The Government’s EU referendum leaflet
The government has sent out a pamphlet to every household in the UK setting out why it believes that voting to remain in the EU is the best decision for the UK.
There is an accompanying website at www.eureferendum.gov.uk, and a nationwide marketing campaign has been launched.
In pursuit of a fair and balanced debate, we’ve taken a look at the facts presented and have sought to put them in context, and add detail where we feel it would be useful to the reader.
“Why the government believes that voting to remain in the European Union is the best decision for the UK
On Thursday, 23 June there will be a referendum. It’s your opportunity to decide if the UK remains in the European Union (EU). It’s a big decision. One that will affect you, your family and your children for decades to come.”
Both sides of the debate will choose to present facts and statistics that support their side of the argument. In this case the government has chosen to present facts that it believes supports the case for remaining a member of the EU.
Whilst this is the Government’s formal position and recommendation, it is also the case that the Government’s MPs are split on the matter. 163 Conservative MPs support remaining in the EU and 130 support leaving the EU. Across the whole of Parliament (all parties) 452 MPs support remaining in the EU and 146 support leaving.1)BBC: Where the cabinet and other MPs stand[[contid]]
An important decision for the UK
“The UK has secured a special status in a reformed EU
- we will not join the euro
- we will keep our own border controls
- the UK will not be part of further European political integration
- there will be tough new restrictions on access to our welfare system for new EU migrants
- we have a commitment to reduce EU red tape”
On joining the Euro
The UK has an opt-out of joining the single currency – so cannot be forced to adopt the euro.
That said, there is a possibility that it could happen at some point in the future if it’s approved by an Act of Parliament and approved by the British people through a referendum. The UK certainly can’t be made to join the Euro, but it could of its own accord – all the while it’s a member of the EU.
This protection became law in the “European Union Act 2011” so has been in place for some time.
As such, it can be said that joining the Euro remains an option for the UK should it decides it would be beneficial to do so. Clearly, if the UK votes to leave the EU then this would not be an option.
On keeping our own border controls
The UK is not a part of the Schengen Zone, and as such does have its own border controls – in the form of security checks.
What the UK cannot do is control how many people from the EU can enter the UK, to live and work. Leave campaigners therefore argue we do not really have “control of our borders”, but this is a case of control over immigration across borders rather than security control at borders.
Whether the UK leaves the EU or remains in the EU, the UK will retain the right to check everyone that enters the country.
On not being a part of further European political integration
In David Cameron’s “new settlement” negotiations, he reached agreement with the other EU heads of state that “ever-closer union” does not apply to the UK – and the United Kingdom is not committed to further political integration into the European Union.2)European Council: Conclusions[[contid]]
The UK is also “protected” from deeper political integration through the European Union Act 2011 – which specifies that an Act of Parliament and a public referendum is necessary before granting the EU new powers (“competences”).3)UK Legislation: European Union Act 2011[[contid]] However, an expansion of remit can of course come from powers already granted to the EU by the UK, and “reclaiming” powers can only be done through exercising opt-outs or reversing the UK’s “opt-ins”.
The UK does have some fairly robust legal protections against further political integration. The challenge it faces (by remaining in the EU) is that if the other member states continue on a path of deeper political integration, then the UK could become increasingly isolated or excluded on political matters. This in itself could be considered a positive or a negative for the UK’s relationship with the EU.
By remaining in the EU the UK has the option of engaging in further political integration should it wish to do so. By leaving, the UK would be permanently outside further political integration with the EU.
On there being tough new restrictions on access to our welfare system for new EU migrants
How “tough” these new restrictions are is open to interpretation. This refers to David Cameron’s agreement with the European Council that EU migrants will have limited access to ‘non-contributory’ in-work benefits for a total period of up to four years from the commencement of employment. Over the 4 year period migrants will gradually increase their entitlement until they receive a full allocation of in-work benefits.
This measure only applies for seven years though, and can only be triggered as an emergency measure if the UK has experienced an inflow of workers of “exceptional magnitude” over “an extended period of time”. So it’s only a temporary measure, albeit one the UK will be able to apply if the UK vote to remain in the EU.
