Oral evidence: The economic and financial costs and benefits of UK membership of the EU, HC 499Wednesday 20 April 2016
Oral evidence, 20 April 2016.
Witness
Dominic Cummings, Campaign Director, Vote Leave Ltd, gave evidence.
Chair
The organisation, Vote Leave, and a number of other supporters of the Leave campaign have published an estimate of the total cost to the UK of regulation. Are you familiar with that figure?
Dominic Cummings
I am familiar with various figures that have been published on this subject.
Chair
Which one springs to your mind?
Dominic Cummings
There are a few different figures that spring to my mind. There is the figure from the British Chambers of Commerce; the Chambers of Commerce did have a series within which they used to address the question of EU regulation. The last one they did was something like £60 billion per year, but they stopped doing it in 2010 or 2011; I cannot remember for what reasons. The main figure that tends to be used is one by Open Europe.
Chair
What is that?
Dominic Cummings
That is, roughly speaking, £30 billion per year—£33.3 billion.
Chair
That is per week.
Dominic Cummings
No, that is £33.3 billion per year.
Chair
Do you not know the figure per week?
Dominic Cummings
It is roughly £600 million.
Chair
That is what I am asking for. Do you know how that figure is composed?
Dominic Cummings
Yes. They looked at a series of EU regulations and they then looked at the Government’s impact assessments of those.
Chair
Yes. Are you aware that they use only the costs and do not seek to add up the benefits in order to arrive at that figure?
Dominic Cummings
I do not think that is accurate.
Chair
Tell me what is.
Dominic Cummings
Their methodology was that they looked at all of these things and the impact assessments. There are some benefits, but Open Europe’s conclusion was that almost all of the benefits that the Government had claimed would happen did not materialise.
Chair
Have you looked carefully at the place in their text at which they have said that the benefits may not materialise?
Dominic Cummings
I looked at the report a few months ago; I have not looked at it since then.
Chair
If you do so you will find that that remarks refers only to the costs and benefits of the removal of climate regulation, not of all regulation.
Dominic Cummings
That is not true. If you look at their website that is not what it says. Do you want me to read what it says on their website?
Chair
By all means.
Dominic Cummings
It has the total cost, and says, “Open Europe estimates that up to 95% of the benefits envisaged in the impact assessment have failed to materialise.” That is not referring just to energy, as you mentioned; it is referring to all of them.
Chair
You will find that the case is as I have described it. In a moment I will read it out to you if you still doubt that. Which, if any of these, regulations—there are in fact 100 of them—are worth keeping?
Dominic Cummings
The main point about our campaign is not to argue about the specifics of particular regulations. There are of course individual regulations that almost all people would regard as silly, and they are very likely to be removed after we vote leave. However, our campaign in general is not about, “Should we have more or less of this type of regulation? Should we have more environmental protection or not?” It is much more about the fundamental principle, which is, “Who ultimately controls this regulatory system? Is it this Parliament and our Supreme Court, or not?” As a campaign we do not have a list which says, “We should definitely bin X% of these top 100”; our point is broader.
Chair
I am looking now at their document and it is clear that this is only a reference to climate targets, but of course it is the same mistake that Boris Johnson made when he gave evidence. If you do not read it carefully enough to grasp exactly what they do say, it is possible.
Dominic Cummings
I am reading the paragraph and that is not what it says here.
Chair
Given the salience that you have given in your literature to this figure of £600 million per week, it may be advisable that you offer a qualification for the rest of the literature you publish, and make clear that that is all it is a reference to.
Dominic Cummings
I will send the Committee a copy of the Open Europe website that I have printed off, which does not say that. Perhaps there are two different documents on the Open Europe website; I do not know. However, I shall certainly send the Committee the copy of the document that I have been given, and you can then make up your own minds about it.
Chair
That will be very helpful. I would like to come back to the question that I asked you a moment ago, which is about which of the regulations—there are 100 regulations that have been costed by Open Europe in order to create the £600 million figure—may be worth keeping.
Dominic Cummings
That is not the way to look at it. There is a broader point as well: as some of the Committee know, I worked in Government for a few years in the Department for Education. One of the areas of EU regulation that was most destructive, that delayed public buildings the most, and cost billions was the whole range of EU procurement, and EU procurement is not even touched on by Open Europe. One of the great benefits of voting to leave, largely undiscussed in the entire debate, is that we will be able to get out of these nightmarish procurement rules. PricewaterhouseCoopers did a large audit of them and suggested that it would add 30% to the cost of projects in 200 days. Where you aggregate that over the entire public spending field of hospitals, schools, aircraft carriers—you name it—you are talking about huge amounts of money. The Government unfortunately refuse to investigate this issue, and there are no concrete numbers on it. That would be one huge gain, but it is very hard to say how many billions you would save.
