Sunday 26 October 2014

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Why is the UK being asked to pay in more to the EU budget and what can it do about it?

Posted by on 24/10/14
By Open Europe There are a number of headlines today around the EU’s request for a further €2.1bn from the UK in terms of its contribution to the EU’s budget. We breakdown exactly how and why this has happened and what options the UK has now.

Irony alert as Poles ride to UKIP’s rescue in a classic Brussels stitch-up

Posted by on 20/10/14
We reported only a few days ago that UKIP's EFDD group in the European Parliament collapsed after a Latvian MEP resigned, meaning the group no longer met the criteria of having MEPs from at least seven different EU member states. The news drew a lot of media attention (not to mention schadenfreude) mainly due to the financial implications for UKIP - which, according to our estimates, stood to lose nearly €2 million a year in EU funding.

Today, it was announced that Robert Iwaszkiewicz, an MEP with Janusz Korwin-Mikke's KNP (pictured) has joined the group. Korwin-Mikke himself was deemed too toxic to join the UKIP group after the European elections given his controversial views on rape (women always "pretend to resist") and the Holocaust (no evidence Hitler knew about it), and that was before he provoked a full-blown race row. Iwaszkiewicz himself is hardly baggage free; during an interview about with Gazeta Wrocławska a couple of months ago, when asked about domestic violence, he said that:
"I'm convinced that many a wife would benefit from such a response in order to re-connect with reality."
When asked about his Korwin-Mikke's views as described above, he said that "these are taken out of context... when considered broadly, they make sense". In any event, this does not appear to be a principled defection - but rather a classic Brussels-style dirty deal. Polish daily Rzeczpospolita reports that Korwin-Mikke and Farage struck an agreement which would see Iwaszkiewicz's transfer mirrored by an MEP from the EFDD move to the 'far-right' bloc led by France's Marine Le Pen, which also includes Geert Wilders's PVV, the Austrian Freedom Party and Lega Nord, and fell one nationality short of forming an official group during the summer. The paper describes this a "binding transaction" and quotes Iwaszkiewicz as saying that:
"Negotiations are on-going. It was necessary to save them and I had to join urgently".
It remains unclear therefore whether an MEP from the EFDD will definitely join the Le Pen group - but that seems to be the implication. Because of the way the nationalities are represented over the two groups, it would either have to be one of UKIP's 24 MEPs or one of the two Sweden Democrats.

If the former, UKIP and Nigel Farage will face some uncomfortable questions given the extent to which they have tried to distance themselves from the Front National. Regardless, this incident just underscores the absurdity of these taxpayer subsides for European Parliament groups.

We should be concerned about Ukip’s approach to overseas aid

Posted by on 20/10/14

We should be concerned about Ukip’s approach to overseas aid, argues Whitehouse Chairman Chris Whitehouse in his latest piece for The Universe magazine.

To read Chris’ article, please click here.

The Whitehouse Consultancy is one of Europe’s leading public affairs and communications agencies.

UK takes another blow over bankers’ bonus cap

Posted by on 19/10/14
EBA HQ in London
The European Banking Authority (EBA) on Wednesday released the results of its investigation into whether banks across Europe have been using ‘allowances’ to skirt the EU’s bankers’ bonus cap. This is obviously a hugely contentious issue in the UK and the fact that UK banks have been taking this approach has been well publicised and oft criticised by EU politicians. But it’s interesting to note that the EBA found 39 banks across six EU states had been using such allowances, so clearly it is an issue which extends beyond the UK’s big banks.

Nevertheless, the opinion does not bode well for the UK with the EBA concluding:
“The EBA found that in most cases institutions had topped up the fixed remuneration of their staff and had introduced discretionary ‘role based' allowances which have an impact on the limit of the ratio between variable and fixed remuneration required by the EU Capital Requirements Directive (CRD IV).”

“The report showed that most of the allowances, which were the subject of the EBA investigation, did not fulfil the conditions for being classified as fixed remuneration, namely with respect to their discretionary nature, which allows institutions to adjust or withdraw them unilaterally, without any justification.”
The report is much as expected, with the EBA making the case that the allowances are not permanent pay for a number of reasons: they are revocable with little notice, specific to the staff member not the role, often have forfeit clauses therefore not permanent and are often linked to proxies for the firms performance (such as the economic environment).

The last point in particular clearly chimes with concerns from banks that they will have less control over their costs at times of economic hardship. This is exacerbated by the point (number 37 in the report) below which is frankly just a bit strange:
"Some role-based allowances might only have been introduced to comply with the bonus cap introduced by the CRD IV while retaining some cost flexibility. Cost flexibility is of importance where the performance of the institution or a business unit is no longer considered adequate."
Surely, cost flexibility is always relevant for a business, particularly one in a very competitive environment, and not just when it is failing? We’re not quite sure what the EBA is getting at there.

