The first of the baskets I named ‘sovereignty’, and it focused on bringing powers back to Britain.
There was one very powerful way we could achieve that. The founding Treaty of Rome proclaimed in 1957 that the then European Economic Community was ‘to lay the foundations of an ever-closer union among the peoples of Europe …’
The phrase ‘ever-closer union’ had both a symbolic and a real effect.
The symbolism went right back to the complaint made by Eurosceptics about the way the decision to join what was then the European Economic Community was sold to the country by Ted Heath in the 1970s. I had lost count of the times people had said to me, ‘I thought we were joining a common market, not a political union.’ Yet that phrase, ‘ever-closer union’, had always been there. I thought that specifically opting the UK out of it would demonstrate that we were serious about different destinations, not just different speeds.
And it wasn’t just symbolism. The European Court of Justice would sometimes quote ‘ever-closer union’ directly in its rulings. More prevalent, and pernicious, was when it invoked the principle – often referring obliquely to the ‘spirit of the treaties’ – in these rulings. It meant that this one small phrase became a key part of the ‘ratchet’ effect, where powers seemed to flow only one way, towards Brussels. As it was put to me, ‘The objective of “ever-closer union” went deep to the heart of the European institutions.’ If the UK was specifically carved out of ever-closer union, it would surely help protect us from EU mission-creep brought about by the ECJ.
But that still left the European Parliament, which had been considerably strengthened by the Lisbon Treaty. It was becoming, as the Juncker appointment illustrated, an increasingly strong force for federal rather than national governance of Europe. It wasn’t possible to roll back Lisbon and its provisions now it had been ratified and implemented. But we could reform Europe’s legislative system, in order to inject a stronger element of national control by introducing a system where national parliaments could, by working together, reject its measures.
What I proposed was a ‘red card’ system, whereby the Commons and its equivalents could come together to block specific European laws which were not in their national interests. Getting this new measure adopted would require every member state to agree – and the European Parliament itself to accept the change – but I knew there was some support for it from other leaders.
I also said we needed to fully implement the EU’s commitment to ‘subsidiarity’. This was the declaration in Maastricht that the EU should only act where individual countries’ actions would be insufficient – in other words, national where possible, supranational as a last resort. This was one of many things already in the treaties which could make our membership more comfortable, but which simply needed to be heeded.
Then came the second basket: ‘competitiveness’.
For many in Britain, particularly on the Conservative side, the whole point of joining the EU had been to make us more competitive and economically successful. That’s why the promise of a Common Market was attractive in the 1970s, and why a Conservative prime minister, Margaret Thatcher, had helped to found the single market in the 1980s.
Scrapping tariffs and trade restrictions, agreeing common standards and using the leverage of the EU to open overseas markets for British goods were all seen as positives. Scrapping what were called non-tariff barriers was possibly more important. It prevented other nations from finding spurious reasons not to import our products, and smoothed free trade between our countries.
However, the harmonisation of rules between different countries that the single market required did have some negative consequences. Businesses started to complain about excessive and often costly regulation. The European Commission became overzealous, endlessly seeking out new areas in which to regulate. Brussels issued directives on everything from what hairdressers wore to which lightbulbs we used. Open Europe estimated that EU red tape cost the UK economy £33.3 billion a year.
Again, it was time to rebalance, and we had already made a start. Legislative proposals fell by 80 per cent after we established an alliance of countries fed up with EU overreach and ambushed the Commission before the EU Council in October 2013. More regulations were set to be repealed than ever before. Now we needed to go further, by setting specific targets for deregulation and creating a mechanism to sharply reduce EU legislation.
I didn’t just want to mitigate such burdens; I wanted to maximise the benefits of the single market. Our businesses could already trade easily in goods, but the same was not true for services. Theoretically, someone trained as a doctor, engineer or accountant in one country could practise in any of the twenty-seven others. In reality, this was far from being the case. With 80 per cent of our economy made up of services, there would be huge benefits for Britain from completing the single market and giving these professionals unhindered access to a market of five hundred million people. Once again, the advantages were there, they were in reach, we just had to grasp them.
This also applied to new technologies. The single market for digital was far from completed, and British firms stood to benefit if it was. We had just abolished mobile-phone roaming charges and extortionate credit-card fees across the EU. But that had taken years. The next big hurdles included removing barriers to EU-wide e-commerce, and being able to stream TV or music subscription services when in other EU countries. These may seem like small beer, but they were important to consumers, crucial to business, and made membership more conspicuously worthwhile. They also proved I wasn’t advancing purely British interests. Completing the single market would make the EU better for everyone.
