The current debate about whether there should be a referendum on the proposed EU Reform Treaty isn’t really about the precise arguments for or against it at all. Rather it’s about people’s different conceptions of what the EU is about or what it’s for.
If you’re a Eurosceptic who thinks the EU should be a loose trading relationship with little or no political super-structure, you’ll support a referendum in the expectation that it will be lost, which might then open the way to leaving the EU and achieving the neo-conservative goal of closer alignment with the US.
However, the arguments actually used are that having an elected EU President for a 30-month term, creating an EU Foreign Minister in all but in name, making the EU a legal entity in certain contexts, and sacrificing the veto by the switch to QMV in 60 (mostly minor) policy areas constitutes a shift of power to Brussels – which it is – though whether it’s a significant shift is a fine judgement. It’s also argued too that Blair promised a referendum on the EU Constitution before the 2005 election (to keep the Murdoch press sweet) and that this Reform Treaty is almost the same– which it is – though it involves nothing like the leap in integration agreed in the Single European Act in 1986 and the Maastricht Treaty in 1992 when there were no referendums. And anyway Blair changed his position on having a referendum 6 times in his last 5 years as PM, so there’s plenty of evidence to quote for his supporting either side of the argument.
What drives the pro-referendum lobby therefore is not their ostensible claims, which are anyway not as strong as they pretend, but rather their underlying view of Europe and their hostility to any move towards even the slightest pooling of sovereignty, whatever the corresponding gains might be.
If you’re a Europhile, the argument will be that there’s no loss of power since Member States will still have to reach unanimous agreement over common policy objectives and a declaration confirms that foreign policy will remain under the control of Member States – though the declaration is not legally binding. It will also be argued that Britain retains an opt-in if it wishes to co-operate with other States in tackling such issues as terrorism and crime – though if Britain did opt-in to an agreement and then found that the final draft was unacceptable, it might not be able to opt out again.
Again therefore the anti-referendum lobby is equally motivated less by force of argument over the minutiae of the Treaty than by their underlying concept of Europe and their sense of Britain’s purpose within it. The key issue here then is how precisely that purpose is delineated.
There’s still time for the Government to turn the tables on the Tories over the inheritance tax debacle, but only if before the Finance Bill is published they take the radical line they should have taken at the outset.
Instead of ignominiously caving in to Osborne’s stunt, they should have used the opportunity to create a newer and fairer inheritance tax, whilst strenuously arguing the case that this is a tax confined to the very rich and that to relax it means that more taxes have to be raised from poorer households. At present only the richest 6% pay it (approx. those with incomes over £70,000 a year) which is less than in most other countries, much less than was paid in Britain even 25 years ago, and (as a matter of interest) much less than was paid in feudal England centuries ago.
A much more attractive alternative than Osborne’s would:
commit the Treasury to raise the threshold regularly so as to ensure that nobody except the richest would ever be liable,
freeze exemption levels above the threshold and close the loopholes, and introduce sharply progressive rates on the most valuable estates,
then hypothecate the proceeds, not to swell the Treasury’s coffers, but to redistribute it to finance long-term care for the elderly.
This would, at one go, resolve a very serious current problem about the funding of long-term care in old age and at the same time achieve a fair and generous redistribution from rich to poor which would prove extremely popular.
If that were then combined with a proper tax on the so-called non-domiciled rich – not Osborne’s footling £25,000 which would be a fleabite to billionaire tycoons like Philip Green – Labour might begin to regain its reputation for social justice and tackling inequality, which has spiralled out of control to grotesque levels in the last ten years and is now the no.1 domestic issue in Britain today.
It’s not only civil servants that get off scot-free (as I blogged here) when they screw up. The Northern Rock fiasco shows it applies also in spades to bankers and so-called finance regulators in today’s finance capitalism.
Matt Ridley, the Old Etonian zoologist chairing Northern Rock, owed his position almost entirely to being heir to Viscount Ridley, and had no knowledge of financial services and no capacity for independence to control a headstrong chief executive taking fearful risks. A month into the crisis he is still there.
Adam Applegarth, the chief executive, borrowed recklessly on unreliable wholesale markets, even up to 75%, for his mortgage lending. Like the US sub-prime lenders, he packaged up the mortgages of borrowers and through securitisation sold on the debt for cash, and used an aggressive sales drive to drum up yet further business. When a lending freeze seized up international money markets in the aftermath of the unfolding US sub-prime disaster, his plan collapsed. He too is still there.
Callum McCarthy, chair of the Financial Services Authority which is in charge of banking supervision, blithely believed that the dangers of excessive bank borrowing for mortgage lending were minimal and failed to recognise early on that Northern Rock’s methods made it unduly vulnerable to wholesale money market volatility. The FSA issued no warnings until too late and manifestly failed in its regulatory duties. He is still there.
Mervyn King, Governor of the Bank of England, refused when the credit crunch bit to inject liquidity into the markets to bail out the banks so as not to condone irresponsible lending, thus sealing Northern Rock’s fate, but then did an about-turn by pumping £10bn into the markets to stop the rot spreading, thus achieving the worst of both worlds. The regulatory system could hardly have made more of a mess. But despite presiding over the first run on a British bank for 140 years, he still survives.
Sir John Gieve, his deputy, was the link between the Bank and the FSA., and as such has been accused of being asleep on the job. By failing to read the reports from Northern Rock and then going on holiday in the first two weeks as the crisis gathered, he failed to note and take action on the warning signs. He too remains in post.
Over the last 5 years while Northern Rock pursued such obviously dubious business methods, the chief executive took home £10m, his deputy £7m, the finance director £6m, the zoologist chairman £1m, and the non-exec directors another £1m. None has resigned or paid back any of their enormous gains to ordinary depositors who found their savings disintegrating.
It is a sorry story of mammoth ineptitude, yet nobody is held to account. Indeed one of the main lessons of Northern Rock is to expose just how far the accountability of Britain’s financial leaders has now utterly vanished.
There is one more casualty too. The 1997 reforms which brought independence to the Bank of England also removed banking supervision to the new FSA. This has been the first real test of the new regime, and it has clearly worked badly, with inept handling by almost all the lead players and the regulatory authorities forced belatedly into hasty and contradictory decisions. Split regulation was obviously not such a good idea, and is certainly not how the US Fed and the European Central Bank head off trouble brewing in the financial markets. Time to think again, Gordon.