain the requisite level of experience, with potentially dangerous implications for patient care. The irony is that due to its own inflexibility, the Directive fails to even fulfil its basic premise of ensuring medical staff work sustainable hours - a number of investigations has found many doctors still work dangerously long hours.

Moreover, EU laws can further impact the NHS in the following, often unexpected areas:

• Language competence testing - a highly sensitive issue following the Dr. Ubani case,
• The Clinical Trials Directive which has contributed to a fall in the number of clinical trials taking place,
• EU data sharing legislation which could remove the exemptions for medical research charities,
• The Energy Efficiency Directive requires energy efficiency improvements from all public buildings which imposes a particularly heavy cost on the NHS,
• There is no data sharing obligation to inform the UK's regulator, the GMC if a doctor is struck off in another EU country,
• EU free movement which allows EU migrants the ability to access the NHS free of charge (although in theory the NHS is supposed to be reimbursed), 
• Wider issues around public procurement and competition law.

In conclusion there is clearly a clash between the EU treaties which state that health ought to be a national issue and the real impact of EU legislation on the NHS. In part, this could be due to the unique nature of the NHS compared with other European models but the political reality is that all main political parties are committed to broadly keeping the NHS. However, the report does note that other EU countries 'bypass' the WTD by treating service delivery and education via separate contracts, which suggests its not only the UK that has a problem with it, and that it could muster allies in an effort to force through reforms.

Highlighting such problems is exactly the point of the Balance of Competences review and its good that these issues are being brought to light. That said, for the impact to be lasting, this information must be turned into a political strategy and fed into the government's attempts to renegotiate the UK's position within the EU. Such a strategy is yet to be formulated, and the quicker this is done the clearer the impact of such reviews will be. 

Dutch government: "Time of ‘ever closer union’ in every possible area is behind us”

Dutch PM Mark Rutte (VVD) and Foreign Minister Frans
Timmermans (PVdA) discussing what the EU should
and should not be doing?

For anyone involved in the EU reform debate, this is a must-read. The Dutch government has today published its “subsidiarity review” – an assessment of what the EU should and shouldn't be involved in. Again, we're first to the punch in publishing an English version of the document on our blog.

This is likely to be welcomed with open arms in Whitehall – and should be studied carefully by MPs in Westminster. Though not all good news for David Cameron’s renegotiation strategy – the Dutch have explicitly said they don’t want EU treaty change for example – this is clearly a major step towards a reformed Europe.

First, it shows that discontent with the EU status quo is not simply a UK phenomenon – or a Tory problem as some commentators would have us believe. Secondly, the ideas the Dutch are putting forward are in themselves pertinent, and would go quite some way in achieving a better functioning, more democratic and better focused EU. Finally – and this is where it gets really good news for Cameron - countries like Sweden. Denmark and Germany are far more likely to be persuaded down the reform path if the Dutch are prepared to take a lead with the UK.

So what does the document say? Well, it sets out nine broad principles and 54 specific recommendations, relating to what the EU should and shouldn't do. Many of the proposals have also been championed by Open Europe in various forms (it’s worth re-visiting our “European localism” paper). Most significantly, in the press release, the Dutch government proclaims that the “time of an ‘ever closer union’ in every possible policy area is behind us”. This is not going to go down well in certain corners in Brussels.

The guiding principle is described as “European where necessary, national where possible”, and the tone of the entire document chimes well with Cameron’s EU speech, calling for a “European Union that is a more modest, more sober and at the same time more effective.” Interestingly, it notes that the Dutch EU Presidency in the first half of 2016 “could play a role in promoting such an agenda” – this could coincide with the beginning of the EU referendum campaign in the UK should Cameron be in power.

The 9 general principles include:

• Where the European Court of Justice interprets EU law in a way that EU legislators had not provided for and/or did not intend, then this should be possible to address by amending the EU rules on which the Court based its ruling (this could well be a key plank in Cameron’s renegotiation strategy. An example of where the ECJ ruled in precisely such a way is the Working Time Directive, where the ECJ's interpretation of rules governing on-call time and rest periods for doctors has caused havoc in the NHS);
• Every EU intervention needs to be motivated by a clear legal basis in the EU Treaties, and the Commission shouldn't be making proposals on a legal basis that is tenuous or insecure. The Dutch Government explicitly mentions the English term “creeping competences” (this is very similar to what the UK government wants); 
• EU legislation should focus on main points to achieve shared goals rather than to prescribe in detail how those goals should be achieved (again echoes Cameron’s speech);
• When there are widely shared objections to EU legislation, there should be a mechanism to stop the Commission taking any further initiative in that area – this is a bid to stop new EU laws in areas where national governments don’t want them.

As regards the 54 specific recommendations, they mention individual measures where EU power should be scaled back. There are many overlaps with UK ideas. These include:

• Halting the further harmonisation of social security systems. The document says: “It is necessary to combat the negative impact of labour migration, including the abuse of social security systems” – an issue UK Home Secretary Theresa May has been keen to highlight; 
• Limiting the EU budget - the Dutch hint at scrapping the EU's Globalisation Adjustment Fund and structural funds outside of the poorest regions in the poorest countries on the basis that these do not demonstrate added value (the latter is a proposal Open Europe has championed and which the previous Labour government had pushed for. It’s also gaining traction amongst Tory backbenchers) 
• No expansion of agencies’ remits and no increases in their budgets – Cameron was very critical of EU quangos in his EU speech;
• Working conditions, which should only be regulated in broad outline (health and safety and working time, for example);
• No EU regulation of media pluralism; 
• A two-year freeze in salaries of EU officials;
• Sunset clauses should be incorporated in EU proposals (an old UK demand);
• The Financial Transaction Tax is heavily criticised, because "it has been designed in such a way that even parties outside the FTT area, like Dutch pension funds, will be taxed when they trade financial instruments issued in FTT countries";
• CO2 emissions should be dealt with at the global level rather than via EU legislation.  

