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
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“I'm very much out on my ear”: what it's like becoming an ex-MP

Returning to normal life isn't that simple.

The week after June's snap election, Theresa May faced the 1922 Committee of Tory MPs. Her eagerness to appease those angered by the loss of the party's majority worked wonders, with Boris Johnson describing her performance as “stonking”.

It helped that she acknowledged the personal cost of the election for MPs who had lost their seats. The Guardian quotes one MP as saying: “The party is going to help them, some of them are in dire financial situations. She did say sorry, several times. She apologised for colleagues losing their seats, for making the call about the early election.”

Elections are based on numbers: swing; votes; majority; seats – but there is a human toll to losing. Jobless overnight, often without experience directly applicable to another career, many ex-MPs struggle in the weeks following defeat.

While May was referring to her Conservative peers, losing a seat is an experience also familiar to Liberal Democrat Sarah Olney. The former MP for Richmond Park made headlines by overturning Zac Goldsmith’s 23,015 majority in the December 2016 by-election – only to lose the seat by 45 votes six months later.

“I don't get any money at all,” she says. “I got paid up to 8 June and then nothing. I don't qualify for loss of office allowance or statutory redundancy because I wasn't there for long enough. You have to have been there for at least two years.”

Olney, who intends to look for a new job after the summer holidays, describes herself as a “little bit cheated” by the snap election. “I was expecting – especially when we had a Fixed-term Parliaments Act – that parliament was going to last until 2020. So to suddenly find that it's changed means that you don't qualify for anything.”

Even if her situation isn’t “dire” as was alluded to by May and the 1922 Committee, she still finds herself without financial security.

“For me personally, it does mean being without any money at all,” says Olney, who left her job in accountancy to stand as an MP. “I have a mortgage to pay and children to feed and I'm lucky that I've got my husband and he's earning and we've got savings to live off, but I'm very much out on my ear unexpectedly. It's not quite the terms you sign up to, but equally you have to accept that it's not a normal employment either.”

Returning to “normal employment” is not always a painless process. Dr Edmund Marshall, Labour MP for Goole from 1971 until the seat’s abolition in 1983, describes a “widespread suspicion” from potential employers that ex-MPs would be seeking to re-enter parliament at the earliest opportunity.

He also bemoans the nature of the career change itself. “An ex-MP has, in the nature of that role, been a generalist – especially if he or she had long service in parliament – and so is in a weak position when applying for any specialised job, for which there will usually be many other applicants with more up-to-date relevant experience,” says Dr Marshall, who went into lecturing and Church of England policy after leaving parliament.

Another downside for Olney is that the legitimate scrutiny MPs are exposed to will continue even after leaving the Commons. “Every single thing I've done has been under scrutiny and has been reported negatively, even though there's very little to say,” she says. “I'm pretty squeaky clean – I have no skeletons in my closet. Anything people could use, they would. So anything I do from now on would be treated the same. It's one thing to be under that scrutiny when you're running for public office, but it's entirely another when you're just trying to earn a living.”

Most of the “relentless” criticism that she has faced on Twitter has faded, but she remains sceptical of the reaction to a new position. “It might well be that I could take a job and people just won't notice or care,” she says, “but it's been my experience ever since I got selected that anything I did was criticised, so I would expect that to continue I guess.”

When it comes to jobs, Olney remains unsure of her direction, describing herself as being at a “crossroads”. “I'm conscious I might face criticism for anything I might do that uses my political experience,” she explains. “Given that I'm now just a private individual trying to earn a salary, I don't want to have to answer for that.” She laughs: “But I think equally my political experience sits rather strangely on my accountant's CV.”

Olney’s defeat on 8 June left more than just one career affected. She describes the “frustration” of having to lay off her newly appointed staff. “I think one of the things I didn't realise – and I wonder if most people don't realise about being an MP – is you're pretty much almost like a sole trader, and you have to set up everything from scratch,” she says. “You have to hire your own staff and you have to find your own office premises. There's a lot of work involved in doing all of that, and I was only just getting to the end of that set-up phase.

“And then all of a sudden, a general election comes along and having just hired all these staff, the next thing I'm doing is sending them all redundancy letters.

“So that for me was a huge frustration that we never really got started, never really got going, never really got to do all the things that I would have liked to get done.”

Despite saying that there was a lack of support for the transition period after her by-election win, Olney says that, from her experience, the infrastructure for leaving parliament is “pretty good”.

Yet as Olney has experienced, the financial support from the Independent Parliamentary Standards Authority (IPSA) has been cut back following the expenses scandal of 2009. Many MPs, if they have not served long enough to receive a pension, rely on IPSA’s payout to tide them over until re-employment. In 2015, this was capped at £33,530, made up of one month’s pay for every year in parliament. Now, the figure is capped at £29,340, and is calculated from both the number of years served and the former MP’s age.

And then there's actually finding a new job. Keith Best, the Conservative MP for Anglesey (renamed Ynys Môn in 1983) between 1979 to 1987, claims to have made “over 400 applications” after a conviction for fraud forced him to leave parliament.