Chair
That does not answer my question. I have had two goes so far. There are 100 regulations out there, the cost of which has been estimated and aggregated, and I am asking you which of those regulations in part or whole may have sufficient benefit to warrant being retained. You have not been able to give me a single example so far.
Dominic Cummings
Vote Leave does not run campaigns saying, “Get rid of this specific regulation.” There are very few things that we have focused on individually.
Chair
Yes, you have made that point earlier.
Dominic Cummings
The Clinical Trials Directive is one where the problems with it are so enormous that it is fairly obvious. You have a whole field of Nobel Prize‑winning scientists saying, year after year, “This thing is crazy and it is killing people.” That is one example that most people would say should change. Generally speaking, we do not touch on that because it is not our job to. Our campaign is much more about the fundamental principle of who controls this system.
Chair
Is it likely that we would want to maintain regulation to ensure that banks are appropriately capitalised.
Dominic Cummings
These big investment banks drove the whole system off of a cliff in 2008. Taking back control over regulation of the banks and over vital issues, such as capital requirements, is crucial. I certainly would not trust that to the cesspit of Brussels’ lobbying where Goldman Sachs has people there and its fingers in every pie. This Parliament should decide the rules on how banks such as Goldman Sachs operate.
Chair
Have you looked at the Capital Requirements Directive?
Dominic Cummings
I have not examined it in detail. I know there are some people who say that in some ways what the EU has done in some of these areas since the 2008 crisis has been sensible. However, that is of course not the main point.
Chair
You do not think it likely that we will want to maintain a measure of higher capital requirements than we had in the run up to the crash.
Dominic Cummings
We certainly should do, and I certainly would not entrust decisions on that to the European Commission, European Court of Justice and the Brussels lobbying system.
Chair
A substantial proportion of the £600 million per day figure for the cost of regulation is in fact an estimate of the gross cost to banks of fulfilling the terms of the Capital Requirements Directive. You do not think it likely that we would want to carry on increasing risk‑weighted assets for banks as we have been in the past. This is all implementing only Basel III after all, which is not ultimately derived from EU regulation, but from a broader international agreement of which the EU forms a part.
Dominic Cummings
You made a very important point there. One of the great advantages of voting to leave is that Britain will regain its seat in a lot of these international institutions where it is currently represented extremely badly by Brussels. It will be able to argue for its case at the global level, where increasingly these decisions are made—in banking, as you say, but in many other areas you see the same phenomenon; the world is very different than it was in 1985 when Cockfield and Delors dreamt up their cunning scheme of the single market. The world has changed; regulation is increasingly moving to the global level. It is a very good reason to vote Leave.
Chair
When Open Europe were asked what estimate they made of the annual saving it was feasible to conclude might be obtainable with the removal of that list of 100 regulations, they told us—and this is also published on their website—that the correct figure is not £33 billion, but £13 billion. Are you aware of that?
Dominic Cummings
No, I was not aware of that, but, as I said, their document does not include all of the costs of procurement, nor all sorts of other costs of the European Union. All of these numbers and all of these studies on all sides of the campaign and in Government—depending on one’s point of view—the methodology behind lots of these is questionable. If you sat a bunch of physicists down and looked at all of these studies, there is almost nothing that the economics profession produces that would withstand any serious scientific scrutiny. These numbers are really looking at orders of magnitude. You have the British Chambers of Commerce saying £60 billion, Open Europe totting up numbers and saying £30 billion; what the true figure is, nobody knows. However it is giving you an indication of the order of magnitude of the impact of what the European Union is doing.
Chair
If nobody knows the true figure, and you are saying that we should be working off of orders of magnitude, would it not be sensible to use the figure that Open Europe themselves say is the maximum feasible likely annual saving from the removal of EU regulation?
Dominic Cummings
What we will probably be doing is that we will produce something that brings together a lot of these different reports—the Open Europe report, Chambers of Commerce, a lot of these things—and says, “Here are a range of different estimates and here is a reasonable way of looking at them. The methodology is what it is; nobody should take these things as any specific indicator, but it gives you a rough idea.” It is in a way similar to the whole issue of what percentage of our laws are made by the EU.
Chair
We may come on to that, but would it not have been a good idea to have done that work first rather than to be telling us now that you may start to draw together a list of all these various costs and benefits of regulation?
