On the referendum #17: The state of the campaign

Below is the Business for Britain Bulletin sent out this morning.

Back in the summer, various people including Matthew Elliott, some MPs, and some businessmen, including Stuart Wheeler, asked me to help get a new campaign off the ground that could fight the ‘leave’ side of the referendum.

We need a campaign aimed far beyond the fraction of the population that already supports UKIP. I have yet to meet anybody, whether a UKIP supporter or not (including Nigel Farage), who disagrees. This campaign will go public shortly.

The BfB bulletin clarifies some of this.

The Times leader today is also on this subject.

Dominic Cummings

 


Business for Britain Bulletin, 26 September 2015

Before the summer recess, the EU Commission published the Five Presidents Report, their plan for another Treaty transferring many more powers to the EU. The EU has been at the forefront of the political agenda after recess. On the Commons’ first day back, MPs voted for a series of amendments to the EU Referendum Bill, allowing for a purdah period and changing the question, both of which will ensure the process is now fairer. The Conservative Party has also in recent days announced that it will remain neutral during the referendum campaign and will not give money or data to the ‘IN’ campaign. A series of business polls have revealed that business is divided about whether to leave the EU and large majorities want Britain to regain the power to make our own trade deals. As you all know, in light of the announcement that there would be no Treaty change in the forthcoming referendum, BfB’s Board decided in July that we would help create the campaign for Britain to leave the EU. This campaign will launch soon.

Please see below for a more detailed update on what we have been up to over the past month.

Best,
Matthew

New polling shows business split on EU membership

There have been three significant recent attempts to measure business opinion on the EU:

1) Business for Britain (August 2015). This was a telephone poll of 601 businesses by Perspective Research Services. It was weighted by the respondents’ number of employees, region, and industry sector in order to give a representative sample of British businesses. It found that by more than two-to-one (41% to 20%) SMEs believe that the EU is harming rather than helping their business. A majority (54%) would also like to see the EU develop into a less integrated free-trade area, with only a quarter backing further integration. 74% of businesses said that Britain should regain the power to make our own trade deals. Coverage of the poll results featured across the media (above).

2) The Federation of Small Businesses survey (June-July 2015). This was an online survey of FSB members which received 6,263 responses from FSB members who chose to participate. Just over 40% of respondents said that they would vote to leave the EU, compared to 47% who would opt to remain. It was weighted to reflect the regional profile of FSB members, but not by the number of persons the respondent employed. 17% of respondents relied on exports to the EU. This was unrepresentative of British companies, of which only 5% export to the EU.

3) The British Chambers of Commerce survey (August 2015): This was a survey of 2,000 ‘senior businesspeople’ who choose to respond to the British Chambers of Commerce by email. Although the results were weighted geographically, half of respondents exported goods to the EU. This survey was wholly unrepresentative of British companies, since only 5% export goods and services to the EU. Nor was the survey weighted by the number of persons employed by the respondent.

Only BfB’s is a proper poll that is properly weighted to reflect ONS statistics on the profile of British business. The other two are surveys that are not weighted to reflect these statistics and have other significant flaws. This is important. The CBI routinely distorted the debate over the euro by manipulating their own membership surveys. After this was exposed in 1999 the CBI had to admit its membership was divided and they withdrew from the campaign in January 2000.

Polls have consistently shown for over a decade that about 70% of businesses reject the rationale for both the Customs Union and the Single Market and want Britain to regain the power to make our own trade deals, which is not part of Cameron’s renegotiation effort (see ICM, April 2004 and October 2006).

Conservative Board agree Party neutrality for EU referendum
In a meeting on Monday 21 September, the Conservative Party Board agreed, following the recommendation of the Prime Minister, that the Conservative Party would remain neutral during the EU referendum campaign. In practice, this will mean that access to data and funds held by the Party – and staff – will not be available to either the ‘IN’ or ‘OUT’ campaigns.

Reacting to this development, Conservatives for Britain Co-Chairman Steve Baker MP said: “I am delighted the Prime Minister and the Party Board have decided that Conservative Campaign Headquarters, its data and funds will remain neutral in the forthcoming referendum. There is a range of views within the Party about the EU, with many members waiting to see the deal before choosing how to campaign.”

Business figures speak out on EU withdrawal

A number of senior business figures have spoken out in recent weeks, expressing their views on a potential British withdrawal from the European Union:

“Our position in terms of competitiveness is driven by not only the situation in Europe in terms of whether we are in or out of the EU but more importantly the commitment of the people we have in the North East, the supply chain we have in the UK.” – Nissan Europe chairman Paul Willcox (Daily Telegraph, 3 September 2015)

BCC Director General John Longworth said the business network did not rule out calling for a British exit – or Brexit – from the EU should Cameron fail to get EU countries to agree to British businesses’ demands. “The European Union is getting further away from us. The single market was conceived for German industries and French farmers,” the BCC’s director general said (La Figaro, 7 September 2015)

“I voted for a free trade area in 1975. That’s what we should be [in]. It is absolutely crazy we are in there. I will be at the forefront of the ‘out’ campaign” – Peter Hargreaves, co-founder of Hargreaves Lansdown (Sunday Times, 13 September 2015)

“I don’t think in that event there would not be a trade agreement with what was left of the EU. We’re a very, very big market for European products, goods and services, and it would be unthinkable to us as a corporation that no such trade agreement would ultimately be negotiated if this country chose to leave.” – Chairman and Managing Director of Vauxhall, Tim Tozer (Daily Telegraph, 15 September 2015)

“Regardless (of the outcome), we think that the UK is a good place for investment.” – Board member of Bentley, Kevin Rose (Reuters, 16 September 2015)

“I’ve had lots of questions in my time in a way of why aren’t you opening up a plant somewhere else… I said guys are you kidding me? This is so truly British, that it belongs to Britain and it is also part of our success story that we are from Britain.” – CEO of Rolls Royce, Torsten Mueller-Oetvoes (Reuters, 16 September 2015)

“We have plants in Luton and Ellesmere port. We will not turn our back on England… We would continue to find ways to invest.” Chief Executive of Opel, Karl-Thomas Neumann (Reuters, 16 September 2015)

EU planning further transfers of power to Brussels

The EU has published its blueprint for its next big Treaty change, which will transfer even more powers to Brussels. In their ‘Five Presidents’ Report’ (right), the leaders of the EU state that they are looking at the possibility of introducing a new Treaty after 2017 in order to fix the euro’s problems.

