“Battling for Britain”: What Cameron Achieved
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“Battling for Britain”: What Cameron Achieved
“Battling for Britain”: What Cameron Achieved EU leaders pictured at the European Council Summit on Thursday evening, before the UK’s deal was agreed. Source: European Commission Foreword Depending on your perspective and location in Europe, David Cameron last night concluded a set of tough negotiations in which the scheduled English Brunch became an All Day Breakfast as he pushed his fellow leaders to the limits of what they would accept without undermining the European project. Or he has capitulated, asking for very little and getting less. David Cameron demanded a referendum on Britain’s EU membership to achieve “fundamental, far-reaching” change in a “more flexible, more adaptable, more open” European Union. What he achieved last night is a commitment for more economic competitiveness; an opt-out for Britain from the commitment to “ever-closer union”; the right of national parliaments to halt EU legislation (if 15 out of the 28 member states agree); safeguards to ensure that the Eurozone cannot discriminate against member states which do not use the euro; and restrictions on some welfare payments to non-UK nationals. (Our grid at the end of this document provides a full overview of the deal and how the various elements will be enacted). What is often missing in the coverage of the debate is that each of these areas, as insignificant as they may sound, represent a real change to how the EU is structured and in some cases, its legal basis. In this context, his negotiation should be seen as a success. The UK has won safeguards that ensure the Bank of England will have some flexibility to adapt prudential regulation to the UK market rather than be forced to implement legislation uniformly. This is significant given the growing fear among UK regulators that with the emergence of the Banking Union (which the UK is not planning to join), legislation will be increasingly rigid to allow the supervisory arm of the Banking Union to work properly. Secondly, the UK also won additional changes that allow any Member State to raise objections at European Council level on issues relating to the non-discrimination of non-Eurozone countries under the Banking Union. These are an important safeguard for UK regulators and the City of London. Ahead of the Summit Cameron stated that he would “…do a deal, but I will not take a deal that doesn’t meet what we need”. Cameron’s negotiation strategy from the start was based on what he could get. This bottom line approach meant that despite getting changes in the areas he requested, the reforms were never going to be far reaching enough to win over eurosceptics. Cameron’s critics have a point that this deal does not fundamentally alter how the EU works or the UK’s relationship with it. But this was never on the table. With the exception of new rules on the status of non-Eurozone countries, which matter a lot to the Bank of England, this deal is mostly about clarifying the UK’s status within the EU and confirming that it is not bound to a political project. What Cameron needed last night was definitive closure on the negotiations and a firm declaration to “let the campaigning begin”. This he has achieved. Cameron has laboured for the renegotiation package to be “binding and irreversible” but legislation is required to activate certain elements of the package. This means the European Parliament has co-decision power on the measures to establish the emergency brake that can be used to limit welfare payments. Martin Schulz MEP, President of the European Parliament, has said that the Parliament will aim to respect what has been agreed by Council and reach a deal quickly. But this is questionable. The Parliament will review the proposal after the UK has voted to stay in the EU. A typical co-decision proposal can take up to 18 months to pass through the scrutiny phase. Even if this issue is given the highest political attention, it is likely to take around 12 months for an agreement to be reached. But such details will not be of interest to the majority of UK voters. That is why it is not the content of last night’s negotiation that will be decisive for David Cameron but rather how he sells the broader case for European Union membership to voters, something that he has been shy to do in the past. Many commentators have argued that this referendum will be fought on risk. What the last general election result reinforced is that the UK electorate is risk adverse. Living with a steady, stable government that protects and even increases the cash in consumers’ pockets is fundamental to voting strategy. Protecting what is in those pockets will guide voting intentions far more than the EU reforms that have been negotiated. When campaigns are fought on risk, the quality of the personalities (political or otherwise) leading them is vital. This will be particularly true for the “Leave” campaign who have no shortage of noisy advocates backing Brexit but very few recognisable and high-profile figures who voters trust to protect their wallets. This is why decisions taken by Michael Gove, who is set to join the “Leave” campaign, and London Mayor Boris Johnson will be so crucial. Helena Walsh Executive Director Cicero Group In assessing the deal struck in Brussels