Douglas Carswell defects to UKIP: A Clacton by election could change the general election result

Douglas Carswell was until this morning the Conservative MP for Clacton on the Essex coast. He has now resigned from the Conservative party, joined UKIP, and says he will resign his seat in order to contest it as a UKIP candidate in the resulting by-election.

His resignation is not a total surprise as it follows a long period as a critic of the Conservative Party's direction and of David Cameron in particular. Carswell's criticisms are not limited to the Conservatives and not limited to Europe - he has developed a critique of British politics generally -  but Europe is among his key complaints.

In his resignation speech Carswell questioned David Cameron's commitment to EU reform accusing him of aiming to do the bear minimum necessary in order to secure an 'in' vote, while Carswell's view of a satisfactory renegotiation seems more akin to associate membership. He says this is a classic example the political class not being straight with the electorate and his reason to quit. The Conservative leadership for their part will feel aggrieved that having set out a 2017 referendum on EU membership they are rewarded with Carswell's 'ingratitude' - recriminations will run and run.

Carswell prides himself on having a large following locally and Clacton itself, it has been argued, is  the "number one most demographically favourable seat in the country for UKIP" according to Goodwin and Ford's Revolt on the Right. He therefore has a fighting chance of winning the seat. So what could happen?

Firstly, it is unclear whether the Conservatives will allow the by election to go ahead - they have to approve the writ being moved and could argue that with an election already scheduled the people of Clacton can wait until May 2015. However, if it is called, the stakes could not be higher.

For the Conservatives to hope to win the 2015 general election they need to minimise the UKIP vote. The best way to do this is the classic 'squeeze'. In a first past the post election they will say there is no point voting for a third placed party - i.e UKIP. This will be very effective. However Carswell's by-election could change voter's calculations - and set a hugely important electoral precedent one way or another:

• If Carswell wins, UKIP can then tell voters everywhere that voting UKIP gives a genuine change of producing an MP. This could be catastrophic for the Conservatives and may deprive them of a number of seats, to other parties mostly, but conceivably to UKIP as well.
• If Carswell loses, the result will be equally disastrous for UKIP. The Conservatives can use it to show that even in one of UKIP's best constituencies with one of their biggest names they can not win a seat - so why waste your vote in May 2015 will be the refrain.

UKIP does not just take votes from the Conservatives, they also gain a lot of their support from Labour, non-voters and even the Lib Dems. However, Carswell by taking on his former party will polarise the debate again into Conservatives/UKIP, something perhaps both parties may wish to avoid. This could be a foretaste of 2015.

In any case, a Labour victory would most likely mean that the In/Out EU referendum Cameron has promised won't happen, as Ed Miliband looks determined to stick to his promise not to offer a straight vote. It would be a tremendous irony if Carswell's defection - Carswell, remember, having campaigned tirelessly for an EU referendum and more direct democracy - would in the end deny the UK public an EU referendum and more direct democracy.

Boris: EU reform the best option, but Brexit should not scare us

Boris Johnson today outlined his response to the report by his economic advisor - and Open Europe board member - Dr Gerard Lyons on the future of the UK’s relations with the EU and how they impact on London.

The report entitled 'a win-win situation' outlines four economic scenarios, with the best seen as staying in a reformed EU and the a close second being leaving the EU on good terms with growth-focussed policies towards Europe and the rest of the world:

• The best scenario is UK membership of a reformed EU, which could see London’s economy grow in size from £350 billion now to £640 billion over the next 20 years.
• The worst scenario would be where the UK leaves the EU on bad terms and does not produce a growth-focused policy. The report suggests the London economy would only grow to £430 billion by 2034 in this scenario, and see a shedding of about 1.2 million jobs. 
• If the UK left the EU, maintained good relations with the EU and adopted outward-looking policies, then the London economy would grow to £615 billion and see an additional 900,000 jobs created over the next 20 years. This is despite the near-term uncertainty that would follow from leaving.
• Being in an unreformed EU, London might see only an extra 200,000 jobs created and growth to £495 billion over two decades.

