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Straight Talking - November 2011

Roger Helmer's electronic newsletter from Strasbourg

Please feel free to distribute this newsletter, or to quote from it. It is primarily written for Conservative Party members and activists in the East Midlands, but may also be of interest to others concerned about developments in the EU. If you receive the newsletter second-hand and want to go onto the
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The euro: Ever deeper in the hole

It was only the back end of October when Merkel, Sarkozy et el ("Merkozy", let's say) announced the final solution to the euro crisis. But in the event, it took only days to unravel. There were three elements:

First, bond-holders would accept a "voluntary" 50% cut. But it's not clear that they'd agreed to do so -- or even who all of them were. But this decision casts huge doubt on the sovereign debt of all the other eurozone laggards, so helps to spread contagion.

Second, recapitalisation of vulnerable eurozone banks. But by how much? By whom? Where is the money to come from? Remember many of these banks will have just taken the hair-cut!

Third, a leveraging-up of the EFSF. But by putting existing sovereign investors on a "first loss" basis (the only way, they thought, to attract new money) this will ramp up risk of sovereign defaults by inter alia France, which would lose its AAA rating just before a Presidential election.

In any case, it's clear that China and the other BRICs want no part of such a plan. Quite reasonably, they feel it's an issue for the Europeans to sort out.

Then the EFSF has its own problems. A recent EFSF bond issue failed, and yields have increase dramatically. Japan, an early EFSF investor, is nursing big losses.

Then there's a new bombshell that Merkozy has accidentally dropped into this explosive mixture. They forced former Prime Minister Papandreou of Greece to back down on his referendum proposal by threatening Greek expulsion from the euro (and from the EU, though it's not clear what would be the legal basis for such a move).

But that shattered the fundamental myth of the eurozone -- that it was a monolith that might increase with new members, but would never let an existing member go. If Greece can go, so can others. So the markets will now be pricing in the risk of other eurozone members leaving the currency union -- further driving contagion.

The Euro's Catch-22

It's time for Merkozy to recognise that there is no way out. While a fiscal/debt union with a single Treasury and a single Finance Minister is theoretically workable in economic terms, it is no longer sustainable politically.

Why not? Because it entails massive, open-ended fund transfers from German tax-payers to Greece, Portugal, Italy, Spain.... and so on. The Germans have spent twenty years bailing out the East. They will revolt if asked to keep paying for the South for another twenty years -- or forever.

And tragically the only workable solution -- an orderly breakup of the euro, either into a garlic (Southern) euro and a wurst (Northern) euro, or into relaunched national currencies -- is blocked by that much-vaunted political will that we've heard about so often.

Yet remarkably the Centre for Economics and Business Research has just published a report suggesting that a euro break-up would be good for Britain -- and for the eurozone. They say that while it would result in turmoil and recession, the negative impact would be short-lived, and that by re-adopting national currencies and market-driven exchange rates, growth would resume, just as it did in the UK when we left the ERM.

Cameron and Osborne have it wrong

I don't believe that Britain should be urging the eurozone to adopt fiscal convergence, because (A) It's a bad idea in economic terms; and (B) It's an affront to democracy. We wouldn't accept direct economic governance from Berlin and Frankfurt -- why should Italy and Greece?

Nick Clegg: Isolated and marginalised

Nick Clegg loves to threaten eurosceptics with being "isolated and marginalised, on the fringes of Europe". Truth is, he's got it backwards.

We are already isolated and marginalised in an inward-looking, self-referential, protectionist EU that's over-regulated, in crisis, and also in long-term economic and demographic decline. The EU broadly represents, today, around 20% of world trade and GDP. By 2050, that figure will halve.

The growth will come in the rest of the world -- much of it in the Commonwealth, as it happens, which we have shamefully disregarded for decades.

So Clegg offers us a false choice. The real choice is to be isolated and marginalised in a failing EU, or to break free and re-join the rest of the world, where trade and growth are achievable. I know which I'd choose.