by David Cameron from a UK political perspective, there is one simple question to be posed: does this deal substantially alter the dynamics of the referendum campaign which will now ensue in the weeks and months ahead? Let’s look at the key actors in turn. For David Cameron, George Osborne and, it seems, the majority of the Cabinet, the conclusion of the deal confirms what has already now been apparent for some time – that they will campaign to stay in a reformed EU. The PM will argue that his renegotiation has yielded concessions which meet the four key aims set out in his letter to Donald Tusk back in November, equating to a relationship with Europe which is sufficiently new and improved to warrant a vote to Remain. For the handful of expected Cabinet rebels it is unlikely that there will be enough here to persuade them that they would be better off toeing the line. While the likes of Iain Duncan Smith and Chris Grayling have largely adhered to the collective position for the duration of the renegotiation period, it is difficult to imagine that this deal will cure them of their longstanding euroscepticism. Needless to say, the same is true of those on the Conservative backbenches who are most ardent in their desire for Britain to leave. There was no deal which Cameron could have secured which would have satisfied Bill Cash and co, and this of course also applies to Nigel Farage and UKIP. On the Remain side, the Labour position has been clear for some time that their support for Britain’s continued membership of the EU was not conditional on the outcome of Cameron’s renegotiation, while the Liberal Democrats and SNP are also unconditionally backing a vote to remain. So, at least in terms of the main political players in the campaign, it is difficult to see that the outcome of the renegotiation represents any kind of game-changer. What about the general public then? Will Cameron’s “battling for Britain” rhetoric and the subsequent reports of all night talks, meals postponed and finally a dramatic 11th hour agreement persuade the electorate that the PM has emerged triumphant? Or are they in fact blissfully unaware that there has even been such a thing as a renegotiation taking place? For many – though of course not all – the latter will undoubtedly be closer to the truth. There is polling evidence which suggests that as many as four in ten voters did not know about the renegotiation. If much of the country did not know that the renegotiation was taking place, it stands to reason that they will similarly not be paying too close attention to the outcome of said renegotiation. And for those who are closely following the outcome, the likelihood is that, like their elected representatives, many will already have a pretty clear idea of how they will vote. So has this entire process been redundant? I wouldn’t go that far. Having embarked on a journey with his Bloomberg speech in 2013, the onus was on David Cameron to be seen to be driving a hard bargain with Brussels. If, as most assume, his plan all along has been to ultimately secure Britain’s place in the EU then it would have been remiss not to undertake a process which would demonstrate that he was not merely defending the status quo. The Better Together side in the referendum on Scottish independence came perilously close to realising too late in the day that arguing merely for the status quo is a dangerous game, and the renegotiation process has had the benefit of enabling Cameron to argue from the outset of the EU referendum campaign that he has already changed Britain’s relationship with Brussels for the better. The exemption from ‘ever closer union’ and seven year emergency brake on migrant access to in-work benefits are central to this argument and have enabled the PM and his supporters to talk of new ‘special status’ for the UK in the EU. For undecided but engaged voters, this could be an important factor in helping them to give the PM the benefit of the doubt. It would not be the first time they have done so, as Ed Miliband knows all too well. Like then, Cameron is more popular with voters than his opponents. His reputation as a ‘safe pair of hands’ may help him win over those wary of significant change and any risk to the economy; a vote to leave would be a ‘leap in the dark’ according to the Stronger In campaign. His passionate display in the post-summit press conference when he declared “I do not love Brussels, I love Britain” again demonstrated what an effective performer the PM can be on the big occasions. For the ‘outers’ they will look to frame the deal Cameron has secured as falling well short of the fundamental reform and repatriation that was required and, indeed, the process of painting it as such began long before this summit even took place. But for now, David Cameron has cleared the hurdle of securing a deal which will give him a platform on which to build his campaign. He will be relieved that it has been enough to keep most of his Cabinet on board, and while the PM has expressed disappointment that his close friend Michael Gove will be on the opposing side, that is likely to be tempered by the support he has received from Home Secretary Theresa May, who had been the most senior Cabinet Minister still on the fence. Following the first Saturday meeting of the Cabinet since the Falklands War, David Cameron confirmed the widely expected