The key reforms - which draw heavily from Open Europe's work - proposed in the report are: addressing the relationship between euro ins and outs, liberalising the single market in services, safeguards on the single market in financial services and the position of the City of London, EU budget reform, reducing the burden of social and employment law, and halting over-regulation. The reforms go well beyond what David Cameron has set out so far.

If reform is not sufficient, the report concedes that withdrawal would create immediate economic uncertainty but this could be mitigated in the longer term if the right policies are pursued. The report suggests that the terms of a Brexit could be defined by the referendum result itself - a close result could prompt a re-re-negotiation rather than an immediate reach for the Article 50 exit clause - you can read the outcome of our 'wargaming' of Brexit here (which the report also references).

The report notes that financial services and insurance are key London industries, comprising 19.8% of GVA, the single biggest sector measured in these terms – how will this be affected in Brexit? The report notes that London has many attributes other than acting as a springboard for access to EU markets but adds that this market access is valuable and could face some extra barriers following withdrawal.

In summary, the report concludes that reform is the best option, but there is little to fear from Brexit.That last point - in addition, to the various reform proposals set out - will no doubt serve to put additional pressure on David Cameron to be more ambitious in his push.

Handelsblatt: Britain a key driver of EU Reform

Britain: The critical voice of reason?

We've been monitoring how the British Europe debate is being received across the continent throughout the Juncker episode (here and here), and already noted how large parts of the German commentariat have come out fighting for the UK to remain in the EU, especially because it is in Germany's long-term strategic interest.

Today's Handelsblatt features a joint op-ed looking at the pros and cons of British membership of the EU, with the paper's political editor Jan Mallien writing:

"The British question [EU] bureaucracy, fight against agricultural subsidies, and ensure that any transfer of power to Brussels is discussed critically. Thus, they provide important impulses -- and make themselves unpopular. In a shared house, they would be in charge of the cleaning-rota. Of course, one can kick-out the person who is charged with the cleaning rota from a shared household. But it would be an illusion to think that the others would never have to clean again."

He continues:

"With their critical attitude, the British are a key driver of reform. Some German newspapers insinuate that Cameron is on an anti-European course. Those who say something like that are simplifying matters: The Brits are in favor of another [vision of the] EU. In many ways, they are fighting the correct battles."

Mallien concludes:

 "Sure, there are some issues where agreement would be easier without [the Brits.] The Financial Transaction Tax, for example. However, these are mainly symbolic issues. The EU is not much better-off with a Financial Transaction Tax. But without the British an important drive for reform will be missing. A Brexit would therefore make the EU poorer -- and not just economically."

On the other side of the fence, Handelsblatt columnist Désirée Linde says:

"Why all the whining about the nightmare scenario of a British EU-exit? If the British want to get out of the EU, continental Europe should let them go. Because, contrary to suggestions of doomsayers and EU-haters, it would not spell the beginning of the end for the EU. Yes, it would be a shock, but one that provides an opportunity for the EU. The cost of a Brexit for the EU is undisputed. Great Britain is one of the EU's biggest net contributors paying over €7bn per year."

She continues that while a Brexit would be “uncomfortable for the EU,” it would be “fatal” for the UK, and concludes:

"From the outset, the British lacked commitment to integration... Brexit would not build a way back to the European Community for the British. So it is up for all of Europe's friends in the UK to perceive this as a cleansing thunderstorm and develop a whole new enthusiasm for Europe. The fact that Europe is not just a customs union, but also a political project is something that the British have not yet understood...It is time that the UK learns. And if it must be, the hard way."

Linde buys into the whole German "pro-integration" rhetoric. However, as we have noted repeatedly, one of the greatest ironies of the German-Europe debate is how to square the need for more integration, especially in the eurozone, with Germany's national interests. This is lost on Linde. 