There are also some further detailed examples of where the EU has gone too far and where powers should be rolled back. For example, the suggestion is made that flood risk management should only be harmonised at European level for truly trans-boundary water courses. The report also recommends the phasing out of the EU programmes for school milk and school fruit, and heavily criticises the recent proposal to ban refillable olive oil jugs from restaurant (which was eventually dropped by the European Commission).

However, the document also sets out clear limits to what the Dutch government says it is prepared to consider and it does not does call for entire policy areas to be returned to national governments. The Dutch government also says it is “not interested in treaty change or opt-outs” for itself.

Nonetheless, the fact that one of the EU’s founding members has stated that "the time of ever closer union is behind us" is clearly a major development.

Is the UK winning the argument on EU regulation?

Yesterday afternoon Open Europe hosted Business and Energy Minister, Michael Fallon MP, the man responsible for pushing the UK's 'smarter regulation' agenda in Brussels. This is a subject close to Open Europe's heart as we have produced a number of highly detailed reports on the cost of EU regulation - £124bn gross between 1998 and 2010.

In his speech, Fallon argued that while the single market had the potential to be the "greatest platform for economic growth", overly burdensome regulation coming from the EU was choking off potential jobs, growth and competitiveness, and as argued by David Cameron in his EU speech, Europe could not afford this in the global context. "The burden of unnecessary costs" was carried more heavily by Europe than by its competitors, he said.

He argued that this burden falls particularly hard on SMEs, citing a consultation which found that many had to employ a dedicated member of staff simply to process the workload stemming from the EU's REACH (Registration, Evaluation, Authorisation and Restriction of Chemical substances) Directive. Other areas of EU legislation identified as particularly onerous were the Working Time Directive, the Agency Worker's Directive and other social and environmental rules.

During the Q&A session he pointed out that leaving the EU was not a panacea - as UK companies exporting to the EU would still have to comply with many of these regulations without having any say over them, something currently vexing the Norwegians (see here for a more detailed look at this issue).

Fallon argued that progress had already been made on over-regulation on both the UK and EU fronts, pointing to strong support from other member states including Germany, which resulted in the recent letter signed by twelve member states calling for a reduction in the overall EU regulatory burden. Fallon pointed out that as a result of the crisis, many member states had become a lot more receptive to UK-style reforms, with France and Poland adopting a 'one in, one out' approach to regulation based on the UK model. He was also hopeful that Mediterranean countries would become allies in this fight given their need to restructure their economies and said he was disappointed they had not done so already.

On the UK front, Fallon claimed that the coalition's six-point transposition plan for EU laws had resulted in the elimination of costs associated with gold-plating, i.e. that when adopting new EU laws, the UK would only impose the minimum standards necessary to comply.

However, as Fallon acknowledged, there is still more to be done, arguing for example that EU impact assessments ought to be independently verified, and that a "cultural shift" needed to take place in Brussels.

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.

Britain should not ape Norway - but new EU membership terms are fully possible

In today's Telegraph, we argue,

During Prohibition in America, the bootleggers and Baptists found themselves in an unholy alliance. One liked Prohibition for commercial reasons, the other backed it due to religious conviction. The alliance proved short-lived. A similar union has now grown up between certain Europhiles and Eurosceptics. Both say that renegotiating new EU membership terms for Britain is impossible: one group because it thinks the status quo in Europe should prevail, the other because it thinks the UK should leave the EU altogether. Both positions miss the point.



From Open Europe "Trading Places" report.

The argument the Eurosceptics make is that Britain should “become like Norway”, i.e. leave the EU and join its more detached cousin, the European Economic Area. But this would actually be a much worse deal than the existing relationship. First, Norway is almost as much of an EU member as Britain is, implementing roughly 75 per cent of all EU laws, from labour market rules (such as the working time directive) to crime and policing measures.

Second, despite being forced to accept all these laws, Oslo has no representation in the EU’s institutions and virtually no way of influencing the decision-making process to reflect its national interests. Should Britain “become like Norway”, it would be home to 36 per cent of Europe’s retail finance market, but with no say over huge swathes of regulation governing that market. And it would have to accept EU employment law – currently costing UK employers £8.6 billion a year – but with no way of influencing it. The net effect would be less opportunity to hold Brussels to account, not more.

Finally, Norwegian companies face extra costs when selling manufactured goods to Europe, stemming from the EU’s arcane “Rules of Origin”, which impose a tariff on any imports that contain components from outside the EU, and lots of extra paperwork. This has been acceptable to Norway, since 62 per cent of its goods exports come in the form of fish or natural resources, which are not affected by these rules. Applied to the UK – its car manufacturing or pharmaceuticals industries – it would bring sudden additional costs and a competitive disadvantage.

In return for its deal, Norway gets control over its farming and fishing industries. This has economic benefits and helps the country manage and maintain its heritage. But fishing and farming only account for 0.7 per cent of UK GDP. As maddening as the EU’s policies covering these two areas are, would the trade-off really be in the UK’s interests? Pursuing a “Swiss model” – based on a cobweb of bilateral agreements – might be a slightly better fit, but it would present similar problems, for example limited access to the Single Market for the UK’s large services sector.

Europhiles are equally wrong in thinking that the status quo is an option. Whether the eurozone integrates further or breaks up, the rules of the game will change. It is clear that the British public will never accept being dragged deeper into a centralised EU.

