The British option – a business proposal for EU renegotiation

Announcing the Balance of Competences review in July 2012, in which the Government launched a consultation of Britain’s membership of the EU, William Hague told MPs that ‘we must take the opportunities for Britain to shape its relationship with Europe in ways that advance our national interest in free trade, open markets and co-operation…that should involve less cost, less bureaucracy and less meddling in the issues that belong to nation states.’

Today, Business for Britain has published the first of several position papers that we are proposing as a means of re-balancing our relationship with Brussels under the Foreign Secretary’s terms. ‘Setting out the British Option: Liberating 95 per cent of UK business from EU red tape’ has been informed by over six months’ in-depth consultation with Britain’s business community and is, we feel, an entirely workable and achievable change that would make a big difference to UK plc.

For many years it has been accepted wisdom that onerous EU red-tape is the price we have to pay for access to the Single Market. The Working Time Directive, laws on waste management, regulations dictating the amount of rosemary you can put on your pasta… all are necessary, we’ve been told, in order to make sure that Europe is a level playing field.

But only 5 per cent of British companies export to the EU (Government figures actually put it at around 2 per cent, but that excludes services and smaller exporters). This raises a serious question: how can it be right that 100 per cent of companies have to deal with the EU’s regulatory burden – costing time, money and, as the Government’s Business Taskforce noted, dissuading some businesses from even starting up – when 95 per cent of firms don’t enjoy the benefits provided by the Single Market?

Instead of forcing all companies to comply with European legislation, we suggest that Parliament should be able to draw up a list of the most onerous regulations that companies and organisations who don’t export to the EU should be allowed to opt out of. The only companies that should have to abide by the whole burden of European law are those 5 per cent who export to the EU. We expect a company who exports to China to abide by Chinese regulatory requirements, but no-one would argue every corner shop in the UK should have to sign up to Beijing’s rules. So why not apply the same logic to the EU?

We have called this simple idea the ‘British Option’ – a reflection of the fact that Britain needs its own idea for imagining a new relationship with the EU, rather than copying any existing model – and it has been designed to fit with the five principles for renegotiation that David Cameron set out in his Bloomberg speech last year:

1. Competitiveness: Freeing up 95 per cent of our companies from EU red tape would be a major boost to British business as it seeks to tap the fast-growing economies in East Asia and Central and South America. Readers may remember how frustrated Steve Hilton and Oliver Letwin were by the restrictions of EU laws as they sought to make the UK more competitive earlier in this Parliament.
2. Flexibility: The British Option would finally create the more pro-business environment in the UK that the Government is pushing for. It would also be very easily transplanted to other EU countries should they wish. As the Prime Minister rightly said in his Bloomberg Speech, ‘Countries are different. They make different choices. We cannot harmonise everything. For example, it is neither right nor necessary to claim that the integrity of the single market, or full membership of the European Union requires the working hours of British hospital doctors to be set in Brussels irrespective of the views of British parliamentarians and practitioners.’ The same can be said of non-exporting companies.
3. Power flow back to the member states: Our proposal would give Parliament the ability to decide which EU rules should apply to all companies and which should only be for those who trade in the EU – amounting to a large chunk of sovereignty returning to Westminster.
4. Democratic accountability: Under our system the EU institutions would design the laws governing trade between member states and the British Parliament could say which regulations non-exporting companies and organisations could be exempt from. This would inject some much needed democracy into the EU legislative process.
5. Fairness: Today British business is in a horridly unfair position. 95 per cent of businesses are expected to comply with European rules but don’t reap any benefits. At the moment they have no choice but to comply with the letter and word of European law – under our system they have a choice. If they didn’t wish to export to the Single Market, they could focus on the UK and export to the fast-growing countries outside of the EU.

The British Option provides a positive, constructive vision for what British business wants from the upcoming negotiations. The Government has asked for ideas as to how to make the EU fairer and more competitive – the British Option fulfils both criteria.