As a post-script, it's not only the Germans who are coming out in favour of Britain. The French  commentariat has been speaking out too, fearful of the imbalance a Bexit would cause in the European club. In today's Le Figaro, French columnist Renaud Girard describes the appointment of Jean-Claude Juncker as new European Commission President as “an unnecessary affront” to the UK, and argues:

 “It is irresponsible to push London on the slippery slope of EU exit… As far as France is concerned, it has no interest in finding itself head-to-head with Germany.” 

The Juncker-episode has shown that the moment of truth on the UK's future in Europe is drawing closer - and it also appears to be focusing minds across the Channel that an EU without Britain may not be in anyone's interest.

Will there be a post-Juncker Brexit bounce?

The Mail on Sunday had the first poll (by Survation) following David Cameron’s summit defeat over Juncker’s appointment as European Commission President. The top line is that 47% of Britons want to leave the EU, with 39% in favour of staying in. Given the recent trend of polls finding majorities for 'In', this is quite a striking change.

However, a YouGov/Sunday Times poll (note that the fieldwork was conducted before the summit) showed attitudes to Brexit more or less unchanged, with 39% in favour of in, unchanged from a week ago, and only 37% in favour of out, actually down from 39% last week.

Other results form the Mail on Sunday poll would suggest that the Juncker episode has had a limited impact: 60% said Juncker's appointment would not change how they plan to vote in an In/Out referendum, while only 30% said it made it more likely they would vote to leave and 10% said they would be more likely to vote to remain.

Interestingly, the extent of German influence in the EU has not gone unnoticed. Asked who would have more influence over how the EU is run over the next few years, 50% said Angela Merkel, just 9% David Cameron, 11.5% Jean-Claude Juncker, and just 1.6% Francois Hollande.

It will be interesting to see further post-summit polls to see if the rise of the Brexit vote is an outlier or whether things have changed (even if only temporarily).

Juncker's appointment would bolster the Outist line that EU is unreformable

In a letter to the Telegraph today, Open Europe's Chairman Lord Leach notes:

This dispute is largely the product of the wording of the Lisbon Treaty. One part states that the election of the Commission President is the joint responsibility of the European Parliament and the European Council; another that the European Council shall “propose” a candidate to the parliament for election.  

David Cameron was entitled to take seriously the widespread support on the Continent for his speech last year in which he spelled out the need for EU reform. He was also entitled to assume that the selection process would be led by elected leaders of member states, rather than dictated by the largest “political group” in the European Parliament. The absurd portrayal of Mr Juncker as the champion of pan-European democracy is a cloak for German indecision and the failure of nerve of several EU leaders in the face of the European Parliament’s ambition to replace national democracies with its own ersatz alternative. Mr Juncker’s appointment would be a bitter blow to the pro-European cause in Britain, bolstering the Outists’ line that the EU is unreformable.

Article 50: a trump card or joker?

We have today published the full report assessing the implications of our EU ‘wargame’ which simulated the negotiating dynamic under two scenarios: first, a UK-EU renegotiation from within and, second, under ‘Brexit’. As we’ve stressed before, the fact is that unless the UK wants to simply fall back on WTO trading rules and unilateral free trade, renegotiation and withdrawal will both require a negotiation with other EU states and the EU institutions.

The only formal way to the leave the EU is via the so-called “Article 50” exit clause of the EU Treaties, which stipulates a two-year timeframe within which to potentially conclude a continuity deal. In our simulation, after their initial hostility, all other member states recognised the need to strike a new trade deal with the UK with economic incentives trumping political rhetoric. Britain is unlikely to face the ‘worst case scenario’ of having to fall back on World Trade Organisation rules.

However, as our simulation showed, the initial new deal would likely fail to replicate the full access to the EU single market currently offered by full membership:

• A Norway-style deal – effectively single market membership but with no formal political influence – is likely to be rejected by EU partners and is in any case a bad deal for the UK as it amounts to “regulation without representation”.
• While a reciprocal trade agreement for goods, where the UK has a sizeable trade deficit of £56.2 billion (2012) with the EU, would be relatively easy to strike, access to the EU’s services market – where the UK has a trade surplus of £11.8 billion (2012) – will be far more difficult.
• Access for UK financial services would be a particular concern since a third of the UK’s trade surplus in financial and insurance services in 2012 came from trade with other EU member states – of the total £46.3 billion UK financial and insurance services trade surplus, £15.2 billion was with the EU and £14.5 billion with the US. Perhaps over time, further bilateral deals on market access could rectify this but the political resistance from France and some others could be high.