As the newly launched Fresh Start group of Tory MPs argued yesterday, Britain should set out a new vision for its place in the EU. This should allow countries to integrate with each other to different degrees. To avoid the pitfalls of the Norwegian model, Britain must not only maintain access to the internal market for goods and services, but also a vote on making the rules, and therefore remain an EU member. But it could take a pick and mix approach in other areas, including retaining its opt-in arrangement on EU policing laws, while participating in a better-targeted EU budget and some environmental measures.

As Europe goes through profound political changes in the wake of the crisis, Britain will have plenty of opportunities to advance this position, including in budget talks and future treaty negotiations, over which it will have vetoes. Once new terms have been agreed, they could confidently be put to the electorate in a referendum.

But to show he can be trusted on Europe – and to avoid a stinging defeat at the 2014 European elections at the hands of Ukip – David Cameron must get to work right away. First, in the ongoing talks over the EU’s long-term budget, he should use his veto to insist on UK economic support being limited to the poorer member states, ending the irrational redistribution of money among richer countries. This would save taxpayers billions. Second, under a loophole in EU law, he could instantly bring more than 100 crime and policing laws back under the control of MPs. Last, as the eurozone presses ahead with a “banking union”, he is right to explore safeguards against its 17 members writing rules for all 27 EU states.

Contrary to what reform-sceptics on both sides say, Britain has leverage in Europe. If the choice is between the UK leaving or getting some powers back, liberal, northern EU countries in particular may – after a lot of posturing and negotiation – go for the latter. The alternative would be losing a key ally in upholding a rules-based system of liberal trade as Europe goes through a highly defensive phase. Germany fears a Mediterranean-dominated EU as much as anyone.

Britain is one of the world’s largest economies, and therefore a major market for other member states, a huge contributor to the EU budget, a powerful military force and a global leader in finance. It lends clout and reach to the EU in world affairs. If it makes the effort, it will most certainly achieve a better deal for both itself and for Europe as a whole.

Cable gets it 100% right on EU regulation (almost)

Vince Cable: Unimpressed by the Working Time Directive

In a nice contrast to the doom, gloom and cynicism which all too often characterise the European debate, here's some much needed can-do spirit from UK Business Secretary Vince Cable. The topic - how to cut down on EU regulation - is a favourite of ours (sad, we know). In a piece for the Telegraph, Vince described a recent meeting in Vilnius, where, apparently, 15 member states, going under the catchy name of the "Like Minded Group", agreed to work towards less cumbersome and more business friendly EU regulation.

Cable attacks the "dreadful economics" and "illiberal" nature of the Working Time Directive in particular and EU social and employment laws in general (at least by implication). But he concludes "the tide is turning":

"Beyond the Like Minded Group, Spain and Italy want the EU to focus more single-mindedly on a growth agenda, including deregulation. Last November the European Commission agreed to attack the regulatory burden with exemptions for micro businesses. And earlier this year, following sustained UK lobbying, we achieved agreement in Brussels to exempt around 1.4 million UK small businesses from burdensome EU accounting rules...I discovered in Vilnius that we are not on our own. We are part of a new progressive European majority replacing the dinosaurs of the past."

This is good stuff, and as we have argued repeatedly, exactly the type of measures that the UK Government should push for (nicely tying in with our piece, also in today's Telegraph, on how the UK should be actively courting Germany in a bid to put free trade at the heart of what the EU does).

However, Cable also rules out a scenario is which the UK "could carve out a comprehensive opt-out of all EU employment legislation", saying that "in practice it is difficult to see how Britain could on the one hand continue to enjoy the benefits of the Single Market, worth £3,500 a year per UK household, while on the other refusing to engage on difficult issues."

It's of course true that it would be politically very difficult to get a carve-out from EU employment law. It's also true that EU employment law acts as a 'subscription fee' for the UK's participation in the single market. But as we set out in our recent paper on EU employment law, where does that argument take you? Should the UK then accept other sub-optimal policies such as the CAP and CFP as that, after all, is part of the 'package deal'.

This position also assumes that EU membership for the UK (and other member states) is "Pareto optimal" i.e. there's no other possible outcome of European cooperation that makes every member state at least as well off and at least one member states strictly better off. Looking at how well Europe is working at the moment (ehum), that is clearly not the case. It's therefore right for the UK to consider the division of labour between member states and the EU in employment law - and other policy areas as well.

But in any case, it's a positive that Cable and the UK government are active in this area. Lets hope they keep up the good work...

The EU and the NHS: the long arm of Brussels

Yesterday we had two reminders of how far the EU's power reaches into the workings of member states. In this case, we're talking about the National Health Service.

MPs debated the impact of the Working Time Directive on the NHS - an issue we looked at here.

Charlotte Leslie MP, who organised the debate, sums up the problems in an article in the Times this morning:

"Doctors warn that the European Working Time Directive, which limits medics to working a 48-hour week, is having a devastating effect on patients’ treatment, doctors’ training and the expertise of future consultants. It was brought in to stop people working 100-hour weeks. But combined with the last Government’s complicated New Deal contract, the directive has put a straitjacket on doctors’ ability to train and to care for patients.

It imposes a 'clock-on-and-off' shift system that means junior doctors no longer get enough quality training with a consultant and patients become products on a conveyor belt. The lack of continuity means things go wrong.

Matters have been made worse by two European Court of Justice rulings. First, on-call time is counted in working hours even if the doctor is asleep in hospital accommodation. Second, if doctors have to go beyond their allotted shift time, they must take compensatory time off immediately. This all costs."  

During the debate, Ms Leslie said that the UK had to look at radical steps to deal with the issue and recognising the depth of reform needed added, "we must ask why we are in this situation, and we must look at the treaties." She cited our recent research on EU social policy, which includes the WTD, saying:

"Open Europe has suggested an interesting double-lock mechanism for negotiating our way out of what was the social chapter and creating a situation in which we are not bound by the rulings of the European Court of Justice. Those are big, radical steps and will take time, but it is something that we should look at.”