Another “new restriction” for new migrants involves reducing the amount of child benefit they can claim for sending back to their children not living in the UK. Instead of the full entitlement it will be an amount indexed to reflect the cost of living where the child resides.4)European Council: Conclusions 18-19 February 2016, page 23[[contid]]
There is some debate over how effective these measures would be at reducing the appeal of migrating to the UK from the EU.5)LSE BrexitVote Blog: Emergency brakes on migration: neither novel nor effective[[contid]]
While the Government describes these as “tough new restrictions” they are not as tough as the restrictions the PM originally sought from the EU.6)BBC: EU reform deal: What Cameron wanted and what he got[[contid]]
On us having a commitment to reduce EU red tape
David Cameron has secured a fresh agreement from the other heads of states at the European Council to reduce the burden of red tape. The agreement commits the EU to “…lowering administrative burdens and compliance costs . . . repealing unnecessary legislation . . . while continuing to ensure high standards of consumer, employee, health and environmental protection”.7)European Council: Conclusions 18-19 February 201623[[contid]]
The EU launched its “Action Programme on Reducing Administrative Burdens” back in January 2007, so has been aware of the problem of excessive regulation and set up a process for dealing with it, for some time. How effective it has been is debatable – with one think tank saying progress is now being made but still estimates the current cost to the UK economy of the top 100 EU regulations at £33bn per year.8)Open Europe: Top 100 EU rules cost Britain £33.3bn[[contid]]
The main issue is that it’s hard to determine which EU regulations are “burdensome and excessive”, since what may be a burden to a company may also be a positive protection for an employee.
A stronger economy
“The EU is by far the UK’s biggest trading partner. EU countries buy 44% of everything we sell abroad, from cars to insurance. Remaining inside the EU guarantees our full access to its single market. By contrast, leaving creates uncertainty and risk.”
The EU is the UK’s biggest trading partner if you consider the 27 other countries of the EU to be a single trading partner. If you take it on a country-by-country basis, then the United States is the UK’s biggest trading partner.9)ONS: The Pink Book, Chapter 9[[contid]]
EU countries do buy 44% of everything we sell abroad (44.4%, 2014), notwithstanding the amount to which the EU acts as a trading gateway to the rest of the world (“The Rotterdam Effect“). Non-EU countries buy 56% of everything we sell abroad (55.6%, 2014).10)ONS: The Pink Book, Chapter 9, 9.3[[contid]]
Exports to non-EU countries are growing at a faster rate than exports to EU countries – although it could be argued that this is because of our EU membership – or despite our EU membership.
Remaining in the EU does guarantee continued full access to its single market. If we leave the EU, the level of which the UK could continue to access the single market would be subject to negotiation.
“The EU’s single market has over 500 million customers and an economy over 5 times bigger than the UK’s. The single market makes it easier and cheaper for UK companies to sell their products outside the UK, creating jobs as a result.”
There is almost certainly a cost benefit brought about through the removal of trade barriers – and by having a single set of rules to follow for trading within the EU.
The single market’s regulations don’t necessarily make it easier and cheaper for UK companies to sell their products to non-EU countries. Regardless of where they are selling products to, UK companies have to comply with EU single market regulations – and therefore may be less competitive in the wider global market than competitors who are located outside the EU.11)Government: Cut EU red tape: Report from the Business Taskforce[[contid]]
The EU is also responsible for all EU international trade agreements, so it can also be said to have made it easier and cheaper for UK companies to sell their products to 50 other non-EU countries. The counter-argument is that – if the UK were outside the EU and the EU’s customs union – it could pursue its own trade deals, potentially have more free trade agreements (FTAs) and even lower costs to more countries. The extent to which the UK could maintain current levels of access to the single market whilst simultaneously pursuing its own trade deals, is the primary point of contention.
“Being inside the EU also makes it more attractive for companies to invest in the UK, meaning more jobs. Over the last decade, foreign companies have invested £540 billion in the UK, equivalent to £148 million every day.”