What happens now?
  • The opinion isn’t binding, although the EBA has said it expects national regulators to make sure that all banks are in compliance by the end of the year, however, it has no legal way to enforce this (yet).
  • The EBA is currently reviewing its guidelines on the issue and will hold a public consultation before the end of the year with the new official rules being published in the first half of 2015 (at this point they will be legally binding).
  • In particular, if banks want to continue using allowances they will have to be “predetermined, transparent to staff and permanent”.
  • Ultimately, this throws a bit more uncertainty in the mix with banks uncertain over exactly how and when to adjust their allowances.
What does this mean for the UK?
  • Clearly, this is a bit of a blow for the UK. That said, the issue has already to an extent moved out of the EBA’s hands. The UK is challenging the original proposal at the European Court of Justice. Even if this proposal fails it could challenge the updated guidelines/rules which are used to implement the cap. Banks themselves could of course choose to launch legal challenges although this looks unlikely at this stage.
  • Banks will ultimately find a way to pay their staff the market rate. This will likely end up being in the form of higher base salaries, something which will make banks less flexible and push up their average costs. This could potentially harm competitiveness and possibly force banks to pass on such costs to consumers.
  • The biggest concern is a broader one of precedent and where laws are really made. The bonus cap was a specific law tagged onto a much larger piece of legislation to which it is largely unrelated. This significantly aided its passage through and watered down scrutiny. Then given the technical nature of the rules a lot of the holes were filled in by the Commission and the EBA in setting the exact parameters for implementation – providing a lot of power to the two institutions. The temptation to take such an approach with complex financial regulation is obvious and circumvents the little accountability and control which member states have.
This debate surely has some way to run yet but this looks to be one battle which so far the UK is losing.

EU BANS TEDDIES IN TIME FOR CHRISTMAS!

Posted by on 16/10/14

True? False? Who cares?

It’s a great headline. With many shops, particularly in the UK, already displaying Christmas baubles in their windows it’s a timely news item certain to grab reader’s attention – especially that broad demographic “parents” who are already fretting over how to fill their children’s stockings in time for Christmas.

The answer of course is false. Let us spell this out clearly: No. The EU is not proposing to ban any teddies in time for Christmas. There is no such proposal on the table. No debates in Parliament. No member state pushing for it in the Council. No ECJ judgement imminent. Some years ago it nearly became headline news but that was a long time ago now…..

….in the mid-1990’s Emma Bonino, the chain-smoking radical feminist who, until recently was Italy’s Foreign Affairs minister, worked as the EU Commissioner for Consumer Affairs. At the time I was working for a public affairs consultancy. Late one Friday afternoon I got a panic stricken message from a client whose job it was to oversee the safety of toys sold across Europe. You can say many things about manufacturers, corporations and industry, all possibly true, but the one thing you can not say of the toy manufacturers is that they do not take safety seriously. If anything goes wrong it’s belly-up for them. Toy safety and the Toy Safety Directive was something they worked on round the clock. Each manufacturer had a dedicated safety officer in charge of designing safe toys and ensuring that all toys sold on the EU market met the safety criteria set out by the Toy Safety Directive.

That Friday afternoon the boffs were in disarray, panic was spreading amongst the ranks, disaster was nigh. Calamity sizzled in the air. Some lowly official in the Commission had proposed an amendment to the Toy Safety Directive that would have classified all toys with long hair as too dangerous for circulation in the EU. Were the amendment to go ahead it would have meant an effective European wide ban on all Barbie’s, teddy-bears, dolls and countless other toys that have fake hair attached to them. Something had to be done. Quick. I was to sort this mess out. Now. I rang the lady in the Commission responsible for the amendment. She didn’t deign to talk to me. I tried calling a few MEPs working on the proposed amendment. None of them were around; nor were their assistants particularly interested in helping me out. I tried to talk to some people higher up the command structure of the Commission. To no avail. No one was in the least bit interested in returning any of my calls or answering any of my urgent requests for more information on this proposed amendment. In the meantime I had the client on my back asking if I had any news? Desperate, I sent a fax to Emma Bonino’s spokesperson. In the subject line I wrote:

COMMISSION BANS TEDDIES IN TIME FOR CHRISTMAS”.

