Simon Richards is Chief Executive of The Freedom Association.
When you go to work (or to watch the Test Match while at work) do you take clothing to suit every climate from Arctic to tropical? Even allowing for the vagaries of the British climate, I suspect that you have more sense than to burden yourself with unnecessary clothing. When you go to sunny Bognor for a day at the beach, do you submit yourself to a full set of anti-malarial injections beforehand? Of course not – yet thousands of small and medium-sized British businesses are burdened by EU regulations that are just as unnecessary, and just as inappropriate.
The vast majority of British businesses are small: over 88 per cent of them employ under ten people. They represent the main engine of growth and employment in the economy. They need to be released from the costly shackles of EU legislation, which they cannot hope to change. Most of this legislation is designed to suit big multi-national companies, and to suit a Franco-German, continental model, not a British one. For example, in the art and antiques world, in which Britain is a world leader, the French droit de suite, embodied in Directive 2001/84/EC, threatens the competitiveness of our auctioneers. It’s so easy for people to send their works of art to New York, if they have to pay less commission there.
Most British companies do not export at all, yet they are burdened with regulations designed for exporters. In 2013, the Office of National Statistics (ONS) found that, of 1,979,600 businesses in the UK, just 223,000 export at all. That leaves 1,756,600 businesses (89 per cent of the total) that never export, but are still subject to often draconian EU Single Market legislation. Of course, not all of those 223,000 exporting companies export to the EU; that figure is much lower still. Matthew Elliott and Oliver Lewis found that no more than 4.27 per cent of UK businesses export to the EU. Where’s the sense in 100 per cent of British businesses being subjected to EU Single Market regulations that need only apply to 5 per cent of them?
You need only look at a map of Europe to see why so much of Germany’s business is conducted with its neighbours. If you’re a German businessman in Aachen, it is only natural that you will send a lot of your products a few miles across the border to Maastricht in the Netherlands, because it’s about the same distance as from Birmingham to Wolverhampton. What suits Germany suits Britain no better than it suits Greece. British business needs British rules, made in Britain, for British conditions: made to suit Brum, not Brussels.
Freed from unnecessary EU regulations, British business would enjoy a huge competitive advantage over its rivals in the EU; no wonder they want us to stay in. That is not the only way that British business would benefit outside the EU. It would be able to enjoy preferential tax rates. As Mark Wallace has outlined, the scale of financial savings that Britain would enjoy as a result of leaving the EU would enable the government to cut tax rates, making the country a much more profitable and business-friendly place for investors, with a boost to employment that will make even the ‘Living Wage’ appear less of a burden.
It’s not just the vast majority of small businesses around the UK that will benefit from the removal of a whole layer of regulation over which they have no influence. The City of London, too, will benefit from the removal of the hostile legislation that the EU has been imposing on it since the 2008 financial crisis. For example, the Solvency II directive, coming in to force in January 2016, will greatly increase costs and regulation in the insurance sector.
With under 10 per cent of the votes in the European Parliament, there is little that British MEPs can do to stem the tide of damaging legislation. Outside the EU, the City of London would have a much better chance of influencing legislation affecting it – even in the event of a Labour government. Most EU countries regard the City either as the fount of all capitalist wickedness, or as a golden goose to be sacrificed in order to benefit their own, less successful financial centres. There’s a limit to the number of exemptions Britain can secure, and, in any case, who in his right mind would want to pay through the nose to remain in an organisation where the main benefit consists of not being subject to some of its rules? Can a great financial centre like the City of London thrive outside the EU? Switzerland’s success suggests that it will. The scaremongers predicted doom for Britain’s financial sector if the UK failed to join the Eurozone. They were wrong then; why should they be believed now?
In a fiercely competitive world, Britain cannot afford to be hampered by unnecessarily high energy costs. With EU energy directives costing British business over £80 billion, it’s hard to believe that significant savings couldn’t be made in this area, without abandoning a responsible approach to conserving energy. EU Directive 2001/80/EC has already forced nine British power stations to close down. How many more jobs will be lost in this sector if Britain remains in the EU?
Quite apart from the huge costs it imposes, there’s a more important reason why Britain would be so much better off out of the EU. Napoleon famously described the country that defeated him as a nation of shopkeepers. Even then, he saw the British aptitude for commerce, founded on a less statist approach than the French advocated. Set free from the failing EU, there is no reason that Britain cannot enter a new golden age of prosperity. If, as a people, we do not believe that, then we shall be doomed to go down with a declining EU. There is a glorious future for British enterprise, if it will just have the courage to grasp it.