EU Referendum: procurement - a WTO agreement

Friday 27 May 2016  



On the Vote Leave grid yesterday was another of those "bent-banana" style of shock-horror-probe "revelations", concerning the cost of EU laws, this time "foolish" EU procurement rules, obligingly given space by the Guardian and the BBC.

The rules are something of an obsession of Dominic Cummings and he has been keen to see them in the frame. Thus, Vote Leave is telling us that they are costing UK taxpayers of £1.6 billion a year - which, of course, could be better spent on "new hospitals and flood defences".

The claims are published online, referring to Directive 2014/24/EU, approved after a 2011 White Paper COM(2011) 896 final. The current Directive builds on the experience of the 2004 Directive, simplifying and redefining procedures to make them more user-friendly.

The cost is supposedly based on a 2011 study for the European Commission, which is said to have estimated the cost of (EU) procurement legislation at 0.7 percent of the total value of spending on procurement in the UK.

There are, in fact, several studies in 2011, but Vote Leave links to this one from PWC. Interestingly, this does not offer a 0.7 percent figure as an increased cost. What it does tell us is that the (average) cost of public procurement in Europe is estimated at about 1.4 percent of purchasing volume and that the total UK cost is 0.7 percent (see figure 2.15).

Crucially - and a point missed entirely by Vote Leave - the report warns that these costs are not fully attributable to the procurement directives. "All costs are captured whether or not they are direct results of obligations from the directives. Procurement costs include business as usual costs that would be incurred even in a world with no EU-wide procurement legislation", it says.

This much we have no problem in understanding. With or without EU intervention, public procurement always carries a cost. UK defence procurement, for instance, costs £1.3 billion annually (around four percent of the budget), where EU involvement is minimal.

However, there was another 2011 report - this one - which refers to yet another report, this one by Europe Economics. In this you will also find a reference to a 0.7 percent cost (as an EU-wide figure), representing an EU-wide increase attributable to the procurement Directives. But it also states that overall the administrative costs for awarding authorities have gone up by 20-40 percent (on average by 35 percent). The would only put the overall UK cost increase, as a percentage of spending at 0.25 percent, as opposed to the 0.7 that Vote Leave claims.

Furthermore, there is also an interesting conclusion that is not mentioned by Vote Leave. As a result of the tendering process, this report says, overall prices of goods and services purchased were 2.5 percent lower than they would otherwise have been. If this is representative of the UK situation, the Directives would actually deliver net annual savings of about £4 billion to the UK taxpayer. These could actually be higher, as Commission modelling in 2009 indicated that savings of 5.5 percent were possible (see p.147).

Cost issues are is further elaborated by another Commission report, which stated (p.19):
The total cost to society of procuring the goods and services covered by the Directives is estimated at around €5.26 billion per year (for the EEA-30 in 2009), which is less than 1.3% of the value of invitations to tender published (by the EU-27) in the same period (i.e. €420 billion). This estimate covers the whole cost incurred during the entire procurement process i.e. from the pre-award phase, through the preparation of offers by all participating bidders, the selection of a successful bidder, and including any costs of litigation. Much of this cost would be incurred whether the Directives were in place or not.

As a result, this global figure would not reduce to zero if the Directives were repealed. Procurement carried out below EU thresholds, as well as private procurement, has associated costs. In fact, the additional cost imposed by provisions of the Directives is likely to be relatively limited, as has been pointed out in an earlier evaluation of the public procurement Directives carried out in 2006. That evaluation put the additional cost of the compliance with the EU Directives compared to national/below-threshold procurement at 0.2% of total contract value for public purchasers, and a further 0.2% for suppliers – or approximately €1.68 billion in 2009.
This much emerges from a proper evaluation of available data - leaving us with a scenario where Vote Leave substantially exaggerates the cost of the Directive and ignores the benefits. But it wasn't just this work that brought me into the fray. For some days, I had already been working on an article about public procurement, specifically to reassure readers that the Directives would not be affected by Brexit.

The point here is that the opening up of public procurement is seen as advantageous to a considerable section of British business – and is a vital step if we are to build on our knowledge economy and develop service industries internationally. It is also considered an important way of increasing the efficiency of public spending.

Crucially, though - and this was what caught my interest - opening up public procurement does not stem primarily from the EU. It relies on the WTO 1994 Agreement on Government Procurement, which is reckoned to have opened up procurement activities worth an estimated US$ 1.7 trillion annually to international competition. It was this that led to an EU White Paper in 1996, and has driven progress ever since.

Interestingly the Agreement has not only been behind intra-Community legislation but also an agreement with Switzerland, liberalising respective public procurement markets, and with the United States. It has also filtered into third country deals.

Such is the importance of this market liberalisation that we saw recently an article in the trade magazine Supply Chain, dealing with the potential effects of Brexit on public sector procurement. Fortunately, in a refreshing change from the usual FUD, the author reassured readers that UK legislation had been put in place to deliver the benefits of the EU Directives, and "would continue to have an effect".

In the article, the belief was expressed that the Government was unlikely to reverse EU based procurement laws, which had "firm principles aimed at transparency, equal treatment, open competition, and sound procedural management".

And indeed that is likely to be the case, and specifically because this is another example of the UK implementing via the EU an international agreement that would remain in force even after the UK has left the EU.

Given the apparent advantages of the Agreement, and its potential, it would appear that the very last thing a "leave" campaign needs to be doing is claiming that the procurement Directives (or their UK implementing legislation) will be abolished.

One wonders why, then, that the two most enthusiastic media publishers of the Vote Leave claims have been the BBC and the Guardian, giving chief executive, Matthew Elliott the opportunity to tell us: "Pernicious interference from Brussels not only stifles business, it makes government more bureaucratic and less responsive".

Perhaps, before this totally undermines the reassurances in Supply Chain, someone will tell Elliott that this "pernicious interference" is actually implementing a WTO agreement, and is saving us money – with the prospect of creating more business for UK Plc.



Richard North 27/05/2016 link

EU Referendum: making the difference

Thursday 26 May 2016  



Allister Heath has been writing in the Telgraph of the difficulty the "leave" campaign is having in articulating a strong macroeconomic case for Brexit. This, he says, is becoming a major issue, especially for more prosperous, middle-class, centrist and Tory-leaning voters in London and across the country who are craving reassurance that it's safe to vote for Brexit. 

Many Telegraph readers fall into this camp; and we all have friends, relatives and neighbours who are vacillating, wondering whether maybe – just maybe – there may be some truth to the endless supply of screaming, hysterical anti-Brexit reports.

The core assumption of the anti-Brexit economists, Heath tells us, is that leaving would erect damaging barriers to trade; the pro-Brexit side must take on and demolish these arguments.