The EU Globalisation Adjustment Fund...
...fiddling at the margin

Earlier this month I went to Spain with a delegation from the EU parliament's Unemployment Committee (at my own expense, since you ask -- I was "hors quota", or supernumerary). We went to look at the workings of the EGF, which is an "instrument" provided by the EU to seek to mitigate the grosser employment impacts of global competition (though you might think that getting competitive would be a better approach).

We've spent €33 million in a year in Spain on this project, and they claim to have worked with 7000 recently redundant workers, and to have placed around 3000 of them in jobs. Great news for the 3000.

But let's have some perspective. 7000 is less than 0.2% of Spain's 4-million-plus unemployed. And on the day we heard about the 3000 helped into work, we also heard that Spain's monthly unemployment count had increased by 134,000. In one month.

The system is very clearly unfair. Employees made redundant in June may fail to qualify, while work-mates from the same company made redundant in July get help.

Then there's a question whether our €33m actually helped at all overall -- or did it just help the 3000 to elbow their way to the head of the queue for available jobs ahead of others? But the funding certainly did increase employment for the army of administrators, bureaucrats, consultants, mentors and trainers who delivered the programme.

This is fiddling at the margin (with our money). It's gesture politics. It gives the EU, and the Unemployment Committee, bragging rights about all the wonderful help that the EU offers in times of hardship, while having a nugatory impact on the real world.

OK, Helmer, (you may ask), what would you do? Good question. If we had money available to promote employment, I'd spend it on reducing employment taxes and social charges. This would create real jobs in the right places, and would be partly self-financing as it reduced welfare/ unemployment spending. Read more here

I also found time at the end of the programme to visit one of my favourite buildings, Gaudi's Sagrada Familia in Barcelona. Read about it.

"Scrapping wind farms could save each of us £550"

A new report from KPMG -- a highly respected accountancy firm -- confirms what I've been saying for some time: that even if you want to reduce CO2 emissions (and that's another big debate), we're going about it in an irrational and hugely expensive way.

We could achieve the same CO2 reductions much more efficiently by investing in nuclear and gas instead of wind. This would save each of us (they say) £550 a year -- which would be a great help to the economy and help to stimulate consumer demand.

In fact it makes very clear that "green technology" is directly damaging our economy, by draining money away from both consumers and industry. This is all so obvious that a child could understand it. Sadly, it appears that Mr. Chris Huhne does not.

But Hey, let's be positive for once. Last night we had a meeting in Brussels with the Chancellor George Osborne, and we recalled his comment at Party Conference: "You don't save the planet by undermining the British economy". I think the government (some of it) is starting to see the light.

A smidgen of good news: I'm very pleased (but slightly surprised) to hear government ministers speaking in positive terms about the large shale-gas deposits recently discovered in the North-West. Of course, as we know, there are safety issues associated with the extraction of shale gas. But there are safety issues with all large-scale energy projects. The problems are there to be managed, not to scare us off. The promise of renewed British self-sufficiency in gas is just too important to ignore.

How over-regulation holds business back

I have recently received a study from the Forum of Private Business on problems experienced by their members in the East Midlands. The FPB is a well-established organisation serving the needs of small and medium-sized companies. The report highlights the ways in which over-regulation stands in the way of growth and jobs.

Critical issues included:

Energy Costs: 94% of businesses saw an increase in energy costs over the period (the main reason for cost increases to small businesses)

EU Regulation: Especially the REACH chemicals directive:
(Member response): “We paid the Reach registration fees last year but another £50,000 [is] due this year which makes our business unsustainable.”

Minimum wage and employment taxes: Businesses want a freeze on the minimum wage in order to retain staff. 55% report that the changes in costs have been detrimental to employment levels. 9% of small businesses want a reduction in employment costs so that they can retain staff. Reducing the cost of employment would also mean that businesses were able to retain staff and minimise the need to reduce staff when faced with increasing costs to the business. Just under half of businesses have seen no increase in employment because of the rising cost of doing business.