Within five minutes I had a meeting with none other than the Commissioner Emma Bonino herself. Result. The meeting went well. The toy safety team presented their case. Satisfied that EU consumers were not at risk from toys with long hair the amendment was scrapped. Readers will be pleased to read that in the intervening twenty years or so there have been no reported cases of children being maimed by or killed by toys with long hair.

A rather long anecdote to make a simple point: when it comes to tabloid head-lines the Commission runs scared. For good reason. The press have been brilliant at ridiculing, belittling, mocking but above all misrepresenting Europe. How easy it is for some bored, ignored Brussels journalist to make up a little story that feeds into the populist mood and grabs the attention of the misinformed.

Then again, if the EU is too stupid to develop it’s own independent media to present it’s case then really it deserves all it gets. More of the EU communication budget goes on paying expensive Consultancies to prepare glossy corporate-style brochures than it does to supporting an independent pan-European media outlet capable of presenting independent, newsworthy stories on a daily basis that readers can identify with.

Yet, at the same time it has to be admitted that a profitable pan-European media is notoriously hard to develop. Many have tried. Many have failed. In the early 1990’s Maxwell launched “The European”. Eight years later it was dead in the dust. In 1995, The Economist launched European Voice but sold it last year to a French company. One of the few survivors has been EurActiv, founded in 1999. EU Observer is perhaps the only other survivor. Neither are large enough to take on the entrenched, media giants that dominate the national landscape and who shape voter’s perceptions of the EU.

There has been much talk in Brussels recently of the new Axel Springer-Politico Joint Venture that will create a new pan-European wide media. Will it succeed where other have floundered? That remains to be seen. More on that later.

In the mean time, in a spirit of mis-information, half-truths and misleading headlines euperspectives has been scouting around for some good, newsworthy stories to boost reader numbers and has come up with some highly probably stories that are bound to engage readers.

Mayor of London, Boris Johnson bans Londoners from speaking English!

The Greater London Authority has announced that the Mayor of London, Boris Johnson, wants to turn London into a “mini-Holland”. Were in not printed in black you’d think they were making it up – but the headline clearly states “Mini-Holland trial starts in Walthamstow!”

This can only mean one thing – Londoner’s are going to have to learn Dutch. Dutch is a guttural language that does not lend itself to estuary English or cockney so we went out to ask what ordinary Londoners thought about the idea. Pete, a cab driver from Lewisham hadn’t heard of the plan but when explained that Johnson intends to turn London into a mini-Holland he was furious. “If Johnson thinks I’m going to learn Dutch he’s got another thing coming. Who does he think he is to tell me what language to speak!”

Sheila Connors, a GP in Hackney worried that many of her patients would not be able to understand her. Hugh, a city worker in Canary Wharf took a more pragmatic view pointing out that Holland had better cycling paths than London so perhaps it was time for Londoners to start behaving more like the Dutch and less like Londoners?A good place to start would be to switch from English to Dutch.

Given the sensitivity of turning London into a mini-Holland we caution Johnson to think carefully about where this plan is heading. What starts out as some loose plan to offer Dutch-style cycling paths in London will soon lead to the complete Dutchification of London. Londoners are just not ready to abandon English in favour of Dutch. At the very least they should be given an “in-out” referendum so that their voices can be heard.

Farage in secret talks with tobacco industry to feature UKIP colours on cigarette packaging

If you’re worried that your teen-age kids might be discouraged from taking up smoking or from drinking cheap alcohol because of proposed plans to introduce plain packaging and minimum alcohol pricing then fear no more. Vote UKIP. Farage, the charismatic leader of UKIP, well known for his love of a pint of lager and a packet of fags is totally opposed to plain packaging of any form. According to the UKIP website the party opposes all “plain paper packaging’ for tobacco products and minimum pricing of alcohol.”

So delighted is the tobacco industry with Britain’s latest rising political star, rumour has it they are in talks with UKIP to use their bright colours, purple and yellow, on all cigarette packages before the end of the year. A spokesperson for the industry said, “Nigel Farage is a role model to all young people. He is a fine example of what a success you can make of yourself if you learn how to smoke more than twenty a day and drink in the pub at lunch time. We would most certainly welcome closer ties with UKIP.”

Farage has never made a secret of his love for drinks, smoking and women and he has not completely denied that he accepted a donation of EUR 25 000 from a British e-cigarette company. He later went on to make a You Tube video promoting their product.

True? False? Who cares?

 

David Cameron’s speech raises Tory prospects ahead of General Election

Posted by on 13/10/14

Whitehouse Consultancy Chairman Chris Whitehouse argues that David Cameron has steadied the Party ahead of the General Election.

To read Chris’ article, please click here.

