The UK’s membership of the European Union is undoubtedly one of the hottest political topics right now. While it has been bubbling under the surface for quite some time on the Left as well as the Right, what are the real reasons for it becoming top of the agenda? What do the ‘No’ camp hope to achieve by leaving, in what ways will the UK be better off?
If I may, I will split the ‘issue’ into three sub-categories: Immigration, Sovereignty, and the Economy. This oversimplifies the question, I know, but these are probably the three most highlighted areas, in the media at least, and so I will concentrate this article there.
One of the most worrying aspects of the immigration issue, is that, while there is plenty of anecdotal evidence, there is precious little statistical evidence to tell us how many immigrants there actually are in the UK at any one time. Certainly that issue needs addressing as a matter of urgency, but without that data, and a detailed breakdown of the countries of origin, length of stay and occupation it is difficult to conduct an informed debate. What appears to be the case, though, is that immigrants from outside of the EU outnumber EU immigrants by a significant multiple; according to the Guardian “In 2011, 168,000 long-term migrants arrived in the UK from the EU – but 329,000 arrived from outside of the EU”.
The paper also makes the claim that this has been the trend since 1975. I do not dispute that net immigration puts additional strain on infrastructure, in particular on the schools and hospitals, but if the Guardian are right then leaving the EU will only reduce the impact by 1/3 assuming that all EU immigrants use the public services (one only has to note the high number of skilled Europeans in the City to know that this is never going to be the case). Moreover, there is an absence of the net economic effect of immigration. The Guardian also reports that “Of the 5.7 million adults in the UK that claim benefits from the Department for Work and Pensions, 371,000 of them were born elsewhere – and of those, just 62,000 were from the EU.”
So it would appear that the problem of ‘welfare tourists’ has been blown out of proportion as far as the Eastern Europeans are concerned. In any case, the UK is not bound by EU legislation to even pay benefits to immigrants from other member states, it merely choses to, as do Ireland and the Scandinavian countries. We are in trouble with the EU over us introducing a differential set of rules just for Romanians and Bulgarians, rather than for all EU citizens.
The key point is that there are 5.7 million adults in the UK drawing some kind of benefits. Simply put, we cannot afford much in the way of largesse to any others until this is addressed. Furthermore, according to Migration Watch: “Between the first quarter of 2004 and the third quarter of 2011, employment of workers born in the A8 (New Eastern Bloc EU Members) increased by 600,000. Over the same period the number of unemployed young people in the UK almost doubled, from 575,000 to just over a million.” So the ‘issue’ is less of benefits sponging to rather more job displacing and it is more of an indirect impact upon the benefits system. I am not suggesting for one second that each single Pole took a job that would otherwise have gone to a Brit, it is far more complex than that, but what I am suggesting is that spare capacity within the economy has contracted in part as a result of immigration from the EU and elsewhere leaving the UK as a whole disproportionately burdened. Supply of labour is outstripping demand, that much is clear.
While the free movement of labour is acknowledged as an integral part of a free and efficient market economy, that only holds true without State interference in the economy; in other words Government policies like the Minimum Wage, Work Place Pensions, Help to Buy and so on are skewing the supply/demand balance of labour and create a system that is easily gamed. In other words, the State’s efforts to create ‘fairness’ have generated a very attractive carrot for migrants the world over, not just the EU. However, in the case of European migrants, they tend to be closer in culture to the British and thereby can seem more attractive to employ – any trip to a café, pub, or hotel in London will confirm this. Finally, the impact often overlooked is the additional bureaucratic and administrative costs attached to having non-UK citizens in the workplace, ranging from the generation of new National Insurance and Tax Codes to translation services in the public sector.
The answer then to the immigration ‘issue’ should not be limited to EU membership, it should be a broader reach of restrictions that make sure that levels of immigrants are appropriate on a life-cycle basis and produce a positive economic sum for the UK. Getting out of the EU would make an impact, but not act as a panacea. We have to include EU membership questions within a much broader reform.
I often hear that it is ‘inappropriate’ for laws to be made at the European level, that we have lost sovereignty that we should claw back. But what do people actually mean by the word itself? I take it to mean that a Sovereign UK has a monopoly on all legislative matters pertaining to activities within its borders. But the UK has ceded a whole raft of decision-making powers to other international bodies in all kinds of areas – for example we have ceded effective control of our armed forces and their nuclear capabilities to NATO without a referendum, virtually all of our export goods are subject to international standards – especially pharmaceutical good, our banks are subject to rules set out by the Bank of International Settlements, our judiciary is very often unable to stand in the way of extradition treaties despite the charges not always relating to activities considered criminal here or, in the case of Asperger’s sufferer Gary McKinnon, even remotely just, and that is before we even begin to consider the powers that we have handed over to the UN and its bodies (the IPCC springs immediately to mind). So why is it that we are happy to hand these powers away, but not ones to the EU?