The good news, he says, is that it’s quite easy to do so. The Leave campaign's long-term aim is to break away completely from the EU. But there is no doubt that, were we to vote Leave on June 23, the UK would seek to adopt, as an interim solution, a Norwegian-style relationship with the EU which ensures that we remain in the single market, giving us plenty of time to work out new arrangements with the rest of the world.

Welcome to Phase One of Flexcit, one might say, and doubly welcome to a journalist who is prepared to write that this "is both the only realistic way we would quit the EU – the only model, that, plausibly, MPs would support as a cross-party compromise deal – and the best possible way for us to do it".

Says Heath, the Norwegians would welcome us with open arms, as their own influence would be enhanced, and other EU nations would seek to join us. Such a deal would eliminate most of the costs of leaving, while delivering a hefty dose of benefits as a down payment.

As part of the EEA, via the European Free Trade Association, we would remain in the Single Market, complete with its Four Freedoms, while withdrawing from agricultural and fisheries policies, justice and home affairs and the customs union.

The City wouldn't lose access and virtually all of the anti-Brexit scare stories would be neutralised, which is presumably why that option was mysteriously absent from the Treasury's ludicrous analysis of the short-term impact of Brexit.

Furthermore, this option would make us more, rather than less, influential. We have only a small share of the votes in Brussels and can thus easily be outvoted. But Norway, which has technically no votes, has regularly moulded key rules, including the Consumer Rights Directive.

The real reason why we – as a large and powerful economy – would have greater influence is that Brussels is increasingly not the place where big decisions take place. Rules are increasingly negotiated under the auspices of global bodies: automotive norms are determined by the World Forum for the Harmonisation of Vehicle Regulations; food standards are determined by Codex Alimentarius; shipping rules are under the aegis of the International Maritime Organisation; and the crucial new banking regulations are being determined by the Financial Stability Board.

These regulations are then passed down, with the odd gold-plating, by the EU. These global bodies proceed by consensus, not qualified majority; we are currently represented by the EU at these meetings. A Brexit would allow us to have a seat at these top tables, and thus to disintermediate Brussels.

Thus, concludes Heath, the economic case for Brexit is remarkably strong. If Brexiteers want to reassure floating middle class voters, it will need to be made again and again, loudly and clearly, over the next four weeks.

That is the bad news. The bones of this scenario have been around since April 2014 – a full two years – with 70,000 people having downloaded the full version. Now, with four weeks to go, we are getting an outline of the first of the six phases in a national newspaper – without the plan being named, of course.

We already know that this is "the only realistic way we would quit the EU" and "the best possible way for us to do it", but it is good to have that confirmation from Mr Heath.

But we knew that a year ago when we sent a copy to Dominic Cummings, and we knew that when we later gave a copy to Arron Banks. Both were in a position to promote "the best possible way" of leaving the EU. Even earlier, back in April 2014, Nigel Lawson who chaired the IEA "Brexit Prize" judging panel could have made the difference. But he didn't either.

So, with four weeks to go, there are hundreds of thousands of "middle-class, centrist and Tory-leaning voters in London and across the country who are craving reassurance that it's safe to vote for Brexit" – exactly the target group that we need to win over in order to succeed in this referendum. And there is insufficient time to get the message to them.

For want of that essential "reassurance", God knows how many votes we will lose. And that will make the difference.



Richard North 26/05/2016 link

EU Referendum: the wages of stupidity

Thursday 26 May 2016  



One can fully understand the sharp reaction of Vote Leave to the publication of the Institute of Fiscal Studies' report on "Brexit and the UK's public finances". For in that report is written two passages which identify clearly why their campaign has failed to dominate the economic arguments, neutralising them as contentious issues and taking them out of the fray.

Firstly, we see the Institute write that the more we can replicate current access to the single market – for example, by membership of the EEA – the lower the cost of exit will be. By contrast, it says, the further we move from that model – for example, relying on World Trade Organisation (WTO) rules – the greater the cost.

Then, as we highlight in the graphic above, we see it observe that: "Key Brexit campaigners seem to have ruled out any deal that would involve membership of the European Economic Area (EEA), like Norway".

This, of course, was the whole point of Flexcit, one about which we almost weary of writing. But the simple fact is that, to protect the UK's economic position in the first instance, we had to preserve our participation in the Single Market. And here we see the IFS confirm what we've now been writing about for several years.

However, the problem came in October last year when Cameron flew to Iceland specifically to diss the "Norway model". Despite its attractions, we had the idiotic Dominic Cummings agree with the Prime Minister, sternly declaring: "Vote Leave does not support the 'Norway option' for Britain". After we vote leave, he said, "we will negotiate a new UK-EU deal based on free trade and friendly cooperation. We will end the supremacy of EU law".

When Farage joined in, saying "I don't want a Norwegian deal", followed by Richard Tice of Leave.eu, Douglas Carswell and then John Redwood and Ruth Lea, Cameron had achieved a clean sweep of the noisemakers, and effectively taken the "Norway option" out of the game.

The IFS suggests that part of the reason for these "leavers" rejecting the option was because the UK would likely have to make a significant contribution to the EU budget, but it was as much the case that it would also require continuation of freedom of movement – something to which Farage, in particular, was opposed.

With that, though, the main campaigners are determined to proceed without a plan and cede the economic argument – with Vote Leave relying on the offset from the EU contributions, claiming to save £350 million a week from the EU budget contribution.

This pretention, though, is badly damaged by the IFS, which reminds us that this figure is ignoring the rebate, which "is clearly inappropriate". It is equivalent, says the Institute, "to suggesting that were the UK to leave the EU and not make any financial contribution to the EU’s budget then remaining EU members would continue to pay the rebate to the UK". With brutal simplicity, it concludes: "That is clearly absurd".

Yet, still the Muppets in Vote Leave don't get it. In a bizarre press statement they claim that the rebate is "a discretionary grant which the European commission can pay to the UK if it so chooses". The organisation adds that: "There is no obligation on the commission to pay it", and then seeks sustenance by citing out of context a remark by George Osborne at the Treasure Select Committee (see para 15) – a remark which in itself was disputed.

So totally without foundation are their claims that there is no easy way to describe such crass ignorance. Originally agreed by Margaret Thatcher as the Fontainebleau Abatement in 1984, the rebate relies for its legal base of Articles 311 and 312 of the TFEU and is firmly locked into EU law. It is not in any way a discretionary matter.

It is now firmly entrenched in the budgetary system, having in 2004 become the Generalised Correction Mechanism for all Member States, after a Commission Proposal (COM(2004) 501 final/2).  Currently, it is given force by Council Decision 2014/335/EU "on the system of own resources of the European Union", implementing the European Council decision of 7-8 February 2013. This concluded that the then existing correction mechanism in favour of the United Kingdom was to continue to apply.

