SME businesses gain from EU membership – and stand to lose massively from Brexit

SME businesses gain from EU membership – and stand to lose massively from Brexit

The London Stock Exchange today launched the 2017 edition of its ‘1000 Companies to Inspire Europe’ report. The overall tone, both in the report and at the accompanying launch event that I attended at the European Parliament, is positive for both the EU and the UK. There are 23 million small and medium-sized enterprises (SMEs) across Europe, and the thousand chosen to be featured in the report have boosted job creation by 43% over the last two years, and have collectively grown by over 100% over the last three years. Companies like these are the engines that drive the European economy.

And I’m pleased to say that the UK, and the South East, is doing particularly well. Of the thousand companies highlighted, 170 of them are from the UK - more than from any other country except Germany.

The report acknowledges that there is still much more to do. For a start, many of these smaller firms could grow and take on more staff if they were better able to access equity and risk finance (if they could sell shares on stock exchanges, or attract venture capital and private investors) rather than having to rely on bank loans and other forms of debt.

This is something the EU is actively trying to address through its ‘capital markets union’ project, aimed at removing the barriers to finance and meaning that investors and companies from right across the continent can make use of a genuine single market for capital. It is an ambitious project, and one that could be game-changing.   

Unfortunately for British SMEs, of course, just as the EU is making real progress in this area, the UK is going to turn its back and walk away. And if those who are pushing for a “Hard Brexit” get their way, we’ll end up on the outside of the single market and life will become more and more difficult for our businesses.

That’s partly because of the risk of having to pay tariffs (which EU membership exempts us from), but also - and perhaps more importantly - because of the significant bureaucratic burdens that companies have to comply with when you are on the outside of a market and looking in. One of the supreme ironies of the Brexit vote is that leaving the EU is going to mean a massive increase in red tape for many of our businesses. As a former director of several successful SMEs which traded with EU states, I warned of this before and during the EU referendum and contributors at today's event supported the view.

These kind of burdens tend to hit smaller businesses hardest, because they cannot just absorb the extra costs in the way that their giant competitors can. So while the EU is doing all it can to make life easier for small businesses - making it easier for them to access finance, dedicating specific sources of funding to SMEs (which I am currently fighting to help protect as part of the EU’s Budget for 2018) - the UK is going in the opposite direction. A country which used to pride itself on being a good place to do business is actually in the process of throwing up barriers and cutting off sources of funding, all to satisfy an increasingly deranged group of Tory backbenchers who seem to have lost touch entirely with one of their traditional audiences.

This all matters. A whopping 99% of British businesses are SMEs. Three in every five private sector workers are employed by an SME. Successful small companies frequently pay well, take care of their employees and pay their fair share of tax - which is more than can be said for quite a few multinationals. If leaving the EU is about to make it harder for them to do business - and, and as one speaker at the LSE event pointed out, Brexit is a number one concern for SMEs - then we will all suffer the consequences.

Posted by John Howarth
Cyber security: freedom and democracy under threat

Cyber security: freedom and democracy under threat

Yesterday I attended a session of the EU Ambassadors Conference - this forum gathers the EU’s permanent representatives from across the globe to exchange information and ideas with MEPs and others from the EU institutions.

The session I attended was themed around how the EU (and by implication the member states) can improve cyber security in the light of increasing attacks around the globe. The past few years has seen apparent and attempted interference in the democratic process of nations including the United States and the apparent state sponsorship of cyber aggression in various forms including mass disinformation and counterfactual propaganda.

Among those speaking to the session were the ambassadors to the Russian Federation and the United States. The picture painted was bleak. Cyber aggression is now the front line of espionage and would, almost certainly, be a pre-cursor to any physical warfare involving major developed nations. The dangers of these assumptions when heavily armed states are involved should be obvious to anyone, however, in the pseudo-cold war battle of information mass-disinformation is a key tactic that works by ensuring that the truth (i.e. factual information) is blurred, overwhelmed and discredited along with the vehicles through which factual information is disseminated.