While Article 50 of the EU treaties has the benefit of definitely triggering negotiations – which isn’t guaranteed under Cameron’s renegotiation plan – it comes with several drawbacks:

• Article 50 is a one way street – once it is triggered, and even if the deal available at the end of the process proves unsatisfactory to the UK, there is no way back into the EU except with the unanimous consent of all other member states.
• It is likely to put the UK on the back foot in any negotiation. The remaining EU member states would be in charge of the timetable and the European Parliament would have a veto over any new agreement. Therefore, while having to fall back on WTO rules entirely is unlikely, it would remain a possibility.
• As the UK will not take part in the final qualified majority vote on whether to accept the new deal, protectionist-minded member states could have greater influence on the degree of market access the UK could secure post-exit – particularly on services (see graph below).

Compared to renegotiation from within, Article 50 therefore cedes more control than what is often thought.

Ultimately, though, while a high transaction cost is undeniable, the big question is if there is a point – and if so when – at which the high one-off cost of Brexit would be outweighed by the long-term benefits of more economic and political independence over areas such as financial regulation, agricultural policy or criminal justice, particularly if the eurozone comes to dominate the wider EU and the necessary reform proves unattainable.

Clegg can’t just take on Farage – He also needs to spell out his own vision for EU reform

Ahead of the first EU debate between Deputy Prime Minister Nick Clegg and UKIP leader Nigel Farage, Open Europe's Pawel Swidlicki has written this piece for Lib Dem Voice:

Like all political obsessives up and down the country I’ve stocked up on popcorn ahead of Nick Clegg and Nigel Farage’s upcoming duels over Europe in anticipation of some captivating political theatre. However, from my more sober perspective as a political analyst, such a binary, ‘all-or-nothing’ debate over Europe is fundamentally flawed as it does not speak to where the majority of the British public are at. Polls have consistently shown that when respondents are offered options beyond staying in on the current terms or leaving altogether, the option of staying in a reformed/slimmed down EU proves the most popular across the political spectrum.

People hold different views about how they would like to see the European Union develop. Which of these statements comes closest to your view? (click to enlarge)

Source: YouGov poll for Open Europe, February 2014

As the polling demonstrates, the public is split over the question of the UK’s future in Europe, although staying in a less integrated Europe is by far the single most popular option across the political spectrum, including among Lib Dem voters (more so than among Labour voters!) and even among a substantial chunk of UKIP voters. The concern is that the debates will focus on whether the UK ought to leave or stay in at any cost, thereby ignoring the wider debate about how best to achieve EU reform.

David Cameron’s EU policy may suffer from a number of shortcomings but to his credit, he is at least trying to achieve the reforms that a majority of the public want. Nick Clegg has also acknowledged that the EU needs reform on a number of occasions and he recently set out a “bold” three-pronged agenda based on further trade liberalisation within the single market as well as between the EU and the rest of the world, slimmed down EU institutions and less regulation, and greater democratic accountability via an increased role for national parliaments. This is welcome, even if it falls short of the more ambitious and comprehensive vision for EU reform – with powers flowing back to member states – that he set out back when he was an MEP.

However, at the same event, he undermined his own message by claiming that the most that Cameron’s reform strategy could achieve – which includes all the objectives set out by Clegg himself – as “a few crumbs from the top European table… a little tweak here and there”. This is hugely unhelpful as it plays into the narrative that the UK has virtually no influence over the direction and development of the EU and must take what it is given.