Being inside the EU is certainly an attraction to foreign investors investing in the UK. According to an EY study 72% of investors surveyed regard access to the European single market as “very” or “fairly” important to the UK’s attractiveness as an investment destination”.12)EY: UK attractiness survey[[contid]] Other attractiveness factors include having an open, large and growing economy, a flexible labour market, excellent access to finance and capital, comparatively low corporate tax rates, use of the English language.
How big an effect EU membership has on inward investment is hard to quantify. As the House of Commons Library states: “There is disagreement as to the severity of the impact on FDI of a UK withdrawal. On the whole, it can be concluded that membership of the single market is one of a number of important determinants of FDI; but outside the EU, the UK may be able to establish a regulatory regime more favourable to overseas investors, which could offset the effect of its departure.13)House of Commons: Exiting the EU: impact in key UK policy areas[[contid]]
In terms of employment, the UK is also the largest beneficiary of FDI employment in Europe.14)EY: UK attractiness survey – Jobs[[contid]]
The research does support the fact that EU membership makes it more attractive for foreign companies to invest in the UK. Inward investment could fall if the UK leaves the EU and does not maintain its current levels of access to the single market, or does not supplement any reduction with “other attractions”.
“Over 3 million UK jobs are linked to exports to the EU.”
Although not a very scientific calculation, it’s probably a fair enough reflection of the number of jobs directly or indirectly linked to export trade with the other countries of the EU.
The same methodology can be applied the other way around – and so it could be said that between 4 and 5 million jobs in the EU are linked to exports to the UK.
The implication is that leaving the UK could in some way threaten these jobs, but it’s important to recognise these jobs are due to trade rather than EU membership. If leaving the EU results in a reduction of trade with EU countries (and it’s not immediately supplemented with increasing trade elsewhere), then these jobs could well be affected over the short-term or the longer-term.
Of course any major reduction in exports – for any reason – would impact the whole economy which could also affect jobs that aren’t necessarily “linked to exports”.
Improving our lives
Cost of living
“If the UK voted to leave the EU, the resulting economic shock would put pressure on the value of the pound, which would risk higher prices of some household goods and damage living standards. Losing our full access to the EU’s single market would make exporting to Europe harder and increase costs.”
The “economic shock” refers to the period of uncertainty that a vote to leave would trigger, whilst the UK works out its future relationship with the EU. This is likely to put pressure on the value of the pound – which may well have the effect of increasing the cost of household goods. A currency devaluation can also lead to higher rates of economic growth by stimulating exports and domestic production.15)Economics Help: Economic effect of a devaluation of the currency[[contid]]
The Government references studies that support a negative economic outcome resulting from Brexit. There are other studies and the conclusions do vary. The House of Commons Library looked at a range of studies, of which 4 found EU membership to be a net cost to GDP, 1 neutral, and 3 a net gain (to GDP).16)House of Commons Library: In brief: UK-EU economic relations – Parliament, p.11[[contid]]
“Millions of UK citizens travel to Europe each year. The EU has made this easier and cheaper. EU reforms in the 1990s have resulted in a drop in fares of over 40% for lower cost flights.”
The EU was responsible for liberalising the aviation market when it created an internal market for aviation in 1992.17)European Commission: Air – Internal Market[[contid]]
Would flights actually get more expensive if we leave the EU? Well it could cause problems for UK-homed carriers such as EasyJet if – for whatever reason – the UK isn’t able to sign up to the European Common Aviation Area (ECAA).18)Reuters: EasyJet CEO says UK should stay in the EU for low fares[[contid]]
“From next year, mobile phone roaming charges will be abolished across the EU, saving UK customers up to 38p per minute on calls.”
This EU has imposed limits on what mobile phone operators can charge within the EU.19)European Commission: Digital Single Market[[contid]]
“EU membership also gives UK citizens travelling in other European countries the right to access free or cheaper public healthcare.”
Yes it does, although as the BBC explain here – “some forms of healthcare such as emergency care while on holiday could be secured through reciprocal agreements post-Brexit”, such as those with Australia, Israel and Russia.20)BBC: Reality Check – What would Brexit mean for health costs?[[contid]]
“Some argue little would change if we left the EU. But there are no guarantees UK customers would keep these benefits if we left.”