Ensuring that populations cannot discern facts, are sceptical of factual news sources and are mistrustful of factual debate is nothing new. It has been a tactic of every totalitarian regime throughout the 20th century and into the 21st. It has been employed by the enemies of democracy to discredit democracy and by pedlars of hate to scapegoat their targets. When employed by the state it becomes one of the tools of oppression and coercion that are the apparatus of dictatorship. It is an uncomfortable truth that in both the former cold-war powers organs of the state are now employed in mass efforts to discredit factual sources and in different ways are succeeding. This more than anything else is the common ground between Donald Trump and Vladimir Putin.

The use of internet channels, social media and the decline of conventional forms of communication have not of themselves created the world of ‘alternative facts’ but they have made it a great deal easier for the purveyors of such lies to go unchallenged because there is no real difference between a population that believes a lie and a population that cannot discern what is the truth. The problem for democrats is the same as it ever was - our ‘alt’ opponents play by rules that if we adopt they win anyway. That’s not to say that the battle is hopeless, but there is little doubt that democracy is playing catch-up. In the UK the modern approach to balance in the media has led to the counterfactual claims being given equal weight to the overwhelming balance of scientific or economic thinking. It allowed counterfactual reporting of the EU by discredited reporters, one of whom now holds one of the UK’s great offices of state, to go effectively unchallenged and in the EU referendum the reporting of counterfactual statements alongside their distribution on social networks helped the leavers to prevail in the face of overwhelming factual evidence of the real damage not taking place.
Democratic politicians are fighting an information war with one hand tied behind their backs and while today’s conference made the problem clear, there is an urgent need for creative solutions that would seem to be in short supply.

Posted by John Howarth
Brexit illusions start to crumble

Brexit illusions start to crumble

The ‘negotiations’ on Britain leaving the European Union are not going well. Why on earth would they? The Prime Minister’s friends and advisors set impossible targets and made irresponsible promises. The very idea of telling people they could “have their cake and eat it”! They may now say that nobody could possibly have taken the claim seriously - so why would you say it?

But we are where we are. The UK Government does have some responsible folk trying their best as they see it. The British civil servants and diplomats believe, as they must, that a ‘deal’ can be done. After all, if they don’t believe there can be an acceptable then they may as well pack up and go home. Nonetheless, in the past week several of the most painful delusions have crumbled in the face of reality.
The approaching ‘cliff edge’ exit from the EU on 19 March 2019 has been all but abandoned. Only the extreme Brexiteers any longer believe this is possible. The various announcements accepting the need for ‘transitional arrangements’ make it clear that the Article 50 timescale is regarded unachievable even by David Davis and Co.

The idea that the UK could exist outside of the European Union without the EU and its law being a significant influence over UK business was something that the Brexiteers had fiercely denied. Theresa May’s (or rather Nick Timothy’s) red line that the European Court of Justice would have no jurisdiction over Blighty was always a nonsense. The judgements of the ECJ on matters of no direct concern to the UK affect the conditions governing our trade now and will continue to do so if for no other reason that judgements will affect how the EU sees it’s own laws and, therefore, what can be sold within the Single Market and how. Those decisions will inevitably apply to UK firms - we will simply have to put up with a court over which we have no influence and on which UK judges will sit no longer. The acceptance by the UK that there is an inevitable interdependency between the decisions of UK courts and the ECJ is the collapse of another pillar in the Brexiteers argument.

Also, the European Union is no longer expected to “go whistle”, as Boris Johnson had so diplomatically phrased the idea of a divorce settlement. The UK has now reportedly accepted that the notion of walking away from the European Union with no settlement of accounts between the EU27 and the UK was always empty rhetoric. So the UK will have to settle what is due, the exact figure is part of the legitimate process of negotiation.

Migration, which Theresa May (or again rather Nick Timothy) held up as the central motivation of those who voted leave, turns out not to have been as high as was previously thought. Equally, drip by drip it becomes clear that significantly reducing migration can only be done at serious risk to the UK economy and our public services. In the light of this reality the UK Government has, quid pro drip, let it be known that during the transition at least migration will not fall significantly.