After all, some of the EU rules have been to our advantage, for example, the double-refusal principle of European aviation regulation has led to a massive growth in low-cost airlines which have broken the failed state monopolies, increased competition and reduced costs, and European action has led to a significant reduction in mobile telephone charges. So why do we think that unshackling ourselves from the EU and its decision-making bodies will leave us better-off and more independent?
Furthermore, what makes us think that we can do the job better? Look at the thousands of insane pieces of legislation, regulation and Government action that the UK is able to produce without even the faintest touch by the EU – ASBOs and on-the-spot fines are a deliberate affront to civil society by removing the independence of the judiciary, the needless slaughter of the herd over Foot and Mouth despite a vaccine being available, the plundering of £400 million ‘dormant’ bank accounts and the BBC. Despite spending increases of eye-watering levels, we have seen our schools go from being ranked 8th in the world to below 20th in ten years. We have an NHS that is the ‘envy of the world’ that produces Mid-Staffs. The ‘Cones Hotline’. Left to our own devices we can be every bit as profligate and stupid as the EU. We are, after all, the country that ordered two mega-aircraft carriers with no planes.
For me, it is economic development that defines humanity. For centuries we have used our initiative and applied risk for the purpose of making our life, and that of others around us better. As our endeavours have returned a profit, we have been able to invest more than we spend. This has resulted in long periods of continuous growth. Of course, there has been waste and profligacy along the way, but overall there has been a massive creation of wealth and prosperity. And the key driver for this is competition. Competitive advantages of materials, skills and labour are scattered all around the globe, and the result has been a localised specialisation of talents.
However, the specialisations are transferred over time, and the winning economies will always be the ones that can be the most adaptive. The British economy has been especially adaptive over the years, as it transformed from an agricultural to industrial economy, and then again to a service economy. For adaptation to exist and succeed it requires a less rigid structure and a healthy private capital base. The less rigid structure allows the system to innovate and develop with minimal hindrance, and the healthy rate of private (risk) capital allows the economy to try, fail and try again.
Most of all the system requires competition. The more competition there is the greater the incentive to create efficiencies, and then there will be greater occurrences of transaction. The EU is the natural enemy of competition, which requires a large number of small and nimble units all seeking a competitive advantage. The EU, via its increasing reach of overlapping powers (competences), generates a more rigid structure and greater regulation thereby slowing down innovation and transaction. The EU also has rigid planning periods which make it vulnerable to more nimble competitors and gives it an in-built technology lag.
The EU, via its package of subsidies like the Cohesion Funds as well as the Common Agricultural Policy, rewards failing businesses paid for by winning ones, thereby creating an inherent disincentive to innovate. The EU also tries to treat 28 countries the same, and apply the same standards regardless. This automatically kills any efforts to create new competitive advantage and slows the whole economy down to the pace of the slowest. It also prevents countries like Greece from using local powers to try and get themselves from off the bottom, by devaluing their currency for example.
So…the Key Issue is…
For me it is clear that the UK has to leave the EU. No question, no doubt. And the sooner the better. Though, as I think I have argued above, it is not for some of the reasons that other UKIP types have. I do not think that all immigration is all bad. I do not think that the immigration situation will be solved, although it could get better, if we left the EU. I believe though, for the UK to survive as a nimble and adaptive economy the borders etc. need to be better controlled, and I can see the advantages of a points-based system. Within UKIP we need to be specific about what that system is and how it will work. No broad brushed strokes, a specific policy agenda. Similarly too, I am not sure that we are necessarily better off if we take back just EU powers as we spray UK decision-making across the globe, be it via environmental, industrial and banking standards, or via NATO or UN bodies, and I think that I illustrated how we can make equally ruinous decisions when left to our own devices.
What I do know is this: EU membership guarantees economic degradation, it can do nothing else, and no amount of tinkering can do anything other than delay the inevitable which is complete economic collapse. That is why we must leave and generate that nimble and adaptive economy, for that is the only way to generate wealth and well-being.