The Whitehouse Consultancy is one of Europe’s leading public affairs and communications agencies.

David Cameron and his Ministers continue to tread fine line on EU migration reform

Posted by on 04/10/14
UPDATE: The Prime Minister has now given his conference speech. This is the passage on EU migration:
"Immediate access to our welfare system, paying benefits to families back home, employment agencies signing up people from overseas, not recruiting here, numbers that have increased faster than we in this country wanted and at a level that was too much for our communities and for our labour markets. All of this has to change and it will be at the very heart of my renegotiation strategy for Europe. Britain: I know you want this sorted, so I will go to Brussels, I will not take no for an answer and when it comes to free movement I will get what Britain needs."
So, no new policy announcement today. However, David Cameron's reference to the "numbers that have increased" and "at a level that was too much for our communities" leaves the question we posed below hanging. He could argue that tackling migrants' access to benefits (particularly in-work benefits) will help with the numbers, as it could reduce the incentive for some to migrate, particularly those at the lower end of the job market. Will he be prepared (or be allowed) to stop there?

Original post: The Times and the Mail today both feature stories on the increasing pressure on David Cameron to take a stronger stance on migration from the EU.

The Times suggests that senior figures within his party are calling on him to use his renegotiation to explore the introduction of quotas on migrants from existing EU member states. It quotes London Mayor Boris Johnson saying that
“We all want change, we all want a renegotiation. We want sensible control of the numbers of people coming in. I think you would agree that it is the right and duty of every state to have some idea of how many people want to settle in its boundaries, what jobs they propose to do there, and how much they cost the local authorities. Isn’t that fair enough?”
As we have noted before, the free movement debate is about fairness and volume. So far, David Cameron and his Ministers have concentrated on the former - rules on migrants' access to benefits can be changed through secondary EU legislation via QMV and co-decision with MEPs and there is widespread support for addressing the issue among like-minded countries in Northern Europe. David Cameron is also on the record saying that he wants new conditions placed on migrants from countries that join the EU in future. However, the latter issue, addressing the numbers of migrants coming from existing EU member states is much tougher - it means addressing what is seen as a fundamental tenet of the EU and altering it would require unanimous agreement, almost certainly via treaty change.

Home Secretary Theresa May and Foreign Secretary Philip Hammond have both been quoted on the subject today, but both have stuck to line that an 'emergency brake' or measures to tackle the numbers of migrants would apply to new members of the EU, not existing ones.

May said:
"This is an area where David Cameron and I have said we need to look to the future to talk about the rules, particularly for countries coming into the EU in the future, and putting some sort of brake on their access to full free movement. For example, one idea we’ve suggested is they shouldn’t have full free movement rights until their GDP, their economy, is at a certain level compared to other economies within the EU."
Similarly, Hammond told an Open Europe fringe event that:
“It isn’t going to be enough just to look at benefit abuse...We are going to have to look at how we accommodate future new member states with the implementation of free movement, future new member states and how we restrict them. We are going to have to look at how we deal with destabilising flows."
There has been speculation that Cameron will address the issue in some way in his conference speech today, it will be interesting to see how he treads what is an increasingly fine line.

Older voters targeted by UK parties ahead of the General Election

Posted by on 01/10/14

Whitehouse Head of PR Chris Rogers argues the General Election will be determined by older voters and all parties will focus their manifesto to that demographic.

To read the full article, click here.

The Whitehouse Consultancy is one of Europe’s leading public affairs and communications agencies.

EP Hearings of Commissioners: Will MEPs claim any notable scalps?

Posted by on 28/09/14
By Open Europe On Monday we will see the first hearings of European Commission nominees by the European Parliament committees responsible for their respective policy areas. MEPs are not able to strike down individual Commissioners but they do have a veto over the Commission as a whole. Which nominees are in the Parliament's cross hairs?

Suck it and See: Scotland and after

Posted by on 22/09/14

Winning the referendum on Scottish independence has thrown the British Establishment into a mighty tither. Only the Queen, whose mother was a Scot, emerges with dignity intact.

Not that things would have been very much calmer if the answer had been Yes rather than No. The fact is that without a written constitution to regulate referenda – their frequency, their threshold, and their mandate – the still United Kingdom (sUK) has no systematic method other than party politics to deal with constitutional change.

Reforms with profound consequences for the vitality of democracy and the efficacy of government to produce public goods are being made on the hoof, in a haphazard and even irresponsible way. There is no precedent for a Convention, at least in England. A simple majority vote in the House of Commons, with no threshold, is deemed sufficient to tamper with the constitution.