So having caved in to the EU27’s agenda and timetable, having accepted that Single Market rules will inevitable apply, that migration is here to stay and the UK is will increase public borrowing in order to leave, David Davis and his team can get on with negotiating without the pretence of “having our cake and eating it”. Whatever the outcome, however, it is increasingly clear that the Government cannot deliver on the false promises made to ‘leave’ voters.

Posted by John Howarth
Commemorating Passchendaele 100 Years On

Commemorating Passchendaele 100 Years On

Today's commemoration on the centenary of the Third Battle of Ypres, Passchendaele, are highly personal for me. During this Autumn I intend to visit the area because I believe the commemoration of the sacrifices of the ordinary working people who fought that war are understood and never forgotten.

If having seen action at the Somme in 1916 and Arras earlier in 1917 wasn’t enough, Battalion 18 of the Northumberland Fusiliers found their way to Belgium for what many historians regard as the decisive battle of the Great War.

The 18th – the 1st Tyneside Pioneers - was a ‘pals’ battalion, where friends and workmates answered the call together, fought together and died together. The photograph of Platoon 5 was taken at Rothbury, Northumberland in December 1914 – nearly three years before Passchendaele. My Grandfather Joe Robinson is third from the left in the front row. How many of the pals survived, till then, I wonder? Somehow Joe had. Before Ypres, as an experienced miner, he had been sent to work with the Royal Engineers Tunnelling companies at Messines and learned the explosives skills he would use for the rest of his working life underground. At Passchendaele, he would be among the 300,000 estimate allied casualties, wounded by shrapnel – at what stage within the 102 day campaign I don’t know.

Sent back to England to convalesce, Passchendaele was not the end of Joe’s war, he would return to France in the spring of 1918.

Passchendaele involved human sacrifice on a horrific scale. The strategy, tactics and moral judgements involved, given the knowledge of the slaughter that had gone before, were highly questionable. The battle was indecisive in terms of territory gained but, because of the unsustainable casualties inflicted, effectively ended the ability of Imperial Germany to win the war.

100 years on Europeans go to Belgium to talk about and settle the affairs of our continent peacefully. In doing so we honour the memory of those who fought in the mud of Flanders.

Posted by John Howarth
The Week in Brussels – 14 June 2017

The Week in Brussels – 14 June 2017

Above: with new North West MEP, Wajid Khan, and Julie Ward MEP

 

I’ve just returned from my first week in Brussels. Taking over as MEP mid-term means that you have to run around setting everything up again almost from scratch - but we are getting there.

As well as getting my new office up and running, I was able to attend my first parliamentary meeting - of the Committee on Regional Development. This is the committee which looks at how best to support the various regions of the EU, from the South East of England to the North East of Romania and everywhere in between. In particular, this is done through “cohesion funding”, with EU money being spent on targeted projects to help deliver economic growth and jobs in those areas of the Union that need it most. The Regional Development Committee oversees this funding and holds the European Commission to account for how it is spent.

On Wednesday of this week, the Committee held a hearing with the Estonian Minister for Public Administration. Estonia will hold the rotating presidency of the European Council for the next six months, and the Minister was in Parliament to set out Estonia’s four priorities for the second half of 2017: an open and innovative European economy; a safe and secure Europe; a more digitally connected Europe; and an inclusive and sustainable Europe. The UK gave up its turn at the presidency after the 'leave' vote the EU last year. 

As the Minister ran through these priorities, and the thinking behind each of them, it struck home yet again just how much the UK is going to suffer by walking away from the EU. The Minister rightly said, with real pride, that the single market of the EU - the means by which European companies can tap into a marketplace of 500 million consumers - is one of its greatest achievements. The Single Market was also, very largely, a British achievement. It is what allows small businesses, like the one I used to run, to sell their products and services all over the continent, to grow and take on new staff. Membership of that market means more jobs for any country which takes part.

Yet the Tory government back home, now with no parliamentary majority or mandate for their policies, is determined to yank us out not just of the single market but also the customs union and all the benefits that come with it. Such an act of economic self-harm, which will make us poorer as a country, was nowhere on the ballot paper last June. To opt for the hardest of hard Brexits is not enacting “the will of the people” - it is a purely political decision, and an idiotic one at that.

