Government's Balance of EU Competences Review sets out need for reform - finally

Today, the UK Government has published the third batch of its reports reviewing the ‘Balance of Competences’ between the UK and the EU. We have noted before that many of the previous reports, whilst interesting on much of the detail, have for various reasons turned out to be rather disappointing and dodged the major questions facing Britain in the EU, so how do today’s tomes compare?

Most interestingly, the controversial, and much delayed, report on the free movement of persons has finally been published and, unlike many of the previous reports, it is much clearer about the Government's thinking in what is one of David Cameron's primary targets for renegotiation. The report, which was trailed in today's papers and quotes extensively from our submission to the consultation, which you can read in full here, makes the following points:

• "Whilst there is broad consensus that highly skilled migrants from the EU have been beneficial to the UK, there is less agreement regarding low skilled migration, with some arguing that gains for employers are offset by negative impacts on the lowest paid workers."
• "The scope of free movement rights has now expanded beyond their original intention, and is no longer limited to economic factors."
• "Successive judgments by the ECJ have interpreted the right to free movement set out in the Treaties and the Free Movement Directive broadly, with the consequence of expanding the rights of entry and residence which may be asserted in reliance upon them, and consequently restricting Member States’ competence in this area."
• Other concerns expressed were criminals' exploitation of the rules, the localised impact on public services, and falling public confidence in the concept of free movement.

Specifically regarding the existing rules on EU migrants' access to welfare, this is the key passage:

"The Government considers that now is an appropriate time to review the EU level rules with a view to modernisation and ensuring they are fit for purpose in the EU of today. The rules have evolved beyond the original scope as the EU has evolved and the interaction between rules on residence and social security coordination becoming increasingly complex. This complexity has led to an increasing number of challenges through the ECJ, creating uncertainty and, in the majority of cases, weakening the ability of Member States to determine how their systems operate."

"Without reform, legitimate public concern about how EU migrants access social security in other Member States is likely to significantly undermine support for the principle of free movement."

This is the most explicit any of the BoC reports has been about the need for reform and, while there is no settled policy prescription (the report discusses OE's and David Goodhart's reform proposals at length), the key issues have been clearly identified.

This is apparently the third iteration of the report, following several rounds of coalition ping-pong. Nevertheless, it highlights the degree of cross-party consensus on the need for reform of benefits rules - which Labour has also called for. It would however be intriguing to know what was cut in the various edits.

We will be leafing through the other reports published today and will return to them on the blog later this afternoon.

The Balance of Competence Review: some interesting stuff but this is becoming a painful process for Downing Street

With little fanfare, the Government has today published the second round of Balance of EU Competences reports – now making it 14 reports published in total. We won't accuse the Government of seeking to bury the latest batch of reports in the week of the worst UK floods for decades or a major announcement on an independent Scotland’s inability to use Sterling. Rather, it probably wanted to get them out before parliamentary recess.

However, the reports are a mixed bag with the most controversial one - free movement of workers - still missing. While the individual reports contain tales of dissatisfaction with the status quo and EU over interference within policy areas, the reports remain largely descriptive. None of the reports draws any deep conclusions on the broader balance of power between Westminster and Brussels, which they clearly didn't set out to do.

Some of the other reports are far better than others. The Trade and Investment report is genuinely interesting, for example. While some disagree with the report’s conclusion that membership of the customs union and the single market represents the best option on offer for UK trade, the report does at least engage with the alternatives and key debates, such as whether the EU is trade diverting or creating and the fact that the European Parliament can be a liability in trade talks.

We agree that on trade grounds the UK is at the moment better off inside (a reformed) EU.

The Transport report expresses concern about EU action that “fails to take account of the distinct circumstances of Member States with peripheral geographic locations, such as the UK.” The Environment and Climate Change report also contained some interesting factoids. The House Builders Federation for example noted that “in some areas 85% of Community Infrastructure Levy is required for mitigation of the Habitats Directive 92/43/EEC, leaving little funding for schools and roads, commenting that this is disproportionate and unsustainable.” And that EU rules can add 18 months to the life cycle of a planning application.

These reports present a useful catalogue of the extent to which the EU now permeates almost all aspects of the UK economy and society, and the logical conclusions of the transport and environment papers is that we need to do more to maximise the EU's trade opportunities but also have some seriously effective mechanisms to fight over-regulation, such as "red" and "green" cards for national parliaments.

Still, the desire for these reports not to reach any ‘controversial’ conclusions, whilst understandable on one level, has created another problem for David Cameron. European partners, media and his MPs may eventually ask ‘Why commission a review that seemingly contradicts your own policy?’ And why seek change when the "evidence" shows that everything is all well apart from some problems at the margins. We still think the basic idea behind the BoC is sound but there's a problem with what this exercise has turned into. It's not so much an attempt to assess the balance of powers but a descriptive public consultation. In its attempt to avoid drawing conclusions, it is doing precisely that, even when the wider criteria against which to measure EU involvement - which should be the point of this exercise - is absent.

Consider the Culture, Tourism and Sport report. In places, it reads like a European Commission advert for EU intervention. For example,

“…Over the last 20 years a Media Programme has supported some highly acclaimed British films including This is England (Shane Meadows, 2006), The King’s Speech (Tom Hooper, 2010) and The Iron Lady (Phyllida Lloyd, 2011). In 2010, UK companies received €8.7m to support the production, distribution and screening of films in the UK, and over €6.7m was invested to boost the European cinema releases of over 40 British films.”

That a report drafted by the Department for Culture, Media and Sport with evidence submitted by various organisations drawn from the culture sector should conclude that the EU’s culture competence is “an important source of funding for the sector, as a driver for new creative partnerships, and as a vehicle for promoting the UK’s ‘soft power’” is hardly a surprise.

Some spending on warm and fluffy initiatives such as films may seem like no big deal. But this is one of the fundamental problems with this entire exercise. Because there is no one weighing these micro aspects of EU membership against a wider set of principles it tells us little about the wider UK national interest. I.e. this funding is simply money the UK has already handed over to Brussels and that surely, if these projects should be publicly funded at all, this should be a decision made by people far more accountable to UK taxpayers than EU officials?

The Balance of Competence Review process was meant to provoke debate about the impact of the EU on the UK writ large. Unless he starts a process of putting these individual reports into the wider context of his vision for the EU, this could become a painful process for David Cameron.

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.