date of the referendum as Thursday 23 June. Now for the campaign that really matters. Simon Fitzpatrick Senior Account Manager Cicero Group Please see the next page for more information on the changes agreed and how they will be implemented. EU Renegotiation Deal – Council Conclusions 19 February 2016 Agreements achieved How will it be enacted? Annex One, Section A, Economic Governance Council decision to be deposited with the UN as an international agreement and inserted into the Treaties at the time of their next revision. Recognition of multi-currency Union Paragraph 1, Decision of the Heads of State In the interim, these Council decisions enter into force as an international agreement on the same day the UK Government informs the Council of its intention to remain in the EU. Prohibition of discrimination between Eurozone-ins and -outs. Legal acts regarding the functioning of the Eurozone must respect the Single Market and respect the competences of Eurozone-outs. Likewise, Eurozone-outs will not impede the Eurozone’s functioning – including closer integration. Flexible prudential rules for Eurozone-outs Paragraph 2, Decision of the Heads of State Council decision to be deposited with the UN as an international agreement and inserted into the Treaties at the time of their next revision. Acknowledgement that Member States outside of the Eurozone could be afforded more flexibility in implementing prudential requirements than those within it. Member States outside of the Banking Union also retain ultimate responsibility for the implementation of supervisory or resolution rules. Secondary law may then be adapted in the future, for example on future legislation affecting prudential or resolution requirements Clarifying budgetary responsibility for financial stability measures Council decision to be deposited with the UN as an international agreement and inserted into the Treaties at the time of their next revision. Paragraph 3, Decision of the Heads of State Eurozone-outs will not have budgetary responsibility for emergency financial stability measures – i.e. bailouts – in Eurozone Member States, while Eurozone-outs hold sole responsibility for any such measures themselves. Additionally, where the EU’s general budget is utilised in financial stability emergency or crisis measures within the Eurozone, Eurozone-outs will be reimbursed by “appropriate mechanisms to… be established”. In the interim, these Council decisions enter into force as an international agreement on the same day the UK Government informs the Council of its intention to remain in the EU. Ensuring Eurozone-out participation in Eurogroup Paragraph 5, Decision of the Heads of State Council decision to be deposited with the UN as an international agreement and inserted into the Treaties at the time of their next revision. Explicit assurance that Eurozone-outs can participate in the deliberations, albeit without a vote, of the Eurogroup. In the interim, these Council decisions enter into force as an international agreement on the same day the UK Government informs the Council of its intention to remain in the EU. Concern-raising powers for Eurozone-outs (‘emergency brake’) Council decision to be deposited with the UN as an international agreement and inserted into the Treaties at the time of their next revision. Paragraph 6 (new) Decision of the Heads of State Any Member State may raise opposition to an issue that could discriminate against non-eurozone members. The Council will discuss the issue and seek to reach a solution. Section B - Competitiveness Decision of the Heads of State Agreement that the relevant EU institutions and Member States will take concrete steps towards better regulation – lowering administrative burdens, compliance costs on economic operators (incl. SMEs) and repealing unnecessary legislation. Annex IV Declaration of the Commission on a subsidiarity implementation mechanism and burden reduction mechanism The Commission will develop a mechanism to review EU legislation for compliance with subsidiarity and proportionality rules. The Parliament, Council and national Parliaments will feed into a priority list for review, and the Commission will report on progress annually to the Council and European Parliament. The Commission will propose a work programme in 2016. Through the Better Regulation initiative’s ongoing Regulatory Fitness & Performance Programme (REFIT), the Commission will establish specific regulatory burden reduction targets at EU and national level – with a specific focus on targeting SMEs’ burdens. This will include an Annual Burden Survey. The Commission will report to the Council annually on progress towards these targets. Confirms commitment to trade strategy of “Trade for All: Towards a more responsible trade and investment policy”. In the interim, these Council decisions enter into force as an international agreement on the same day the UK Government informs the Council of its intention to remain in the EU. Commission action as part of ongoing Better Regulation initiative. Commission action as part of ongoing REFIT platform work. Section C – Sovereignty ‘Ever closer union’ clarity Paragraph 1, Decision of the Heads of State Council decision to be deposited with the UN as an international agreement – entering into force the same day the UK Government informs the Council of its intention to remain in the