From the directives that govern the way we do business, to the all-consuming blackhole into which British taxpayers funding tumbles, the European Union pervades our daily lives like never before. Like many of my colleagues on the Conservative benches, I believe this country could – and should – thrive outside the EU.
I also agree, however, with Boris Johnson’s assertion that the EU bogey must not become a crutch that allows us to duck our immediate, home-grown, failings. In addition to accumulating historic debts through extravagant and ineffective spending programmes, Labour encouraged families to incur reckless levels of borrowing. Between 1997 and 2009, household debt as a share of GDP rose by a third. It has started to fall back since 2010, but remains at 98 per cent of GDP – leaving many families acutely vulnerable to any increase in interest rates. Whilst on average British households only save about 7 percent of our disposable income, that same figure in China is closer to 50 percent.
The next great problem is our chronic skills gap, which saw the UK plummet down the international rankings in maths, literacy and science. Labour’s arbitrary goal of getting 50 per cent of youngsters into university led to the proliferation of what one of its ministers called “Mickey Mouse” courses, which have benefited neither the students nor the economy. A 2005 Ofsted report found that almost half of those in their twenties said their education had not prepared them for their first job. Far from blaming Europe for this, Michael Gove is rightly learning from it – promoting innovative Swedish-style free schools and a more German emphasis on vocational training.
Next, for all the hand-wringing over EU regulation, there is plenty the UK can do by itself. Cutting Whitehall departments – last week in the Commons I congratulated the Cabinet Office of saving the taxpayer £10 billion alone last year - and selling off the state’s shares in the banks would allow both the deficit and business taxes to be cut further and faster.
Finally, the Government’s welfare reforms are vital in terms of making work pay. But we also need to incentivise hard work by overhauling marginal rates of taxation and creating the right conditions for start-up companies to expand and thrive.
The scale of these problems puts the debate over the EU into perspective. If we left, the ability to cut red tape and forge free trade deals would present enormous opportunities. Yet the unions, the BBC and the Labour Party – as well as many Liberal Democrats – would still scream blue murder over every attempt to ease the regulatory burden on entrepreneurs.
Whether we are in or out of the EU, we must deliver reform at home in order to compete in the wider world.
Henry Smith MP