| The Bruges Group spearheads the intellectual battle against the notion of "ever–closer Union" in Europe and, above all, against British involvement in a single European state.
 Ten Years On
Britain without the European Union
THE CITY OF LONDON UNDER THREAT
The EU and its attack on Britain's most successful industry  Bruges Group research shows that the EU's financial regulations are set to destroy thousands of well-paid jobs in the City of London. The EU now threatens the long term prosperity of the City of London and, by extension, the London and UK economies. How is Britain to remain a well-paid, successful and influential nation in the 21st Century world economy? We should be concentrating on such activities as financial services, marketing, design, advertising, legal work, accountancy, publishing, journalism, business information, the arts and the various forms of management consultancy. We should also want the UK to be the headquarters for companies with production facilities across the globe.
Yet threats are emerging to Britain's long-term prosperity. In September the European Commission submitted new and sweeping proposals for a European Systemic Risk Board. This is to include the so-called "European Banking Authority", which is to have far-reaching powers. In the current proposals they include the authority to close down a particular bank or insurance company, regardless of the views of the UK's own regulators.
The proposed Directive on Alternative Investment Fund Managers, which in practice means managers of hedge funds and private equity funds, is interventionist and prescriptive. Not only will it cramp the operations of alternative investment managers who have long records of good performance, but also it will cause the relocation of well-paid and talented professionals to centres outside the EU.
Britain's exports of international financial services grew by 15% a year for over 15 years, a really serious growth industry in which the UK is a world leader. The EU will ruin this.
How many people will be affected? Total employment in international financial services in London is approaching ½ million people. There may be about 250,000 in the Square Mile itself. Around 20% – 25% of those will be affected by the EU's plans with the potential loss of tens of thousands of well-paid jobs. These jobs – like those in manufacturing – will be forced out of the UK; losing Britain many talented professionals. Almost certainly the financial services industry will go to Asia.
We must do everything we can to put pressure on our politicians to hold a referendum on the Lisbon Treaty after the forthcoming general election. Click here to read the full publication online To purchase a published copy of this paper, please call Robert Oulds on 020 7287 4414
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 TAXPAYERS TO LOSE BILLIONS
EU court ruling shames successive Chancellors British taxpayers will lose at least £9.7 billion due to rulings by the European Court of Justice. Commentators on the HSBC SDRT case have suggested that it will cost up to £5 billion, the UK Government's estimate for the FII GLO case is that it will cost taxpayers another £4.7 billion, and the estimated total of those (£9.7 billion) does not even taken into account the Thin Cap GLO or the Cadbury Schweppes CFC tax cases, both of which the Government is currently fighting in the courts.
Yet these tax blows to the nation's finances, coming at a time when the Government is struggling with our huge national debt, could have been prevented. However, Ken Clarke and his successor, Gordon Brown, as Chancellor failed to act on advice to amend EU tax rules. Now the only option to protect British tax law from EU interference is for the UK to regain its freedom. Sensational evidence produced in a recent tax case1 shows that Ken Clarke, when he was Chancellor of the Exchequer, failed to defend the UK's tax rights, despite clear warnings from Inland Revenue officials that the ECJ would erode the UK's tax base. Furthermore, it is highly likely that his successor, Gordon Brown, also failed to act. Warned, as early as 1994, that the only solution was for the UK to obtain clear tax exemptions from the EU, then either from incompetence or neglect, Clarke ignored advice, probably also given to Brown, to seek changes that could have saved the UK Exchequer billions.
It is scandalous that the advice of Inland Revenue officials to seek a Treaty carve-out for tax, has been ignored by successive governments. It is clear that the approach of Ken Clarke and Gordon Brown has cost the UK Exchequer £billions as HMRC now loses tax case after tax case on EU law, when if the officials advice had been followed these cases may not have arisen.
The Labour government claims to have secured a red-line protecting the UK from the EU taking power over taxation. The evidence now shows that it waved a white flag. Background In Test Claimants in the Thin Cap Group Litigation v Commissioners for Her Majesty's Revenue & Customs [2009] EWHC 2908 (Ch) evidence was produced that showed disregard by Ken Clarke of official advice that the UK's tax powers were under threat. Actions of the Treasury under Ken Clarke's Chancellorship In July 1994, a policy memorandum from a senior Inland Revenue official, headed "EC: Direct Tax: European Court of Justice" outlined the issue as "Early warning of problems ahead with the Court of Justice applying the principles of the Treaty to national tax provisions".
The summary of that memorandum states the following:
- "There is a growing risk of a major setback in Exchequer and political terms";
- "In so far as there is any comprehensive solution to this problem the only [our emphasis] option worth serious consideration is a Treaty revision with the objective of securing tax carve-outs in the relevant Articles."
- "Short of amending the Treaty there are very real limits to what can be done at national level to reduce the potential for damage"2.
