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Michael Fallon portrait

Red Tape BritainMichael Fallon is the Minister for Business and Energy and MP for Sevenoaks.

British businesses benefit from being part of the world’s largest trading bloc. But the European Union needs urgent reform if it is to compete against faster growing economies. Too much of the single market remains incomplete including energy and services.  All too often the EU adopts a risk averse approach to innovative technologies and imposes stifling labour market regulation. As a result Europe is falling behind.

Politicians differ about how to respond to this challenge. Some believe we should accept the status quo as the only deal available. Others maintain that the EU is unable to reform so the UK would be better off out. David Cameron has rejected the defeatism of both approaches, and has set out a path for a reformed Europe.

The stakes could not be higher. Unless the EU focuses on promoting growth it won’t create the high value jobs that its people want.

That’s why last year the Prime Minister asked me to Chair his Business Task Force on EU Regulation. After endless Labour stakeholder groups it is easy to be cynical. But this one was different – led by serious businesspeople including Marc Bolland and Dale Murray, its remit was to shift the debate in Brussels to competitiveness. Its report made 30 specific recommendations on tackling barriers to growth.

In the few months since the report was published, 6 of the 30 recommendations have been delivered as part of broader developments which reflect growing recognition of Europe’s competitiveness challenge. Tomorrow the Competitiveness Council has the opportunity to promote this agenda further as it meets to debate the internal market and energy.

Energy is one of the biggest costs for business and a benchmark for companies looking to invest. The dramatic impact of shale gas on the US economy has exacerbated the competitiveness gap. Recognising the need for new energy sources the Commission last month rejected calls for a directive on shale that would have threatened investment and undermined the opportunity Europe has to benefit from the jobs and economic security Americans enjoy.

But is not just energy where Europe needs to up its game. The challenge from the US and Asia to be at the forefront of innovation in areas such as pharmaceuticals is immense. Earlier reforms had made the EU a less attractive place to conduct clinical research. Tackling this was identified as a priority by the Task Force and agreement has since been reached on a streamlined approach that is essential to remaining competitive.

Increasing trade is the EU’s raison d’être and as well as completing the single market it must open up new markets. The Task Force called for the completion of Free Trade Agreements and concluding negotiations with the US, Canada, Japan, and India could generate over £20bn of benefits for the UK alone. Initial agreement has been reached with Canada and good progress is being made on the other deals.

A stark illustration of the challenge we face is that a quarter of all young people in the EU are unemployed. They equate to the 17th largest member state. In the UK the creation of 1.5 million private sector jobs has been a crucial part of the improving economy but even here more action is needed. So it is welcome that rules on traineeships will now be left to employers and avoid unnecessarily constraining opportunities available to young people.

These successes came from building alliances. President Barroso and the leaders of Germany, Sweden, Italy, Poland, Finland, Estonia and the Netherlands met with the Task Force. Those countries, representing all parts of Europe and all political traditions, agree on the need to make more progress in cutting regulation. European business organisations have also united around the Task Force’s COMPETE principles for removing red tape.

It is not just the Commission and the Council that are getting the message. After tremendous work from Conservative MEP Sajjad Karim the European Parliament has just adopted a “Better Legislation” report. This calls for an annual statement of net costs to business of new proposals, regulatory offsetting, and more power to MPs to block damaging proposals.

Incredibly, some opposed this approach. UKIP’s lack of engagement has betrayed British interests before but to vote against the report is a disgraceful move. It is little surprise that Liberal Democrats who have never knowingly said no to more Europe opposed these measures.  At least they had a position – Labour sat on its hands rather than backing business.

A pro-growth approach at EU level is essential but we also need to stop gold-plating rules. Last year a review found that the government’s commitment to ending gold-plating had been met. Updated analysis shows that in 2013, there was only one instance out of 76 proposals to implement EU legislation where additional costs were imposed; the Consumer Minister argued it was justified to protect consumers over the use of premium rate help lines.

There has been much debate about our membership of the EU. I am focused on putting deregulation on the agenda in a way that it has not been before. The last few months’ successes suggest a growing appetite for change.  We must capitalise on this as part of our plan to negotiate a new relationship. It is only the Conservative Party that will then give the British people their say on our future in Europe in a referendum.

25 comments for: Michael Fallon MP: Turning the tanker – how we are fighting to reform the EU’s uncompetitive regulations

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