Europe — An Academic Approach

Having done an endless amount of research about the EU, I felt it would be unjust if I did not then share the results of my research. Particularly because the debate and public opinion is going in increasingly confusing and worrying directions. My biggest concern is that many of the people voting leave are not actually aware of what they will get if they vote leave. Therefore I will spend the remainder of this blog post explaining why I feel this way. I should say that much of the opinion expressed here is from academics and not my own.

I thought it would be good for me to start with the most pressing issue, immigration. For everyone concerned about immigration, it may be worth looking into history. Immigration is an issue that politicians have touted for years! For years they have predicted floods of immigrants and for years they have unloaded our failings (and theirs) onto them but we have still not seen this apocalypse. Jonathan Portes, a former chief economist at the Cabinet Office, shows that a reduction in migration would jeopardise the government’s hopes of reaching its fiscal targets. Therefore, taxes would have to be raised to compensate for that loss of positive impact of public finances. If migration were to reduce by 50%, the tax rate on labour income would have to rise by 2% to preserve the budget balance. In addition, some of the low-skill sectors would have severe recruitment difficulties, as these are jobs that are unattractive to UK workers. In order to make up for this, some agencies may even resort to illegal workers.

HMRC figures from the last four years show that EU migrants contribute £2.54bn more in income tax and national insurance than they received in tax credits or child benefits. The Office of Budget Responsibility conclude that their labour contribution is helping to grow the economy by 0.6% per year.

It’s also important to remember that the jobs market is not a zero-sum game in which there are only a fixed number of jobs (as, again, Portes points out). While it is true that if an immigrant takes a job, a British worker can’t take that job, that does not mean that he/she won’t find another job that has been created directly or indirectly as a result of immigration.

Furthermore, a number of studies have shown that the negative effect of migration on the wages of low-skilled workers is less than 1% over the last eight years. Therefore, far from being an evil to our economy, immigration is at worst, neutral, and, at best, a benefit.

Some may go on to argue that unchecked immigration means that criminals can legally enter the UK. That, again, is false. Britain is in the EU but not part of the Schengen area which means that it can carry out checks on everyone entering the UK and turn away criminals (6000 EU nationals have been turned away since 2010). In fact, membership of the EU has only made us more secure as Britain has access to the Schengen II database which has details of 250,000 wanted or missing suspects across Europe. It is unlikely that the EU would be keen to take the additional effort of sharing this information with the UK if they are not in the EU.

In addition, Brexit would mean no access to the European arrest warrant. Due to this 5000 people have been speedily extradited from Britain to Europe in the last five years. Before the arrest warrant, it took ten years to extradite Rachid Ramda (part of the Paris Metro bombing) from Britain to France for example. In contrast, in 2005, it took 56 days to extradite Hussain Osman (failed 21/7 London tube bomber) from Italy to London.

The next big issue for the leavers is economy and trade. They argue that to avoid the disadvantages of leaving the single market, we could get a similar deal to Norway and Switzerland with the EU. However, while that will give us access to some of the free market, that would still mean that we have to abide by EU immigration laws (which leavers are against), in fact, both Norway and Switzerland have higher immigration than the UK. So we can’t have access to the free market and complete control over our borders. On the other hand, by remaining in the EU, the British government gets a say in deciding how and when the free movement can be extended to new member states.

Furthermore, by keeping access to the free trade agreement after leaving the EU, the UK will be bound by all legislation in the field of the single market but won’t actually have a say in it. The UK will still have to comply by EU rules for any goods or services traded there and so there would not be a reduction in red tape either (it should be pointed out that many agree that much of the red tape plaguing small businesses comes from the UK). What will change is that there will be an increase on the price of products that we export to the EU as we would be charged import duties on goods (like with any country that is a member of the trading bloc), on top of VAT. Currently the EU covers this through our subscription.

Another problem with the Norway solution is that they are members of European Free Trade Association which has only 25 free trade agreements unlike the countries in the European Economic Area (which Britain is currently a member of) which have 50 free trade agreements.