This Decision is augmented by Council Regulation (EU) No 608/2014 of 26 May 2014 "laying down implementing measures for the system of own resources of the European Union", and by Council Regulation (EU) No 609/2014 also of 26 May 2014 "on the methods and procedure for making available the traditional, VAT and GNI-based own resources and on the measures to meet cash requirements" (Recast).

Vote Leave, however, have got themselves into a typical bind, trying to defend the indefensible because one of their "stars" is committed to an error and cannot row back from it - as we had with Johnson and his three-fingered banana clusters.

In this case, we have Dominic Cummings who is insisting on using the £350 million figure, come what may - even after having been challenged on it during his session with the Treasury Select Committee. Presumably on the basis that there is no such thing as bad publicity, he believes that the controversy plays into Vote Leave's hands. Despite that, almost everyone around him is telling him that the false claim just detracts from the argument. It is certainly giving the BBC endless opportunities to point out the error.

Such is the notoriety of the £350 million claim that it has even spread to the New York Times giving an international dimension to Vote Leave's stupidity, further degrading the credibility of the leave campaign. And with nowhere else to go, Vote Leave supporters are reduced to whingeing on the sidelines, having already destroyed the best and only counter to the IFS report.

Thus will they find in good time that the wages of stupidity are defeat.



Richard North 26/05/2016 link

EU Referendum: the lack of a plan

Wednesday 25 May 2016  



The multiple references in this piece by Asa Bennett to an opinion poll from ORB must be taken with a pinch of salt. All and any opinion polls must be treated with caution. Nevertheless, they cannot be ignored entirely, and this one from ORB seems to show the direction of travel, with the "remains" pulling further ahead of "leave". Their lead now stands at 13 points.

On the back of this poll, Bennett has picked up exactly the same vibes that we have explored in our report, only he personalises it by telling us that Brexiteers are on the receiving end of Mr Osborne's offensive, with Messrs Balls and Cable deployed yet again and the Treasury releasing its second report on why it thinks leaving the EU isn't a good idea.

Such tactics, Bennett thinks, seem to be working. The "remains" are continuing to dominate the economic battle in the referendum campaign, a crucial element for – as we have always maintained – the polls are suggesting that there are bigger issue than immigration.

When voters were asked by ORB which side would create a "stronger economy for the UK", the "remains" lead by 21 points with 54 percent, a four-point increase in their net lead since last week, the same boost for "remain's" lead on the question of who will "create more jobs".

Bennett asked how the "outers" can fight back. But the alarming truth is that they probably can't. To win this referendum, we had to get in first and pre-empt the scare tactics, laying a solid base of reassurance. Thus, the moment Dominic Cummings, for no good reason, rejected the idea of an exit plan, the leave campaign's fate was probably sealed.

We might possibly have been able to claw back from this huge error if Arron Banks had been a man of his word, and backed Flexcit as he said he would. He would also have had to have been successful in seeking lead designation for the "leave" proposition. He was our last chance, and he failed.

For an excellent review of where we could have been, Andrew Stuttaford's article in National Review is the place to be, especially as he makes the point that we have been pursuing the idea of an exit plan for years, only to have been ignored for several and different reasons.

Asa Bennett helps by making it clear that Vote Leave's refusal to adopt and exit plan – any exit plan – was never personal. This was a function of the flawed logic and ignorance of Dominic Cummings, the progenitor of a failed strategy – and also the craven response of the people around Cummings who never had the courage to rein him in.

The result has been a train-wreck campaign. Homing in on putative savings from leaving the EU was never going to be a credible strategy – and less so when the core claim was a clear and demonstrable lie, that we could save £350 million a week.

Under questioning from the Treasury Select Committee, Cummings sought to justify this position by claiming that there would be additional savings from the bonfire of regulation that would accompany Brexit. Yet he was unable to offer a credible figure, or be at all specific as to what regulations he would repeal.

Then, when he and his sock-puppet Michael Gove – together with the leering, buffoon Johnson – rejected any idea of continuing in the Single Market, there was no longer any doubt. Our fate was sealed. Watching the first of Vote Leave's referendum addresses did nothing else but confirm the paucity of their vision – distilling the greatest constitutional issue of our time down to the length an elderly relative might have to wait in Accident and Emergency.

With this level of campaigning, there is little Vote Leave can achieve. However, Bennett has it that one option left is to fulminate about the "scaremongering" from their opponents.

But, he notes – as do we – that the latest Treasury analysis looks at two models for their short-term impact assessment of Brexit. The first one is the model set out by Canada (which they say would result in an economic "shock"), and the other one relies on World Trade Organisation rules (which they think would lead to a "severe shock").

The Treasury decided not to look at the option of Britain following the "Norway option", joining the European Economic Area, despite doing so in their previous report on the long-term impact of Brexit. But then, this is precisely the option that Vote Leave have rejected. They can hardly complain that the Treasury hasn't modelled it.

Now, says Bennett, Brexiteers need an agreed plan in order to show Britons why the experts are "scare-mongering", and they need to be plugging it relentlessly over the next few weeks if voters are to be aware of it by 23 June.

For the moment, though. while they complain of how unfair the Chancellor is being, Bennett concludes in exactly the same way that we did, that Osborne's tactics were inevitable, and are working as voters are starting to drift away. The "outers" (as in Vote Leave) have no idea what they want, and they're giving them no reason to think otherwise.

There is not the slightest chance, however, that Vote Leave will admit to error, or change tack. This is simply not in their make-up, while craven sponsors and close supporters lack the fortitude or insight to force the issues. The "Titanic" is being driven onto the iceberg at full speed and there's nothing that can stop it.

What price a campaign when one of its most prestigious spokespersons, Sarah Wollaston disowns the core message, saying she would be refusing to hand out their "deliberately misleading" NHS leaflet.

When we then see even Katie Hopkins savage the ghastly Johnson as a "big, fat fraud", we know the game is over. In fact, Johnson the serial liar is only a symptom of the greater malaise. Driven to destruction by Cummings and his friends, the official campaign never had the slightest chance of success.

If the Brexit side does lose, says Hopkins, "much of the blame will lie with Boris - who will have no compunction about scampering back aboard the government bus if he gets half a chance". But the greater blame will belong to Dominic Cummings, with the likes of Arron Banks also occupying a prominent position in the hall of shame.

The only possible thing we can salvage from this wreckage is a clear understanding of where we went wrong, and why – and to out the guilty men (and women). At least then, the next time round we might be better prepared. And there will be a next time. This referendum will resolve nothing. The boil still has to be lanced.