(Member response): “We have had to review expenditure. Staff leaving are not replaced to save money. No investment being made for at least 2 years.”
(Member response): “Indirect costs are harder to control than staff costs so it will be employment that suffers. I feel that we have to grow revenue by 10% a year just to stand still and this is not realistic.”
(Member response): “We are concerned about the pension legislation coming in the next year pushing employment costs up further especially after raise in NI employer contributions, extra holiday legislation and minimum wage being raised.”
(Member response): “We have to strip out costs unfortunately this is usually staff costs. The Government must work harder to help reduce direct and indirect cost to businesses.”

Honey: You couldn't make it up

Honey has been part of the human diet since before the dawn of time -- indeed it's also popular with our simian cousins. And honey contains pollen, which the bees pick up along with the nectar from the flowers. But now the European Court has ruled that pollen is not an intrinsic part of honey, but "an ingredient".

So it has to be listed on the label. But it gets worse. As "an ingredient", it becomes subject to the rules on GM content, and the "manufacturer" (the apiarist, not the bees) has to certify the GM content. This adds enormously to production cost, especially for testing of GM content -- for who knows where the bees foraged for nectar?

Now I read that "The Commission's Joint Research Centre is evaluating methods for extracting pollen DNA from honey". You really couldn't make it up, could you?

Recently on the blog:

"Time to Say No": Ian Milne's Civitas booklet is the best case I have seen so far for leaving the EU:

Open letter to a Belgian socialist MEP:

Solar PV: Why the government is right to cut subsidies:

Health risks from exotic pets: Don't put a turtle in your mouth (unless it's well-cooked!)

Why the new global temperature analysis from Berkeley Earth fails to settle the climate debate:

Old MEPs never lose their sense of humour

I have had a very large number of exceedingly kind notes and e-mails from a huge range of people since I announced my intention to resign from the European parliament. Absolutely the funniest came from my former colleague Philip Bushill Matthews, who served as MEP for the West Midlands from 1999 to 2009:

Dear Roger

I gather that you and Liz Lynne (Lib-Dem MEP, West Midlands) are resigning -- together.

This was a very well kept secret, and I hope you will both be very happy.

Meanwhile I can assure you that life as a non-MEP is quite satisfactory. I am personally managing without Europe, though Europe is clearly struggling without me. How it will manage without the three of us I can but wonder.

Best wishes for the future


Country Sports still going strong

Recently the Daily Telegraph ran a story on "Why fox hunting is more popular than ever" (6th November 2011).

I was glad to read that one hunt, the Warwickshire, had seen its membership double since the Labour government outlawed hunting. I believe that other hunts have a similar story, and many new members see their membership as a practical protest against a mean-spirited and unjust law. The ban is based on prejudice and class-envy, not animal welfare. The law has fallen into disrepute. It is virtually impossible to enforce, and is a huge waste of police time, as the Hunting Bill was once a huge waste of parliamentary time.

I regularly attend the Fernie Hunt Boxing Day Meet at Great Bowden, near Market Harborough, and I look forward to going again next month.

TFA ups its act on blogging

The TFA has been transformed out-of-sight in recent years, and while I'd be glad to take some of the credit (for the years when I was Chairman) 99% of it is down to Simon Richards, and he's keeping up the good work, ably supported by Jane, Stephanie & others.

One particular thing is the new and extended blogs section, where there are some sparkling writers, including my former staffer Donna Edmunds; my successor as MEP Rupert Matthews; and (dare I say) occasionally myself. Well worth a look, as is Simon's own blog at the Daily Mail.

A Farewell Message

I have just received from a Conservative Association Treasurer (who had better remain nameless here, though he gave me his name) which is not untypical, and I should like to share with you:

"I have just read with great sadness of your intention to resign because of the attitude of the Conservative party to the EU. If by the 'Conservative Party' you mean its members, you are wrong because we are behind you. If you mean David Cameron, he is not the Conservative party and, unless he changes many of his views, will not be with us for long. Please reconsider but, whatever you do, good luck to you".


That's it from Straz for November. Please remember to visit this website, my blog at http://rogerhelmermep.wordpress.com, and follow me on Twitter: @RogerHelmerMEP