In the committee meeting, I was struck by something the Minister said about the benefits of the Single Market. He said that it gives businesses an environment which is “simple, predictable and supportive”. As a businessman myself, I can vouch for how important that is. What on earth is simple, predictable or supportive about the disastrous path Theresa May is intent on walking us down?

I have always thought leaving the EU is a terrible idea. Having spent my first couple of weeks in the European Parliament - meeting my colleagues from 27 other countries, hearing their hopes and ambitions for the future of the EU and listening to them reiterate the many benefits that their countries gain from being members - I am more convinced than ever that we are making a terrible mistake as a country. It is heartbreaking to see the extent to which our national future is being dictated by a group of bitter, out-of-touch Tory backbenchers.

With the time that I have as an MEP, I am determined to use the platform that it gives me to do some good - for the UK as a whole, and for my constituents in the South East in particular. To me, that means engaging fully and properly with my counterparts from the other 27 member states, and doing everything in my power to limit the damage that Theresa May and her team risk inflicting on our country.

Posted by John Howarth
Strasbourg Session –  6 June 2017

Strasbourg Session – 6 June 2017

Above: My view of the Strasbourg Chamber, ready for the first set of votes

 

Getting to Strasbourg is notoriously difficult and is best planned well in advance.

To take my seat as soon as practical I didn’t have that luxury and the logistics meant that I arrived at the Parliament after EU Commission President, Jean-Claude Juncker’s, outburst describing the Parliament as ‘ridiculous’ as only a handful of MEPs had turned up to hear his wise words.

Like most national Parliaments there is a lot going on while the European Parliament is in session and Members go into the Chamber to speak on particular debates, listen to reports and raise questions but are often occupied with meetings, groups and various committees elsewhere in the building. Also, because the Parliament’s votes take place in blocks, there is no running around to walk through doors when bells ring. Mr Juncker knows this very well – he had a seat in the Parliament he never took up while he was Prime Minister of Luxembourg. There are those who say that his outburst was intended to deflect attention from a later report focussing on tax avoidance. Surely not - but there certainly wasn’t much coverage of that item.

Ironically, had I been able to get there I would have liked to listen to Mr Juncker, but I expect this won’t be my only chance. It does amaze me however that he has the front to still be around. On his watch the EU lost one of its largest member states. At least David Cameron had the decency to resign.

Votes, votes and votes and votes

As things worked out my first vote in the Parliament was on a highly technical matter placing further limits on substances that deplete the ozone layer. Just the sort of thing that can only be effectively done by a trans-national body like the EU and just the sort of rule that British companies will have to comply with if they want to sell their stuff into the EU and over which, should Britain leave as currently planned, we will have no influence.

Back to the Drawing Board

Later in the session the Parliament threw out the Commission’s proposed work programme for 2018. The detail isn’t important, though I find the argument that this was some kind of petty revenge prompted by Mr Juncker’s earlier outburst a little fanciful. The political groups in the Parliament just don’t work like that. The fact is that the Commission just hadn’t been able to put together a programme that commanded a consensus – but they have got plenty of time to take note of the view of the Parliament and think again.

E-Stonia

Estonia, a small state of 1.3 million people, is taking over the Presidency of the Council on Ministers – the rotating ‘chair’ of the 28 EU Governments. Estonia has an impressive record as a county, particularly in science, technology and in educating its citizens to a high standard. They have interesting ideas and things to say about technology, how the internet should serves society and a whole lot of other things. They also have intriguing ideas around a concept of e-citizenship – about which I want to find out more. Estonia, like many small countries, seems to see the EU as a protector of rights and freedoms. They have, perhaps, a better perception of these things having not so long ago been rather less than free.

Turkey – not joining any time soon

Speaking of not so free, some readers will remember the disgraceful adverts peddled by the Leave campaigners stating that Turkey would be joining the European Union and that meant umpteen million Turks would be coming to the UK. This was just another lie put about to deceive people worried about migration into thinking that getting out of the EU was the answer. Well whatever Boris Johnson says, Turkey won’t be joining the EU any time soon – if ever. The Parliament sent a very clear message making it clear that the restrictions on democratic freedoms and the retreat from the values to which member states of the EU must subscribe that President Erdogan has implemented are incompatible with EU membership. The situation in Turkey should be of great concern to the democratic world.