Unsurprisingly, the minister present at the debate ruled out the UK taking unilateral action to protect the NHS from the directive. 

Meanwhile, on the same day, we had the European Commission calling on the UK to drop an allegedly unlawful restriction stopping unemployed EU citizens who want to reside in Britain from claiming the NHS as their “sickness insurance”. Such insurance is a condition to reside in other member states under EU free movement rules. UK officials argue that the NHS cannot be seen as an insurance policy to EU citizens without health insurance and that the controls are essential to ensure the NHS is not overburdened with bills for treating non-UK citizens who are not working or economically active. The Commission has threatened the UK with legal action at the ECJ if the rules are not changed.

To put it simply, Article 7 of the EU’s Free Movement Directive states that for EU nationals to have a right of residence in the UK for more than three months and if they are not working they must:

"have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State during their period of residence and have comprehensive sickness insurance cover in the host Member State;"

The Commission’s complaint is that the UK doesn’t consider access to the NHS to be sufficient to meet this requirement.

From the UK’s point of view, the concern is that EU nationals would have the right to treatment on the NHS but with no means for the NHS to be reimbursed for the care. If the EU national does not have his/her own health insurance or a European Health Insurance Card (EHIC), the NHS would be left with no one to invoice for the treatment.

As we've said before, EU free movement comes with benefits to Britain but it needs to be managed with extreme care and, in order for it not to lose all support from the public, the UK and other member states need some discretion in protecting their welfare and public health systems from abuse and/or being overburdened.

Given the UK public's attachment to the NHS, the EU's interference in this area could lead to powerful forces being unleashed.

Trading something for nothing?

Over on Conservative Home, we take a look at the alleged deal between Angela Merkel and David Cameron (with emphasis on alleged).

We argue:

It has become clear, over the past few months, that German Chancellor Angela Merkel wants to reopen the EU Treaties in order to beef up the rules on eurozone economic governance, giving the EU institutions, including possibly the European Court of Justice, the power to impose and enforce semi-automatic sanctions when euro states break the budget rules. There’s no concrete proposal for Treaty change yet on the table, but the Germans will most certainly want to seek a “limited” change to the EU Treaties without the need for referenda across Europe.

Irrespective of the merits of the proposals, with German money necessary to keep the eurozone show on the road, you can understand why Merkel feels the need to take some sort of action. 'Never again' is the implicit lead theme. But where does all of this leave Britain?

Last week, David Cameron, who has the power to veto Merkel’s demands as they require unanimous consent, flew to Berlin, presumably to tell the German Chancellor what he wants. Both the German and British press had a field day with the alleged tensions between the two countries. German tabloid Bild – the most widely read paper in Europe – led the pack asking, “What is Britain still doing in the EU anyway?”

Vey little was given away at the post-meeting press conference, but we know that Cameron has some established objectives in ongoing EU negotiations: ensuring that decisions on the EU’s single market are agreed by all 27 members (an aim which Merkel broadly agrees with) and insulating the City of London from intrusive EU laws (a no-go for Merkel). An objective, entailed in the Coalition agreement, to revise the EU’s draconian working time rules is also now being revisited with reports suggesting that Cameron may be set to agree a Treaty change in return for just that. The reports are still pretty speculative but if they contain any truth, Cameron risks repeating the mistakes of past prime ministers who have consistently underplayed the UK’s hand in Europe (think of Tony Blair’s decision to give up a huge chunk of the UK’s EU budget rebate in return for broken promises of reform to the Common Agricultural Policy).

Here’s why: re-negotiating the Working Time Directive (WTD) – the EU law regulating working hours – would certainly be a worthy aim. But the problem is that, unlike Treaty negotiations, where the UK has a veto, the WTD is decided by qualified majority voting amongst EU minsters and subject to so called co-decision with the European Parliament, giving MEPs the opportunity to get in on the act with a whole range of demands of their own. Not only does this mean that the final outcome of EU negotiations is out of both Merkel’s and Cameron’s hands, it could even result in an even worse outcome than we have already. You don’t have to look too far back in time for evidence showing why such a strategy would be a major gamble. In 2008, the last time the WTD was up for renegotiation, in an attempt to resolve the very same problems caused by the ECJ’s rulings, MEPs voted to scrap the opt-out from the 48-hour working week. The Labour government, who pointed out that losing the opt-out would cost the UK economy billions, was forced to fight tooth and nail to keep the exemption. Meanwhile, the rulings on rest periods and ‘on-call’ time were left completely unaddressed, despite the fact that several member states in addition to the UK were seeking to overturn them.

Cameron would therefore be trading a UK veto – and spend plenty of political capital – in return for little more than the vague hope of a reformed WTD, changes that he should be pushing for anyway.

So what are the options for Cameron ahead of the key EU summit on December 9^th, when Merkel, aided by EU President Herman Van Rompuy, will begin her quest for a limited Treaty change? As Open Europe research has shown, there are potentially major gains to be won from repatriating EU social and employment law, including the WTD. But admittedly, it would be difficult to achieve a comprehensive repatriation through the limited Treaty change that Merkel now is pushing for.

A better objective for the December talks is some sort of safeguard to protect the UK from harmful EU financial regulation. It is true, that if Britain over-reaches, Berlin may seek an arrangement which involves only the 17 euro members, leaving Cameron without veto and leverage. But the Germans are actually very keen to get things done at the level of all 27 member states for a whole range of reasons and it would be foolish for Cameron to fold prematurely. In a report to be published next week, Open Europe will set out what such financial safeguards could look like, and how they can be achieved, so watch this space.

