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'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.

The EU in 2010

As 2009 draws to a close, Open Europe today looks ahead to 2010 and what the EU has in store.

From 1 January 2010, Spain takes over the six-month rotating 'presidency', currently held by Sweden.

The new Lisbon Treaty rules mean that the country holding the Presidency is stripped of its power to 'represent' the EU because of the appointment of a permanent EU President and Foreign Minister. However, Spanish ministers will chair most meetings of the Council of Ministers, and as the first in the next 'trio' of presidencies, Spain gets to lay out an agenda for the EU for the first six months of the year.

In a new briefing note, Open Europe outlines the main priorities for the Spanish EU Presidency, and takes a look ahead to key events and developments in the EU in 2010.

Key things in the pipeline:

- New social legislation to bolster 'European citizenship', including turning the EU into a "factory of rights" Yikes!
- "Common economic governance", including the creation of controversial new EU financial supervisory authorities and new rules for managers of alternative investment funds
- Speedy establishment of the new EU Foreign Service - hoped to become "the biggest diplomatic service in the world"
- Efforts to turn the controversial 'Stockholm Programme' into concrete justice and home affairs legislation

What's clear is that the Spanish government wants to use its Presidency to achieve greater political, social and economic integration in Europe - to work for a more 'unified' EU. This is fundamentally at odds with British priorities for the EU in 2010. Reformist governments must resist moves towards 'building Europe' for the sake of it, and instead concentrate on promoting economic reform.

In particular, the Spanish government's determination to push for new EU social legislation over the next six months and beyond should ring alarm bells at Westminster. The UK Conservatives have said that if they win next year's election, they will fight for control over social and employment policy to be returned to the UK where it can be properly controlled closer the people it affects. This kind of legislation already represents a huge regulatory burden in the UK, and the Spanish government's talk of turning the EU into a 'factory of rights' tells us fundamental reform is more urgent than ever.

Please click here to read the briefing: The EU in 2010 - what to expect from the Spanish Presidency:

http://action.openeurope.org.uk/page/m/4b660976/1ba9f669/85d4f97/7c5561ff/2392946743/VEsH/

It's going to get a whole lot worse

In a speech yesterday David Cameron cited Open Europe's recent report which showed that the UK has spent more than £35 billion complying with EU employment, health and safety law in the last decade.

What he didn't mention, is the report's even more important findings that if the problem of EU regulation isn't tackled, EU social and employment laws will cost a further £71 billion over the next decade, even in the highly unlikely event that no more regulations are added to the rulebook in this time.

In our view, the Conservatives should negotiate a blanket opt-out from all the social and employment related articles in the EU treaties, and bring control over these laws back to the UK, where we can scrap, amend or fine tune them to the needs of our own economy.

Only a blanket opt-out will do

Over at Conservative Home today we lay out our response to David Cameron's announcement that he will bring control over social and employment policy back to the UK. This is the most welcome aspect of his new 'Europe policy', but on close inspection, his language suggests he is not contemplating going as far as he should in order to make this a success.

You can read the article here and post your comments:
http://conservativehome.blogs.com/platform/2009/11/mats-persson-the-conservatives-are-right-to-focus-on-eu-social-policy-but-only-a-comprehensive-optou.html

On basketball, Obama and EU employment rules

Saturday's Times had a rather interesting feature on US President elect Barack Obama and specifically his passion for basketball. The article offers a contrast to Britian's political leaders, and rightly notes that "it is hard to imagine Gordon Brown or David Cameron on the sports pitch, even in their youth." Attention is also drawn to the fact that Obama actually manages to "do a high-five on the court and not look as though he was a middle-aged geek trying to be cool." Again, a contrast is drawn to certain British politicans.

Slightly more relevant to the general theme of this blog, the article notes that American National Baskeball Association, the NBA, is hoping that Obama's victory will give the league a world-wide boost, including in the UK (where basketball enjoys very limited popularity - to put it mildly). The NBA hopes to set up a European division with teams in London, Barcelona and Berlin. But, the NBA's yearly 'draft' of young players - a set scheme under which the clubs recruit their players, usually from college teams - may violate the EU's employment laws. Although no further details are given in the article, this is said to represent an obstacle to the plans of establishing an NBA franchise in Europe.

So, do we here see a future trade row with basketball-loving Obama accusing the EU of enacting non-tariff barriers to prevent American companies (the NBA) to invest in Europe? Hardly. But, as ever, EU regulations work in mysterious ways.

On a seperate note, Obama actually has some decent skills. Open Europe's scouting report shows that he has a good left-hand jump-shot and a nice touch around the basket. However, he seems slightly one-handed (the equivalent of a footballer being one-footed, for those of you not familiar with basketball jargon). Neither does his 'hops' (jumping ability) seem to be what it once was. Still not bad for a 47 year old, also considering that he can 'bench' 200 lbs. In any case, he far outscores most European leaders on athleticism. Sarkozy's jogging rounds are just not quite the same, are they..?