18 September 2015

Look to Guernsey for a model of a post-EU Britain


In politics, whenever you offer a foreign example, in however narrow and limited a context, you are guaranteed – guaranteed – to be told an unrelated fact about the country you’ve cited. You admire Estonia’s approach to shale extraction? “You can’t compare us to Estonia: they’ve got Putin on their border.” You think Singapore has got a useful system of individual healthcare accounts? “Yeah, and I suppose you want to live in a semi-dictatorship.”

It’s a mystifyingly effective put-down. We might usefully learn from Sweden’s school voucher system? “Britain isn’t Sweden!” Cue moronic applause from the BBC audience.

There are more than 40 states and territories in the European common market, stretching from Iceland to Turkey. Only 28 of them are in the EU. So, you’d have thought that, if we want to consider what Britain might do after leaving, the non-EU states, especially the developed ones in Western Europe, might be a useful place to start.

When you look, you can hardly help noticing that these countries are doing extraordinarily well. According to the United Nations, which measures not just GDP per head, but also literacy, longevity and the like, Norway and Switzerland are the two best places in the world to be born. Both trade freely with the EU while retaining their parliamentary sovereignty.

“Ah, but you can’t compare us to Norway, they’ve got oil and fish!” Well, OK. I mean, Britain has oil and, but for the wretched EU, we’d have fish, too. Still, if you really don’t like Norway, what about Switzerland? It has no natural resources to speak of. Like us, the Swiss became world leaders in financial services: maybe that’s a useful parallel? “Yeah, well, the Swiss took Nazi gold!”

I won’t argue the point. I’ll just offer my last-ditch example. If Norway and Switzerland are too exotic for you, how about Guernsey? If we can’t draw a parallel even with the Channel Islands, we are truly lost to introversion. Guernsey is an English-speaking, common law, parliamentary democracy. Its currency is the pound. Its head of state is the Queen. It is, for certain purposes, in political union with the UK. Its political system resembles ours in every way. Except one. Guernsey is outside the EU.

The bailiwick is thus a handy guide to how we’d fare after Brexit, and I’ve just made a visit there to find out how it works. Essentially, Guernsey opts into the economic aspects of EU membership, but opts out of everything else. Under Protocol 3 of the UK’s accession treaty, the Channel Islands are covered by the EU’s trade and tariffs policies. But they are outside the Common Fisheries Policy, outside the Common Agricultural Policy (except for import duties on non-EU produce), and outside the common rules on justice, home affairs, foreign policy employment law and environmental regulation.

Guernsey is part of a free-movement area with the UK and Ireland, but controls its immigration policy. Indeed, startlingly to British eyes, it has an immigration policy: its legislators vote on whom to admit, on what terms and in what numbers. They are currently, for example, debating how many Syrian refugees they might take in. They set an annual population target, and issue their residence permits accordingly, mainly taking in temporary workers from Latvia and Madeira.

Parliamentary sovereignty evidently suits the Guerns. Their economy has been growing steadily at around 3 per cent a year, their GDP per capita is one of the highest in the world, unemployment is in the hundreds and crime is virtually non-existent. While I was there, some vandals damaged the wing-mirrors of six cars. The item led the local news, where it was reported in scandalised tones.

I can already hear the scoffers. “You can’t compare us to Guernsey: it’s tiny”. Look, let’s nail down this surprisingly common objection. Are we seriously supposed to think that small nations can thrive outside the EU but large ones can’t? It’s extraordinary how quickly EU supporters switch from “Britain has to be part of a bigger bloc” to “You can’t compare us to small countries”. Apparently we’re simultaneously too large and too small to prosper.

“Ah, but Guernsey is a tax haven.” In the sense that it has low taxes, yes. And why does it have low taxes? Because it is well-governed. As late as the 1980s, Guernsey had no financial services industry, and its economy rested on tomatoes and tourism. Since then, it has built up a highly successful services sector without being covered by most EU directives. That’s the really key point. Like Switzerland, but unlike the UK, Guernsey is excluded from some aspects of the single market in services. But the flip-side is that it doesn’t have to apply idiotic Brussels rules that threaten managed funds and smaller banks.

Guernsey’s relationship with the EU is not perfect. Many of its business leaders and politicians told me that they felt that Britain was pressuring them to accept too many EU-inspired rules in areas from fish quotas to financial regulation. Still, at least they have the right to say no – unlike Britain where EU law has primacy, and where these rules are enacted automatically.

Parliamentary supremacy should be the key to any EU renegotiation. We might not want to copy Guernsey’s deal precisely. For example, our global trade links give us more incentive to be able to negotiate bilateral deals outside the Common Commercial Policy. Still, an economics-only deal, inside the market but outside the political structures, is attractive.

The Chief Minister of Guernsey is a hugely impressive man called Jonathan Le Tocq, one of the last islanders to have been brought up speaking the local Norman French dialect. He studied in Paris, and feels very European. But what he prizes above all is the sense of accountability intrinsic in the island’s parliamentary system. “People know that they’re in control,” he told me. “If they don’t like a policy, they can get it changed”.

Extraordinary, really, that such a thing should need saying. How diminished our own democracy has become.

Daniel Hannan is a Conservative Member of the European Parliament and blogs at www.hannan.co.uk.