So it is to this partisan muddle that the country must now look for constitutional reform. As none of Britain’s seven political parties are in favour of doing nothing with the constitution, we must conclude that the status quo is not an option.

One need not be optimistic. Even Tony Blair’s reformist government with a large Commons’ majority managed few constitutional reforms: the removal of a number of aristocrats from the House of Lords; the creation of parliaments with limited legislative and budgetary powers in Edinburgh and in Cardiff; the election of two fairly eccentric Mayors of London; and the incorporation of the European Convention on Human Rights into UK law. The coalition government since 2010 has failed on almost all counts: a botched referendum on a non-proportional electoral system for the Commons; a failed reform Bill for the House of Lords; and, worst of all, an EU Act in 2011 whose main effect is to impose a referendum on the hapless public about continued membership of the EU, possibly as soon as 2017.

The flight to referenda is the desperate recourse of political parties having lost the will or capacity to face up to informed and decisive debate at Westminster. Populism, however, is no guarantee of democratic legitimacy, as Louis Napoleon Bonaparte (and many others) could aver. Plebiscites are good at shaking up the established order but seldom of any use whatsoever in settling complex constitutional issues.

There was no more futile claim made by either side in the Scotland campaign than their insistence that the vote last Thursday was the final decision about Scotland’s membership of the UK. As early as Friday, after losing by 45% to 55%, Alex Salmond, the Scottish Nationalist leader, was talking seductively of the prospect of another future referendum. Even David Cameron spoke of having only settled the matter ‘in this generation’. It certainly cannot be ignored that Glasgow, once the second city of the British Empire, has voted to leave the United Kingdom. Twitter had soon converted the Better Together slogan of the ‘No thanks’ campaign to Bitter Together. Salmond and his likely successor Nicola Sturgeon pointedly missed a service of reconciliation in Edinburgh’s St Giles Cathedral. I guess a generation in politics is about one decade long.

Cameron might have seen off Salmond, who resigned later that same day, but he has not satisfied that (large) part of his own Tory party which now marches to the beat of UKIP’s drum. The Prime Minister’s proposal immediately to exclude Scottish MPs from voting on ‘English’ matters at Westminster hardly smacked of magnanimity in victory. It is a wonderful conceit shared by many in London that a change in the rules of procedure of the Commons amounts to radical and durable constitutional reform.

It is interesting to consider the future of the UK in the light of what has happened in Belgium. Belgium’s national problem is not identical to Britain’s, of course, and is complicated by a sectarian language issue that does not affect Anglo-Scottish relations. But Belgium’s answer has been, over the years, to install and then tweak a federal system of government under a constitutional monarch who is a Saxe-Coburg-Gotha cousin of Queen Elisabeth II. Today, Belgium’s federated kingdom serves to accommodate the jealousies of its component regions and the competing claims of its political parties. What dominates the media day-by-day in Belgium is not so much the confrontation between Flanders and Wallonia but the politics and the politicians of the country’s big cities: Ghent, Antwerp, Liege, Charleroi and Brussels. Decentralisation in Belgium is the mundane political, economic and social reality. It is a bit costly and surely complex, and nobody fools themselves that the national problem is ‘settled’ for good.

There are lessons to be learned here for the UK. When self-government was invented in Flanders under Spanish tutelage, the English and the Scots sat up and took notice. They should do so again. Britain is not Belgium, but it is quite Belgian in needing to become a more sophisticated democracy.

The first lesson is to revive the federal idea in Britain. A system in which each level of government is coordinate with each other but none is hegemonic seems to be a rational starting point. Federal law has primacy, as indeed does EU law, but checks and balances preserve harmony. The dominance of England, being so big, must be catered for by its sensible partition into large regions. London is already a powerful city-state. Four regions in the rest of country would work well as functional polities: the South East and East Anglia, the South West, the Midlands, and the North. Within these regions, once-powerful municipalities, the engines of economic growth, should be restored to their former glory. A decentralised NHS could scarcely do worse than the current behemoth. Whitehall should be stripped of its omnipotence in education. Autonomous local government, with assets at its disposal, would compete healthily for investment.

The federal solution is above all a pragmatic one. The House of Lords would do well adapted as a federal chamber. The rehabilitation of federalist thought might make the Brits understand Europe a little bit more. And a federal United Kingdom, with Home Rule for Scotland, Wales and Northern Ireland alongside powerful self-confident English city-states, might prove to be a more convincing basis for the future of the European Union than the old, creaking nation state. Worth a try. Suck it and see, in the best British tradition of constitution mongering.

_____________________________
Andrew Duff is a former local government Councillor and Member of the European Parliament. He is a federalist and a Liberal.