There are no guarantees, but most of these benefits are reciprocal and mutually beneficial.
What happens if we leave?
“Voting to leave the EU would create years of uncertainty and potential economic disruption. This would reduce investment and cost jobs.”
The period of uncertainty depends how quickly certainty can be restored – i.e. what type of relationship the UK negotiates with the EU and with non-EU nations. The UK has two years of continued membership whilst the EU negotiations take place, and this can be extended if both sides agree.21)Lisbon Treaty: Article 50.3[[contid]]
“The government judges it could result in 10 years or more of uncertainty as the UK unpicks our relationship with the EU and renegotiates new arrangements with the EU and over 50 other countries around the world.”
This is the Government’s assessment of how long it could take. By supporting remaining in the EU, the Government is unlikely to take a more optimistic stance. There’s also very little precedent – certainly no other country of comparable size to the UK has left the EU before. There are reasons to believe it would be a very complex and protracted process, and there are reasons to believe the motivation to mitigate uncertainty and conclude an agreement could be high on both sides.
In terms of renegotiating a new deal with the EU and new arrangements with over 50 other countries of the world – this assumes the UK doesn’t join the EEA in a Norwegian-style arrangement. If renegotiations do become necessary then there is some precedent for continuation agreements and “third country” arrangements – and Switzerland has managed to strike its own deals where the EU has not (yet). This is a huge topic so for starter arguments on both sides check here and here.
“Some argue that we could strike a good deal quickly with the EU because they want to keep access to our market. But the government’s judgement is that it would be much harder than that – less than 8% of EU exports come to the UK while 44% of UK exports go to the EU.”
44.4% of our exports do go to the 27 other countries of the EU (2014).
The figure of less than 8% is correct – but only if you include intra-EU trades. In other words, an intra-EU trade between France to Germany is also counted in this calculation as an “EU export”. That very same transaction also happens to be an “EU import”.
This type of “EU export” doesn’t actually leave the EU at all, so would most people consider it fair to describe it as an EU export? The EU itself doesn’t include intra-EU exports when it describes and values its position in world trade.22)European Commission: EU position in world trade[[contid]] In fact it explicitly states that intra-EU flows are “dispatches” and “arrivals”, rather than exports and imports.23)European Commission: DG Trade Statistical Guide[[contid]] So whether the government was fair to include intra-EU trades as “EU exports” is debatable.
If you don’t include intra-EU trades then the UK’s share of EU exports is 14.6%. It’s still a lot less than the EU’s shares of UK exports (44%), so the same point could have been conveyed with this figure, even if a bit less dramatically. When trying to compare economic bargaining power, most economists prefer the measure of exports as a percentage of GDP – in which case the UK is 3% of the EU’s, and the EU is 13% of the UK’s – a ratio of just under 1:4.
“No other country has managed to secure significant access to the single market, without having to:
- follow EU rules over which they have no real say
- pay into the EU
- accept EU citizens living and working in their country”
To secure “full access” to the single market, the EU has (to-date) insisted that the trading partner follows its rules, that they contribute towards the EU in some form, and accept “free movement”. This is the situation for Norway. Norway does have the opportunity to “observer and influence” EU rules, but not a formal vote.
There is some debate over what “significant access” to the single market is, and whether so-called “full access” is actually necessary in order to trade with the EU. Countries outside the EU are able to trade with the EU quite successfully. The United States is the EU’s largest trading partner, and China is it’s largest import partner (for goods). That trade is currently conducted without a trade agreement, and is subject to tariff and ‘non-tariff’ barriers.
Certainly it stands to reason that trade between the United States and the EU could grow with the help of a trade agreement to reduce these trade barriers – such as the one in progress (TTIP). Equally it stands to reason that the UK’s trade with the EU could fall if trade barriers are erected and each adopt different sets of regulations. Under WTO MFN rules neither can levy excessive trade tariffs on the other – so would average around 3% with some products items such as transport equipment, farm produce, and textiles being most affected.