This is worrying, as these plans will leave Britain as a permanent second-class member state, subject to EU law but condemned to be constantly outvoted in the EU’s institutions. The French Government has already come out in support of some of the report’s ideas. With Commission President Jean Claude Juncker saying he wants a ‘EU Army’ introduced, and German Finance Minister Wolfgang Schäuble this week advocating EU-wide minimum taxation rates, it is clear that the EU is going to be trying to take even more control over the coming years.

Immigration and the referendum

There is some confusion about the immigration issue and the referendum. There is no doubt that immigration tops the polls as the No. 1 issue. Contra some pundits, this is not a left/right issue. People across the political spectrum and demographic groups are very worried about Britain not having control of immigration policy. This is bound to get worse. For example, the EU’s Charter of Fundamental Rights has given the ECJ the power to judge how the UK implements the crucial 1951 UN Refugee Convention. This is another big limitation on Britain’s ability to adapt to the huge migration underway. David Cameron originally promised to get an opt-out from the Charter but this has been dropped.

However, for a crucial group of voters, roughly 20-25%, their attitude is – ‘we don’t like the EU, we would like to leave the EU, but we are very worried about the effects on jobs and living standards’. These people are also deeply worried about immigration. However, many of them will not vote to leave unless their fears about living standards are neutralised. If they are neutralised, then they will vote to leave. This does not mean ‘they don’t care about immigration’. They do care. But they care more about their own jobs.

Our campaign

We have been working with various people over the summer to set up a professional cross-party campaign, including an Exploratory Committee of Parliamentarians that includes: Steve Baker MP, Douglas Carswell MP, Kate Hoey MP, Kelvin Hopkins MP, Bernard Jenkin MP, Owen Paterson MP and Graham Stringer MP.

 

The Business for Britain Board voted unanimously in July to affiliate to this campaign and throw our resources behind it. New offices are being set up. The campaign, along with a new version of the BfB EU Briefing (above), will launch shortly.

This requires an unprecedented organisation. We need to create something that can scale from a handful of people to hundreds of staff and thousands of volunteers quickly. It needs a professional media operation and a combination of old-school grassroots and cutting-edge technology. We will make further announcements on this soon.

EU news from the last month

What you might have missed…

  • The EU is important for our economy, but it’s not a one-way street – Ruth Lea, The Times
  • Conservative party machine to stay neutral in EU referendum – Financial Times
  • EU referendum – the state of public opinion – Anthony Wells, YouGov
  • Cameron suffers Commons defeat over ‘purdah’ rules – BBC News
  • The UKIP/Arron Banks campaign re-launched at the UKIP conference today. We’ve had some friendly meetings with Arron. We wish him well. – Daily Express
  • The future looks rosy for the Brexit brigade – Tim Montgomerie, The Times
  • Ignore the scaremongers, manufacturing powerhouse Vauxhall says it would be fine outside the EU – Daily Telegraph
  • Hammond raises possibility of 2017 referendum – Reuters
  • Will David Cameron deliver ‘associate membership’ of the EU for Britain? – Spectator
  • UK claims migrant crisis will help its push for EU reform – Financial Times
  • No, Brexit would not “drive” European Premier League footballers out of the UK – Robert Oxley, CityAM
And finally… yet another startup falls foul of EU regulations

Last week, the IN Campaign launched its website. Unfortunately, as reported on Guido Fawkes, the website was in breach of EU law in several places, particularly concerning the use of cookies and information sharing. They’ve seen for themselves just how hard it is for new startups to comply with EU regulations, and how the EU makes life hard for entrepreneurs…

On the referendum #15: Good news, Cameron changes the question – and a new poll

Today the Electoral Commission said the question should be framed as stay/leave rather than yes/no. (They have given similar advice before.) The government knew about the announcement beforehand and immediately announced they agreed. This is good news.

Cameron has been persuaded that his original desire to be the YES campaign was an error. It is unclear to me whether this nudges things in his direction or not. There are reasonable arguments either way. I suspect it will not help either side much. More importantly, I think clarity about stay/leave will avoid the confusion that I had already noticed with Yes/No, so regardless of which side it helps (if any) it is better for the public debate for this element of confusion to be eliminated.

One of the reasons why we decided in June to revive the old ‘no’ campaign logo and branding from the euro campaign 1999-2002 was so that we could get going fast without having to spend a penny on branding and without having to worry about the question being changed as it went through Parliament. When we discussed it we thought it unlikely this would happen but worth guarding against, particularly given branding processes can be expensive as well as nightmarish. The announcement today therefore is unexpected good news because of the clarity and hasn’t cost us anything.

The referendum will rest on whether the third of the public that dislikes the EU and would like to leave are persuaded that they have little to fear in terms of their jobs and living standards and that a vote to STAY is at least as risky as a vote to LEAVE given the long-term dynamics of the EU grabbing more money and power every year and planning a new Treaty after the referendum. If they are so persuaded, we will win by at least 65%. If they are not, we will lose roughly 65:35. If they split 50:50 it will be close.

Now, few MPs have heard of the Five Presidents Report and the Commission’s plan for a new Treaty (part of the reason is that it was published at the same time as the Tunisia terrorist attacks so it got almost zero coverage). When the vote happens, most of the country will know about it. Now, almost nobody in the country has heard of the EU’s Charter of Fundamental Rights which gives the ECJ more power over Britain than the Supreme Court has over US states, and which Blair promised would have ‘no more legal effect than the Sun or the Beano‘. (NB. this is NOT the ECHR which is justiciable in the Strasbourg court). When the vote happens, most of the country will know about it. STAY will not seem like the safe status quo because it is not a safe status quo. The EU is inexorably changing as it always planned to do, adapting to the long-term plan for the euro to drive ‘political union’ – a plan that the Foreign Office understands very well but which it has masked for decades with propaganda about ‘3 million jobs’ and so on.

The choice is not between ‘a safe status quo’ and ‘a risky leap’. The choice is between whether you think it is riskier a) to keep giving away control and money to an organisation that cannot cope with the economic and technological forces changing the world, and cannot use the power it already has wisely yet wants even more power to prop up the euro, or b) to take back control and money and negotiate a new deal based on free trade and closer international cooperation with our European friends and other countries around the world.