Alternatively, the UK could try the Canada route which would mean free movement of goods between the UK and EU. However, that deal took five years to agree on and the UK does not have the same bargaining power since it sells 50% of its goods to the EU while the EU sells 6% of its goods to the UK.

Therefore, business in the UK does not stand to benefit from Brexit. In fact, many EU regulations that help British businesses would be scrapped. For example, making calls in Europe will be a huge expense as roaming charges would be scrapped. While some might argue that some EU regulations are costly to British business, that is very short sighted. The 100 most expensive EU rules cost UK companies and the public sector £33.3bn a year. The quantifiable benefits from these rules are worth about £56.8bn a year, which amounts to a net gain of £487m a week (this doesn’t factor in the benefits from the boost to trade due to the single market and benefits to citizens).

Besides businesses, workers stand to lose out if Britain were to leave the EU. UK workers enjoy limits on their working week, rights to time off, minimum paid holiday rights, health & safety protection at work, parental leave, and maternity rights. All of this, is thanks to the EU in part. In fact, the TUC fears that Brexit could usher in more exploitative employment such as that in the US where workers can be fired with relative ease (and only have two weeks leave a year and six to seven day working weeks).

On the topic of tax, one certainty of Brexit is that the UK government will be free to decide how it wants to pursue tax avoidance. Currently Britain has complete sovereignty to limit tax avoidance, and that will not change after Brexit. What will change is the mood for clamping down on tax avoidance. After Brexit, the British financial industry will have more difficulties selling financial services, and therefore, one business model Britain may adopt to attract international capital is to become more of a tax haven. Given that the British government will be free from pressure from Europe, it is much more likely to concede to bankers’ demands to move down this road. Recently the EU has been pressuring its member states to tackle tax evasion, in addition, they recently announced proposals to force multinational companies to declare how much tax they pay in each EU member state alongside their tax affairs in tax havens. It also proposed a tightening on anti-tax avoidance legislation. Therefore the EU has been very active in getting its member states to shut down tax havens. The UK, on the other hand, has opposed these moves.

What about the £350m a week that the UK is giving to Brussels? Well, that figure (made up by Boris Johnson), is completely false. It doesn’t take Britain’s rebate into account which is close to £100m a week, secondly, roughly half of what Britain pays comes back in EU spending in the UK. A more accurate figure is between £136m — £160m a week which is still 40% less than the amount that was spent on the battlebus by the Brexit campaign (however, that doesn’t take into account the economic and financial benefits from being in a single market)

In addition, it is misleading to claim that savings from membership fees could be spent on the NHS as unless the future government decided to stop spending on British farmers, scientific research, and the country’s poorer regions, that would not be the case.

What about education? The EU actually fund our arts, without which, arts would become a luxury only the elites can enjoy (as in the past). Arts are usually the first to be hit by cuts during austerity drives and therefore, if it weren’t for EU support, some of our cultural heritage (that the Brexit campaigners so vehemently claim to defend) may be lost.

Furthermore, 18% of EU funding sent to the UK is for scientific research, the UK is a net beneficiary in science. The European Investment Bank has added £4bn to Britain’s education sector in the last ten years. Students also benefit from the EU-funded Erasmus exchange scheme in which around 10,000 British students study at EU universities each year (with a similar number coming here).

The EU even helps in fighting poverty. The European Regional Development Fund (ERDF) and Social Fund (ESF) invests in the poorer regions of each country (something, which, if left to the current Tory government, would not occur). In addition, ERDF and ESF spend on sustainable transport, next-generation broadband, and training and employment programmes. A few examples of beneficiaries are Birmingham’s International Convention Centre and Symphony Hall, its Thinktank museum, the National Graphene Institute, council houses, City University, Swansea’s National Waterfront Museum and University campus, Aberdare, PontyPridd, Ebbw Vale, Isles of Scilly, Liverpool, and Cornwall, to name but a few. To provide a tangible example, the EU helped create and fund (£175m) an emergency job-finding taskforce for the 6,000 staff made redundant when MG Rover collapsed in 2005, and, this year, gave £33m to help 16,000 young Birmingham residents into work.