Given that no other country of comparable size or importance to the EU has left the EU, it’s impossible to predict how many points the UK may be able to negotiate on, by how much and over what period of time. The UK’s priorities could also evolve over time – it may be prepared to forego “significant” single market access for a lower level of market access – if it determines it more beneficial to pursue its own trade deals or wishes to apply tighter controls to immigration from the EU.
It’s interesting to note that this is the first time the Government tells the reader that access to the EU’s single market is not dependent on having EU membership.
“A more limited trade deal with the EU would give the UK less access to the single market than we have now – including for services, which make up almost 80% of the UK economy. For example, Canada’s deal with the EU will give limited access for services, it has so far been 7 years in the making and is still not in force.”
The trade agreement with Canada (CETA) is the most ambitious trade deal taken on by the EU, although it’s not clear whether the time its taken is because of complexity or because the bloc’s vast size “hampers negotiations”24)CapX: Can Britain seal decent trade deals if it left the eu[[contid]]
The Government is right to point out the Canadian deal with the EU includes limited access for services. Trade in services between the EU and Canada is very low (€27.9bn in 2014) compared to the trade in services between the UK and the EU (€175bn in 2014). Services make up 80% of the UK economy, but they account for 35% of the UK’s exports to the EU.
It’s also worth noting Canadian firms can still access the EU’s single market for services if they establish a presence in the EU and comply with EU regulations.25)Open Europe: What could the EU-Canada free trade deal tell us about Brexit?[[contid]]
Controlling immigration and securing our borders
Securing our borders
“The UK is not part of the EU’s border-free zone – we control our own borders which gives us the right to check everyone, including EU nationals, arriving from continental Europe.”
The UK is not a part of the Schengen area, and as such does have its own border controls – in the form of security checks. This doesn’t extend to controlling immigration from the EU to the UK though as mentioned previously.
“The government has negotiated a deal that will make our benefits system less of a draw for EU citizens. In future, new EU migrants will not have full access to certain benefits until they have worked here for up to 4 years. The government will have greater powers to take action where there is abuse of our immigration system.”
There is some debate over how effective these measures would be at reducing the appeal of migrating to the UK from the EU, and the restriction to in-work benefits applies only for seven years – as mentioned previously.
The greater powers to combat the “abuse” of our immigration system refers to preventing non-EU family members from joining EU family members in other EU states – and then moving to the UK under free movement rules.26)European Commission: Conclusions – 18 and 19 February 2016[[contid]] This has been agreed by the European Council, however according to Full Fact this is one of the changes that could be reversed by other countries.27)Full Fact: Explaining the EU Deal: Is it legally binding?[[contid]]
“Some argue that leaving the EU would give us more freedom to limit immigration. But in return for the economic benefits of access to the EU’s single market, non-EU countries – such as Norway – have had to accept the right of all EU citizens to live and work in their country.”
This is true of Norway as a member of European Economic Area (EEA). If the UK pursues a free trade agreement, a bilateral trade deal or entry into the EU’s customs union then there is no obligation to accept the free movement of people.28)Global Counsel: The impact of Brexit on the UK and the EU[[contid]] It is fair to say that the EU will look to enforce free movement in exchange for granting higher levels of access to its single market, so to the extent that the UK needs or wants full or high levels of access to the single market, it is likely to need to allow free movement. As with most things it comes down to what is negotiated, so the UK may look to agree free movement principles but press for some measure of additional control, in order to diffuse immigration concerns.
Remaining in the EU will mean the UK has to allow free movement – which means it cannot limit immigration from the EU unless all the other member states agree. Leaving the EU may also mean the UK allowing free movement in exchange for full single market access, but by being outside the EU it would give the UK the option of altering this arrangement should it deem it more beneficial to do so at some point in the future.
Keeping us safer
“EU membership means UK police can use law enforcement intelligence from 27 EU countries, 36 and will have access to fingerprint and DNA information.”
There are senior figures arguing on both sides about whether EU membership keeps the UK safer or not.29)BBC: Brussels attacks spark UK security debate[[contid]] It is logical to expect that sharing intelligence should improve security for all member states, however it’s also logical to expect collaboration on security to continue if the UK leaves the EU – since it would be in all countries’ interests to do so. Of course it’s not guaranteed.