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.

MEPs response to the downturn: ban work on Sundays

MEPs are an interesting lot. As we reported in our press summary a couple of weeks ago, a third of all MEPs have signed a petition, urging the Commission to include requirements for 'work-free Sundays' in its upcoming review of the Working Time Directive. In their declaration, the MEPs stated that the Commission should “protect Sunday, as a weekly rest day, in forthcoming national and EU working-time legislation in order to enhance the protection of workers' health and the reconciliation of work and family life.”

German Christian Democrat MEP Martin Kastler has also launched an online petition, trailing the citiziens' initiative created by the Lisbon Treaty (whereby one million signatures will require the Commission to consider a request for a legislative initative in some cases), to call for Sunday to me made a work-free day across the EU. The campaign is called "Mum and dad belong to us on Sunday." The petition has received some 13,000 signatures so far.

Now, few people like to work on Sundays and it's hard to argue against the need for some good, quality time with the family at least once a week. But come on, is this really something for the EU? And is banning work on Sundays what we need right now given the economic climate?

Setting the record straight on regulation

In case anyone has yet to see it, Open Europe has today published a new report detailing the cost and benefits of regulation introduced in the UK since 1998. Since last year's study on the same topic we have analysed an additional 320 of the Government's impact assessments, bringing the number of IAs analysed in total above 2,300.


It's not the easiest subject to traverse for those unfamiliar with the inner workings on regulation and deregulation initiatives, which is perhaps why it seems to have led to confusion in some quarters over what the report actually is.

The European Commission, for one, gave their response to our study in the Telegraph saying:

"The Open Europe study lacks rigour and is intentionally misleading. The headline figures suffer from a methodological bias. It confuses stocks and flows, it suffers from double-counting, it does not consider what repealing EU regulations would imply either in terms of foregone benefits or alternative regulatory costs."


An intriguing response. The Commission appears to have read only the first sentence of our press release and nothing of the actual report. That's a shame because:

• We presented three sets of figures, the cumulative cost of regulation, the annual cost of regulation and benefit/cost ratio of regulation. The Commission only responds to the first figure.
  

• The cumulative cost, or a cost of the 'stock' of regulation, measures the entire cost to the economy since 1998, which is £176 billion. The EU is responsible for 71%, or £124 billion of that cost. We explained that £176 billion is equivalent to 12.6% of the UK's annual GDP, and roughly equivalent to the country's budget deficit. This does not mean that the £176 billion cost of regulation occurs in one year, as we make clear, and the comparison to the budget deficit and GDP is illustrative and designed to relate a large figure to something most people are familiar with. In particular it's a useful reminder that regulatory policy deserves as much scrutiny as budgetary policy, as both have a significant impact on the economy. We can see why the Commission doesn't like that thought. We're note sure what the Commission's remark about 'double-counting' refers to.
  

• In the report, we do address the counterfactual , i.e. the costs that would have occured in absence of EU regulation. This is indeed an interesting discussion - one that the Commission would do well in seriously engaging with. We accept that many regulations - but certainly not all - would exist in national law also in the absence of the EU. However, and this is crucial, while the framework of laws may still exist at the national level, a whole range of prescriptive requirements that go with it would not. We give examples in our report.
  

• Additionally, knowing the source of regulation is vitalling important, both in terms of practically amending the law if so desired, and in terms of political accountability. Not knowing the source of the laws massively undercuts citizens' ability to hold policymakers to account. I.e. if I'm not happy with my energy bills rising as a result of regulation, who should I blame? The answer is far from straightforward.
  

• The annual cost of regulation measures the cost to business and the pulic sector arising from red tape in any given year (from existing and new regulation). We consider this to be a more useful measure than the cumulative cost as it allows us to look at trends. The Commission doesn't seem to address this figure, which is surprising. Particularly as it shows that the EU proportion of the total cost has gone down over the last three years (at 59% in 2009, compared to a 72% average), which could be a sign of the EU's 'better regulation agenda' beginning to pay off...

• But the most interesting figure is the benefit/cost ratio, showing the benefits of EU and UK regulations relative to each other. This figure is not being addressed by the Commission either. The ratio makes clear that for both EU regulations and UK regulations the benefits outweigh the costs, but UK regulations areo n average 2.5 times more cost-efficient than EU laws. This is also true in the areas where the EU and UK regulate the same parts of the economy (for example, social policy and environment legislation). This is what the Commission really should be trying to respond to if they’re concerned with relative benefits.

Additionally, a spokesman from the Department for Business said:

"The figures presented in this report are out of context as they take little or no account of the wider economic benefits that regulation can deliver. European regulation has helped open up new markets for UK business across Europe and provided important new rights and protections."

Again, we acknowledge that regulations come with benefits, and that EU laws, for example on public procurament or energy 'unbundling', can have a positive impact on the economy. The problem is that EU regulations too often are mistargeted, overly burdensome and decided at the wrong level of policy-making in the first place. That's what we're addressing.

The Department for Business added that its "Forward Programme", which details the regulations planned for next year, shows that EU regulation will only make up 31% of the total cost. The discrepency is explained by the fact that the forward programme doesn't take into account any of the existing regulations generating costs to businesses and the public sector - our estimate does.

And closer inspection of the Government's "Forward Programme" reveals that the economic impact of many of the EU regulations due to come into force next year have yet to be quantified (24 to be exact). Some are also very important, such as the proposed establishment of the EU's three new financial regulators - which could have a massive impact on the City of London. True, there are also many domestic regulations yet to be quantified but, as we have seen in previous years, a high EU proportional cost can just as easily be attributed to just a few extremely costly regulations as several put together. So, essentially, it is too early to tell until all the costs are quantified.

