Stretching the Red Tape

A depressing flavour of the European debate ahead permeated the annual conference of the British Chambers of Commerce. "Setting Business Free" was its disreputable theme, filling the air with a multitude of mendacious factoids. Valiant business is being choked to death by unstoppable red tape from a leftwing government that is cavalier with the nation's wealth-makers.

An officious Labour government and its friends in Brussels are the twin anathemas of business organisations when they rally together in true blue belligerancy. It does not, of course, mean everyone in business agrees. A large part of business is strongly pro-Europe, since 58% of their trade is across the Channel. But the BCC, the Institute of Directors and the Confederation of British Industry claim to represent business, as they vie with one another in public to denounce Labour and Europe. They are the mirror image of a trade union movement that too often lets loudmouths give a false impression of most of what unions do most of the time.

"Red tape" is the rallying cry that sets the tone for the Europe yes-or-no debate. The Tories yesterday launched a "task force to tackle regulation". Forty per cent of regulation comes from Brussels, and that will rise to 80% if we sign up for the new constitution, they averred. All week, Michael Howard and Oliver Letwin have hammered out this theme - and it sounds pretty good. "There are 15 new regulations every working day!" There's been a 50% increase in regulation since 1997. Tolleys tax guide is now too heavy to lift. How well Howard and Letwin massage the victimhood of hard-pressed businesses, feeling the pain of the Whitehall and Brussels bureaucrats sitting on their hard-working shoulders. The BCC runs a "burdens barometer", which claims that the total cost of regulations on business since 1998 is £30bn.

It is, of course, bunk. Statutory instruments have stayed constant over the past decade, with a blip up during foot-and-mouth. Most are everyday governance, such as the 30% that are temporary orders for local road closures under repair. The BCC's barometer is a shocker: it includes the four-week holiday entitlement, sick and maternity leave. It complains that one of its more expensive "burdens" is the control of asbestos at work regulations, hardly trivial.

But this is fertile Tory Europhobic soil, and "red tape" is a catchy slogan. Rebutting these lies, eyes glaze over when listening to duller explanations. The pro-Europe campaigners always start on the back foot. But they have one big truth on their side: Britain is now the best place in the west to do business. Who says so? Some of the most capitalist organisations. Take the OECD's economic survey this year, always laconic in style: "Competitive pressures appear to be relatively strong in the UK, with economic and administrative regulations inhibiting competition and barriers to trade among the lowest in the OECD." The UK has the lowest costs and fewest regulations for entrepreneurs in the EU, with the lowest taxes on small businesses. How about the World Bank? It put Britain in the top 10 out of 130 countries, with the least regulation. Arthur Andersen puts the UK above the EU and the US as the most entrepreneur-friendly. The Economist, that leftwing rag, ranks the UK top, with Switzerland and the US behind.

Here is a good recent example: Variosyst, a Bavarian company, won a contract from Taiwan which required setting up a new company fast to meet tight deadlines. In Germany, it would have cost €25,000 in paperwork and taken three months. So they opted to form a UK company, which cost £260 and took a week to fix. How good is that?

All this makes excellent campaigning material for Labour at the election. Gordon Brown delivered a thunderingly effective speech to the BCC, reminding it of what they know perfectly well when they stop and think: never has the British economy been such a stable environment for business to thrive in. Alone in the west it sailed through the downturn with its growth rate only slightly dented: this is the country that was always first in, worst hit and last out of every previous recession. How good is that?

Very good indeed for Labour. With growth now re-forecast higher at 3.5%, it is the reason why Labour will still win the next election. As Brown fired off his cannonades of facts and figures telling of lowest inflation, lowest unemployment and highest growth, he beat them into submission. The room rippled with reluctant recognition: it was all true and the Federation of Small Businesses survey this week confirmed it, reporting strong confidence, with 43% of businesses growing in size and only 16% shrinking. Whingeing, politically motivated business leaders don't represent the real lives of their members.

However, all this news that is so good for Labour is a double-edged sword in the upcoming Europe battle. If we have done better than the eurozone, rejecting EU directives and fighting for our red lines, why get in deeper? Why not step back? Every time a British minister makes a favourable comparison between us and them across the channel, they hammer another nail into the pro-European cause. This will become a growing dilemma.

It is no coincidence that it is a long list of essentially conservative organisations that puts Britain top of entrepreneur-friendly countries. To be top of anything is a remarkable new experience for us, but is that the league table Britain prizes most? Or is it also top of the low-pay, low-skill, under-regulated league? Consider some other criteria and we sink near the bottom in the OECD. France, Germany and certainly the Nordic countries trounce us every time on quality of life, standard of living, fairer distribution of income, better public services, better transport, happier populations, more money per capita and more time to enjoy it in family-friendly working hours. True, some have serious unemployment problems - though not necessarily due to any of the above. (The French 35-hour week created a net 450,000 extra jobs.) They have higher productivity and a higher skilled population. Schadenfreude about Germany is dishonest: West Germany, untrammelled by the east, is miles ahead of us. If back in 1989 we had incorporated a similar country - say, Hungary - into the British economy, it would have sunk us. Modesty is in order.

Labour needs to find better language to praise both the European idea and the more mundane value of day-to-day tussles within the actual, living, argumentative EU. That means Labour defining itself more clearly against the Conservatives. That means valuing the European social democratic way a little more, as well as the business case for staying in. "Let the battle be joined," said Blair with an empty theatrical flourish we've heard before. The words from ministers this week have been wholly inadequate for the Herculean task ahead. Labour has to decide what it really cherishes about Europe if it wants to win.