NB. The 5 Presidents Report and the Commission’s timetable also opens up  a wild card option for Cameron that I will blog on soon…


UPDATE

Half an hour after writing the above I got this poll back from ICM.

Coincidentally, given today’s news, I asked ICM to ask a question over the weekend to probe attitudes.

The standard tracker question on the (now) ‘old’ official question shows 46(+2):35(-2) for YES, bang in the region where it has been for weeks.

We asked another question:

‘Which of the following best reflects your view?

A) I am not worried about the UK leaving the EU because I believe it can negotiate a free trade deal with the EU, and carry on cooperating in a friendly way from outside the EU.

B) I am worried about the UK leaving the EU because I believe that outside the EU it will not be able to negotiate a free trade deal and cooperate in a friendly way.’

The headline figure is 43:40 for (a), i.e. neck and neck (within margin of error).

If you look at the crossbreaks, it shows that the 43% who say YES break 76:14 for B, while the 35% who say NO break 90:4 for A.

This is interesting. Lots of polling shows the public divide roughly into a third definite OUT, a quarter to a third definite IN, and about a third who dislike the EU and would like to be out but are worried about leaving because of fears over jobs and living standards.

Today’s poll suggests that if more people are persuaded that we can get a new deal based on free trade and friendly cooperation, then the headline voting number could swing our way quite significantly.

Of course this will be hard. There is substantial fear that, I think, is unjustified. Whether you are pro/anti the EU it ought to be clear that Britain can have a free trade deal and cooperate from outside as other countries in Europe and elsewhere do.

All those who think like me that the EU cannot cope with the profound economic and technological transitions reshaping the world should reflect on this. We need to present a picture of how the world could be organised much better, with 1950s bureaucracies like the EU replaced with dynamic institutions that can adapt fast and fix their errors rapidly. If we sit around discussing ‘gene drives’ in Brussels committees the way we’ve sat around discussing the ludicrous CAP for fifty years, we are in big trouble. We deserve better and we can do much better than the EU. We need to explain how.

 

On the referendum #11: new ICM poll on a second referendum idea, Boris etc

A few weeks ago I wrote a blog on the issue of exit plans and a possible second referendum. According to various media reports, Boris liked the idea and has told people so.

I thought it would be interesting to see some numbers so asked ICM to consider it.

Attached HERE are the results.

Unsurprisingly, they show that 1) the public supports a second referendum, and 2) the prospect of one makes the idea of voting NO in the first vote less scary and therefore may increase the chances of NO winning the first vote.

It is also worth considering that the public has not focused on the first vote yet so the idea of a second vote is necessarily an abstract and hazy thing. As the campaign develops, I suspect these numbers will strengthen.

I have a few thoughts about this though no time to sketch them now, but I thought it would be useful for people to look at some numbers.

NB. It is not for me to decide what the NO campaign position should be on a second referendum and I have not decided what I think about it, but the 5 Presidents Report, the Hollande interview today on the need for another Delors-esque great leap forward etc show how important it is for these things to be thought through quickly…

Please leave thoughts below.

Book review: How to run a Government, by Michael Barber

I wrote a review of Michael Barber’s book, How to Run a Government, for the Spectator a few months ago. Here is the text.

One fact check. Early in the book Michael writes that Magnus Carlsen, the world chess champion, can beat the best chess computers because ‘the eagle of computer analysis soars to a great height, and then the wren of human judgement, sitting on the eagle’s back, can fly that bit higher.’ Alas the wren of human judgement slides off the back of the eagle and falls – plunk – to the ground. The best chess computers now play at a level far above any human, their tactical battles like light-sabre duels on mountain tops, one false move spelling instant death.

On a connected theme, it is interesting that experiments with humans + brilliant computer versus brilliant computer show that strategic use of computers by humans can lead to better performance than the computer can manage alone. I don’t know the results from the latest experiments – Kasparov wrote a fascinating piece in the NYRB a while ago – but if this holds it will give clues about other possible man-robot collaborations.

*

How to Run a Government, Michael Barber

Allen Lane, pp.316, £16.99, ISBN: 9780241004975

In 2001, Tony Blair took Sir Michael Barber from his perch as special adviser in the Department for Education and brought him into Downing Street. Once there Barber set up Blair’s ‘Delivery Unit’ and oversaw his attempts to reform public services. He then moved to the McKinsey consultancy where he cloned his unit for governments around the world.

He has now written a book, How to Run a Government, about what he calls ‘deliverology’ — an ‘emerging science of delivery’. It is part memoir and part a ‘how to’ manual describing ‘a set of processes that enables governments to deliver ambitious goals’.

Steve Hilton, David Cameron’s adviser, is reported saying to Barber six months after the 2010 election: ‘I know we disparaged targets and delivery and all that when we were in opposition, but now we’ve been here a while, we have a question: how did you do it?’ Barber replied: ‘You’ve learned fast. It took Blair four years to learn the same thing.’ His book is an extended answer to Cameron and others who arrive in Downing Street ignorant of how to get anything done.

Barber summarises wisdom from hundreds of books about effective management. He explains the various systems his team have developed to take a politician’s agenda, break it into a series of priorities and processes, then chase each one relentlessly.

I have worked in Whitehall and dealt with a decrepit Downing Street and Sir Humphrey at his worst. I am sure that new ministers would learn from this book. Many will be more successful if they turn over their agenda to Barber’s consultants.

However, this book is not a manual on ‘how to run a government’. As Barber says, his approach is based on the assumption that his team ‘always knows more about what “good” or “bad” looks like in other, similar organisations’ than officials and MPs do. This is the heart of the problem. It is inconceivable that Barber’s consultants could go into a brilliantly managed company like Apple and know more than the CEO about ‘what good or bad looks like in similar organisations’.

His team gets results because they are picking very low-hanging fruit— they are providing what should be minimal competence for people who do not know how to prioritise and are managerially incompetent. He recalls realising that after all the promises made in the 2000 Spending Review ‘there was no plan’ to achieve them. This was ‘a seminal moment’ for him, and he started the necessary planning, but as he says: ‘Why wouldn’t any minister with a sense of purpose [do] this in the first couple of months in office?’ Quite.Barber, a nice man who believes the best of politicians, does not answer his own question.