Richard North 25/05/2016 link

EU Referendum: the deregulation delusion

Tuesday 24 May 2016  



The one thing that is being utterly destroyed by this referendum campaign is the idea that it is possible to have a grown-up political debate in this country. Certainly, any adult not already of that mind, and happening accidentally on the cretinous Mr Johnson in full flight, would come to that conclusion – as even his co-campaigners admit that their champion is something of a "mixed blessing".

Actually, that is the kindest of all possible constructions one can put on the activities of this walking embarrassment – a man who actually makes you feel ashamed to be associated with the leave campaign.

Again we see reported another self-indulgent rant on EU regulation, again bringing in bananas – alongside hairdryers and vacuum cleaners – but with puerile truculence as he attempted to justify his earlier errors in typical Johnsonian fashion, by refusing to accept that he'd got anything wrong.

Last week he was roundly mocked for wrongly claiming that EU law prohibited bananas from being sold in clusters "of more than two or three bananas". But yesterday, addressing a crowd in York, the cretin reminded his audience that he had said "there was an EU directive on bananas", but then claimed that "the Remain campaign got very angry - they said that I was wrong".

This, of course, is deliberately to evade the point. No one at the time disputed the existence of EU law on the matter (even if Paxman and Richard Corbett were later to claim the marketing standard had been repealed). The issue was that Johnson had got the detail wrong – not least the fact that the law had no domestic application.

The key point, though, is made by pro-Brexit Labour donor John Mills who – as one of the very few duty grown-ups - said Johnson was being "unrealistic". "I think we are over-regulated", he told the Mail, "but the idea that all these regulations are going to disappear on the 24th of June is frankly unrealistic and you might be able to unpick some of them but I don't think there's going to be a bonfire".

This is actually a sensible comment, so much so that a grown-up campaign with anything approaching message discipline would keep the lid on Johnson and make sure that only the grown-ups were heard.

The best Mills can do, though, is admit that Johnson's style of campaigning has drawbacks, and observe: "Boris is Boris, I mean he's a plus and a minus to be honest, I think he's in that sort of category", adding: "Boris has always had a bit of a tendency to go off piste but he does it in a half-loveable way and he's a mixed blessing".

Quite how "mixed" is that "blessing" is indicated by an article in the Financial Times headed: "The deregulation delusion" in which, once stripped of the obligatory pro-EU propaganda, actually attempts an adult discussion on regulation.

The whole debate, says Martin Sandbu, is marred by a lack of critical thinking around how regulation affects the economy, in which event, "to treat regulations axiomatically as costs to doing businesses is bit like treating traffic rules axiomatically as costs of driving".

"There is, to be very generous", he says, "a sense in which traffic rules impose a bit of effort on drivers. And it is certainly true that bad traffic rules can make traffic slow and unsafe. But it is just as certain that all but the worst rules are better than no rules at all".

In economic terms, Sandbu tells us, there are three broad reasons why this is so, both for traffic and for the economy: information, externalities and co-ordination.

On the road, street markings, signs and costly requirements to keep the surface at a certain standard help you predict the driving conditions and the behaviour of other drivers. The importance of information in economics should be just as easy to grasp: a lack of knowledge about the good or service you are considering buying is akin to a transaction cost. Imperfect information can even make markets break down altogether.

Thus Sandbu asserts, far from being costs to doing business, regulations that improve buyers' ability to know what they are paying for - labelling requirements and minimum standards - facilitate market transactions. And that explains why regulation has grown and why efficient economies will continue to regulate activity comprehensively.

The second point, "externalities", should also be straightforward. There are limits on how you can drive because your reckless driving can harm others. Similarly, there are prohibitions on how and what businesses can do. Some of those have to do with protecting their workers and if improving work conditions leads to greater wellbeing of workers, then the "cost to business" of doing so overestimates the cost to the economy.

Besides, says Sandbu, there are reasons to think some worker protections, including higher minimum wages and other rules that make labour costlier for employers, can improve productivity.

Finally, we have "co-ordination". Why require cars to drive on a specific side of the street? Because the benefits to all of co-ordinating on right or left vastly outweighs any difference in the merit of which particular rule is chosen. And this is hugely relevant to the Brexit debate.

Sandbu recalls his colleague Philip Stephens who regaled readers a few years ago with the tale of the British dust-up over a European noise limit on lawnmowers.

The supposed Brussels over-reach had, it turned out, been instigated and steered through the legislative process by the British government at the behest of UK manufacturers, who were finding their lawnmowers locked out of the German market because of Berlin’s national noise rules. "Sure enough, the new, Europe-wide, decibel ceiling put the British producers back in the game".

None of this, says Sandbu, shows that any particular European (or indeed British) regulation is fit for purposes. But it does three things.

First, that an efficient economy will be a comprehensively well-regulated one, not an unregulated one. Second, therefore, that a post-Brexit UK economy would not be less regulated than today, any more than other non-EU economies have remained radically unregulated: just look at the US. Finally, that positing freer trade as an alternative to common regulation is to deeply misunderstand the complexity of modern economic activity, and therefore of trade.

The reason why empirical estimates show Europe's single market to boost trade so much more than simple free trade deals, and why modern free trade deals are really about harmonised regulation, is that common rules are increasingly a prerequisite for efficient trade.

Sandbu thereby concludes that, to be open to international trade today means to be willing to make rules together. That is the fundamental contradiction at the heart of the case for Brexit. Rather than a cost of doing business, good rules make it possible.

And there, exposed for those who are willing to see it, is the utter fatuity of Boris Johnson – this vain, stupid, shallow man who is doing such enormous damage to the cause, turning away anyone who does not want to buy into dog-whistle euroscepticism.

The ultimate irony, of course, is that Sandbu makes the case for Brexit. Common rules, he says, are increasingly a prerequisite for efficient trade. And what is good for 28 Member States of the European Union is even better of the 185 or so states in the global trading system. To get the greatest benefit from the economies of scale, we need to break out of "little Europe" and re-engage at a global level.

This is the point I made on Sunday, and an extremely powerful point it is. But as long as Vote Leave are committed a "deregulation" agenda, we simply cannot progress.

And that is the wider truth. A campaign obsessed with bleating about the NHS - and the facile claim of saving £350 million a week - is going nowhere. We are being dragged down to the lowest common denominator, with the leering buffoon Johnson destroying our efforts to be taken seriously.

The greater delusion, therefore, is that there is any room left in political campaigning for grown-ups. At the moment, this does not look to be the case.



Richard North 24/05/2016 link

EU Referendum: in the absence of a plan

Monday 23 May 2016  



The whole point of having an exit plan was to pre-empt attempts by the government to project leaving the EU as a risky option. Crucially, we had to get in first, demonstrating to people that the exit could be ordered and safe, with no significant economic impact.