Moreover, there are large gaps in Clegg’s argument when it comes to the future of UK-EU relations. How would the Lib Dems react if the UK were to lose an EU legal case over the safeguards it applies to prevent potential abuse of the UK welfare system by EU migrants? The party supports the so-called ‘right to reside test’ so would they accept its axing at the behest of the European Commission and Court of Justice? Likewise, the party supports safeguards to prevent the rules of the EU’s single market from being set by the Eurozone bloc to the detriment of non-euro member states. Would Lib Dems still insist on staying in if in the longer term the EU became an extension of the Eurozone?

This all matters because in the event of the Coalition being extended post-2015, the two parties will have to hammer out a common position on EU reform/renegotiation prior to a 2017 referendum which Cameron has made clear is an absolute red line for him. Hopefully, Clegg will use the debates to flesh out his ideas for EU reform in greater detail instead of repeating discredited claims about 3 million jobs being lost in the event of an exit. Ultimately, with the public more or less split down the middle on the in/out question, reform is not only not only worth pursuing as an end in itself, but also as a means of securing an ‘in’ vote when the referendum eventually comes.

EU hit with downgrade

While the spate of EU downgrades has slowed to a relative drip feed this year, it turns out there was at least one left in the locker – the EU, which Standard and Poor’s (S&P) this morning cut from AAA to AA+.

Many may ask, does the EU even have its own credit rating? And if so why? The answer is, of course it does, although why is a bit more ambiguous. It relates mostly to the rating of the EU budget and any bodies which borrow with EU guarantees. This includes the European Financial Stability Mechanism, the smaller €60bn bailout fund which is backed by the EU budget.

The move is largely symbolic but the reasoning behind it is interesting if a bit strange in places:

• The first couple of points are obvious: the on-going financial and political instability in some states has led to the downgrade. This is par for the course in terms of ratings.
• It’s also obvious that the EU rating would be reflective of the ratings of its largest members, some of which have seen downgrades over the past year.
• However, it then gets a bit odd. S&P cites the EU budget negotiations, which were admittedly tricky and divisive, as an example of declining support for the EU. Firstly, the budget negotiations are always difficult but were eventually concluded and were pretty much wrapped up early this year. It’s also a bit strange given that the budget cannot run a deficit and countries are obliged to contribute – it’s not clear exactly how this relates to a credit rating issue.
• The final point S&P raised was the issue of ‘Brexit’ and how the UK referendum could create uncertainty. Again this is some time away so the timing of the decision seems strange. Nevertheless, it does drive home an interesting point, in that S&P believe the EU would be less creditworthy without the UK. Something for members to ponder as the push for reform begins to get underway properly.

In any case, the main impact is likely to be symbolic. S&P have choice timing delivering the news on the same day when there was much backslapping and congratulations over reaching a deal on the banking union.

Mind the counterfactual

As we've argued before, whenever anyone makes a claim about the cost or benefits of the EU, look out for the counterfactual - i.e what would be the case if the UK weren't an EU member.

The classical "3 million jobs would be lost if the UK left the EU" claim is one of the most conspicuous examples of a rogue statistic without any credible counterfactual attached to it.

Of course 3 million jobs wouldn't be lost over night if the UK left the EU, because all trade with Europe wouldn't suddenly disappear (even North Korea trades with the rest of the world). But, as we also have argued, Better Off Outers who believe a world of unilateral trade and pareto optimal regulation would ensue on the day after the UK left the EU are also making huge leaps of faith. 

On that note, UKIP’s Tim Congdon takes issue with something we said in a blog last week in his latest group email. When highlighting problems with the CBI’s recent cost-benefit analysis we were a bit loose in our critique of Congdon's study measuring regulatory costs, pointing out similarities with UKIP’s own analysis (right) in terms of the counterfactual.

We argued that Better Off Outers have:

"Mastered the art of measuring EU costs with no reference to a counterfactual (see [Tim Congdon’s How much does the European Union cost Britain?] – for a fine example). To a large extent, the CBI study falls into the same trap."

To be fair to Congdon he has described a counterfactual in his UKIP paper:

"The UK’s departure from the EU would allow us to adopt unilateral free trade, which economists tend to regard as the best policy."