Dr Marshall recalls a similar, if less extreme, application process. “In 1983, it took me six months to find good, alternative employment,” he says. “I made an application for 56 specific, advertised jobs, and was interviewed for 14 of them. In the end I was offered two good posts, so at least at that stage I was able to make a choice!

“I think the good rate of getting interviews, 25 per cent, was because the selectors were curious to see what an ex-MP looked like. So that curiosity factor is a small advantage that the ex-MP has.”

Meanwhile, Michael Meadowcroft, Liberal MP for Leeds from 1983 to 1987, describes having “survived through journalism”, writing for a number of different outlets before eventually chairing the Electoral Reform Committee.

While the experience of former MPs appears largely consistent across party lines, two former Labour MPs argue that Conservative politicians face advantages when it comes to gaining re-employment. Tony McWalter held Hemel Hempstead for Labour from the seat’s creation in 1997 until 2005. He cites “two advantages” for former Tory MPs.

“On the one hand,” he says, “their party thinks that to be an MP is not a full-time job, so frequently they keep paid positions while they are MPs without incurring the wrath of their constituency members. This makes the transition to being a former MP much smoother.

“Secondly, many Conservative MPs have close friendships with those who run companies, and that in turn means there are likely to be people in positions of considerable [influence] to whom they can turn when the electoral axe falls.”

Dr Marshall agrees it is easier for Conservatives, but attributes this to political bias rather than connections. “All ex-MPs, when job-hunting, are likely to encounter some party political prejudice among the selectorate,” he says, “but I think this poses particular difficulty for Labour ex-MPs, because the Tories probably have a majority among the selectorate. For instance, it appears easier for ex-Tory MPs to land positions on boards of directors.”

Keith Best and his 400 unsuccessful applications may disagree.

Yet losing a seat is not all doom and gloom. Sir Hugh Bayley, the former Labour MP for York Central, writes of the personal and professional opportunities afforded by stepping down in 2015 after 23 years’ service. “My wife, Fenella Jeffers, had had enough of a spouse who was rarely at home, and focused mainly on politics even when there,” he explains. 

“Fenella was born abroad, in Nevis in the Caribbean, and said she was going home, to live there much of the time. We decided it was her turn to set the ground rules for our lives.

“I now spend a few months a year in Nevis. I draw a parliamentary pension but work (pro bono) as a member of the UK/Europe Board of the International Rescue Committee (the New York-based humanitarian NGO led by David Miliband), and (paid, part-time) as a lay member of the Nursing and Midwifery Council.

“Fenella spends a few months a year in the UK so we spend roughly half our time together, which is far more than we did when I was an MP, and it is allowing us to rebuild the relationship which nearly collapsed because of the pressure of all those years when I was in Parliament.”

Olney echoes those sentiments. Speaking over the phone before going to play football with her son, she says: “The up-side of only having been there six months is that I had a normal life before, and it's been an opportunity to reconnect with that normal life, so spending more time with my children.

“It's been an opportunity to catch up with people and rediscover some of the other things I used to do before I became an MP.”

And yet, the call to the Commons is persistent. When asked if it was in her plans to re-stand for election, Olney was emphatic. “Yes. Yes, absolutely it is. It definitely is.” Referring to Goldsmith, she says: “He had a majority of 23,000 two years ago and now he's got a majority of 45. That's just the momentum that we've got going on here locally and I don't want to spoil that, I want to get over the line next time.

“For me, it's not so much personal. I am now out of work, but I will find another job reasonably easily and I will get back the life I had before. I just don't feel Zac Goldsmith is the best person to represent this constituency and I'm just really annoyed he's our MP again.”

Olney’s point that being an MP is no “normal employment” was also part of the appeal for her predecessors. “It is an absolutely marvellous job,” writes McWalter over email, emphasis his own. “You might be able to help, not dozens of people who are victims of injustice or callous indifference, but thousands of them.

“You will get opportunities to expand your knowledge to be able to do the job, and I found my placements with police service and with the Royal Navy during my time in parliament of extraordinary value.

“You will find the job has dazzling variety, so you need to become knowledgeable about a huge range of matters – from war to warts, and you have to employ the knowledge so gained to improve the lot sometimes of people throughout the country.

“Just to serve on a select committee, [as] I did [on] Northern Ireland at a crucial time, and then science and technology, is to be faced with challenges every bit as demanding as those faced by those who stay in the academic world.

“Most people who have been Members of Parliament have found the experience wonderful. It is sad, however, that the skills you acquire are redundant the moment you lose your seat. Those who seek to get into Parliament are often rational and altruistic, for they are applying for one of the best jobs you could do. But it would be a service to our democracy if their offer to serve were to be put into proper context."

McWalter does realise that not every aspect of the job, and the consequences of losing it, are positive. “Some have to pay for their time of service by having a quality of life a lot worse than they had before they were successful in an election,” he says. “That is the price to be paid by many, and the subsequent strains on mental health, on marriage, and on financial security, are sometimes such that those who are the family and friends of former MPs wish they had never been elected.”

Best concluded on a similar note: “Being an MP these days is so risky that I fear that it will deter many, if not in their own interests at least in those of their families.”

Nevertheless, for many MPs, working in the Commons is not a career that can be simply left behind. For them, the price of entry – and exit – is worth it.