@AndrewDuffEU

Yesterday Scotland, tomorrow the EU? Are there lessons for the ‘In’ and ‘Out’ camps?

Posted by on 22/09/14
Staying or leaving?
If David Cameron wins the May election he has promised an In/Out EU referendum by 2017. Even if he does not it is still probable there will be one at some point. National referendums are rare in the UK so with the Scottish vote we have a rare glimpse of what the EU referendum campaigns could look like. What should the nascent In/Out camps take away from it?

In trying to understand the motivations of the Scottish voters Lord
Ashcroft's poll, conducted after the vote, sheds some interesting light. Voters made up their minds late in the day - 52% of voters made their mind up this year with 18% in the last month. The main issues driving independence voters were disaffection from Westminster and concerns about the NHS. Uncertainties over the pound and pensions drove the No side. 70% of Yes voters said they agreed with "The principle that all decisions about Scotland should be taken in Scotland" while No voters also felt the risks of independence were to great and conflicted with their attachment to the UK.

So are these findings and the Yes/No campaign relevant to a UK referendum on EU membership? here are some key issues:



Scottish Yes/No
EU In/Out
The need for a clearly thought out alternative to the status quo
The Scottish 'Yes' campaign came unstuck on some key elements of their proposition. Notably confusion over the £ and EU membership. The difficulty ‘Yes’ had with these key policies dogged their campaign
The nascent EU ‘Out’ campaign has a similar problem as there is no settled view. What relationship will the UK have with the EU after exit? Will it be the EEA, a new free trade agreement, what will access to the Single Market be etc and what are the political trade-offs. 
Harnessing optimism
The 'Yes' campaign was good at harnessing the ‘future’ and ‘change’ as a campaign weapon. The ‘No’ side failed to put forward a comparable future vision for the UK focusing instead on the risks of independence leading them to be portrayed as ‘negative'.
It will be difficult for the ‘In’ campaign to portray an optimistic vision of an EU future, given the likelihood of ongoing problems in the Eurozone – it will probably stick to pointing out what it sees as the risks of leaving.

It remains unclear whether the ‘Out’ campaign will be able to manage to transform itself from campaigning against the EU’s negative record to wholeheartedly putting forward its own positive vision.
Who leads the campaigns matters - can they claim to be the anti-establishment?
In Scotland the ‘Yes’ campaign was united, had message discipline and was led by the First Minister of Scotland. This gave it the credibility of office and the ability to set the scene while remaining an outsider/underdog in relation to Westminster at the same time.

By contrast the ‘No’ campaign was cross-party, divided and although ‘backed’ by the UK government was simultaneously seen as 'the Establishment' while being in opposition in Scotland.

It is unclear who the ‘In’ and ‘Out campaigns will be led by. However, on the basis that David Cameron is content with his renegotiation, the ‘In’ will have the advantage of the head of government and all the main party leaders.This could leave the ‘Out’ campaign run by UKIP and a number of backbench MPs.

Although the ‘Out’ side would have the advantage of being ‘anti-establishment’ there would be a large imbalance in credibility and official resources that could tell in the campaign.

Foreign interventions helpful /

unhelpful?
The ‘Yes’ campaign had to endure a series of interventions against them from UK allies and others including the USA, Australia, Germany, Spain, NATO and the EU.  
While foreign interventions in the EU referendum are inevitable some will be more effective than others. While UKIP will not lose any sleep over an admonition by Mr Juncker, Germany or France, they may suffer some damage if Commonwealth allies or the US express a desire for the UK to stay in the EU.
Business interventions - do they matter?
'Yes' had to put up with major Scottish and UK companies threatening to relocate out of Scotland in the event of independence. To counter it Yes managed to organise some pro-independence business voices but the overwhelming balance of the warnings weighed on the campaign.
‘Out’ like ‘Yes’ is likely to have to endure a slew of major companies questioning the case for exit, particularly larger businesses. This too will be countered by pro-exit business voices. Without the currency issue to worry about, the business question will be about what market access the UK would have to the single market (see alternative to the status quo section above).
Emotional appeal of staying / leaving?
While 'Yes' managed to mobilise significant emotional appeal for independence the residual emotional appeal of the United Kingdom was also considerable.
The emotional appeal of the EU institutions in the UK is close to zero. While it is clear that the emotional desire to leave the EU is felt strongly by confirmed 'Outists', it is less clear what role political identity will play among the undecideds.
Devo Max / EU Devo Max - key to the middle ground voter?
While the campaign started as a polarised Yes/No campaign it quickly switched in the last week into a No+Devo Max v. separation. This managed to win over some of the wavering middle ground to No. For that to work the credibility of the offer being delivered was key.
The In/Out campaign will start from the basis that ‘EU Devo-Max’ has either been achieved or has failed. This will have a huge repercussion on the campaign. If the negotiation is still on-going and is in the form of a last minute ‘EU Vow’ it is unlikely the credibility of those offering it will be enough to swing the result.
Turnout and the undecided voters - Age groups voting
The Yes/No campaign had a very high turnout and a high level of voters who made their mind up in the last month.