The third basket was ‘fairness’ – specifically fairness towards EU countries outside the Eurozone. This was the issue that had led to my showdown in 2011 and the treaty veto – and that George believed was the most important to address. Attempts were being made to move financial services denominated in euros from the City of London to Paris or Frankfurt. And even though we were outside the Eurozone, repeated efforts had been made to drag us in to bailing out Eurozone countries or standing behind Eurozone banks. As late as July 2015 the European Commission had proposed another EU-wide bailout for Greece, despite having promised that it would never happen again. After quite heated confrontations with EU partners and the Commission we were able to protect British taxpayers, but it underlined the need to have legal protections.
Our opt-out from the single currency, negotiated at Maastricht by Norman Lamont, was still a trusty shield, but in places there were now holes in it. The problem was similar to the issue of ever-closer union. The words ‘the euro as the currency of the European Union’ were written into the European treaties, and could be used – or alluded to – to silence anyone who raised concerns relating to pounds, krone or zlotys.
Consequently, we wanted recognition of existing circumstances, protection of the single market, and assurances that the Eurozone countries could not discriminate against the non-euro countries. To have the words ‘the euro is not the currency of all EU countries’ written into EU treaties would be not just symbolic but operationally significant. The pound could no longer be treated as a second-class currency. There would be no prospect of the UK joining the euro or bearing the costs of another Eurozone crisis. And there would be no common financial destination for the whole EU.
The final basket was immigration. This was the most difficult and politically significant issue. And it was the one I will always look back on and think: could I have done more?
The sense that we hadn’t got overall national control of immigration was concrete, easily grasped, and a totally legitimate concern. It wasn’t just about the numbers of EU migrants that were coming to Britain, it was about who was coming. There were concerns about people arriving and staying under freedom of movement who quite clearly shouldn’t have been – criminals, couples in sham marriages, spouses from outside the EU. Th
is was partly a result of mission-creep by the European courts. A series of judgements had helped turn free movement into an almost unrestricted right. They paved the way for anyone who married an EU citizen to acquire EU citizenship, whether they met British immigration requirements or not. That essentially opened freedom of movement to the world, and spawned countless fake marriages.
Theresa May set out meticulously what needed to be done, such as tougher re-entry bans on criminals and the power to deport them if they were already here. Together, we secured agreement from the EU that, for the first time, non-EU nationals would have to meet the immigration requirements of the first country they lived in. Those who wanted to live in Britain had to pass our English-language requirement and our minimum-income requirement, which prevented them being a burden on the taxpayer.
The main immigration issue, though, was the vast numbers of people who were arriving legitimately. And as I have explained elsewhere, immigration offers many positive advantages, economically and culturally, but that only happens when you have a balanced and controlled programme.
After the surge in the numbers coming from the accession countries in 2004 – a million people, rather than the 5–13,000 the Labour government had predicted – arrivals had fallen broadly into balance with the combined number of British people choosing to live abroad and EU citizens returning home due to the recession. But that changed while we were in office. By 2012 there was a sudden uptick in the migration graphs, and by 2015 the net number of arrivals from the EU hit a record 184,000. That is what transformed immigration from an issue that wasn’t even mentioned in my Bloomberg speech in January 2013 to an issue that helped propel UKIP to victory at the 2014 European elections.
It was easy to see why so many people were arriving. The continent had been plunged into recession by the crash. Britain was seen as a beacon of jobs, opportunities and stability.
But the imbalance wasn’t just down to economic events. It was also down to how freedom of movement had evolved. When the principle was established in 1992, there were just twelve members of the EU, which had broadly similar economies. Now there were twenty-eight members, with wildly differing economies, thanks to the accession of those formerly communist nations in eastern Europe (and then to the way the crash tore through southern European economies). It was inevitable that migration to richer, more stable countries would rise.
It was also – and people forget this – originally meant to be the ‘freedom of movement for workers’. That was written into Maastricht. Yet two things had gone wrong with this.
The first problem was that the principle was being expanded. It was no longer just people with a job who were coming to the UK under freedom-of-movement rules. Forty per cent of EU migrants were arriving here without a job offer at all. Of course many intended to work, and would work, but some did not.
The second problem was inherent within the principle. The definition within the EU treaties of a worker was someone who worked more than a certain number of hours a week. There could be no differentiation between a worker from another EU country and a UK worker, and successive treaties had expanded these rights over decades.
Combine these two factors with Britain’s non-contributory benefits system – under which both workers and non-workers can claim immediately, and as much as anyone else – and you can see why numbers swelled so dramatically, and why action was needed to bring them back in balance.
I did not want to end freedom of movement. I didn’t want to stop our citizens’ right to live, work, study and retire in other countries, as 1.3 million of them were doing in 2015. My whole political ethos was about giving opportunity to all our people, and I didn’t want to do anything that closed doors or put up barriers for the next generation of Britons.
I also didn’t want to stop EU workers from coming to this country. We depended on them in our schools, universities, hospitals, businesses – across our entire society. We talk a great deal about the contribution of, say, the Windrush generation who came here in the 1940, 50s and 60s, or the Ugandan Asians in the 70s – and rightly so. But sometimes we forget those like the Balkan refugees who arrived in the 1990s, the hard-working eastern Europeans who since the 2000s have proved vital to our national story, and indeed all Europeans who have made Britain their home, before and since the freedom of movement rules came into place.