“EU co-operation makes it easier to keep criminals and terrorists out of the UK. 38 Since 2004, using the European Arrest Warrant, over 1,000 suspects have faced justice in UK courts and over 7,000 have been extradited.”
An independent review by Lord Justice Scott Baker in 2011 concluded that the European Arrest Warrant “…improved the scheme of surrender between Member States and that broadly speaking it operates satisfactorily”.30)Home Office: A Review of the UK’s Extradition Arrangements[[contid]]
If both the EU and the UK stand to benefit (as they do currently) from the UK continuing to have access to EAW, then it’s reasonable to expect that similar arrangements can be negotiated if the UK leaves the EU, as they have been with Norway.31)European Union Law: Agreement on the surrender procedure between the EU Member States, Iceland and Norway[[contid]]
The benefits of EU membership
“The UK is part of the EU, a group of 28 countries which exists to promote economic security, peace and stability. The EU operates as a single, free trading market, without taxes between borders.
“The UK has secured a special status in the EU. The UK has kept the pound, will not join the euro and has kept control of UK borders. We have ensured that no UK powers can be transferred to the EU in the future without a referendum. The UK will keep full access to the single market, with a say on its rules. For every £1 paid in tax, a little over 1p goes to the EU. The government judges that what the UK gets back in opportunities, job creation and economic security from EU membership far outweighs the cost.”
Most of these points have been mentioned previously. The Government is correct – a little over 1p in every £1 goes to the EU, about 1.3p. The net contribution after allowing for the rebate and EU spending in the UK amounted to £8.5 billion in 2015, the equivalent of £23 million a day.32)Full Fact: The UK’s EU membership fee[[contid]]
Opportunities for you and your children
“EU membership means you and your family have the right to live, work or study abroad in any of the 27 other member countries. It also guarantees many employment rights.”
This is correct on both counts.
Of course many Brits also live, work or study abroad in countries outside of the EU – 73% of British emigration in 2014 was to non-EU countries, with Australia being the most popular destination.33)Migration Observatory: Long-Term International Migration Flows to and from the UK[[contid]]
It can be argued that a supranational body such as the EU (which in theory can operate free of corporate influence) is necessary to guarantee employments rights, although it can also be argued that as a mature democracy the UK should be able to guarantee employment rights on its own.
The UK as a leading force in the world
“The UK is a strong, independent nation. Our EU membership magnifies the UK’s ability to get its way on the issues we care about. EU action helped prevent Iran from obtaining nuclear weapons; and the EU is leading the world on tackling climate change.”
The UK still has its own foreign policy objectives, control over its own foreign affairs, and an advanced military and security capability.
As one of the “big three” the UK does have significant influence within the EU so it’s voice is louder than most within the EU. The EU acts on behalf of all its members, so no country will get its way all the time.
The EU’s European External Action Service (EEAS) provides diplomatic services on behalf of the EU and did help prevent Iran from obtaining nuclear weapons. The existence of the EEAS is there to serve the collective interests of all member states, and it has raised concerns that it’s a threat to British influence particularly where the EU have taken over a function previously carried out by British diplomats.34)Telegraph: The EU is stealing Britain’s diplomatic influence[[contid]]
The EU “has long been committed to international efforts to tackle climate change” and has notched up some successes. It also plays a significant role in other areas such as the protection of the environment.
A once in a generation decision
“The referendum on Thursday, 23 June is your chance to decide if we should remain in or leave the European Union. The government believes it is in the best interests of the UK to remain in the EU. This is the way to protect jobs, provide security, and strengthen the UK’s economy for every family in this country – a clear path into the future, in contrast to the uncertainty of leaving. This is your decision. The government will implement what you decide.”
The referendum is intended to be a “once in a generation decision” – although some have suggested that a vote to leave could be quickly followed by another renegotiation and another referendum with “better terms”. The EU has brought about follow-up referendums previously but this was in respect to securing unanimous agreement on treaty change – not exit of a member. As this BBC article highlights, both sides say it’s a final decision, notwithstanding the fact that Article 50 of the Lisbon Treaty does say a country can rejoin subject to the usual rules of application.
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