This is exactly what Flexcit did, and it was freely offered to Dominic Cummings for use by Vote Leave, precisely to head off the scaremongering (FUD) which we knew was to come. Yet, as we all know, Cummings didn't even have the courtesy to respond to me.

And now we have, exactly as we predicted three years ago, a reliance on FUD, with the government cynically exploiting concerns about the economy, exactly as we predicted in July 2014, when we warned of the need to pre-empt it.

With those warnings unheeded, the official "leave" campaign has paved the way for today's Treasury analysis which, accompanied by a lurid graphic (above), tells us:
A vote to leave would cause a profound economic shock creating instability and uncertainty which would be compounded by the complex and interdependent negotiations that would follow. The central conclusion of the analysis is that the effect of this profound shock would be to push the UK into recession and lead to a sharp rise in unemployment.
Two scenarios have been modelled to provide analysis of the adverse impact on the economy. These deliver a "shock" to the economy or a "severe shock". You can take your pick, but what you cannot do is pick the Flexcit scenario. Even Ed Conway of Sky News notices its absence.

But then the Treasury's game is to capitalise on the uncertainty which would necessarily follow from any of the post-exit scenarios proposed by Vote Leave. The moment this organisation rejected the "Norway option" (as did Leave.eu) and then had Cummings and Gove both specifically reject continued participation in the Single Market, they paved the way for today's scare. 

To build its picture of uncertainty, the Treasury tells us that four processes would need to be completed:
Process 1: agreeing the UK's terms of withdrawal from the EU under Article 50 of the Treaty on European Union.

Process 2: agreeing the UK's new trading relationship with the EU.

Process 3: agreeing the UK's new trading relationships with the rest of the world including over 50 countries with which the UK would need to negotiate new trade arrangements.

Process 4: changing the UK's domestic regulatory and legislative framework.
Each of these four processes, we are then told, "would be complicated in their own right". But then we get: "conducting them all at the same time, on any terms that would be acceptable to the UK and within the specified two-year period for leaving the EU would almost certainly be impossible".

This, of course, is straw man territory. None of this presents the slightest problems if we adopt Flexcit. The terms of withdrawal and the trading relationship with the EU are largely settled by continued participation in the EEA.

The trading relationship with the rest of the world is maintained as at present, relying on the presumption of continuity and, as far as the UK's domestic regulatory and legislative framework goes, there would be no change. We would simply repatriate the entire acquis and take our time with any necessary changes or revisions.

Vote Leave, though, has no answers. In the Gove/Cumings scenario, they throw everything into the pot, with absolutely no idea of whether any settlement can be achieved, or what the timescale might be. They then talk grandly of a vast bonfire of regulation, from which they supposedly gain most of the economic benefits from leaving.

In other words, Vote Leave have set us up for the fall. They gave the game to the government, which can make the unanswerable case that leaving will cause a recession. Where we needed certainty, reassurance and predictability, Vote Leave gave us uncertainty and revelled in creating even more. 

With "recession" headlines plastered over today's newspapers, Vote Leave needs to revisit Galatians 6-7. This is the sort of stupidity that has cost us the referendum - and they can't say they weren't warned.



Richard North 23/05/2016 link

EU Referendum: looking at defeat

Monday 23 May 2016  



Straight from the Cummings book of the EU – the one that has the Schengen area and the single currency as part of the Single Market - and the Boris Johnson school of banana regulation, we now have armed forces minister Penny Mordaunt telling us that the UK does not have a veto over Turkey joining the EU.

Mordaunt was on the Sunday Marr show, expounding on Turkey's chances of joining the EU, when she said: "This is our last chance to have a say on this, we’re not going to be consulted on whether those countries should join. Those countries are going to join, it is a matter of when".

Marr suggested this was wrong, given "the British government does have a veto on Turkey joining, so we don't have to let them join". But Mordaunt replied: "No, it doesn't. We are not going to be able to have a say".

Giving the woman every opportunity to correct herself, Marr returned to the issue at the end of the interview, telling Mordaunt he was "pretty sure" we had a veto. "Are you sure that we don't?", he asked.

Determined to bury herself in her own stupidity, Mordaunt refused to take the hint. "We haven't", she said. "I think that with the current situation, the migrant crisis and other issues in Europe at the moment, we would be unable to stop Turkey joining".

Nailing down the coffin lid, she then said: "I think this is a matter for the British people to decide, and the only shot that they will get to express a view on this is in this referendum… I don't think that the UK will be able to stop Turkey joining".

Given such a gift, David Cameron could hardly have believed his luck. "Let me be clear", he told ITV's Peston on Sunday, "Britain and every other country in the European Union has a veto on another country joining".

Then, making the killer point, he added: "That is a fact, and the fact that the Leave campaign are getting things as straightforward as this wrong should call in to question their whole judgment in making the bigger argument about leaving the EU".

So there we have yet another unforced error – a train-wreck interview in a train-wreck campaign, where Vote Leave is making just about every mistake in the book and then coming back to invent a whole lot more.

Earlier, four "supermarket bosses", capitalising on Vote Leave's stupidity in rejecting continued participation in the Single Market, warned that the uncertainty arising from leaving the EU "would cause shop prices to rocket and prove 'catastrophic' for millions of families".

According to the Mail on Sunday, they also "demolished" the argument touted by Gove and Johnson that Britain would be better off without EU regulations. "The much-cited suggestion that we will be free of the apparent constraints of over-regulation if we leave Europe is nonsense", they said. "We need regulation to protect consumers and, if we want to continue to trade with Europe, the rules still apply".

In what was obviously a coordinated initiative, David Cameron wrote a piece for The Sun telling us that a 12 percent fall in the value of sterling precipitated by Brexit would mean "more expensive imports". That in turn, wrote Cameron, "means more expensive food and it drives higher business costs. And we all know where that ends up: higher prices in the shops".

Helpfully, a new Treasury analysis shows the average cost of the weekly family shop for food and drink would rise by almost three percent - £120 a year. Clothing and footwear would see even bigger increases - a five percent increase, or an extra £100 a year. Put together, that's a £220 bill for the average family says Cameron.

Then, right on cue, came NHS England chief executive Simon Stevens telling us that he took warnings of possible recession in the event of Brexit "very seriously", adding that would be "very dangerous" for the service. "When the British economy sneezes, the NHS catches a cold", he said, adding it would be a "terrible moment" at a time when the NHS needed extra investment.

And with all that piling up, it took the Mail on Sunday yesterday to note: "it is clearer than ever that the Leave campaigners are losing the economic argument". "They have", the paper said, "failed to produce a substantial body of evidence that Britain will prosper or gain as a result of quitting the EU, and time is running out for them to do so".

"So far in this campaign", the paper concluded, "the more the Leave campaign's arguments have been subjected to the stress test of national debate, the weaker they have looked. They have very little time left to make a consistent and persuasive case for a momentous and radical change in the nation's course".