Posted by John Howarth
An unexpected turn of events

An unexpected turn of events

Above: Celebrating my becoming an MEP with friends in the Pakistani community who I represented as a councillor.

 

Becoming an MEP was the last thing I expected

Since I stood for election to the European Parliament in 2014 and, again, missed out narrowly, I have taken a relatively low profile in political life. While I always knew it was a possibility, were Anneliese Dodds to become unable to continue as an MEP I would be asked to step into the role. I considered it a highly unlikely possibility and got on with earning a living.

My political ‘career’ (though I never considered it a job as such) had borne fruit for the town that I served and for the wards I represented and I was content with that. After a gruelling campaign across the vast constituency that is South East England, I needed a break from front line politics.

Of course I continued to advise my colleagues and provide services to elected Labour representatives of all hues through the business I ran, but I was happy to find new challenges for my political abilities in the public affairs world and was lucky to do so.

Nobody could have predicted the things that would happen in the three years that followed. Early in 2015, at a chance of many millions to one, I found myself standing in the John Radcliffe Hospital in Oxford. My step daughter was on life support after a bleed in her brain and we were told she had a less than 50% chance of making it through the night. As life-changing experiences go that comes pretty high up the list and the months that followed were tough. Luckily for Alex she is 98% recovered – a massively strong and determined young woman to tackles issues head on (as she like to have it). She’s off to university in September.

That experience tells you to live your one and only life to the full and take the opportunities on offer – not that I needed any encouragement to accept Labour’s nomination and take up my seat in Europe. What politician in their right mind would say no to being involved at the centre of the great issue of the day with some change, however slight, to have influence?

Deep disquiet in the business community

Since the referendum in 2016, in the process of earning a living, I was attending a lot of business networking. The elephant in the room was always the narrow decision to leave the European Union. Most of us, Labour, Conservative, Liberal or none of the above, had the same question that we would have put to the likes of Boris Johnson and Michael Gove if we had the chance: exactly where are these ‘new opportunities’ that are going to arise when we leave? What will enable my business to trade more effectively? How will we continue to sell in Europe as easily and routinely as we have and do right now? Because I, for one, am hearing nothing of any substance, little other than platitudes and repeated assertions.

What we do now know wholly and conclusively was how comprehensively people were lied to: the big fat lie of £350m a week for the NHS – even Nigel Farage disclaimed that one; the lie that there was no threat to our membership of the Single Market – many of the Leave campaigners repeated that one and they didn’t even mention the Customs Union; and of course the biggest lie of all, that migration to the UK could be stopped when so many sectors of the UK economy and public services depend upon workers from overseas – whether it is picking fruit or looking after our infirm and elderly and the lie that we could “have our cake and eat it”.

First the absurd idea that there can be a divorce without a financial settlement – something at least a third of the UK population know through their own experience is rarely if ever true. Then finally the biggest deceitful promise – that we will have a ‘deal’ that delivers “exactly the same benefits as we get from the Single Market and the Customs Union”. Their promise, not mine, quite right that the UK Conservative Government be held to account and quite right that Labour should seek to do so.

A year on and no answers from the Conservatives

I’m hearing no answers from the Conservative Government. No vision of life outside the EU beyond the notion of the UK as an offshore tax haven in which the wealthy can prosper and where the rest can sink or swim, maybe. It isn’t good enough and it is a central reason why Mrs May failed in her attempt to sweep aside all opposition to that view.

We owe it to the millions of people who feel they have had their future stolen from them to work hard to continue to expose the lies and do the best we can to protect the future of the UK – not as an abstract notion but in the real measure of the day-to-day lives and welfare of our fellow citizens. Repairing the damage that has already been done will take at least ten years – it is incumbent on those of us with any influence to use it to try to prevent as much damage of possible and hope in the meantime that the nation wakes up to what is happening.

Posted by John Howarth