Interestingly, former Dutch EU Commissioner Frits Bolkstein today reaches some similar conclusions to those we spell out in our report. Writing in Belgian daily De Standaard he calls for the size of the Commission to be reduced to 12. He explains his reasoning:

"A proposal to grant independent women the right to pregnancy leave. Both in the Netherlands and Bulgaria, shouldn't we decide on that ourselves? The European Commission has apparently learned nothing from the Nos in France and the Netherlands...Under Barroso the Commission has become a presidential system. Now there are 27 Commissioners. Power is with the President and his Chief de Cabinet. The Chief of Cabinet has more power than many Commissioners. Discussions within the Commission don't mean anything any more."

"What do Commissioners want? They want to get into the picture with initiatives, smart or not...The only way to stop the stream of useless initiatives is to reduce the number of Commissioners to what is necessary to steer the EU. I think a Commission of twelve capable people is enough."

Is the opt-out safe?

The Hungarian nominee for EU Employment and Social Affairs Commissioner, Laszlo Andor, has had his European Parliament today, and it was not quite as dull as some other hearings - Mr Andor seemed willing to share his views on several issues and actually offer an opinion.

(For anyone who didn't read our briefing on the Spanish EU Presidency, they have pledged that it will be a "factory of rights", suggesting that the employment portfolio might be one to keep an eye on in the next 6 months.)

Andor said that there was a "compelling case to revisit" the Working Time Directive - negotiations on which collapsed last year.

UK Lib Dem MEP, and former member of the conciliation committee during negotiations on the Working Time Directive last year, Liz Lynne asked Mr Andor about the rights of workers to engage in overtime if they so choose, and about the opt-out more generally.

Mr Andor's response: "Since we have economic and monetary union, I think that opt-outs are, in general terms, never the best solution. We always have to think first about what rules can be or in principle could be applied in every country. But if there is some kind of fundamental obstacle to apply an overall regulation in an EU country, yes there is a possibility of opting out. Opting out, perhaps temporarily, we also have to bring in the time dimension when we think about these issues and face difficult negotiations."

"Concerning the voluntary overtime, this is really an issue that needs to be seen. I am not sure that a general conclusion could be reached. My approach would be that if it's voluntary in a certain period, within a broader context of working time regulations, we should still find ways to protect the workers, because it comes from the health and safety considerations. We should give room to voluntary arrangements that exceed regulations with certain conditions."

In her follow up question, Liz Lynne mentioned that the latest unpublished report from the Commission found that 14 states are using the opt-out, and asked him if he thought there was a possibility of bringing forward WTD negotiations on the health sector, separately from other sectors.

Mr Andor's response: "When we bring back the Working Time Directive [negotiations] we need to have a new approach and the sectoral approach can be one of the aspects. Obviously we have to learn from the difficulties of the previous attempt to review the Directive. The opt-out itself is not an abuse. I think the opt-out is a reflection of different realities in different member states and we have to take that into consideration when the discussion next comes up."

So...what conclusions can we draw, if any, on Mr Andor's stance on the Working Time Directive, and negotiations on the opt-out which is sure to come back onto the agenda this year? Well, he doesn't seem to be opposed to the opt-out itself, and recognises that different national characteristics in labour markets mean that certain adjustments need to be made in any EU approach within the field of social and employment policy.

However, he does indicate that he is against opt outs in general, suggesting they are not conducive to the smooth operation of the internal market - and they can only ever be temporary measures. This is surely not good news and would provide further support for our case that decision-making in social and employment policy should be repatriated altogether (since the opt-out has to go sooner or later with Andor's reasoning).

Additionally, the suggestion of a sectoral approach to working time negotiations spells a worrying turn. While there is much evidence that the Directive does not work well with the NHS, and other health services across the EU, the health sector is not the only one people should focus on in this respect.

It is not hard to imagine a scenario where some kind of deal is done on health workers, say by the European Parliament agreeing to a change in the definition of on-call time and rest periods, across the EU, in return for which a qualified majority could be reached within the Council to agree to an end to the opt-out altogether.

As Liz Lynne mentioned, 14 EU countries currently use the opt-out, but mostly out of necessity because the ECJ rulings on the Working Time Directive, with regards to on-call time and rest time, are not easily workable in health services.

But what about other workers that want the ability to take on voluntary overtime as and when they choose, and don't necessarily want a maximum cap on working hours handed down by their MEPs, most of whom they have probably never heard of. For more information on the kind of people that want to retain the opt-out for their industries, see our briefing on the Directive and opt-out.

All in all, there are definitely worse people we could see in the position of Employment and Social Affairs Commissioner than Laszlo Andor, but his appointment may not be good news all round.

The top 100 most costly EU regulations

Open Europe has today published a list of the top 100 most costly EU regulations, detailing the annual cost of the laws, the cumulative cost of them by 2020, and the article base in the Lisbon Treaty for each regulation . We estimate that these laws will in total cost the UK economy a staggering £184 billion by 2020. To put that figure in context: for the same amount, the UK Government could abolish the country's entire budget deficit and still leave the Exchequer with some £6 bn. All cost estimates are based on the UK Government's own impact assessments so the figures are instructive.

The top four items on the list account for almost £97 billion - or 53% - of the total cost of the 100 regulations by 2020. Looking at these four laws clearly illustrates the enormous, and often overlooked, potential for the UK economy to save money by making a few key regulations less burdensome. Notably, cutting down the costs of these regulations could happen without any of the stated benefits being lost in the process.

1) The Working Time Directive, to cost the UK economy £32.8 bn by 2020: This Directive has been widely criticised for being overprescriptive, impractical and generally out of touch with reality - particularly as it applies to the NHS. Merely changing the on-call time and compensatory rest rules entailed in the WTD could save the UK's public sector millions - if not billions - of punds every year.