Yet, there is nothing in the critique of the "leave" case that could not be resolved either by attention to detail or, in respect of the economic case, by adopting the Efta/EEA option as an interim solution for leaving the EU. Today's talk of "recession" spread across the front pages of the newspapers should have been headed off at the pass by early publication of an economically neutral plan. 

All Vote Leave needed was that sensible exit plan. Most of the scaremongering would have evaporated. Instead, they based their campaign on a lie and chosen a serial liar to lead it. They have rejected the very idea of an exit plan, yet made economic savings the centrepiece of their pitch, thereby placing the issue firmly on the agenda. 

There must be some optimists who believe we can overcome the sheer weight of stupidity with which we are confronted. But if the campaign is salvageable, Sam Hooper doesn't think so. Nor does Pete, who is writing of a "well-earned defeat", and even Mary Ellen Synon thinks we're losing.

We will have to wait for the patient to die before conducting a post mortem, but we have to agree with the pessimists. As long as we're handicapped by the huge burden of Vote Leave's stupidity, I simply do not see how we can win. With only a calender month to go, the chances of this campaign being turned round are looking increasingly remote. 

Unless there's a miracle, we're looking at defeat on 23 June.



Richard North 23/05/2016 link

EU Referendum: why we must leave

Sunday 22 May 2016  



In terms of constructing a coherent case for leaving the EU, my last four blogposts have done nothing if not demonstrate quite how slender the case is, and how so many are pursuing the wrong issues for quite the wrong reasons.

The trigger point in the recent posts is the idiot Johnson and his particular aversion to the EU's "banana regulations", reflecting a more general rejection of regulation which, in some cases, seems to verge on visceral hatred.

And this, in my view, is where many the "leave" campaign have got it badly wrong, in looking to Brexit as an opportunity to divest ourselves of the huge amount of regulation that has come our way as a result – directly or indirectly – of EU membership.

In this blogpost, therefore, I'm going to look a little more closely at this error and then, when I've finished, I'm going to suggest areas on which we should be concentrating, giving chapter and verse as to why they are so important.

Firstly, turning to the issue of regulation, one of the biggest problems we have – or so it seems to me – is the one-dimensional view of the subject. There is a tendency to declare all regulation "baaaaad", without being able to recognise that there are many different types of regulation, devised and applied for very different reasons and in very different ways.

Depending on the variables, a class of regulation – or even individual regulations – may be either good or bad, helpful or harmful. There are few absolutes. Rarely is regulation wholly bad, and much of that which is applied is helpful and benign.

In this context, it would help if critics devoted a little more time and effort to understanding the basics of regulation and how some of it works – especially that raft of legislation related to the Single Market, to which so many people are objecting.

Here, the discussion so far on the rules covering the marketing of fruit and vegetables has been helpful although – to judge by some of the comments - we're very far from any universal understanding of the nature or role of this group of laws.

What is not always appreciated is that there is no uniform regulatory model that applies across the product spectrum. Some products merely rely on what is known as a general marketing standard GMS), a group of non-specific principles which determine quality parameters. Other products also rely on the GMS, but this is defined by a very detailed UNECE standard. Still others rely on Codex standards and, for a very few, there are specific EU standards. Then, some of the standards apply only to goods traded internationally while others apply to domestic (intra-community) trade as well.

As regards the banana standard, this is an unusual one. It remains in force as an EU regulation but applies only to the internationally traded product. It has no application in domestic trade.

Furthermore, the actual standard is not at all onerous. It is exactly what one might draw up as a basic specification for a good quality product, and presents no great challenge to the grower. But then what so many people miss is that the standard is there to protect the grower. As long as the product meets the standard, it cannot be excluded from the EU market on technical grounds. In other words, neither the EU nor a member state can impose arbitrary standards, or any in excess of the posted standard.

Then, as UNECE points out, standards help in other ways. A buyer can order fruits and vegetables from a producer or trader on another continent, sight unseen, and be confident to receive what was ordered. Because everybody is working to the same (known) standard, this can be certified by national inspection agencies at export, .

The crucial thing is that we have a uniform global standard. As we see from a World Bank study, the biggest handicap for developing world exporters is differences among standards. This is regarded as the most serious problem of all.

This particular type of regulations, therefore, facilitates trade. The mandatory marketing standard makes preparing produce for export easier and, once it is despatched, growers and shippers know that, as long as they have valid orders from their destination countries and meet the technical standards, their products will be admitted and they can claim payment for their goods. That certainty is what underwrites free trade.

Some will (and do) argue that there is no need for a mandatory standard - that this is a matter for traders to agree between themselves. But free-for-alls never work. Standards end up being used for market manipulation, becoming non-tariff barriers which exclude products from specific markets.  

However, it is also the case that no one standard is good for all time. Those which specify pesticide limits are particularly contentious and, where standardisation is lacking, these can constitute real barriers to trade as farmers struggle to meet differing MRLs (Maximum Residue Limits) for the same products.

The World Bank study (cited earlier) reports considerable problems in this respect, where pesticides in use may not registered in the country of destination. The difficulty is that it is not always possible to select the correct pesticide as the country in which the final product will be sold is not always known until after harvest.

For importing countries determined to promote trade in developing countries, therefore, it is essential that standards are devised and revised with utmost sensitivity and flexibility. This is not always the case with the EU. It has, for instance, been a particular problem with produce in Kenya (and in many other countries). Unarguably, the standard is a double-edged sword.

This situation is partially mitigated by the increasing tendency of limits and marketing standards generally to be set at international level. And while, as regards its Member States, the EU has exclusive competence over trade policy, there is an important loophole which still allows Member States some degree of independent action.

Examination of this takes us into the area where, I believe, we should be concentrating, and which provides one of the most powerful reasons as to why we should leave the EU.

To understand quite how important it is we must, for one moment, step back and look at the root of the European Commission's power. This stems primarily from its monopoly of initiative. Only the Commission can propose a new law, and since any existing law can only be repealed by a new law, the Commission is also able to protect the acquis from attempts to weaken it.

At international level, though, the situation is different in some important respects. Since the Lisbon Treaty, the EU has its own legal identity and power to make agreements with international organisations in its own right. It is gradually seeking to upgrade its role as a global actor.

But, while it is a founder member of the WTO and has become a voting member of the Food & Agriculture Organisation (FAO) - and has signed up to a new strategic partnership - it lacks the all-important right to submit items for consideration on the agenda.

Similar restrictions apply to the EU in respect of its dealings with most other international organisations, which means that the greater powers are still held by Members States. And, while the treaty requirements of "solidarity" and "cooperation" require Member States to agree "common positions" with the Commission, and to vote in support of them, the Member States are still able to decide the agenda. At this point, therefore, they can still force change on a reluctant Commission.

