Exposé of Daniel Hannan’s “Ten reasons to leave the EU”

Tory MEP Daniel Hannan, writing in yesterday’s Telegraph, has laid out what he claims are “Ten reasons to leave the EU”. LFF examines them point-by-point.

Tory MEP Daniel Hannan, writing in yesterday’s Telegraph, has laid out what he claims are “Ten reasons to leave the EU”. Left Foot Forward rebuts each of Mr Hannan’s points:

1. Since we joined the EEC in 1973, we have been in surplus with every continent in the world except Europe. Over those 27 years, we have run a trade deficit with the other member states that averages out at £30 million per day.

Trade is a two-way operation and Britain’s trade with other EU countries has risen from about a third of our trade when we first joined to nearly 60 per cent now, despite the huge increase in the purchasing power of China, India, and oil producing countries in that time. The fastest growth rates of UK exports in recent years have been to the new EU Member States. 3½ million UK jobs are dependent on the export of goods and services to the EU.

If we were out of the EU, there would have even less likelihood of selling UK manufactured products to other EU countries, so the figures would be worse.

2. In 2010 our gross contribution to the EU budget will be £14 billion. To put this figure in context, all the reductions announced by George Osborne at the Conservative Party Conference would, collectively, save £7 billion a year across the whole of government spending.

Hannan is guilty of sleight of hand here by talking about “gross contribution”. Once the rebate is taken into account, our net contribution is £3.3bn in 2009-10 (see UK Budget 2009, Table 9C, footnote) – about £1 per week per person. Some of this finances things like infrastructure development in the poorer EU countries, which British firms regularly win tenders for.

The EU budget is just over 1 per cent of EU-wide Gross National Income, and 1/40th of public spending in total EU-wide. The Department for Work and Pensions, for example, has an annual budget of more than £100 billionthat’s about the same as the entire EU budget, just from one UK government department.

3. On the European Commission’s own figures, the annual costs of EU regulation outweigh the advantages of the single market by €600 to €180 billion.

Hannan takes no account of where common EU rules actually cut costs for businesses. By having one set of rules for the common market of 27 countries and 450 million people, EU legislation reduces costs for businesses. For example, a firm can register a trademark once, valid throughout the EU, without having to go through 27 different sets of national rules, form-filling and fee paying. A lorry taking British exports to Italy used to need over 20 documents to present at frontiers. Thanks to EU legislation this is now down to one.

Another example, the Payment Services Directive, guarantees fair and open access to payments markets and increases consumer protection. Currently each Member State has its own rules on payments, and the annual cost of making payments through these fragmented systems is as much as 2-3 per cent of GDP. Payment service providers are effectively blocked from competing and offering their services throughout the EU. Removal of these barriers is estimated to save the EU economy €28 billion per year overall.

Indeed, a European Commission study in 2002 showed that EU GDP is around 2 per cent higher than it would be without the Single Market, equivalent to a benefit of £20bn for the UK economy (or about £1,000 per family every year). The single market gives all UK businesses access to a market of 450 million consumers. Perhaps this explains why, in a recent Ipsos Mori poll which interviewed 102 executives from Britain’s largest businesses, 78 of them replied that the single market had been helpful to UK business.

Hannan also misses the point because he assumes that all regulation is bad. Of course, some regulation imposes costs, and these should be removed if there is no justification. But most regulations have clear benefits such as saving money in the future, protecting workers for harm or loss of life, and protecting the environment. Many would also have been implemented at national level if they did not exist at EU level (though at greater costs if divergent national rules fragmented the single market).

Europeans need and want social protection. Things like maternity and paternity leave, right to paid holiday, those sorts of things. Abolishing all rules of the single market implies a total erosion of workers’ rights – for example, the costs to cigarette companies by making them label their products as dangerous are outweighed by the benefits to public health and long-term savings for the health service. Nutritional labelling protects consumers with allergies and informs consumers about the food they eat. The list goes on.

4. The Common Agricultural Policy costs every family £1200 a year in higher food bills.

If Hannan thinks that the alternative to the CAP is that Britain (almost alone in the industrialised world) would no longer subsidise its farmers, he is living in a dreamland; only one thing would be worse than the CAP – it is 27 national agricultural policies, each trying to out-subsidise the other. It makes much more sense to reform CAP by remaining in the EU and reforming it from within.

It should also be noted that the cost of CAP has steadily declined as a proportion of the EU budget from over 70 per cent two decades ago to around 35 percent now. It has switched from market intervention to direct payments to farmers similar to the old UK system.

5. Outside the Common Fisheries Policy, Britain could reassert control over its waters out to 200 miles or the median line, which would take in around 65 per cent of North Sea stocks.

Because fish stay within British territorial waters and never leave?! How exactly do you stop fish swimming from one country’s waters to another? Like it or not, the only way to conserve fish stocks and save what is left of our fish is through joint agreement. The North Sea is already terribly over-fished, and common rules are vital to ensure sustainability of fisheries.

The EU, it is true, does need to reform its fisheries policy, making sure less fish are thrown dead overboard – but fish themselves do not respect borders, hence the need for supranational decision making. And, as with the CAP, the more isolationist, the more extreme the Tories’ position, the less likely they are to influence it.

6. Successive British governments have refused to say what proportion of domestic laws come from Brussels, but a thorough analysis by the German Federal Justice Ministry showed that 84 per cent of the legislation in that country came from the EU.

This is plainly nonsense, both the claim that the Government “have refused to say” the proportion of laws that come from Brussels, and the figure he quotes. The House of Commons Library states that only 9.1 per cent of UK laws stem from the EU.

7. Outside the EU, Britain would be free to negotiate much more liberal trade agreements with third countries than is possible under the Common External Tariff.

But Britain will be in a much weaker bargaining position vis-a-vis other countries than when we bargain with the whole clout of the worlds largest market behind us. And what of the tariffs that would be imposed on UK trade with the EU were we to leave? The UK is a country of 60 million people that is reliant on imports. The EU is a market of almost 500 million people, and can negotiate in the World Trade Organisation at a similar level to the USA, China, India etc. Leaving the EU would decrease the UK’s power to negotiate internationally, not increase it.

8. The countries with the highest GDP per capita in Europe are Norway and Switzerland. Both export more, proportionately, to the EU, than Britain does.

Both Norway and Switzerland have to accept EU market legislation with no say in shaping it. Both contribute to the EU budget (more per capita net contributions than the UK!). Both are small countries with very special features: massive oil reserves for Norway and a unique banking sector for Switzerland.

These countries are also – to all intents and purposes – in the EU single market. Norway, for example, implements all legislation for the single market (labour rights included) as it is in the European Economic Area (EEA).

9. Outside the EU, Britain could be a deregulated, competitive, offshore haven.

So, offshore banking is our future! Does Mr Hannan seriously, seriously, still believe that?! And in these times of financial crisis as well.

10. Oh, and we’d be a democracy again.

So what are we now? Is Hannan questioning his own democratic legitimacy? The EU is, far and away, the most democratic of all the international structures we belong to. It has its own directly elected Parliament, Charter of Rights and Court. Compare that to the IMF, World Bank, NATO, OECD, WTO etc. It should also be borne in mind that the Treaty of Lisbon, opposed by Hannan, for the first time gives countries the right to leave the EU and improves its democracy.

Additional reporting from Jon Worth

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