THE turbulence of Britain’s relations with the European Union continues to rage as the Algerian terrorist bloodbath made David Cameron shelve his keynote speech last Friday.
But 24 hours before, the boss of the British Chambers of Commerce (BCC) is forthright in his view that renegotiating our membership is better than trying to force reform from within the trading bloc, writes Martin Flanagan.
John Longworth, the BCC’s director-general for the past 16 months, says the Brussels elite is institutionally dilatory and that “we don’t have the luxury of 20 years” to get the best deal for Britain’s businesses.
Longworth argues that those who believe in the status quo for Britain’s relationship with the EU are “delusional” because – due to the euro’s problems – the bloc is moving away from us as much as we are moving away from it.
“Speed is of the essence. I have been going there for 30 years now and nothing moves fast in Brussels,” he says, as we talk near the BCC’s offices in central London. “It’s a bureaucratic machine. It would be fiddling while the Treaty of Rome burns,” he adds, referencing the 1957 founding document of the old European Economic Community.
“You could go down that legitimate route of reform from within if the EU was not moving towards ever-closer fiscal and political integration. Renegotiation of the terms of our membership would, by contrast, be more honest and pragmatic.
“Renegotiation would also avoid souring relations, whereas an attempt at reform would lead to constant vetoes from the UK. And we would constantly be playing catch-up [with new Brussels initiatives] in areas like restructuring of employment law, taxation and banking.”
A recent BCC survey suggests Longworth’s bedrock view on Brussels enjoys the support of most of the 104,000 UK businesses he represents, and which he characterises as “60 per cent small businesses, 30 per cent mid-sized companies and 10 per cent big companies”.
That study showed 47 per cent of firms wanted to negotiate a looser relationship while remaining part of the 27-member EU. Only 12 per cent wanted to quit; 26 per cent were happy with the status quo.
British businesses disenchanted with EU red tape have firmly in their sights the Working Time Directive, the Agency Workers Directive, the Common Agricultural Policy and regional funding subsidies.
Longworth says BCC members would be happy to comply with rules “related purely to trade”, but want this barrage of EU “harmonisation” taken off their backs. He cites Turkey’s arm’s-length customs union with the EU in this respect as an exemplar.
He is at pains to emphasise that the BCC – whose 54 accredited chambers of commerce serve businesses employing five million people in the UK – is firmly against the UK “sleepwalking towards the exit door” of the EU.
“We are not europhile or europhobe,” he says. “We are pragmatic. The best solution would be a renegotiated position in the European single market. But any businessman who has been involved in negotiations on a deal could tell the Prime Minister that the other side has to believe he is prepared to walk away.”
Away from EU matters, the BCC has been heavily involved in and supportive of Lord Heseltine’s drive to devolve more economic power and wealth creation to the regions.
Longworth says it could help revive Britain’s high streets, even if in future this involved more leisure and residential space rather than just shops.
On the shift to online sales and the flurry of retail collapses, including Blockbuster, HMV and Jessops in recent days, Longworth is relatively sanguine.
“Retail is a volatile market. There are lots of famous names that disappear; companies rise and fall,” he says. “There’s no question there’s a shift to online sales. But I think there will be significant niche and mainstream markets for retailers who do physical retail well.
“There are also successful ‘clicks and bricks’ operators on the high street. It is not a zero-sum game.”
In the wider shape of things, the BCC boss indicates support for the UK government’s austerity programme but, like the CBI, would like to see economic growth stimulated through infrastructure work.
Interestingly, he believes the Bank of England itself could get more involved itself in underwriting such projects to get them off the ground and contributing to economic recovery.
“Why should the Bank not underwrite infrastructure development?” Longworth asks. “It would help to de-risk such projects. I know the idea is slightly off-piste, but it just needs a careful and considered view.
“What are the chances of the Bank getting its fingers burnt? If the infrastructure development eventually pays for itself, the Bank gets a return on its investment and helps create a vibrant economy.”
Longworth also welcomes the government’s pensions reforms unveiled last week, aligning the BCC with a host of business and financial organisations who have said the simplified – if sometimes lower – state entitlement provides clarity.
The BCC has praised the reforms as also giving parity for the self-employed, who were previously ineligible to top up state pensions. It says the new clarity on the size of the state pension will both help support the roll-out of automatic enrolment in pension schemes, and get people thinking of the correct amount to save privately.
The organisation has made clear its view that higher inflation – 2.7 per cent in December, above the Bank of England’s 2 per cent mid-term target – would be a concern for the struggling UK economy.
But Longworth is perhaps unexpectedly a bit more nuanced in his view. He says a “small amount of inflation” can actually be good for the economy “in bringing down public debt and bank debt”.
When it is put to him that pensioners, for instance, might not react kindly to even slightly higher inflation eating up their savings, he replies: “Pensioners won’t benefit from a struggling economy.”
Meanwhile, the BCC, like the CBI last autumn, will be drawn into the Scottish independence debate when it publishes the views on the subject of members north and south of the Border.
Showing that he has a little bit of the politician about him, as well as a personal business background that includes small, medium and large companies, Longworth smiles and says: “I won’t go there on the Scottish independence issue until we publish.”
30-SECOND CV
Born: Bolton, 1958
Education: Smithills Moor Grammar School, Bolton; University of Salford civil engineering faculty, BSc (hons) and MSc by research
First job: Clearing tables in a restaurant, aged 15
Ambition while at school: At first I wanted to be Royal Navy officer, then to be a writer
Car you drive: Jaguar
Favourite music: It’s eclectic – Britten, Vivaldi, Debussy, Coldplay, Oasis, Fleetwood Mac, Supertramp
Can’t live without: My wife and family
What makes you angry? ”Me first” people
Best thing about your job: Getting to know great businesses up and down the land