He writes that the military’s success in dealing with the 2001 foot-and-mouth outbreak showed Blair the wonders of Cobra, the No. 10 disaster response system. When Blair faced a media storm over asylum seekers, he therefore turned to Cobra. For Barber, this is an example of successful ‘deliverology’. However, a prime minister using the terrorist crisis response system to grip a media storm over basic policy is not an example to be copied. It is a symptom of Whitehall’s profound dysfunction. It is similar to the way in which the London ambulance service now regularly uses the protocol for coping with terrorist attacks just to get through the day. It is a sign of a broken system, not a prescription for ‘how to run a government’.

Unfortunately, Barber explicitly advises MPs: ‘Don’t depend on generic civil service reform because you don’t have the time.’ This will get a very loud cheer from Sir Humphrey, but if we want serious government then we need fundamental changes in the way ministers and officials are selected, trained, paid, managed and held accountable. We need to reshape institutions so that they do not depend on sprinkling a layer of consultants on a broken bureaucracy to gerrymander management processes that ought to be in entry-level training for junior officials.

Barber’s ‘deliverology’ is better than government by spin and gimmick, but is only a recipe for forcing a few priorities through routinely incompetent bureaucracies. It is not a recipe for coping with the economic and technological forces, from drones to genetic engineering, that are disrupting society faster than our institutions can adapt. This requires replacing many Whitehall institutions with ones that can change as quickly as the world around them changes.

Available from the Spectator Bookshop, £13.99 Tel: 08430 600033

On the referendum #9: Cameron begins his renegotiation, the Commission sets out its timetable for new Treaty pre-2025, BJ & SJ make moves, a Greek ‘no’

A few thoughts on developments over the past week or so…

1. No Treaty change before the referendum. On Thursday 25th at the start of the EU Council, it emerged that Cameron officially dropped the idea of the EU treaties being changed before the referendum. His pledge that there will be ‘legally binding’ promises by the other 27 members to change the EU treaties in certain ways a few years in the future is a useful development for the NO campaign. No such promise will be believed regardless of the choreography. A future EU Treaty can be vetoed by any member and some members will also require a referendum. Nobody can guarantee in advance that a new Treaty will be agreed at all or on what terms, as the EU has found a few times already. A promise before the end of 2017 to change the treaties at some point in the future is the political equivalent of ‘the cheque’s in the post, and it will be paid in a few years time if 28 people still agree to pay it’. The NO campaign will be able to say simply, ‘If you trust all these politicians’ promises vote YES, if you suspect they may be lying as usual, vote NO to get a better deal.’ Polls will show strong distrust.

2. Trivial substantive demands from Cameron. The Guardian leak on Friday confirms how little Cameron is asking for. Do people in No10 really think that deleting phrases like ‘ever closer union’ and having the EU formally say ‘OK we won’t force you to join the euro’ would persuade people that the EU has fundamentally changed?! DC’s approach so far has been to send Llewellyn and Liddington around asking foreign governments ‘what should we ask for that you can give us?’ Unsurprisingly, this approach to negotiations is seen by other countries as consistent with Cameron’s lack of understanding of how EU business is done, as the Monnet-ist Foreign Office officials also ruefully acknowledge. There is no sign that the long-standing desire of Open Europe for a deal whereby Britain remains in the EU and Single Market but is outside all non-Single Market stuff is on the table or that No10 is pushing for it to be on the table.

3. The Commission plans its new Treaty to ‘complete’ Economic and Monetary Union before 2025. Meanwhile, as Cameron plays his role in the re-enactment of Wilson’s 1975 deceit, the Commission has its own timetable. It will be more influential than Britain’s. The Commission has, since Monnet, seen disasters as ‘beneficial crises’ – the answer to a crisis is always ‘more Europe’ (meaning ‘more centralised bureaucracy’). This was true after 9/11 and after the Madrid bombings. It was true after the 2008 financial crisis. It is true again now with the Greek crisis and the immigration crisis in the Mediterranean.

This paper, ‘Completing Europe’s Economic and Monetary Union’, was published on 22 June 2015. It got little coverage in the UK media. It was written by ‘the five presidents’: European Commission President Jean-Claude Juncker; the President of the Euro Summit, Donald Tusk; the President of the Eurogroup, Jeroen Dijsselbloem; the President of the European Central Bank, Mario Draghi; and the President of the European Parliament, Martin Schulz.

It sets out three stages for the ‘completion’ of Economic and Monetary Union by 2025, building on what it thinks is ‘a credible and stable currency’ to create a financial union, a fiscal union, and a political union, in three stages:

  • Stage 1) using existing treaties to push further including: single bank supervision, single bank resolution, single deposit insurance, a European Deposit Insurance Scheme (EDIS) at the European level, ‘further measures … to address the still significant margin for discretion at national level’ for bank regulation, a Capital Markets Union to ‘strengthen cross-border risk-sharing through deepening integration of bond and equity markets’, ‘harmonisation of accounting and auditing practices … addressing the most important bottlenecks preventing the integration of capital markets in areas like insolvency law, company law, property rights’, and a ‘system of Competitiveness Authorities … in charge of tracking performance and policies in the field of competitiveness’.
  • A White Paper in spring 2017 to set out the transition to Stage 2 outlining the legal measures needed to ‘complete’ EMU, following explicitly the model of the Delors White Paper of 1985 which paved the way to the Single European Act.
  • Stage 2) ‘a common macroeconomic stabilisation function’ to ‘improve the cushioning of large macroeconomic shocks’, maybe built on the European Fund for Strategic Investments, and a European Fiscal Board to ‘coordinate and complement the national fiscal councils that have been set up in the context of the EU Directive on budgetary frameworks’.
  • Stage 3) completion of EMU will involve further major steps towards a political union including ideas such as a ‘euro area treasury’ and unified external EU representation on international financial institutions such as the IMF.
  • This will require a new Treaty. It will also ‘require Member States to accept increasingly joint decision-making on elements of their respective national budgets and economic policies’.

Dominic Lawson’s column also shows the dismissive attitude of the German Europe Minister to Cameron’s renegotiation. Cameron has long had what is to me a baffling hope that Merkel both wants to and is able to solve all his European problems. This delusion is similar to many other unrealistic delusions about the EU held in the Foreign Office and Downing Street over the decades.

