A Brexit could mean more regulation for small businesses, not less

Questions raised at a recent New Statesman roundtable challenge the ‘better off out’ argument.

‘Britain is shackled to the corpse of Europe’, wrote the MEP and polemicist Daniel Hannan last November. Often central to this argument is the notion that Brussels red tape is strangling the potential of small businesses, which could be a fundamental driver of our economic growth. If we left, we could dictate the terms of our trade with Europe. Recent tumult amongst the Conservative ranks would suggest that Hannan is not unique in this view. However, the idea is rooted in a fundamental misconception about our relationship with the EU- that exit would lead to less regulation for small businesses.

In a recent roundtable held by the New Statesman discussing the methods by which Britain might increase exports amongst small and medium enterprises (SMEs), Dr. Rebecca Harding, CEO of Delta Economics, suggested that exit from the EU will result in more regulation, not less. This is based on previous research conducted by Delta Economics in collaboration with UKTI, which shows that the amount of distance regulation would in fact increase. Non-UK companies outside of the EU but inside European Free Trade Association (EFTA), most notably Norwegian and Swiss companies, have complained of being treated as being both outside and inside of Europe, thereby increasing the amount of bureaucracy that they are forced to face. Further information about this research and the work of Delta can be found here.

Therefore, even if we accept the premise that our relationship with the EU is primarily about trade rather than the more utopian social democratic vision of Europe as a protector of rights and freedoms, it remains in our economic interest to stay in. This strikes at the heart of the economic pillar of the Eurosceptic ‘better off out’ argument. This also questions the oft-touted premise that Britain should, or even could, aspire to a ‘Norwegian-style’ relationship with the EU.

Instead, evidence suggests that small businesses stand to benefit from further economic integration. At the New Statesman round table, Helen Brand showed that even further removal of barriers to the achievement of the single market could provide invaluable trade opportunities for SME’s- potentially increasing trade by 45%. Findings from the progressive think-tank Institute for Public Policy Research (IPPR) further support this- suggesting that further integration of the single market could increase EU consumption by €37 billion, thereby providing ample opportunities for small business growth. Even the prime minister's newly appointed strategist Jo Johnson agrees, arguing in a recent essay that further integration would leave the average EU household £3,570 better off.

The more reasoned political voices on this issue remain oddly silent in the face of popular pressure, despite the fact that it marks a point of accord between the progressive Europhile and pro-trade business lobbies. As IPPR notes, neither the British government nor the EU itself have done enough to convince of its benefits, and myths have abounded. If the argument was centered around our small business economy becoming more competitive and the ceaseless ‘global race’, perhaps our discourse would be more measured.

Research suggests SME's could face more regulation if we left the EU. Photo: Getty Images
Photo: Getty Images
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The future of policing is still at risk even after George Osborne's U-Turn

The police have avoided the worst, but crime is changing and they cannot stand still. 

We will have to wait for the unofficial briefings and the ministerial memoirs to understand what role the tragic events in Paris had on the Chancellor’s decision to sustain the police budget in cash terms and increase it overall by the end of the parliament.  Higher projected tax revenues gave the Chancellor a surprising degree of fiscal flexibility, but the atrocities in Paris certainly pushed questions of policing and security to the top of the political agenda. For a police service expecting anything from a 20 to a 30 per cent cut in funding, fears reinforced by the apparent hard line the Chancellor took over the weekend, this reprieve is an almighty relief.  

So, what was announced?  The overall police budget will be protected in real terms (£900 million more in cash terms) up to 2019/20 with the following important caveats.  First, central government grant to forces will be reduced in cash terms by 2019/20, but forces will be able to bid into a new transformation fund designed to finance moves such as greater collaboration between forces.  In other words there is a cash frozen budget (given important assumptions about council tax) eaten away by inflation and therefore requiring further efficiencies and service redesign.

Second, the flat cash budget for forces assumes increases in the police element of the council tax. Here, there is an interesting new flexibility for Police and Crime Commissioners.  One interpretation is that instead of precept increases being capped at 2%, they will be capped at £12 million, although we need further detail to be certain.  This may mean that forces which currently raise relatively small cash amounts from their precept will be able to raise considerably more if Police and Crime Commissioners have the courage to put up taxes.  

With those caveats, however, this is clearly a much better deal for policing than most commentators (myself included) predicted.  There will be less pressure to reduce officer numbers. Neighbourhood policing, previously under real threat, is likely to remain an important component of the policing model in England and Wales.  This is good news.

However, the police service should not use this financial reprieve as an excuse to duck important reforms.  The reforms that the police have already planned should continue, with any savings reinvested in an improved and more effective service.

It would be a retrograde step for candidates in the 2016 PCC elections to start pledging (as I am certain many will) to ‘protect officer numbers’.  We still need to rebalance the police workforce.   We need more staff with the kind of digital skills required to tackle cybercrime.  We need more crime analysts to help deploy police resources more effectively.  Blanket commitments to maintain officer numbers will get in the way of important reforms.

The argument for inter-force collaboration and, indeed, force mergers does not go away. The new top sliced transformation fund is designed in part to facilitate collaboration, but the fact remains that a 43 force structure no longer makes sense in operational or financial terms.

The police still have to adapt to a changing world. Falling levels of traditional crime and the explosion in online crime, particularly fraud and hacking, means we need an entirely different kind of police service.  Many of the pressures the police experience from non-crime demand will not go away. Big cuts to local government funding and the wider criminal justice system mean we need to reorganise the public service frontline to deal with problems such as high reoffending rates, child safeguarding and rising levels of mental illness.

Before yesterday I thought policing faced an existential moment and I stand by that. While the service has now secured significant financial breathing space, it still needs to adapt to an increasingly complex world. 

Rick Muir is director of the Police Foundation