Wednesday, August 18, 2004

Gold-plated nonsense

"Companies will be able to sue the government if they are suffering financially from unfairly 'gold plated' European Union legislation, under plans to be announced today by the Conservative party", proclaims The Daily Telegraph, albeit from the relative obscurity of the business pages.

This looks good, until you read further: "The Tories are hoping to capitalise on a sense of injustice among companies that British bureaucrats take relatively simple European Union legislation and make it overly onerous on business", so Stephen O'Brien, shadow industry secretary, "wants to let companies challenge EU regulations in court if they feel they are being unfairly penalised compared with their European rivals".

One example cited is an "abattoir directive", which "emerged from Brussels as a 12-page document. It was cut to just seven pages when adopted by France, but expanded to 96 pages when it became British law".

Er… no. The Directive, 91/497/EC is actually 34 pages long, in very fine type, printed in two columns. This was transposed – by a Conservative government – into the Fresh Meat (Hygiene and Inspection) Regulations 1992. With larger print, single column format and with the addition of contents pages, an enforcement section, repeals, explanatory notes and other necessary additions which were not in the directive, the Regulations came out at 61 pages.

The regulations were, therefore, largely a direct copy-out of the directive. True, there were some additions but most of these these were either explanatory in nature or clarifying the text. By no means could the regulations be regarded as significantly "gold plated".

The problem was in fact that the working directive, 91/497, started its life as Directive 64/433/EC, intended to harmonise hygiene standards for the production of meat exported across national frontiers.

This directive was based on a 19th Century German code. Out of date even before it had been written, it had been challenged – for that very reason - by non-EEC countries, including New Zealand. In response, the Commission, unable of unwilling to re-write the directive, modified the rules informally, codifying them in a new, extra-legal guide called the "Vade Mecum".

In the 1980s, the UK Ministry of Agriculture had imposed the Vade Mecum on export abattoirs, also providing grants worth millions of pounds to enable them to comply with the structural standards.

As the Single Market approached in 1992, however, the rules were included in the list of measures to be applied to even those producers who did not export. Without any "gold plating" at all, the new directive, 91/497, posed enormous difficulties for the hundreds of small and medium-size abattoirs. They were going to have to make the same hugely expensive structural changes which were originally required only of industrial meat plants. But unlike their larger competitors, no financial assistance was available for the 'upgrades.

What made the situation still worse was that as early as May 1990, long before the new directive was actually finalised in July 1991, MAFF veterinary officials began "advising" abattoir owners on the supposed new legal requirements. But the instructions were, in fact, derived from the Vade Mecum. In other words, abattoir owners were being told to comply with law that did not even (then) exist, for want of which the Ministry was applying an extra-legal code.

Bemused owners were then told that unless they complied with these standards by 1 January 1993, the start of the Single Market, they would be prohibited from trading. They were given just seven months to make often major and expensive structural changes – some of which, based as they were in the Vade Mecum, were neither necessary nor legally required - without which they would be refused a licence to operate. Faced with what seemed impossible demands, between 1990 and 1992, 205 businesses - more than a quarter of all the abattoirs in Britain - shut their doors.

Thus, the situation was actually quite complex. It stemmed firstly from a draconian and inappropriate directive, and then the imposition of an extra-legal code, which was treated as if it was law. This is a million miles from O'Brien's simplistic picture of "gold plating", and suggests that, once again, the Conservatives have not done their homework.

Furthermore, doing the homework would not have been very difficult. The background recounted here is actually taken from The Great Deception (pp. 301-302), of which Mr O'Brien – like every other MP in the country – was sent a free copy. All he had to do was read it – or get his researcher to read it for him.

Anyway, the idea of attacking "gold plating" is lame. Compared with the central problem of the sheer volume of EU legislation coming through the system, that problem is small beer – but somehow it is typical of the Tories to mess around the edges instead of confronting the main issues. Once again, they are dodging the E-word.

Nevertheless, The Telegraph, in an editorial in the main paper, seems to approve of O'Brien's initiative. It would "make our civil servants think twice before making the outpourings of the EU even worse than they are already", it opines.

But this comment actually does nothing more than demonstrate the fatuity of O'Brien's initiative. Regulations are made in the name of departmental ministers. They bear the responsibility for them – not the civil servants – and if they decides not to sign them off, they do not go before Parliament and do not become law. All the ministers have to do is ensure that their departments do not "gold plate" – taking outside advice if necessary – and the problem is solved. O'Brien's idea of companies suing is gold-plated nonsense.

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