4. The EU Council dinner witnessed a huge row over the migrant crisis. Although the migrant crisis has been in the news, it is perhaps not appreciated just how much concern it is causing across Europe. (The terrorist attacks also diverted media attention.) The situation is dire, it will get worse as thousands of Africans head north for the coast, it is obvious that the EU’s institutions and laws cannot cope, signatories to Schengen are starting to introduce informal measures that are strictly illegal (e.g. French police checking papers of people coming from Italy contra the Schengen rules), and nobody can agree on what to do. Worried diplomats have described the shouting at the dinner as some of the worst scenes seen in decades. It seems likely that the Italian government will be forced to declare some sort of emergency state and start ignoring EU and ECHR law to a much greater extent than previously. This will create all sorts of dynamics that affect the UK referendum.

5. Boris backs a ‘NO’ vote and a second referendum to get a better deal. In a previous blog in this series, I discussed the issue of exit plans and a second referendum. According to a story by Shipman in the Sunday Times, Boris Johnson, after reading this blog, is considering that this may be the best path for him to take:

‘Boris Johnson is preparing to call for a “no” vote in Britain’s referendum on the European Union in an attempt to extract greater concessions from Brussels than David Cameron is demanding.

In a stance that puts him on a collision course with the prime minister, the mayor of London believes Britain should reject any deal Cameron puts forward because the EU will not give enough ground.

Johnson has told friends that a “no” vote is desirable because it would prompt Brussels to offer a much better deal, which the public could then support in a second referendum.

Johnson said: “We need to be bold. You have to show them that you are serious.”

The mayor’s views, shared with friends last week, will send shockwaves through Downing Street. Both the “yes” and “no” camps had assumed that he would support Cameron in arguing for Britain to vote yes.

Johnson made the comments after reading a blog by Dominic Cummings, the former Tory aide who is organising the “no” campaign, in which he argued that Eurosceptics should say: “If you want to say ‘stop’, vote no and you will get another chance to vote on the new deal.”

A friend of the mayor said: “I don’t think in his heart Boris wants us to walk away. But he’s interested in us saying no because it won’t be what we want. That would mean a second vote. He thinks the only way to deal with these people is to play hardball.”’

A Guardian story on Monday said that BJ sources confirmed the Shipman story and Forsyth’s Spectator story similarly confirmed it.

Since I blogged about this idea, many people have got in touch.

A. It seems likely to many people that a NO vote would have to be followed by a second referendum on a new deal because the scale of importance of the UK-EU agreement, dwarfing the issues in normal general elections, would require giving people a vote.

B. It is clear that escaping the supremacy of EU law enshrined in the 1972 European Communities Act will be a complicated process stretching over years – it will not be a simple event. A NO vote in the first referendum would not, as a matter of fact or law, mean we had left the EU or would immediately leave. It would in practice be a rejection of Cameron’s deal and a direction from the public for a new government team to negotiate a new deal.

C. This issue is entangled in the Conservative Party leadership campaign. Some leadership candidates will like the idea of a second referendum – it allows them to position themselves against Cameron’s deal without committing themselves to OUT.

They will be able to say, ‘David Cameron has got a bad deal that does not solve our problems on immigration or anything else, he’s wasted the historic opportunity handed him on a plate by the euro crisis and migrant crisis to negotiate a completely different European system, and if we vote NO we can get a better deal, we finally have a chance to do this properly’ etc.

D. If it becomes clearer that a NO vote will mean a second referendum on a new deal, then the probability of NO winning is likely to rise.

5. Sajid Javid tells the CBI that they are undermining efforts to reform the EU. SJ has previously said that leaving the EU is not something to be afraid of. SJ gave a speech to the CBI this week in which he said:

‘I heard that the CBI thinks the UK should remain in the European Union no matter what. That the people of Britain should vote to stay in regardless of whether or not the Prime Minister wins the concessions that British business so badly needs… [D]oes it really make sense to say, so early in the process, that ‘the rules of this club need to change, but don’t worry – we’ll always be members no matter what’?

‘You know how negotiation works. You wouldn’t sit down at the start of a merger or acquisition and, like a poker player showing his hand to the table, announce exactly what terms you were prepared to accept. It doesn’t work in the boardroom and it won’t work in Brussels.’

SJ is right. Polls have shown for over a decade that most businesses regard the costs of the EU and the Single Market as greater than the gains and want many more powers brought back than Cameron is now asking for (e.g. ICM, April 2004).

SJ could have added a historical lesson for the CBI about its long record of being wrong on big issues. Its forerunner advocated appeasement in the 1930s with the old ‘stability’ argument wheeled out. The CBI played an important role in pushing Britain into the disaster of the ERM. It tried to play an important tole in pushing Britain into the euro which would have been a disaster.

Fortunately, businesspeople like Stanley Kalms and Michael Edwardes formed Business for Sterling (which I worked for 1999-2002). We surveyed British businesses and proved that the CBI was lying about business opinion and was systematically cheating its own membership surveys to give the false impression to the FT and BBC that ‘British business overwhelmingly wants the euro’ – sound familiar? In fact big businesses were split and small businesses were hostile by about 2:1.

However, the power of the UK Government and the EU Commission makes it extremely hard for senior FTSE people to speak out against the EU while they get brownie points by backing the EU (cf. Branson who still speaks in support of Britain entering the euro). Many businesses were told in 1999 – if you support Business for Sterling, we will screw you. The same thing is happening now. Few journalists understand the politics of company boards whereby pro-EU people are licensed to speak out while anti-EU people are told to pipe down to avoid causing blowback.

Within a year of starting, by January 2000 we had forced the CBI to withdraw from the euro campaign.  Meanwhile the IOD and FSB were clearly hostile to the euro.

31 March 1999, Daily Telegraph: BfS/ICM poll showed business opposition to euro

2015-06-06 17.32.55

31 January 2000, FT: CBI withdraws from euro campaign

2015-06-06 17.35.25

 

The CBI is now arguing that Britain should stay in the EU on any terms. This view is out of whack with the general view of British businesses but the cabal that controls the CBI has never cared about this and the BBC has very rarely challenged them.

