Britain’s next aircraft carrier HMS Queen Elizabeth, due to enter service with the Royal Navy in 2016, is still years away from being completed, let alone battle ready. On Friday, in a damning testament to our defence procurement system, I saw the final touches being applied to the fridges that will stand in her galleys. As I stood at my own village war memorial this morning I listened to the familiar family names in the roll of honour and I wondered what our British soldiers in Afghanistan would think about the money that has been spent on un-needed fridges.
Actually I was very impressed by the fridge company. Based in deepest Norfolk they are Europe’s leaders in commercial refrigerators. Every product is hand finished and environmentally of the highest standards. Even with the recession their sales have held up – declines in domestic sales helped by increased exports especially to France and Germany. In a week when Britain has ceded so much control to Europe this reminded me that it was to help companies like this that we went into the common market in the first place. On the other hand the company also explained that the last thing they need is the “Agency Workers Directive” – the vast majority of their staff are permanant but to be competitive they need to employ agency staff when they have bigger orders. This was a real world example of the opt out of Employment law from Brussels is so important.
Negotiations in Brussels are often more complicated than they first seem. I have been looking at the plans to create new European Authorities for banks, financial markets and insurers. Everyone agrees that we need a new form of regulation and must not go back to the risk taking that led to the financial crisis. We need better ways to share information across borders and to manage not only national but global risks. But these new authorities potentially go much deeper – the current drafts cede powers from the FSA/Bank of England to Europe to manage emergency failures in the future. With Britain being home to the world largest financial centre and such a vast amount of British tax-payers’ money currently on the line with our banks I believe the current draft crosses a red line.
To date the principal has been upheld that if national taxpayers are affected then national regulators (not Europe) should make the decisions. Gordon Brown’s step this weekend to propose a “transaction tax” on all financial trades starts to move into a potential grey area. Whilst I totally agree that financial institutions need to show some austerity and pay back the tax payer for the pain they have caused, I also know that if trading is more expensive in Europe then financial market business will just be driven overseas. But if Europe starts to set up a “pool” for future bail outs then Europe will argue for central decision making and ultimately wrench control of financial institutions from National regulators. Is the UK really ready to see the Bank of England subservient to the European Central Bank, the European Commission, or majority votes of the other 26 member states?
It may be easy to brush Gordon’s proposal of a transaction or “Tobin” tax away as pre-election posturing (the first reactions from the US are so negative that it’s unlikely to happen globally and therefore maybe not at all) but it does open up the possibility of another set of very difficult negotiations with Brussels.