The surprising thing is that Members States do have a considerable level of residual power - more so the UK, which is a full member of many international bodies, to which the EU is only an observer, with very limited rights.

But the writing is on the wall. Through what is known as the Barroso-Ashton Strategy (see also Annex 1), intervention by the Council, and multiple interventions by the ECJ (including this one) the EU is seeking gradually to trim the powers of Member States at international level, and extend its own.

In the longer term, therefore, the UK – along with other Member States – will progressively lose its ability to influence the agenda, becoming even more subordinate to the EU institutions.

This brings us to the key issue. The obsession of the "leave" campaign to cut regulation is entirely misplaced. Much of the regulation of which people complain is benign, and would be kept whether we are in or out of the EU. What really matters is our ability to influence the legislative agenda at global level. We need to be able to get rid of that which is bad, to improve the mediocre and to support and extend the good.

The point is that, to some some extent, as long as we retain some residual powers, we can still do this. But our powers are on the wane, and the longer we are in the EU, the weaker we will get. The only way we can maintain (and extend) our power at the global level is to leave the EU.

And that is why we must vote leave on 23 June.



Richard North 22/05/2016 link

EU Referendum: "pettifogging regulation"

Saturday 21 May 2016  



Returning to Jeremy Paxman's documentary on the EU from Thursday, one needs to remember not who he is, but what he is. Strip away the subject material and what he does for a living is broadcast. He's a professional broadcaster.

Now, if nothing else, broadcasting is an industry driven by standards - thousands of them. If all the standards for the pieces of kit used by the BBC (some it pictured above) were printed out, you'd have a stack of documents feet high. Yet Jeremy Paxman looks at a $25bn industry - the banana industry - which has one 13-page international standard, and calls it "pettifogging regulation"?

This is actually the measure not of the subject, but of the myopia of the man. In his little bubble, he probably doesn't even register all the kit around him in his workplace. This is "techie" stuff so far below his extremely generous pay grade that it will be invisible to him. That it might be standards-driven wouldn't even occur to someone who thinks that marketing standards for fruit and vegetables are something to be dismissed.

Yet, for those who can remember, there was a world without such standards – the one I recall as a lad when the first-born was press-ganged into going with mum on the weekly shop to help carry the bags. There were no supermarkets then, so buying the week's supplies took most of Saturday morning queuing at the butchers, the baker, Sainsbury's (with a queue at each counter) and the greengrocer. I hated it.

But I still remember the greengrocer. Mum used to complain bitterly about the potatoes. Bought loose, by the time you'd scrubbed the mud off them, they were several ounces lighter. Machine damage was common, and you had to trim them generously to remove the spoiled areas. And then it was not at all uncommon to find one or more rotted potatoes.

At that time there were no consumer standards – only wholesale marketing rules, which came from the Agricultural Produce (Grading) (Potatoes) Regulations 1929. Even then, they wouldn't have been much use as the standard gave a "dirt and rot" tolerance of five percent. And farmers certainly made the most of it. At least five percent of the money you spent on that particular foodstuff went in the bin, and that was before peeling.

Latterly, we got the Agriculture and Horticulture Act 1964 which gave the Ministers powers to designate and define grades of quality in relation to any description of fresh horticultural produce.

These powers, though, were not to help the hard-pressed shopper. There was clearly a demand for them to apply to the retail product, as emerged from an exchange in the House of Lords in February 1967. Then, Labour peer Baroness Burton of Coventry asked whether the benefit of these grading provisions would "apply only to growers and wholesalers, or whether such grading will be available for shoppers to make selection in the shops".

For the Government, the Baroness Phillips, in response, confirmed that this was basically not consumer legislation. Its purpose was "to enable our growers to compete with imported produce" – an important facet of such standards.

This again is something the likes of Paxman and his fellow travellers would never understand. Bluntly, a lot of British farm produce was very poor quality. Having relied on scarcity and rationing – which had only recently been removed – farmers could unload any rubbish on the consumer, and often did.

As a result, the better quality imports which were then becoming available – marketed in accordance with rigid grading systems on the Continent - were taking market share. Imported goods were establishing a reputation for better quality, so much so that some UK enterprises conformed to their rules, calling their produce "export standard".

Interestingly, the disparity of standards was well known. In a debate in June 1962 on the EEC, initiated by Harold Wilson, Labour Member for East Ham, Albert Oram, observed that if we joined the Common Market, "our horticultural industry will probably suffer, but the consumer of those commodities will be better off".

"Imports", he said, "will come in from the Continent duty-free. Furthermore, if the horticultural industry has to pull up its socks and put its house in order in such matters as grading and packaging in order to compete with goods from the Continent the consumer will benefit still further".

Then, fast forwarding to February 1967, and back to Baroness Phillips, she gave a clue as to where things were heading. "I think that my noble friend may be heartened to know", she told Baroness Burton, "that the Government are watching the Common Market countries who are extending their regulations to the retail market to see how it works out". Thus, said Phillips, if at the end of the year if she cares to put down another question, "I may be able to give a more favourable reply".

In October 1967, Baroness Burton was back on the case complaining of the lack of a grading scheme, in a long and interesting debate.

Within the debate, Burton referred to recent standards introduced by the EEC and indeed in the previous year we had seen such delights as Regulation No 41/66/EEC of the Council of 29 March 1966 "laying down common quality standards for cabbages, Brussels sprouts and ribbed celery". How appropriate that one of the very first standards should cover Brussels sprouts.

But, as early as 1962, we'd had Regulation 58 "laying down common quality standards for certain products listed in Annex I B to Regulation No 23 on the progressive establishment of a common organisation of the market in fruit and vegetables". This covered spinach, witloof chicory, peas, beans, carrots, artichokes, table grapes, cherries and strawberries.

Nevertheless, the Government remained opposed to retail grading schemes – mainly on the grounds of cost – but offered Burton "one ray of hope" that Her Majesty's Government were keeping a close watch on the EEC schemes.

In 1969, however, questions were still being asked, this time from Alasdair Mackenzie, MP for Ross and Cromarty, and the Government was still refusing to implement a retail grading scheme.

Three years later all this changed, with the European Communities Bill, debated in the House of Commons on 15 February 1972. With UK entry was to come the Community fruit and vegetable grading scheme. This was finally introduced via the Grading of Horticultural Produce (Amendment) Regulations 1973, subsequently amended by the 1983 Regulations.

But, as can be inferred from this debate in 1981, the writing had been on the wall since the mid-sixties. The moment the EEC countries started grading, and thereby driving up standards, the UK growers were going to have to conform. And there was no question that, from the competition on quality and price, the consumer gained. So, eventually, did the growers, when they were finally able to meet quality standards.