The CBI has also just announced that Cridland will be replaced by a former ‘head of strategy’ at the BBC and ITV. Mike Rake said, without apparent irony, that she has ‘an impressive background as an economist, journalist, management consultant and policy strategist’. The CBI represents hired managers, management consultants, lawyers etc – it has never represented successful entrepreneurs. It is always controlled by a small number of politically powerful multinational firms (generally run by non-entrepreneur hired managers) that can be crucified by the Commission. This is why they are not taken seriously as the ‘voice of British business’ other than, unfortunately, by the BBC.

The people who control the CBI should consider 1999. Unless the CBI changes its position, 1999 will be a picnic compared to 2016.

6. Business for Britain has serialised a big report on the economics of the EU which will be published in full shortly.

7. The Greeks have voted NO. Those in the Commission, Eurostat, and other EU institutions who colluded with Goldman Sachs and others to cheat the numbers to ease Greece into the euro have got away with it. The euro financial system was set up so that a lot of bankers made a lot of money out of artificially low Greek bond prices. What about when the music stops? IBGYBG (‘I’ll be gone, you’ll be gone’ as assholes in the City say to each other when ripping off their clients/customers.) Those like Mandelson who predicted the euro would be great for Greece still have their huge pension pots paid for by taxpayers and are invited on TV to pontificate about the EU, largely un-reminded by the BBC of their previous duff predictions.

There are deep problems with the global financial architecture, from China’s shadow banking system to the recurrent flash crashes driven by high frequency algorithmic trading. There are deep problems with the euro financial architecture. Since 2008 global debt has increased enormously. There has been a huge distortion of debt markets with investors holding massive quantities of government bonds that offer very little future reward and great future risk. CDO’s, CDS’s, all sorts of synthetic credit derivatives that contributed to the 2008 crisis are back and being sold to idiots who don’t understand them by some of the same people who used such complicated scams to cheat the figures for Greece’s euro entry. Bureaucrats keep bailing out financiers. The public quite rightly rages that ‘us idiots on PAYE are bailing all these crooks out’. Politicians largely ignore them. In Britain, Cameron even defended the indefensible non-dom rules and has done nothing about the grotesque abuse of executive pay by hired managers paying themselves as if they are successful entrepreneurs, with institutional shareholders happily pushing the merry-go-round and getting their kickbacks. Everywhere one looks one sees insiders ripping off the public and politicians either colluding or helpless spectators.

The EU system is, characteristically, not admitting its own terrible errors that have contributed to the destruction of the Greek economy. Even the IMF has told the EU that Greece’s debts are unsustainable and will need a haircut. But the EU leaders feel they cannot face this reality because it would lead to an explosion of demands from Spain, Portugal, and Italy. Instead of facing reality, Europe’s leaders have decided to turn the disaster into a morality play in which ‘the lazy Greeks’ are blamed for  everything. Meanwhile, Brussels’s real answer is the Five Presidents Report (above) – deeper and further integration because, after all, as Delors said the whole point of doing EMU before political integration was that the problems with the former would force the creation of the latter, like Athena from the head of Zeus.

(I have written elsewhere about the fundamental problem that the 21st century global system has become too complex for traditional states with traditional bureaucracies to cope with, and the need for very different kinds of political institution and very different training for political decision-makers. In other fields, there is innovation: for example, JSOC and UK special forces have completely changed how they operate to cope with networked enemies. In politics, there is almost no innovation partly because incentives are set up that reward people for failing conventionally, a political equivalent to ‘nobody gets fired for buying IBM’.)

*

The combination of no Treaty change and no substantial demands is no surprise to many. The EU timetable always made Treaty change practically impossible before the end of 2017 (other than an Article 48 minor change to lower order things, which NB. could allow DC to claim ‘I’ve got treaty change’). However, Cameron’s position since his Bloomberg speech has relied on teasing the media, his MPs, donors and others that he intended to fight for treaty change to show he was ‘serious’.

He has decided to drop this pretence at the start of the process. His approach since the election has helped rally support for the NO campaign as it becomes increasingly clear that his talk of ‘fundamental change’ was just to keep people onside before the election. Some Conservative Party donors, who have suspected for a long time that the Cameron-Llewellyn team does not know how to negotiate, can see there is no serious attempt to reshape our membership. This is particularly striking given that the combination of the Greek crisis and the African/Med migrant crisis is pushing the EU itself to consider a new Treaty and new arrangements for the non-euro countries.

This approach is also unpopular with some of Cameron’s spads in No10 and Cabinet ministers who think that Llewellyn – a diehard pro-euro/EU campaigner – is harming the prime minister with his approach. Some of them think that rushing it also means rushing the day of DC’s departure as the leadership campaign will effectively start after the referendum. Others have pointed out that rushing so transparently to get trivial changes is hardly the best way to win a YES vote – or to maintain good faith in, and good will for, the prime minister. So far Llewellyn is ignoring such criticism – if he hears it, which is perhaps unlikely given how No10 works. No10 spads are keen to stress to journalists that ‘Ed is completely in charge of this, my responsibilities are domestic only if you know what I mean’.

On the Referendum #7: Transparency for our Potemkin government – Memo to ministers and spads thinking about how you could help the NO campaign

There have been many attempts to quantify the extent to which EU law (primary, secondary, Regulations, Directives, ECJ judgements etc) really determines what happens in the UK. It is inherently hard to come to an agreed answer given the combination of a) the sheer scale and complexity of EU law’s entanglement with domestic law over decades including things like domestic court interpretations of ECJ judgements, b) different definitions of regulation and the units of measurement, c) the desire of the civil service to obscure the issue, and so on.

You – ministers and spads – can contribute something valuable to this debate in a way that will help the NO campaign at a crucial time.

For those not in government reading this… One of the basic mechanisms of government is the ‘Cabinet write round’ system. This involves Secretaries of State being given lots of documents every night in their box from other departments. The SoS is supposed to read these documents and tick the relevant box on the attached form signalling assent, disagreement, comments etc. (When I find a copy of one in my papers I’ll post a photo.)

For entirely domestic things, this process can lead to disagreement and negotiation. An interesting aspect of our membership of the EU is that a large fraction of the documents concerning future law and administrative action come from the EU. For reasons that are opaque, the civil service continues with the write round system. It is, of course, a Potemkin system as ministers do not have a real power to oppose anything – the document in question will become law regardless of how the minister fills in the chitty. Still, the chitties are sent around so everybody can pretend they are in charge. This is a depressing process for some ministers but perhaps the Cabinet Office regards it as a Pavlovian exercise – ministers become habituated to simply tick everything without engaging their brains or ethics.