And in his email:

"In my study I estimated the costs of EU regulation and protectionism assuming that the EU would carry on pretty much as it had been doing for the last 20/30 years, and that the UK outside the EU would be lightly-regulated and pro-free trade."

So, he does provide a counterfactual - apologies for saying otherwise. There is still a problem however: it's a completely unrealistic counterfactual. The UK would not turn into to Hong Kong on Day 2. However much one would like to see all the costs of the EU to evaporate and for the UK to adopt unilateral free trade, with corresponding unilateral liberalisation on the EU's part - covering everything from rules of origin for UK-exported cars to "passports" (if you can trade in one country you can trade in all) for UK-based fund managers. Do you really trust Whitehall and Westminster that much? Also, under article 50, the Mediterranean bloc could stop EU trade liberalisation for a very long time. Call us pessimistic but that’s life.

Bringing the point back round to cost benefit studies in general, contrary to what Congdon suggests in his email, we believe determining the counterfactual for the UK outside the EU is actually pretty difficult (see our report 'Trading Places' for a full discussion of this), and providing a quantitative assessment of it is even harder. As the Channel 4 fact check blog highlights, this difficulty has lead to a very wide range of estimates on the costs and benefits of EU membership.

In any case, our wider point still stands, that studies of this type are full of caveats which hamper their effectiveness, no matter how tempting putting a single number on the costs/benefits of EU membership sounds.

Is the CBI right to claim the net benefit of the EU to the UK is 4-5% of GDP?

Is the CBI right to claim
the EU benefits UK GDP by 4-5%?

As we discussed in our previous post, the CBI's report on Europe, published today, makes for interesting and thought-provoking reading. However, the CBI’s estimate of the net benefits of EU membership isn’t the strongest part of the report.

The CBI puts the net benefit at between £62bn and £78bn, or between 4% and 5% of UK GDP. This, it claims, is equivalent to £3,000 per household or £1,225 per individual. Credit to the CBI for trying to inject some hard numbers into the debate. However, putting a single figure on the costs and benefits of such a complex arrangement is notoriously difficult – as we ourselves know too well. The CBI does readily admit that in its report, and to be fair, very clearly qualifies its figure.

 

Still, there are at least three problems with this figure, which in combination means it should be taken with a huge pinch of salt.

 

Arbitrary extrapolation based on a highly limited literature review: Ultimately, the figure is taken from a literature review of previous estimates of the benefits. On average, the literature surveyed puts the net benefit of EU membership at between 2%  and 3% of GDP. The review covers only five pieces of literature with the most recent one being from 2008. This is a very small pool of literature to draw from. More critically, the CBI goes onto assert,

“Since these studies are not mutually exclusive…it is not unreasonable to infer that the net benefit arising from EU membership is somewhat higher than 2–3%, perhaps in the region of 4–5% as a conservative estimate.”

It’s widely accepted that EU membership comes with unquantifiable benefits, but the CBI takes a massive leap of faith here. It seems to suggest that the net benefits of different aspects can be tallied up given that they are not mutually exclusive – and it may well be that dynamic effects triggered by, say, EU market access mean net benefits are often underestimated. However, curiously, the CBI provides no proper explanation or evidence for why it settled on 4% to 5%, leaving us guessing where this extra net benefit actually comes from. Having discussed this with the CBI, it’s clear that they have aggregated the net benefits of various aspects of the EU from different studies.

 

While there is logic in this approach, given the diverse nature of the studies it is tricky to simply add parts of the up, assuming that they work the same together as they do in isolation. After all, there is a reason why these studies have struggled to produce a clear figure for all the areas themselves. Once this approach was chosen more detail should have been included in the CBI report, even if it meant adding a statistical or economic annex (given the hugely sensitive nature of the EU cost-benefit debate).

 

No proper counterfactual is given: What are these net benefits measured against? Does the CBI assume that the UK outside the EU would be left with no trade deal and no single market access? If not, then the net benefit is presumably lower than the 4% to 5% identified. This is the classical shortcoming of most EU cost-benefit studies. In the CBI study, the problem is exacerbated by the fact that the various pieces of literature that it draws from will themselves have diverse counterfactuals.