Bringing this right up to date, this is what the Single Market is all about – a Common Regulatory Area, where all commercial enterprises adopt the same standards. And while, we didn't need to sign up to the federalist, supranational agenda in order get a Europe-wide system of grading apples, potatoes, cucumbers (and Brussels sprouts), leaving the political construct of the EU does not necessitate abandoning such a system.

In fact, the idea that, on leaving the EU, we would revert, say, to the original grading system is absurd. Equally absurd would be adopting two-tier regulation with a lighter touch for our domestic market. As we were seeing in the 60s and 70s, all that would happen is that our competitors' higher standards would win them market share. In order to compete, our producers would be forced to accept the higher standard "voluntarily". There are no savings to be made from that "bonfire of regulations".

However, things have changed. The fruit and vegetable standards have now migrated upwards. They no longer originate from Brussels but from Geneva (UNECE) and Codex (Rome). And, as globalisation increasingly takes effect, the whole Single Market will also migrate – to global level. Free from the grip of the EU, we will be able to follow.

Transition is not going to be immediate – it cannot be. But this is the direction of travel. For the time being, we can tolerate the sub-optimal EEA membership until we have built the global market. What we can't do yet is walk away from the European Single Market, not until arrangements are in place.

And, come what may, we're not going to see the end of that "pettifogging regulation". But then, Mr Paxman's broadcasting workplace wouldn't work quite so well if we did. How then could he make vacuous programmes about cucumber regulations?



Richard North 21/05/2016 link

EU Referendum: polluted by ignorance

Friday 20 May 2016  



How illustrative it was that Jeremy Paxman chose to open his programme on "Brussels: Who Really Rules Us?", holding up a cucumber, declaring that: "Everywhere you look, the European Union is telling us what to do".

He then went on to regale us with some details of Commission Regulation (EEC) No 1677/88, laying down quality standards for cucumbers, before informing us that this "notorious curved cucumbers rule has now been repealed, along with the one about bendy bananas".

And there, in just a few sentences the man demonstrated that he knows next to nothing about the EU and, as much to the point, about the way the world works.

For sure, the "notorious curved cucumbers rule" was repealed – by Commission Regulation (EC) No 1221/2008 - but it was replaced by another requirement. The new regulation said:
In order to avoid unnecessary barriers to trade, where specific marketing standards are to be laid down for individual products, these standards should be those as set out in the standards adopted by the United Nations Economic Commission for Europe (UNECE). For the same reason, other products should be considered to conform to the general marketing standard where the holder is able to show they are in conformity with any such applicable standards.
In essence, such products should meet the "General Marketing Standard" which, in the case of cucumbers is set out in UNECE Standard FFV-15 - an almost exact copy-out of the EU standard. In other words, the EU has outsourced much of its vegetable and fruit marketing regulation, bumping it up to the regional level and, via Codex, to global level.

The marketing regime is now set out in Commission Implementing Regulation (EU) No 543/2011, applying rules across a wide rage of fruits and vegetables including – as we wrote recently - cabbages.

If you understand this, and how the system works, then you are getting somewhere to understanding something of how this complex world is governed. It illustrates perfectly how globalisation is now rampant and pervades virtually every aspect of the EU's activities.

Interestingly though, when it came down to it, veteran MEP Richard Corbett chose to disown the "banana regulation".Asked why it had been repealed, he told Paxman that this was because "it was found not to be necessary". But it was necessary, it is necessary and it hasn't been repealed, living on as Commission Implementing Regulation (EU) No 1333/2011 and, at global level as Codex Standard STAN 205-1997, AMD. 1-2005.

What we see, therefore, is an example of regulation gone global - the ultimate fruit of the 1994 WTO TBT agreement. But quite what his ignorance tells us about Mr Corbett, I'm not entirely sure – nor, for that matter, Mr Paxman, other then they both totally out of the loop. However, while Paxman is a BBC journalist and therefore expected to be ignorant, Corbett, of all people, should know better. He not only should have known that the banana marketing standard is still in force, he should be one of those prepared to defend it.

But what this ignorance does tell us it that we are now living in a world where a vanishingly small proportion of people actually understand how it is regulated. Thus, we have people like Paxman going to Brussels for the state broadcaster to bring back a trivialised documentary that does not even begin to explain how the system works.

Altogether, the way regulation is now treated, the way it is made, and its origins, is proving to be the dividing line between the "knows" and the "know nots". Leaders amongst the "know nots" is the eurosceptic "community", which has got itself into a huge muddle, failing to understand the significance of the developments over the last 20 years. 

This piece, yesterday, therefore, had more than usual relevance. It had Charles Portsmouth, director at insurance adviser Moore Stephens, saying that most of the EU legislation that affects the insurance industry is likely "here to stay" whether the UK leaves the EU. In his view: "The UK as a whole and the insurance industry in particular are likely to want to retain access to EU market with a new trade deal".

Portsmouth went on to say that: "The UK insurance sector owes its world-leading status partly to its strength on the European stage and a major part of the UK industry's revenues comes from Europe. To preserve these lucrative ties and be able to sell cross-border, UK-based insurers are likely to find they still have to comply with EU regulation".

He added: "In short, there are no simple answers to predicting what the world would look like on 24 June if the UK votes to leave the European Union. However, much EU legislation affecting the insurance industry is likely to be here to stay, whatever the referendum outcome".

Portsmouth also said that in reality, a wholesale rollback of regulatory pressures originating from the EU after a "leave" vote is unlikely. "Major European-level initiatives such as Solvency II have already been incorporated into UK law; they are an integral part of the system in this country", he said.

And to add to this, we then had John Nelson, chairman of Lloyd's of London, who said that many of the assertions are being made by those, who have "little up to date working knowledge of trade relationships and agreements".

That's the rub. It's not only Paxman and Corbett who are ignorant, but most of the eurosceptic community, who are wedded to the idea of a "bonfire of regulations". In their ignorance, they are joined by almost all the euorphiles and all but a handful of politicians. The entire debate is polluted by such a staggering degree of ignorance that it is rendering the debate over the EU almost meaningless.

Paxman went to Brussels supposedly to find out "where the true power lies" but instead brought back a trivial little documentary. Twenty years ago, his film would have looked much the same as it did yesterday – but for a few minor updates.

That typifies what is happening. The warring parties are locked in the past, endlessly rehashing the issues from decades ago, while the world moves on without them. In terms of globalisation, there is a revolution going on out there – and not one of the pundits has noticed.

Meanwhile, as we give away our strongest card, the latest ComRes poll puts the "remains" on 52 percent, against "leave" at 41 percent - 11 points ahead.



Richard North 20/05/2016 link
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