EU. These clarifications will then be inserted into the Treaties at the time of their next revision. Clarity that the Treaties’ reference to creating an ever closer union among the peoples of Europe does not refer to Union objectives of political integration. Additionally, it is clarified that the reference does not offer a basis for extending the scope of the Treaties or EU legislation – meaning the reference cannot be used by future court decisions. ‘Red card’ system Paragraphs 2-3, Decision of the Heads of State Introduction of a ‘red card’ system allowing groups of national parliaments to collectively object to draft legislative acts. The mechanism would require 55% of national parliaments to submit to the Council objections to how the draft legislation fails to comply with subsidiarity rules within 12 weeks of the draft’s publication. The Council would then be required to discuss the concerns and, failing to amend the draft legislation to accommodate the concerns, halt the act. Council decision to be deposited with the UN as an international agreement – entering into force the same day the UK Government informs the Council of its intention to remain in the EU. Schengen and Freedom, Security and Justice (Protocol No 20/21) Paragraphs 4-5, Decision of the Heads of State Explicitly recognises the UK is not bound by Protocol No. 20 and has an opt-out in its participation in the Schengen areas as regards internal and external borders. It also have the right to choose whether or not to participate in measure in the freedom, security and justice (Protocol 21). Section D - Social Benefits and Free Movement Limit access to in-work benefits for EU migrants Paragraph 2 (b), Section D, Decision of the Heads of State and Commission declaration on the Safeguard Mechanism Through a combination of clarity around the interpretation of existing EU rules and changes to EU legislation, recent EU migrants can be restricted from accessing in-work benefits for four years. This will last for seven years. The exclusion could be enacted by a Member State notifying the Amendment to Regulation (EC) No 492/2011 on freedom of movement for workers within the Union is required to insert an alert and safeguard mechanism to respond to a marked increase in migration. The Council declaration itself – to be deposited with the UN as an international agreement – clarifies related restrictions to freedom of movement available to Member States, including the ability to restrict freedom of movement based on overriding public interest. Commission and Council that freedom of movement threatens a public interest, such as the sustainable provision of social security systems. The actual exclusion would then be enacted by the Council through an implementing act, after the Commission examines the notification and proposes the exclusion to the Council. Despite the headline four year limit however, the exclusion is gradually reduced over the four year period to reflect the increased integration into the labour market of the migrant. Restrictions on EU migrant access to child benefits Paragraph 2(a), Section D, Decision of the Heads of State Amendment to Regulation 883/2004 on the coordination of social security systems by the codecision process. Ability to index child benefit payments to match the standard of living of the Member State in which the child resides. Initially this will only apply to new arrivals but from 1 January 2020, may apply to all workers. Restrictions on freedom of movement rights of third national spouses The Commission will adopt a co-decision proposal to complement Directive 2004/38 on freedom Paragraph 1(c), Section D, Decision of the Heads of State and Commission declaration on the abuse of movement. of the right of free movement of persons The Council declaration itself – to be deposited with the UN as an international agreement – clarifies available Member State actions against marriages of convenience. Clarity on the interpretation of current EU rules to allow Member States to take action against nationals from third countries regularising unlawful stay through marriages of convenience with EU nationals. Additionally, a legislative complement to Directive 2004/38 on free movement will be proposed to restrict freedom of movement rights for the spouses of EU citizens. Clarity on ability to address public threats Council decision to be deposited with the UN as an international agreement – entering into force Paragraph 1(c), Section D, Decision of the Heads of State and Commission declaration on the abuse the same day the UK Government informs the Council of its intention to remain in the EU. of the right of free movement of persons Any future revision of Directive 2004/38 on the freedom of movement must include a reexamination of thresholds for definitions related to these clarifications. Clarity on the interpretation of current EU rules to allow Member States to take preventative action against public policy or security threat posed by individuals. Member States are additionally able to take into account past conduct of the individual, even in the absence of a previous criminal conviction. The Commission additionally commits to re-examine the thresholds for defining “serious grounds of public policy or public security” and “imperative grounds of public security” in future revisions of the Directive 2004/38 on freedom of movement.