Older people tended to support the UK and younger people independence. As turnout was universally high the normal higher turnout among older voters probably did not tell.

An In/Out referendum is likely to have a lower turnout and a higher level of undecideds, making the last month and weeks of the campaign key.

Older voters are more likely to vote for 'Out' and younger for 'In'. However, with a lower turnout older voters are more likely to make their voice heard.

Wild card issues
The Yes/No campaign spent a lot of time discussing the supposed ‘privatisation’ of the NHS - a policy area already devolved to Edinburgh.
Immigration aside, the dry nature of EU policy could mean the In/Out campaign comes to focus on unpredictable issues.
Rogue polls - who might they help?
The close nature of the polls probably drove turnout and drove ‘shy unionists’ who may have taken the result for granted to vote.
Polling is also very likely to be a large driver of the 'In' / 'Out' campaigns but it is unclear who this might benefit.

Once the dust from Scotland’s ‘No’ settles, what are the implications for the UK’s EU renegotiation?

Posted by on 21/09/14
Act in haste - repent at leisure?
The big question over Scottish independence may have been settled but the campaign has thrown up a whole host of further questions concerning the UK's constitutional settlement that will need to be addressed in the near future. We look at some of these questions and at how they could impact on the UK's EU reform agenda. 

What’s the plan and schedule for devolution negotiations and implementation?

When it looked like a 'Yes' vote might be on the cards, the Tories, Labour and the Lib Dems pledged a new raft of powers for the Scottish parliament over areas like taxes, spending and welfare, with proposals due to be tabled in January. Speaking this morning, Cameron announced that discussions over a new settlement for the rest of the UK and England in particular - would take place "in tandem with, and at the same pace as, the settlement for Scotland".

Given that this will include - in Cameron's words - "a decisive answer" to the long-standing West Lothian question (ensuring "English votes on English laws"), it remains to be seen whether this timetable is realistic (some MPs are calling for a full constitutional convention). Labour have said they are committed to "looking at the issue" but the party is divided, with some senior figures including Gordon Brown and Douglas Alexander rejecting the option of Scottish MPs being excluded from votes only affecting English matters (which could deprive a potential Labour government of a majority on such votes). We simply do not know how far-reaching this shake-up will be and a quick and amicable cross-party consensus cannot be taken for granted.

Could this spill over into the general election campaign?

If the devolution question isn't on the way to being settled, it could conceivably play a large role in the general election campaign; the Tories and UKIP would take up the English cause, Labour and the Lib Dems would be stuck somewhere in the middle while the SNP would play the 'another broken promise by the Westminster establishment' card (unless the Scottish and English questions are considered separately). Not only would this displace debate about EU reform from the campaign, but growing English resentment at Scotland's privileged position within the UK could further boost the UKIP vote. Nigel Farage is already deftly positioning himself to take advantage. A strong UKIP vote would of course put pressure on any government (particularly a Conservative one) to take an even tougher line during the EU renegotiation.  

How will it impact the EU renegotiation/referendum timeline?

If the Tories end up back in government but still have to wrap up the constitutional questions it could prevent the government from hitting the ground running on EU reform and renegotiation. Given the scale of the challenge this is far from ideal. Furthermore, as we have warned before, we believe that Cameron is already behind the curve on finalising targeted reforms and road testing them with governments and business across Europe. In the end though, it is hard to see how Cameron could get away with shelving his planned 2017 EU referendum, given the pressure he would be under from his own party.

Secession: Scotland says NO but quest for legal framework continues

Posted by on 21/09/14
By Catherine Brölmann and Thomas Vandamme The 300-year-old union between Scotland and the rest of the United Kingdom survived the referendum held on 18 September 2014. But while preserving the UK's union, The 'No' victory did not shed much-needed light on the legal framework for secession, however.

David Cameron’s Asymmetric Referendum

Posted by on 21/09/14
In the world of financial speculation there is something known as an asymmetrical trade. This means that the downside is very limited – or none at all – and the upside is considerable. I have long thought that the in/out referendum in Scotland was a superb move by David Cameron, but reading his speech this [...]