2) The EU's Climate Action and Renewable Energy Package, to cost the UK economy £28.2 bn by 2020: As we've argued before, the EU could find a much more cost-effective way to achieve carbon emission reduction by setting overall targets, and then allowing for individual member states to decide for themselves how best to reach them (as opposed to the current micromanaging approach). This would hurt the economy less and provide a more credible alternative to follow for countries outside Europe.

3) Energy Perfomance Certificates for buildings, a.k.a Home Information Packs, to cost the UK economy £20.2 bn by 2020. Again, this cannot possibly be described as the most cost-effective way to achieve reductions in carbon emissions from the residential sector.

4) The Temporary Agencey Workers Directive, to be implemented in 2011 and set to cost the UK economy £15.6 bn by 2020: When he was Business Secretary, John Hutton warned that this Directive could consign "literally thousands of people to benefit dependency" (this was in 2007, before Gordon Brown was outnegotiated in a horsetrading deal involving the UK's opt-out from the EU's 48 hour working week. The Government is now trying to defend the Directive).

Making these laws less burdensome or tailor them to better fit the UK is not easy - but it certainly isn't impossible. Neither is avoiding repeats of these laws. But this does require a far tougher and smarter approach to EU regulations/negotiations than that employed by the current government. See here for our ideas on what such an approach should entail (chapter 5).

An excellent place to start would be for an incoming UK government to opt out altogether from the articles in the EU treaties which give rise to EU's social legislation (articles 151 to 161 as amended by the Lisbon Treaty). With correspondng domestic reforms, this could instantly reduce much of the cost stemming from, for instance, the Working Time Directive and the Temporary Workers Directive.

At a time when every penny is needed to close a massive public deficit, surely cutting the cost of regulation should be a top priority for the next government?

The ECJ strikes again

We've just come across another hugely significant ruling by the European Court of Justice on the EU's Working Time Directive (WTD), which slipped largely under the radar last week. HR magazine People Management has the story.

Essentially, in the latest Pereda v Madrid Movilidad case, the EU judges' ruling opens up the possibility of employees 'reallocating' their annual leave if they are struck down by 'illness' while on holiday.

The employee in the case, Vicente Pereda, was injured shortly before his annual leave was due to start but his employer refused a request to move his holiday. The Court ruled that this was illegal under the WTD. Lawyers have warned that there is now no reason in principle why an employee whose holiday had already started could not claim the right to reallocate leave, if they were entitled to sick leave at the same time.

To call this a can of worms would be a gross understatement. How would employers be expected to police this in practice? Fly 'compliance officers' to the Costa Del Sol to verify a bout of food poisoning at the hands of a dodgy paella?

But there is a wider and more serious point about EU law here - that at the hands of the ECJ judges it can take on a life of its own.

Since the WTD was agreed in 1993 the ECJ has continuously extended the Directive's reach, ruling against national governments and increasing employment costs to both the private and public sector.

In November 1996, the EU's judges in Luxembourg ruled against the UK Government by determining that the WTD's legal base fell under health and safety rather than social policy, meaning the UK no longer retained its veto (which existed at the time).

In October 2000, in the 'SiMAP' ruling, the ECJ decided that time spent resident on call in a hospital or other place of work should count as working time, even if the worker is asleep for some of that on-call time. This has had a huge impact on the NHS, for example, as resident on-call doctors' hours were slashed.

In June 2001, the ECJ ruled that the UK was in violation of the WTD’s provision on annual leave.

In April 2003, in the 'Jaeger' ruling, the ECJ ruled that rest periods entailed in the WTD have to be taken immediately rather than within a “reasonable time” if the minimum rest period has been interrupted by an emergency. This causes huge problems for the rota system at British hospitals and the British Medical Association estimates that the effect would be tantamount to losing between 4,300 and 9,900 junior doctors.

In March 2006, the ECJ ruled that British firms that pay workers in place of their holiday entitlements – so-called rolled up holiday pay – were violating the WTD.

In September 2006, an ECJ ruling found that UK Government guidance on rest entitlement was incompatible with the WTD.

In January 2009, European judges ruled that employees on long term sick leave must remain entitled to annual statutory holiday pay upon their return to work. This means that staff can take their annual holiday built up while at home as soon as they return to work.

For more of our thoughts on the WTD, see here.

Now, one can debate the merits of each of these individual rulings but what is surely not in doubt is the immense power vested in the unelected ECJ to extend and interpret EU law as it sees fit. The ECJ is able to drive policy almost at will and yet it answers to no-one .

If only UK ministers had known that by signing the WTD all those years ago, they were creating their very own Frankenstein.

A lesson in caution against unnecessary EU rules

Over the weekend John Black, President of the Royal College of Surgeons, called for the Government to have the courage to "step in and suspend" EU rules which will bring junior doctors' hours down to 48 a week from Saturday.

Matt Jameson Evans, chair of campaign group RemedyUK, said: "We already know most doctors are against EWTD [European Working Time Directive], we just need the leadership to do the right thing here."

Let this be a lesson to all those in Europe - UK Labour MEPs included - who voted at the end of last year to abolish the opt-out from the working time directive as it applies to the rest of the economy. That includes firefighters, police officers, ambulance workers - and plenty of other people whose dedication and flexible workings hours are central to the health of the country. The vote triggered a tense round of negotiations in Brussels from which the UK Government eventually emerged unscathed, albeit by the skin of its teeth - but the current Swedish Presidency of the EU is keen on relaunching the talks, and the fight will be back on before long.