When occasionally a SoS refuses, the first step is the Private Office asks whether a mistake has been made. No? Are you sure minister? Off the chitty goes to the Cabinet Office (‘very courageous minister’). Step 2 is that the Cabinet Office emails to say – ‘Was your SoS drunk again last night, he seems to have rejected the EU Directive on XXX, better go and tell him to withdraw his objection pronto or Jeremy [Heywood] will be on it.’ This is normally enough to get SoS scuttling to retract his objection. Stage 3 is unusual – it involves the SoS not giving in at Stage 2. What happens then is that the SoS is informed by the private office that Ed Llewellyn has said that the Prime Minister agrees with Jeremy and insists on measure X. This flattens practically all objections. I have witnessed the very unusual Stage 4 – the SoS sends back a message asking for a meeting with Jeremy. Jeremy arrived. ‘This is EU law so there is no basis for us to object.’ Gove: ‘Why do we get sent these stupid forms to fill out then if we can’t stop these awful things, this is going to waste hundreds of millions of pounds for nothing?’ Jeremy [a chuckle]: ‘Haha, yes, so I’ll inform the Prime Minister that you agree after all, we will mention to European officials that ministers have grave concerns, I’m sure Oliver will look at it further, goodbye Michael.’ Game Over: ‘All your base belong to us’, as the old video game said…

The fairy tale that Britain still has Cabinet government involves maintaining this Potemkin process.

I have asked No10 spads a few times over the years what proportion of things they see come from the EU. The estimates have been 50-60%. When I was in the DfE, I would occasionally do surveys of Gove’s box, going through every single paper in it, to see the proportion of EU stuff. I would estimate the same – typically about half, though sometimes much more (though obviously volume does not equate to importance).

With the referendum coming, this will be an important question. The usual surveys will not answer the question. So what could you do?

From now, start collecting stats on a daily basis of the proportion of EU stuff in the box. Spad, create a GoogleDoc – obviously do not use the official system – so that the minister can simply fill in the box on the grid for each day. For the minister (or you) to jot ‘x%’ each day and fill in a GoogleDoc grid will take no more than a few seconds per day, less than a minute per week, less than an hour in a year. (If they are technically hopeless just get him to jot a figure and you fill it in.)  Also, you could take a few photos of some of the boxes (‘This one was 80% EU stuff’) and save them to Dropbox for future use. Keep copies of the 1% most stupid, irrational, and wasteful things. Add ECHR/HRA stuff too – that is all relevant particularly given Cameron is going to do nothing at all about the Charter of Fundamental Rights (NB. this is the EU thing, not the ECHR). No officials will know you are doing it. Neither Heywood nor Llewellyn will be able to know you are doing it.

After Cameron returns from the EU proclaiming triumph and some of you resign, you will then have a record of contemporaneously collected stats on the real importance of EU affairs in Government. You will be able to publish this. It will be recorded over a year or so and therefore have hundreds of data points. Much more than other surveys on this question, people will take it seriously – particularly when you explain it at a press conference holding up some photos and copies of the most stupid documents. It will be impossible for No10 to rebut it effectively. They will not be able to publish documents that could refute it. Heywood will give a statement saying that your claims are wrong but nobody will believe him.

This is a simple thing that could have a significant impact at the right time. You all know how much EU stuff is hidden by Whitehall and how much effort goes into pretending that ministers decide things that were really decided by some lobbyist in a Brussels hotel years ago. You know these Kafka-esque bureaucratic processes, redolent of the dying days of the Austro-Hungarian Empire, that characterise modern Whitehall. DO SOMETHING ABOUT IT!

Lots of you now won’t know whether you are going to resign but you can do this without anybody knowing so you have something useful if you do decide to resign; if you don’t you can delete it all, no harm done. Boris, we know you read this blog, you could do the same thing in the Mayor’s office and surely there will be some committees Cameron puts you on shortly to try to keep you quiet…

Please suggest ideas about how to improve this process,

Dominic

On the Referendum #6: Exit plans and a second referendum

[NB. This blog was published in June 2015 but pundits have written about it since then so I’ve added some links at the bottom.]


There are three connected questions that add up to some interesting problems for both sides of the referendum debate:

1) Will the Government suggest a second referendum? Offering a second vote would give them the opportunity to reverse a loss in the first, so that YES means victory and NO does not necessarily mean defeat. European governments have held second votes repeatedly over the past quarter century. One can imagine them saying: ‘If the public votes NO we will have to negotiate an exit deal with the EU and we believe that it is only right that the public has a vote on the final deal.’ If it did, it would be likely that Labour would do the same. Perhaps Labour will suggest this and the Government would feel obliged to agree.

2) Should NO demand a second referendum in the hope of forcing the parties to commit to one? One can see why NO might argue for a second vote. It enables NO to make a NO vote seem much less risky. ‘If you vote YES, you won’t get another vote for another 40 years – if ever. You should vote NO to Cameron’s rubbish deal. If you vote NO, you will force a new Government to negotiate a new deal and give you a new vote. A NO vote is much safer than a YES vote.’ Further, as a matter of democratic accountability, given the enormous importance of so many issues that would be decided in an Article 50 renegotiation – a far, far bigger deal than a normal election – it seems right to give people a vote on it.

3) Does NO need to have a unified plan for exit? A Government trying to leave the EU obviously needs an exit plan. The SNP needed an exit plan. But the NO campaign is neither a political party nor a government. It has no locus to negotiate a new deal. Does it need an exit plan, or does that simply provide an undefendable target and open an unwinnable debate for a non-government entity?

A. Creating an exit plan that makes sense and which all reasonable people could unite around seems an almost insuperable task. Eurosceptic groups have been divided for years about many of the basic policy and political questions. An interesting attempt at such a plan is FLEXCIT based on using the EEA as a transition phase – remaining in the Single Market and retaining a (modified) version of free movement – while a better deal, inevitably taking years, is negotiated. This is an attempt to take the Single Market out of the referendum debate. I will discuss the merits of this idea another time when I’ve studied it more.