So, Mr Putin and Mr Farage – what lessons have you learned from the Scottish Referendum?

Posted by on 21/09/14

The Scottish referendum made for magnificent drama. At risk a 306 year old Union. The disintegration of an ancient kingdom. A monarch awaiting the fate of her kingdom in an ancestral palace in the Scottish highlands. A weepy Prime Minister. A feisty independence fighter. The haunting sounds of bag-pipes echoing through the Scotland’s fabled mists. Saltires and the cross of St George fluttering atop mountain peaks.

No wonder the world was hooked.

This morning the audience awoke to the realisation that the dream of an independent Scotland was pie-in-the-sky. A notion for romantics not realists. With the Scottish economy so tied up with England the risk of going it alone was just too high. Wages. Pensions. Currencies. Trade. Investment. The danger of a staggering economy. At the end of the day economics trumped patriotism.

But hey, that’s democracy for you. Those who live in the free world, with constitutional democracies and a legitimate application of a substantive Rule of Law know that patriotism is secondary to economics. Jobs, income, pensions, low inflation those are what voters really hold dear – not a few extra miles of some God-forsaken, pot-holed road leading to a regional airport littered with the bodies of young soldiers and civilians.

It is apt that six months after the so-called democratic referendum in the Crimea the UK should hold a referendum. You’d have to be a self-exiled, hermit living amongst the puffins in the Outer Hebrides not to have noticed the difference between the two. Yet, there are still those who cling to the theory that the referendum in the Crimea was somehow legitimate and that Russia’s aims in annexing this land is perfectly within Russia’s “geo-political” sphere of influence. The two referendums couldn’t have been more different but for those who still don’t quite get it they are spelt out here.

Rather than witnessing the massing of troops and tanks on the border between England and Scotland, we saw desperate, sweating politicians running up to Glasgow and Edinburgh from Westminster, literally pleading with the voter to stay part of the Union. This is a rare moment to treasure and enjoy. It is not often that real power resides in the people and not the leaders of the main political parties.

Not once did we hear talk of anonymous, heavily armed “little green men” in army fatigues appearing here there and everywhere, trying to influence the way voters should decide as opposed to how they would like to vote. Rather, we witnessed a bunch of British celebrities leaving their mansions in the home-counties hot-footing is to Scotland to sing songs and hold rallies pleading with the Scottish to stay part of the Union.

The referendum was organised over two years not seven days. This gave enough time for there to be not one, not two but three televised debates between the two parties where the pros and cons of both sides were aired. Plenty of time for comment and debate allowing voters to make an informed choice not a rushed one.

Above all, best of all, there was plenty of satire. Those Westminster politicians may have looked teary-eyes, hot under the collar and frantic but they never once looked peeved, piqued or proud when things weren’t looking so good for them.

The Yes campaign accepted defeat with grace happy in the knowledge that they will not wake up fearing unknown thugs might drag them from their cars as they head off to work this morning only to disappear into the dark forests of Scotland’s highlands never to be seen again by their families.

That is how to hold a democratic referendum that the international world can recognise as legitimate. Alex Salmond and his fellow politicians who worked day and night over the past couple of months to persuade the electorate to vote for Yes to an independent Scotland and the 44.7% who dearly hoped Scotland could go it alone will be gutted but they will pick themselves up and begin a new process of negotiations with Westminster as was promised them in the dying days of the referendum

Nigel Farage, England’s equivalent in sentiment, if not temperament, intelligence and nature to Scotland’s Alex Salmond may also want to take note. Dreaming of independence from Unions is one thing. Getting the electorate to vote for it is something different all together.

Should there ever be an “in” “out” referendum in the UK on EU membership the voter will put their hands on their wallet and know which way to vote. Nothing wrong in holding long established traditions in great affection, nothing wrong in being proud of one’s heritage, nothing wrong in enjoying the colour, pageantry and music that define who you are. Unions that uphold the Rule of Law – be it the Union between Scotland and England or the Union between the United Kingdom and 27 other EU member states, allow room for that – plus they guarantee you a better economic deal than would otherwise be the case.

There is one big difference that UK voters may want to consider. Whilst Cameron, Milliband and Clegg were all desperate to keep Scotland in the Union and prepared to make last-minute concessions in an attempt to keep the Union together, can the same be said of the EU’s other 27 member states? It seems highly improbable that Merckel, Juncker or Hollande will rush to London, with tears in their eyes and sweaty palms, begging the UK to stay in the EU. You never know. Could happen – but it is hard trying to envision such a scenario.

 

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