And anyway, there was no deal on earth that would have enabled us to stay in the EU and not sign up to the ‘four freedoms’ – the free movement of goods, services, capital and people. The EU is a quid pro quo: we get full access to the single market only if we accept its conditions.
So I wanted to reform free movement. With change, I believed that numbers could become broadly balanced once again. We had shown outside the EU that we could reduce immigration. Numbers coming from the rest of the world were down by a quarter since 2010, almost at late-1990s levels. That was thanks largely to our crackdown on bogus colleges, limits on economic migrants, tougher rules on bringing in family members, and the introduction of exit checks at borders.
Of course we couldn’t apply all these things to EU migration. But the existing rules allowed for extra steps to be taken (removing welfare claimants more rapidly, for instance) – and we should take them. There was also the potential for returning rules about free movement to a form more like that which their original authors had intended.
I saw changes in all these baskets as being absolutely essential to the future of the entire EU, not merely to Britain’s membership. After all, the euro had some fundamental flaws. You can’t have monetary union without fiscal union – as became clear when the financial crash struck, and the euro struggled. Likewise, Schengen had fundamental flaws. You can’t have open internal borders without strong external borders – as the migration crisis exposed when it brought open borders under irresistible pressure. And now it was plain to see that freedom of movement had flaws of its own. Unqualified, unrestricted migration within such a large, diverse institution was unsustainable, particularly in such extraordinary times. With the impact of the financial crash, EU enlargement, mass migration and European courts’ judgements, it was failing too. Fraying support in the UK was just the beginning of the unravelling.
I truly thought we could find a solution. For a start, we could redefine what it meant to be a ‘worker’. Someone coming here under freedom-of-movement rules would have to qualify for benefits through contributions, rather than having an automatic right from day one.
But to make a real difference to numbers, the best option seemed to be designing a mechanism for a cap on numbers, enforced by an emergency brake. This meant that if numbers were too high, they could be brought under control long enough for the underlying drivers that had caused the rise to be addressed.
Assume net EU immigration into the UK reached 100,000 in year x. The emergency brake would then allow you to set a cap at, say, 50,000 in years x plus 1 and x plus 2. Anyone who wanted to come would be able to until the 50,000 number was reached, after which they would have to join a queue. It would be policed by the number of National Insurance numbers allocated to workers. No NI number, no work.
At the outset I thought the advantage of this scheme was clear: it went to the heart of people’s concerns about the need to control overall numbers. It was, however, doomed. Business would dislike the restrictions. It would be very bureaucratic. Most significant of all, the British system of issuing National Insurance numbers was simply not fit for purpose. We couldn’t seem to align the number of NI numbers with the immigration figures, and did not register EU workers separately from anybody else.
What’s more, the promised popularity of the cap might well not have materialised. When you asked people the number at which migration should be capped, the majority wanted it as low as possible. Even ‘50,000 plus’, a modest figure which many thought unrealistically low, was only supported by 15 per cent of people.
And in any case,
when we discussed the scheme with officials they said it would have been considered illegal under the treaties – discrimination on the basis of nationality – and therefore impossible to negotiate. Merkel had told me the same. Their argument was that, in a rights-based system, if you meet all the conditions you retain that right whether you are the first migrant or the 50,001st.
There was, however, an alternative: restrictions on welfare for EU migrants.
At first that may sound like a rather roundabout way of reducing numbers. But if you looked at what a draw our welfare system was, you’d begin to see what a difference it could make. I hadn’t quite realised the extent of it until my Europe spad Mats Persson set out the figures for me. Of the £25 billion we spent per year on in-work benefits for workers on low incomes, around £2.5 billion went to migrants from the EU and the wider European Economic Area. That money wasn’t going to people who had been working hard in Britain for years and paying their taxes. Two in five recent EU migrants were claiming benefits in the UK. Some of them who were working were managing to pay less than £750 in taxes while claiming nearly £14,000 in benefits. Others were claiming child benefit and sending it to children back home, who had never set foot in the UK. And an average family in which one or more members was an EU migrant was claiming almost £6,000 per year in tax credits.
It was easy to see how this had come about. Britain is unusual in that it has a non-contributory benefits system, where you can take out without having put in. And that is a factor that undermined all the arguments about the reciprocity of freedom of movement – ‘They have rights in this country that we have in their countries’ – because Britons living in EU countries couldn’t claim anywhere near what EU citizens living in Britain could, or claim it so quickly.
I suspected that action on this welfare question would actually be more popular than the cap, since I knew how well people responded to our arguments on welfare. I would receive a box note later with figures backing this up. Private polling showed that three-quarters of voters supported a brake being placed on payouts to newcomers. Over 60 per cent thought it would reduce immigration.
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