B. Even if one succeeded, the sheer complexity of leaving would involve endless questions of detail that cannot be answered in such a plan even were it to be 20,000 pages long, and the longer it is the more errors are likely. On top of the extremely complex policy issues is a feedback loop – constructing such a plan depends partly on inherently uncertain assumptions about what is politically sellable in a referendum, making it even harder to rally support behind a plan. Further, in market research I have done it is clear that 15 years after the euro debate the general public know nothing more about the EU institutions than they did then. Less than 1% have heard of the EEA. Few MPs know the difference between the EEA and EFTA or the intricacies of the WTO rules. The idea that the public could be effectively educated about such things in the time we have seems unlikely.

C. There is much to be gained by swerving the whole issue. No10 is dusting off its lines from the Scottish referendum. Perhaps they can be neutralised.

‘Different people have different ideas about the best way to leave. For example, some people suggest we should leave the EU but simply remain in the Single Market while we negotiate a new deal. Others have different ideas. Global rules set by the World Trade Organisation provide some guarantees against European countries discriminating against British trade. But none of this is the real point. We are not a Government. We can’t negotiate anything. A NO vote as a simple matter of law does not mean that we leave the EU tomorrow. A NO vote really means that a new government team must negotiate a new deal with the EU and they will have to give us a vote on it. If you want the EU to keep all the power it has and keep taking more power as it has for decades, and you’re happy paying billions to the EU every year instead of putting it into the NHS – then vote YES. If you want to say ‘stop’, vote NO and you will get another chance to vote on the new deal.  If the country votes YES, we’ve lost our chance to change anything. We may not get another vote for decades, after we’ve had to bail out euro countries and had another few decades of the EU’s useless and inhumane immigration policy. If the country votes NO, we can force politicians to get us a better deal.’

This approach might allow NO to avoid its biggest problem – the idea that a NO vote is a vote to leave in one jump and is therefore a leap in the dark. It would allow NO to portray YES as the truly risky option. This approach would enable NO to build a coalition between a) those who think we should just leave (about a third) and b) those who dislike the EU but are worried about leaving (about a third) and who may be persuaded that ‘Cameron’s deal is bad and we should try to get a better one but the only way to force this is to vote NO’.

This approach would be based on a legal and political fact: a NO vote would not mean that we had, or immediately would, leave. The day after a NO vote our legal situation would be identical to today: we would remain a member. A NO vote might mean the government is obliged to start negotiating to leave, presumably under Article 50, though many questions arise such as – would the PM have to resign, if not how could he credibly negotiate such a deal, and what about the timing given a 2020 election and it may have to happen with a new PM, etc? What a NO vote really means would depend upon what the political parties say they will do and this remains unclear as these issues have not been explored yet.

There is no clear answer to these problems. The conundrum is inherent in the fact that those who want to change our relationship with the EU are operating in a very hostile environment. Campaigners forced David Cameron to have a renegotiation and referendum instead of focusing efforts on building a national movement that could be used by a leader who actually wanted to leave and could therefore do it in an optimal way.

But – we are where we are, the referendum is going to happen. How to maximise chances of avoiding disaster?

Expanding the debate to consider a second negotiation and a second referendum offers potential advantages. It also has potential disadvantages. But as a matter of fact a NO vote does not mean we would immediately leave and it seems likely that the parties will be forced by public opinion to offer a second vote, and therefore this could be turned to the advantage of NO. There is no escape from the fact that ending the legal supremacy of EU law is an extremely complex enterprise, unravelling decades of legislation, legal judgements, and practice. There is no scenario in which all the problems caused by the EU can be solved in one swift stroke.

I have not reached any conclusion. These are the sort of things that need to be discussed BEFORE a NO campaign launches officially. In the euro campaign we pursued Sun Tzu’s maxim – ‘winning without fighting is the highest form of war’ so we tried to stop a referendum happening. The situation now is different and much more dangerous. In such a situation, going along with the conventional wisdom could easily mean losing in a conventional way. The current landscape means the NO side faces disaster if it loses but no victory even if it wins. In such circumstances, it is wise to consider ways to reshape the landscape.

To those who say these discussions should happen only in private, I strongly disagree. Much about a campaign has to remain secret but these big questions are necessarily part of public debate. A decade has been largely wasted. These big things must be confronted now in parallel to establishing a professional campaigning organisation and public discussion raises the probability of the NO campaign getting things right.

Please leave comments / corrections etc below.

Ps. There is also the issue of what happens with the euro and a new IGC/Treaty. It is likely there will have to be one, the Monnetists want one, and they always see disasters in Leninist fashion as ‘beneficial crises’. So there is also the prospect of a UK government being forced to have another referendum on a future Treaty. One way or another, the first referendum is unlikely to be the end of the matter. It takes a long time to correct a huge historical error, if it can be done at all.

Ps2. [Added 28 June.]

In the Sunday Times, 28 June, Tim Shipman writes re Boris reading the above:

‘Boris Johnson is preparing to call for a “no” vote in Britain’s referendum on the European Union in an attempt to extract greater concessions from Brussels than David Cameron is demanding.

‘In a stance that puts him on a collision course with the prime minister, the mayor of London believes Britain should reject any deal Cameron puts forward because the EU will not give enough ground.

‘Johnson has told friends that a “no” vote is desirable because it would prompt Brussels to offer a much better deal, which the public could then support in a second referendum.

‘Johnson said: “We need to be bold. You have to show them that you are serious.”

‘The mayor’s views, shared with friends last week, will send shockwaves through Downing Street. Both the “yes” and “no” camps had assumed that he would support Cameron in arguing for Britain to vote yes.

‘Johnson made the comments after reading a blog by Dominic Cummings, the former Tory aide who is organising the “no” campaign, in which he argued that Eurosceptics should say: “If you want to say ‘stop’, vote no and you will get another chance to vote on the new deal.”

‘A friend of the mayor said: “I don’t think in his heart Boris wants us to walk away. But he’s interested in us saying no because it won’t be what we want. That would mean a second vote. He thinks the only way to deal with these people is to play hardball.” …’


 

15 October 2015

Three columnists have written about this blog today.

1. Matthew Parris in the Spectator.

2. Simon Jenkins in the Guardian.

3. James Kirkup in the Telegraph.

They all have interesting points that I’ll answer when I have some time.

NB. Fans of Colonel Boyd…

DC