“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
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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.