It is several years since the UK lost in negotiations to end the opt-out for doctors - when it was impossible to foresee the situation in which the rules would begin to apply in the future (EU regulations take an average of 2 years to come into effect).

Presumably, no-one imagined we'd be smack in the middle of a pig flu pandemic, for example.

This game is not over

This is from Swedish Radio:

Swedish Employment Minister Sven-Otto Littorin - whose country currently is at the EU helm - will next week sit down for a talk with the new chairman of the European Parliament's employment committee (most likely an MEP from the EP's socialist bloc). The objective is to revive the negotiations over the EU's Working Time Directive. As we reported on extensively as the story line unfolded, the negotiations broke down in April following a disagreement between the EP and the Council over the right of British and other European workers to opt out of the EU's maximum 48 hour working week, entailed in the Directive.

We've estimated that the Working Time Directive as it currently applies in the UK is already costing the economy between £3.5 billion and £3.9 - a cost that could rise to between £9.2 billion and £11.9 billion should the opt-out be scrapped.

The Swedes, alongside several other European countries, are primarily interested in changing the rules in the WTD which define all time spent on-call as active working time - a rule that has messed up rota systems in health care sectors right across Europe, and cost taxpayers billions (the rules were introduced following two absolutely ludacrious rulings by the ECJ).

As several member states are using the opt-out primarily to get around the on-call time rules, we fear a future deal between ministers and MEPs, in which the European Parliament agrees to revise the on-call time provisions, in return for removing the opt-out altogether. Critically, the opt-out has been an obsession for the socialists in the EP for some time, and a surprising number of MEPs in the EPP are also in favour of seeing it go.

In such a horse-trading scenario, the UK could suddenly find itself terribly isolated. Is anyone in Whitehall paying attention?

Promotion for trying to kill the opt-out?

PA reports that Labour MEP for the North East of England Stephen Hughes has been made Vice-President of the Party of European Socialists the Progressive Alliance of Socialists and Democrats.

You may recall that Stephen Hughes is the MEP who led the charge to end the UK's opt-out from the Working Time Directive - trying to link it with teenage pregnancy when he told the Today programme,

"I think another useful study might be to look at the correlation between very long working time in Britain and teenage pregnancy, social dysfunction; a whole range of social indices that might well suffer as a consequence of the long working hours in Britain."

Could this be his promotion for trying to kill the opt-out?

Problem solved?

Following the collapse of conciliation talks on the Working Time Directive in Brussels on Monday, the right to opt out of the EU's 48-hour working week has been retained. For the moment...

However, the opt-out is only one part of the hugely burdensome Working Time Directive (for a thorough discussion see here). Some groups are already subject to restrictive working time limits under the Directive.

From August this year, for instance, the maximum working time for junior doctors will be reduced from 56 hours to 48 hours per week. Various doctors' groups, including the British Medical Association and the Royal College of Surgeons, have expressed concern that the quality of doctors' training could be threatened by the reduced hours.

We have now noticed that there is a petition on Downing Street's website, calling for an opt-out from the working hours limit for surgeons - whose training is particularly intense. We would encourage as many people as possible to sign it, in order to pile pressure on the Government to push for a permanent derogation from these rules.

Just Say 'No'

The final round of 'conciliation talks' between MEPs and government ministers will tonight decide the fate of the UK's opt-out from the EU's 48-hour working week, potentially making it illegal to work more than 48 hours, if the Government does not get its way in the negotiations. For the record, the right to opt-out is also enjoyed by workers in 14 other member states, including Germany.

The Government has repeatedly said that it will fight to retain the opt-out and it looks as though it may succeed, but at what cost?

If no agreement is reached at tonight's talks the whole proposal will fall, leaving the opt-out intact but with the downside that there will be no resolution to the issue of how on-call time is counted as working time. EU rules for on-call time are hugely problematic at the moment, particularly in the public sector, because of the European Court of Justice's ludacrious intepretation of the WTD. In the SiMAP and Jeager cases, the ECJ ruled, against all known principles of common sense, that all time doctors, nurses and others spend on-call, must be counted as active on-call time - even when the doctor is sleeping.

This interpretation messed up rota systems in health care sectors all over Europe and imposed massive extra costs. In fact, on-call time is the reason why national governments were so keen to revisit the issue of working time in the first place.

As with all EU negotiations compromise is usually required and, almost equally as often, it is far from ideal. The FT today reported that there is a deal on the table that will allow the UK to retain an opt-out but only with significant concessions.

From Brussels we hear that the UK may agree to a provision that would require workers regularly exceeding the 48-hour limit to write to their employers twice a year to say they are still prepared to choose their own working hours. Employees would not be able to sign an opt-out during a probationary period and would be allowed to withdraw from any agreement without notice.

These proposals would add extra burdens to businesses and the public sector and are a prime example of regulatory over-kill. The existing rules a quite clear about the opt-out being an individual choice that employers must respect.

The FT's article also states that, under the proposed compromise, member states retaining the opt-out will have to present a report to the European Commission on the health and safety aspects of their decision not to limit hours, as well as detailing how many workers are working over 48 hours.

It might just be us but this requirement seems patronising in the extreme and illustrates everything that is wrong and, quite frankly, ridiculous about the whole situation. That is, that MEPs think they and the European Commission know better than democratically elected national governments and, even worse, the general public.

Why would the UK agree to such a proposal? The answer is that there is still a chance that its allies in the negotiations might be so desperate to resolve the issue of on-call time that they agree to give up the opt-out. The UK doesn't have a veto in the negotiations, and can be outvoted, contrary to the reports in the FT.

This sorry episode shows how erratic the European Parliament can be - and the problems that may be created should it get more powers under the Lisbon Treaty.

Surely there needs to come a time when the Government can just say 'No'.