It’s all the more surprising given that the CBI rightly goes to great lengths to discuss the counterfactuals when it comes to the costs of EU membership, arguing for example that some EU regulations would remain even if the UK left the EU given that they would be domestically needed or pursued by international groups  (which we agree with).

 

Why the same rigour is not applied to its calculation of the net benefits of the EU is not clear. UKIP-types have mastered the art of measuring EU costs with no reference to a counterfactual (see here for a fine example). To a large extent, the CBI study falls into the same trap.

 

Benefits aren’t evenly distributed: Lastly, in an understandable attempt to present an easily digestible figure, the CBI converts its percentage number into pounds and presents it as an evenly distributed benefit over households and individuals. Of course, this is unlikely to be the real benefit felt by households or individuals, with any benefit distributed unevenly and in ways which are nearly impossible to measure.

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. 

Hey Berlin, this is what an EU without Britain would look like

Open Europe's Director Mats Persson writes on his Telegraph blog,

One of the biggest questions in today’s European politics is what price Germany is willing to pay to keep the UK in the EU. One school of thought – which strangely sees an over-representation of retired Europhiles and hardcore Eurosceptics – claims virtually no price at all. Berlin will choose Paris – and Warsaw – any day of the week. David Cameron might as well throw in the towel now.

Well, the past week may have given Berlin a taste of what an EU without Britain could look like. And it ain’t pretty.

The looming EU-China trade war has again pitted Europe’s north against its south, with Beijing pursuing its patented ‘divide and conquer’ strategy. The dispute was triggered by Brussels’ decision to impose anti-dumping tariffs on heavily subsidised solar panels from China. Beijing’s retaliation was swift: you Europeans spend an awful lot of cash subsidising wine. Is that really legal under World Trade Organisation rules?

It hasn’t been lost on anyone that the biggest wine producers in Europe also are the strongest proponents of the solar panel tariffs: France, Italy and Spain. Given the symbolic importance of wine in these countries, this is no longer only business: it’s personal.

A trade war with China would hurt everyone but, wine exports notwithstanding, it would be particularly bad for Germany. With demand in the eurozone drying up, the boost in German exports is largely due to a rise in its share of the Chinese market. A disruption in these export flows now, when the European recovery is balancing on a knife’s edge, would be a disaster for Germany.

It’s therefore not surprising that Berlin has gone to town over the anti-dumping tariffs, and it has been backed by the UK and other liberal countries.

However, since the EU has so-called “exclusive” competence in trade policy, the European Commission negotiates on behalf of all EU member states and Germany is hostage to majority decisions amongst EU ministers.

The way EU trade policy is decided is complex. A final decision on whether to keep the tariffs in place will be taken at some point towards the end of the year, though it could well be solved before then. But clearly, without the additional pressure and weight of the UK, Germany would struggle to get its way on this one. Any short-team decision to remove the tariffs requires a so-called Qualified Majority. Germany would find it extremely difficult to reach the necessary voting share absent the UK (and may even struggle with it, though the final decision is taken by a simple majority).

And this is where Brexit meets the German economy. At the moment, under a Qualified Majority Vote the Northern, liberal bloc has a “blocking minority” in the EU’s Council of Ministers, which means it can stop the many attempted protectionist measures originating in the Mediterranean. The southern group, too, has a blocking minority – meaning the two blocs balance each other. However, should the UK leave, the Mediterranean block would substantially strengthen its collective voting weight, whilst the German-led North would lose its blocking minority altogether. The field would be wide open for a barrage of anti-dumping tariffs and tit-for-tat trade wars (think “Buy European”) with China and other crucial destinations for German products.

There are several other reasons why Berlin fears a UK exit more than it lets on – prospect of paying even more to the EU, extra costs to UK-bound exports, losing a financial gateway to global markets, geopolitics and more. But as Germany increasingly goes global, it’s the fear that a more protectionist EU could prevent it from doing business across the world which really hits home.