The final topic I’d like to address before taking a slight tangent is that of the EU’s alleged lack of democracy. When people call the EU undemocratic, they’re actually referring to the European Council/Commission. This consists of 28 commissioners (one from each country) appointed by the governments of each country who are democratically elected in that country (thereby giving the people a voice on who gets this role). Nonetheless, it cannot pass laws, only propose them. It also monitors and enforces EU laws that are passed by the parliament (which is directly elected by the people).

What about EU laws that have been forced on the UK? Between 2009–2015, the UK was on the winning side 87% of the time. That does not necessarily mean that the remaining 13% of the time was bad news as one example of a law we lost on was when George Osborne was defeated in his attempt to overturn an EU law to restrict bankers bonuses. It would seem to me that it would be more democratic to be a part of the EU and have a say in these laws, rather than not be but still be forced to abide by them (if we arrange for a free trade agreement)

The final topic I’d like to address is the leave campaign itself. The leave campaign is fronted by Boris Johnson. While many see him as a visionary and dissimilar to other politicians, I want to stress, he is nothing more than a charlatan. No one who has observed him believes he is telling the truth about the EU. Boris Johnson was a strong supporter of the EU, in March last year he was all too happy to announce £560m of new ERDF and ESF funding to help create jobs. In his biography of Winston Churchill two years ago, he said the European Union, together with Nato, “has helped to deliver a period of peace and prosperity for its people as long as any since the days of the Antonine emperors”. As late as February, Johnson said that leaving would embroil “the government for several years in a fiddly process of negotiating new arrangements, so diverting energy from the real problems of this country”.

However, when he saw an opportunity for the leadership spot in the Conservative government, his opinion changed sharply. He was all too happy to stab his close friend and leader in the back for his personal gain. This is not a man who has the best interests of the country in mind, rather, this is a man only concerned about his self-advancement. Therefore to follow him would be a grave mistake.

This is not the first time he has done this, when in Oxford, he lost in becoming president of the Oxford Union as a Tory, but in his second attempt, he won. He managed this by pretending he opposed the policies he previously endorsed. When working in the Telegraph, he exhibited the worst qualities of a journalist by producing stories (none of which could be verified) that supported his readers’ prejudices rather than challenge them. The Times didn’t take this when he worked for them and he was sacked from there for making up quotes.

Any honourable man would be mortified by Johnson’s performance at the Treasury select committee in late March. He didn’t even possess the basic ability to memorise a cover up story. Andrew Tyrie, the committee chair, accused him of “exaggerating to the point of misrepresentation”. Originally he said he wanted two referendums, after a few days, he dropped that. Then he said Britain should have the same relationship with the EU that Canada does. Later, he said he didn’t want to imitate the Canadian deal either. This does not strike me as someone convinced of his opinion. The point I’m getting at is, that if even the leave campaign’s most adamant supporters don’t believe in it, then why should we?

Boris Johnson is usually afforded the grace of being rather harmless. However, people would do well to remember that while on a trip to the Kenyan-Ugandan border, Johnson remarked to his Swedish Unicef hosts and their black driver in reference to African men: “Come on, let’s get out and see some piccaninnies”. He also once described them as having “watermelon smiles”. In 2002, he said of Africa: “ The problem is not that we were once in charge, but that we are not in charge any more”. This does not strike me a harmless person. This is the person that could be in charge if we leave the EU.

There are many more benefits from remaining in the EU that I have not touched (due to space), one being the travel benefits (no need for a visa). I would encourage you to think logically though, as one comedian observed, the leave camp is saying that if we keep things the same, we will mess things up. The remain camp is saying that if we mess things up, we will mess things up. Which sounds more plausible? I conclude with a rewording of the famous tweet, if Johnson, Trump, Farage, Le Penn, and Putin are for leave, what will you choose?