Michael Gove says when we leave the EU “we wouldn’t have all the EU regulations which cost our economy £600 million every week”.
Equivalent to £33.3 billion per year, this is a shaky estimate of the cost of EU rules and nothing like what we would save by leaving.
Research by the Open Europe think tank, on which Gove’s figure is based, does not indicate we would save £33 billion if we leave. In March 2015, Open Europe calculated a maximum possible saving of £24.4 billion per year, and a more “politically feasible” one of £12.8 billion. But even these figures overestimate Brexit savings.
Open Europe uses government documents that attempt to predict the impact of new EU rules. They also calculate benefits worth £1.1 billion a week on businesses and the public sector – but even this excludes other benefits, such as for employees.
Overstated cost of working time directive
The think tank puts the cost of EU working time rules, which set maximum workplace hours and minimum annual holidays, at £4.2 billion a year, and believes 50-75% of this cost could be slashed post-Brexit.
The government’s impact assessment predicted the cost of the EU’s working time rules at around “£2.6 bn per annum based on 2002 prices”, or £3.5 billion at 2014 prices.
On top of that, Open Europe added £85 million for oil and gas workers. Another significant sum was added to take into account a European court judgement that time on-call counts as working hours, which particularly affects NHS workers. But the actual cost is not clear cut.
In 2004, John Hutton, then Labour’s health minister, said the impact on doctors “would be between £380 million and £780 million if we did nothing other than respond to the directive by recruiting… additional doctors”. However, a 2010 study by consultants Deloitte noted additional recruiting “appeared to be relatively limited in practice”.
Another court judgement on falling sick while on holiday was predicted to cost “in excess of £100 million per year” – not a small sum. Still, Open Europe’s £4.2 billion total estimate of the working time directive seems high, especially as many of the court challenges previously predicted by the government apparently did not materialise.
Many rules will not change
After Brexit, we might scrap or amend some EU laws to “make savings”, but we would keep many others.
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Some, like Basel banking rules and the Paris climate change agreement, are international agreements, not EU impositions. These two rules together account for nearly a quarter of total estimated EU “costs” under Open Europe’s calculations.
Brexiteers like to have it both ways, promising an Aladdin’s cave of savings by “cutting red tape” without specifying the rights or protections they would also cut. Any figures based on unspecified cuts can only be unreliable and should be taken with a pinch of salt.
Edited by Yojana Sharma
See “we are Europe” facebook page promoting what is good or and from Europe, cred by tech people with the support of actors and artists. For a passionate positive argument in favour of urope and the EU. EU is not only economics for UK but more, much more in positive terms.