EU Referendum Issues

Though I have always opposed holding an in-out EU referendum (for reasons well expressed by Tony Blair during the recent election campaign), UK voters have now decreed that we will have one. More than 50% of voters supported the Tories and UKIP together, so there was a definite majority in favour of the Tories’ promised referendum.  I do not like it, but we are going to have it anyway.

We now move on to the ‘detail’ of David Cameron’s promised re-negotiation of the UK’s relationship with the UK, plus the referendum question itself and the composition of the electorate.

The re-negotiation – It is still not possible to comment in detail on what Cameron will ask for, as he has not yet laid out his specific demands.  However, it is fairly clear his demands will include:

  • (i) the right to withhold social benefits (including tax credits) from EU nationals for four years after their arrival in the UK;
  • (ii) a reduction in ‘regulation’ emanating from the EU;
  • (iii) the ability of national Parliaments to block EU legislation;
  • (iv) an end to the ‘ever closer union’ language in the EU Treaties.

I expect he will make significant progress on (i), (ii) and (iv).  However, (iii) is likely to be problematic, as if national Parliaments acquire the right to block EU legislation, would they not use it mainly to block trade liberalisation measures that would otherwise be implemented by majority voting?  As for (i), (ii), and (iii), even if Cameron succeeds in persuading the UK’s EU partners to make significant concessions, they are very unlikely to satisfy the demands of Eurosceptic Tory MPs.  There will definitely be a problem over tax credits, as they are not strictly social security payments and are therefore not within the discretion of national governments to withhold from intra-EU migrants. Perhaps a quid pro quo for securing agreement on this point would be an agreement that UK nationals working in other EU countries would no longer benefit from the more generous tax exemptions given by countries like Germany and France to married couples?

As for securing a reduction in the EU regulatory burden, there is enormous scope for dissatisfaction with whatever deal Cameron manages to secure.  Eurosceptic MPs who give press interviews on this subject invariably refuse to elaborate on exactly what EU regulations they find particularly burdensome.  I suspect they are referring to employment protection and health and safety measures in particular, but they will not let us know that until after they persuade the UK electorate to vote for ‘Out’.  The dilution of unfair dismissal, redundancy and discrimination rights that follows will no doubt come as a surprise to some of those who voted ‘Out’.

I am confident that Cameron will ultimately secure a deal that will enable him to recommend that the UK should vote to stay in the EU when the referendum does come along.  A fair number of Eurosceptic MPs will disagree, and some UK voters are likely to be dismayed by wounding remarks made by politicians in other EU countries during the course of the negotiations, but I am sure some kind of deal with be negotiated.

The Referendum Question – I am not over concerned about the exact question that is put to the electorate.  However, I do regard it as most important that the ‘In’ answer is ‘Yes’.  The Scottish referendum campaign was bedevilled by the apparent negativity of those who sought to persuade the Scottish to vote to stay in the union.  They were not helped by the fact that they were campaigning for for a ‘No’ vote.

The Electorate – According to reports on the likely contents of this week’s Queen’s Speech to Parliament, the Tories will propose that EU nationals resident in the UK, and young people aged 16 and 17, should not be able to vote in the EU referendum.  I would have preferred that EU residents should be able to vote, but I do not strenuously object to excluding them.  If they were allowed to vote and the result was a narrow ‘Yes’ to stay in the EU, Tory Eurosceptics and UKIP would immediately demand a second referendum in which they would be excluded from voting.  As for the 16 and 17 year olds, I do hope that the opposition parties will unite in seeking to amend the referendum legislation, so that they will be allowed to vote.  Young people have a huge interest in whether or not the UK remains in the UK.  If anything, older voters over the age of 65/70/75 (take your pick) should be excluded from voting, as they will have minimal interest in the outcome.  In fact, if the UK does vote to leave the EU, many older voters will have passed on before the exit negotiations are completed.  The consequences of their votes will then be visited on their children and grandchildren.

It appears that UK nationals who have resided abroad for not more than 15 years at the time of the referendum will also be able to vote in the referendum.  This will exclude around a million people who have been abroad for more than 15 years.  This is unfortunate, but such individuals have lived outside the country for a very long time, so I can see the rationale in excluding them.

The ‘In’ and ‘Out’ Campaigns – We are likely to experience an ongoing referendum campaign from now until the referendum actually takes place, and I will comment on this further as it goes on.  Owen Paterson, a Tory MP, has made an initial sally in favour of an ‘Out’ vote which deserves brief comment, however. He has said that Brexit would have no effect on our living standards, because the UK would continue to benefit from free trade with EU countries because of its membership of the EEA, similar to Norway and Switzerland.  He failed to mention however that Norway and Switzerland both also have freedom of movement with EU countries, whereas a key argument of those who support the ‘Out’ campaign is that the UK must be able to block EU migrants from working in the UK. I think it unlikely that the EU would agree to the UK having the same trading rights as Norway and Switzerland if it is not prepared to retain freedom of movement.  It is far more likely that the EU would insist on a Turkish solution for the UK, which would involve free trade in goods without freedom of movement.  I do not know where this would leave us in terms of trade in financial and other services, but prospects for freer trade in these areas are likely to be seriously compromised.

Michael Ingle

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Categories: EU, Politics, Tax

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