Support 100 years of independent journalism.

  1. World
  2. Europe
3 June 2014updated 24 Jun 2021 1:00pm

The EU’s wise advice to the UK shouldn’t be ignored

It's not up to the unelected commission to determine Britain's policies, but it has reason and evidence on its side. 

By George Eaton

You can’t accuse the EU of lacking chutzpah. Less than a day after David Cameron denounced it as “too big, too bossy, too interfering”, the European Commission has called on the government to change its economic policy – and much else. In a document released last night, it urges Cameron to raise taxes on high-value properties, to increase the supply of housing, to adjust the Help to Buy scheme, to make childcare more affordable, to raise capital spending and to improve the implementation of Universal Credit. A day before the state opening of parliament, it adds up to a draft Queen’s speech. 

Here are a few extracts:

Action is needed to further boost the supply of houses – by creating appropriate incentives to raise supply at the local level. The authorities should continue to monitor house prices and mortgage indebtedness and stand ready to deploy appropriate measures, including adjusting the Help to Buy 2 (loan guarantee) scheme, if deemed necessary.

Reforms to the taxation of land and property should be considered to alleviate distortions in the housing market. At the moment, increasing property values are not translated into higher property taxes as the property value roll has not been updated since 1991 and taxes on higher value property are lower than on lower value property in relative terms due to the regressivity of the current rates and bands within the council tax system.

The commission’s proposals have prompted a predictably sardonic riposte from the Treasury: “As one of the fastest growing economies in Europe, we always listen to the commission’s recommendations with interest.” Conservative eurosceptic Dominic Raab said: “Having helped bankrupt the eurozone and delivered the biggest anti-EU election results in history, the chancellor can be forgiven for treating the commission’s advice as spam when it arrives in his inbox.” 

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. The best of the New Statesman, delivered to your inbox every weekday morning. The New Statesman’s global affairs newsletter, every Monday and Friday. A handy, three-minute glance at the week ahead in companies, markets, regulation and investment, landing in your inbox every Monday morning. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A weekly dig into the New Statesman’s archive of over 100 years of stellar and influential journalism, sent each Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.
I consent to New Statesman Media Group collecting my details provided via this form in accordance with the Privacy Policy

But while it’s not up to the unelected commission to determine Britain’s fiscal policies (although like bodies such as the IMF, the OECD and every think-tank going, it was merely offering advice), the inconvenient truth for the Tories is that every one of its suggestions is entirely sensible. 

It would be better for the government to make property more affordable by building more homes, rather than subsidising mortgages. It is absurd that the council tax bands have not been updated since they were first introduced in 1991, despite house prices rising by more than 250 per cent since then. There is a strong moral and economic case for increasing taxes on land and property. (Wealth taxes are progressive and hard to avoid, and benefit the economy by shifting investment away from housing and into more productive industries.) It is lamentable that there are just 5,910 people claiming Universal Credit (994,090 short of Duncan Smith’s original April 2014 target of one million) despite the government spending £612m on the programme. 

That it takes the profoundly flawed EU to tell the government all of this is the real cause for outrage.