And that the cost could run into:
- "hundreds of millions if not billions of pounds".3
The same Inland Revenue expert added in August 1994 that:
- "The vulnerabilities of ourselves and indeed other Member States run to the length of a ball of string."4
It is clear that the Financial Secretary at the time, Sir George Young, clearly understood the danger, as outlined in an October 1994 note to Ken Clarke where he wrote:
"But this, I fear, is only a minor example of the problems we will face in dealing with the Halliburton decision, and other major ECJ decisions in the future."5 Young further wrote to Ken Clarke on 1st November 1994, referring to the risks of judicial lawmaking by the ECJ in taxation, and strongly recommended that the issue of the ECJ overriding UK tax law be made a priority for the UK agenda for the 1996 Inter Governmental Conference. He wrote:
"since Treaty revision is the only long-term solution".6 Less to his credit, the Financial Secretary did also recommend keeping the issue off the political agenda, due to "avoiding shock/horror politicking from the Eurosceptical tendency in Parliament". Not only did this ignore the fact that the Eurosceptics would have been proved right, it reduced the UK's chances of getting the momentum required, both in the UK and abroad, to force the necessary Treaty changes. Actions of the Treasury under Gordon Brown Amazingly, the disclosures made in the Test Claimants tax case cover no discussion of such issues between July 1997 and February 2001, a period during which only Gordon Brown was Chancellor.
Questions have to be asked as to why there was no evidence in the case covering this period. During this period the ECJ ruled on a number of cases, including at least one UK case7, which made clear to the tax community that EU law is being used to force through tax harmonisation via the back door8. There was a major UK House of Lords case, where ICI successfully argued for greater tax relief, because of EU rules.9
Given that litigation, it is highly unlikely that at no time during those 4 years, did Treasury or Inland Revenue officials provide a briefing to the Chancellor of the Exchequer on matters clearly identified in 1994 as having a detrimental impact to HMRC. And its highly unlikely that such briefings did not make the same recommendations as in 1994, to seek treaty amendments, recommendations which if made public will be highly embarrassing to the now Prime Minister. References - Test Claimants in the Thin Cap Group Litigation v Commissioners for Her Majesty's Revenue & Customs [2009] EWHC 2908 (Ch):
http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Ch/2009/2908.html&query=Thin+and+Cap+and+Group&method=boolean - Ibid, paragraph 269
- Ibid, paragraph 270
- Ibid, paragraph 272
- Ibid, paragraph 283
- Ibid, paragraph 290
- Metalgesellschaft Ltd & Others v CIR, CJEC Case C-397/98; Hoescht AG v CIR, CJEC Case C-410/98, TL 3686; [2001] STC 452; [2001] 2 WLR 1947; [2001] All ER (EC) 496
- Including Futura Participations, Compagnie de Saint-Gobain, Royal Bank of Scotland v Greece, Verkooijen – all well known in the tax community when published
- Imperial Chemical Industries v Colmer, HL 1999, 72 TC 1; [1999] STC 1089; [1999] 1 WLR 2035; [2000] 1 All ER 129. See also Metalgesellschaft Ltd
TEN YEARS ON
Britain without the European Union Dr Lee Rotherham, a longstanding Bruges Group campaigner, explains the latest work at the TaxPayers' Alliance and offers Bruges Group friends a special offer.
There is no reason for it, no excuse. The preparatory work has long been done. The groundwork is long prepared. The intellectual arguments have been made and remade: beyond all reasonable question, the UK needs a radical shakeup of its relationship with the EU, and not merely the tinkering currently proposed by the Conservative leadership. One example of itself makes the point. That party's policy was once to bring control over fisheries back to national parliamentarians, thence to be passed down to be closer to the communities themselves. Indisputably, the CFP is an unmitigated disaster, ecologically, financially, socially and ethically. The work of past shadow fisheries spokesmen demonstrated a problem and provided a solution. That pledge currently seems to have disappeared.
Other campaigners have explored a myriad of other fault lines. The Bruges Group deserves credit from its role at the very coalface. Its research has shone candlelight on most if not all of the seams.
It is correspondingly a light task today to recommend where renegotiation should focus, as revisited here. It is a fairly straightforward task to draw up a genuine list that addresses what needs to be centre stage from a genuinely Eurosceptic viewpoint.
The prize is tremendous.
In my new book, Ten Years On: Britain without the European Union, I explore the concrete improvements that a decade of political freedom from Brussels can deliver. People from all walks of life would see their standard of living improve. Businesses would see less red tape and more opportunity for expansion. Individuals with issues would be able to achieve democratic satisfaction from politicians able to deliver on their concerns.
A limited number of free copies are available on our new website, http://www.greateudebate.com/. The site is intended to foster debate about the future of the EU. Not everyone will agree with our analysis in the book, but that's not the point. With an issue of such magnitude, the country needs a massive debate about our place in the EU, or our position alongside it.
All credit to the Bruges Group for its contributions to date. Given that we currently seem to be denied a referendum, it's the least the British people deserve. --------------------------------------------------------------------------------------------------------
For further information contact:
Robert Oulds
Director
The Bruges Group
227 Linen Hall, 162-168 Regent Street, London W1B 5TB
UK
Tel: +44(0) 20 7287 4414
Mobile: 07740 029787
E-mail: info@brugesgroup.com --------------------------------------------------------------------------------------------------------
Honorary President: The Rt Hon. the Baroness Thatcher of Kesteven, LG, OM, FRS
Vice-President: The Rt Hon. the Lord Lamont of Lerwick, Co-Chairmen: Dr Brian Hindley & Barry Legg
Director: Robert Oulds MA, Head of Research: Dr Helen Szamuely
Washington D.C. Representative: John O'Sullivan, CBE
Founder Chairman: Lord Harris of High Cross, Former Chairmen: Dr Martin Holmes & Professor Kenneth Minogue --------------------------------------------------------------------------------------------------------
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Latest Research
The City of London Under Threat
Taxpayers to lose £9.7 Billion