Dominic Cummings
We have all sorts of documents and briefing notes. I would be very happy to send you a copy of one that has all of these things laid out, if you would like.
Chair
What you are saying is that there are a range of numbers. We should not take any particular number that you are using as a headline number—and you are using the £600 million per week and £33.3 billion per annum cost of regulation all the time in your literature—and you are now telling us in evidence that we should set that at a heavy discount and not worry about it or its accuracy too much because it is just one of a range of numbers that may be taken into consideration. Is that summary of your evidence right?
Dominic Cummings
Roughly speaking, what you are saying is a reasonable perspective. As I said, campaigns on both sides and the Government produce these economic studies that have various numbers. It is crazy for anyone to take decimal points seriously in these things.
Chair
This is a decimal point that is moving along quite a long way, is it not? We are talking about a decimal point that has shifted quite a bit from £33 billion to £13 billion at the stroke.
Dominic Cummings
Or to £60 billion, according to the Chambers of Commerce.
Chair
Yes. I am just looking at the figures that you have used as your headline figures for your literature.
Dominic Cummings
We use all sorts of figures.
Wes Streeting
He keeps saying the same thing.
Chair
There are some figures more prominent than others and some of the figures you are now saying we should set at greater store than others, and it is up to us to pick and choose. It sounds to me as if we might do well to not pick and choose any of them. I would like to move on to EU contributions. How much is in Britain contributing per year to the EU budget?
Dominic Cummings
According to the ONS it is £19.1 billion.
Chair
You are aware that there is a rebate in place, are you not?
Dominic Cummings
I am aware that there is a rebate.
Chair
Do you know how much the rebate is?
Dominic Cummings
The rebate is £3 billion or £4 billion.
Chair
It is £6 billion. Are you aware of what happens to the rebate physically?
Dominic Cummings
Yes.
Chair
Perhaps you would like to describe that to the Committee.
Dominic Cummings
The interesting thing about the rebate is—
Chair
I have just asked you to describe what happens to the rebate. You have stated that you are aware of what happens to the rebate, so I would like you now to describe it.
Dominic Cummings
What happens to the rebate is that there is constantly an enormous row between Britain and Europe about how much of our money we get back. We lose these arguments and we get some of this money back in a very unpredictable way. If you look at how the accounts are done by the ONS, one of the reasons why they look at the actual figure and not what the estimated figure is, unlike the Treasury, is they have to work out the rebate in arrears to find out where on earth the negotiation got to.
Chair
Perhaps it is my fault for not being precise enough. What I am asking you is: there is a sum of money—£19 billion per year—
Dominic Cummings
Yes, that is debited from the UK Government.
Chair
That is you think debited from the UK Government consolidated fund.
Dominic Cummings
It is not what I think. That is what the ONS tell you, and defines it itself.
Chair
It is in fact not debited from the consolidated fund; £6 billion of it never leaves the consolidated fund.
Dominic Cummings
It is in fact debited. That is exactly what the ONS says. If you do not like that then you should argue with the ONS, not with me.
Chair
I am just telling you that it never leaves the UK.
Dominic Cummings
It is debited from the UK.
Chair
The money stays in the UK for the whole of this period. It never leaves the UK or crosses the exchanges.
Dominic Cummings
When you are sitting in your slippers talking to Mrs Tyrie, looking at your bank statements, and it says X amount of money is debited from your account, that means that it has gone from your account, does it not? It is pretty clear what that means. The debiting is exactly what the ONS says here. It is debited from the UK. In table 9.9 of the ONS, that is what it says.
Chair
I used to work in the Treasury and was in shortly after the Fontainebleau Agreement was negotiated, and as I have just explained to you, this money never leaves the Treasury. It is therefore quite significant that we should work off of figures that have some plausibility. £19 billion is not the figure that we pay across the exchanges; we pay £13 billion across the exchanges.
Dominic Cummings
We are debited £19.1 billion according to the Office for National Statistics.
Chair
That is an accounting procedure, but the money never leaves the UK, Mr Cummings.
Dominic Cummings
What happens on your bank statement when you are debited £19? That means that you are debited £19. That is what the ONS says we are debited—£19.1 billion.
Chair
How much of the EU’s expenditure in the UK would we, the UK after Brexit, want to continue with?
Dominic Cummings
Of course similarly to the regulatory issue, it is not for Vote Leave to say what should happen. Our fundamental argument is that we should become a normal, self‑governing democracy again, and that it should be up to elective representatives to have these arguments. There are some areas where all sensible people would say that after we vote Leave on 23 June we do not want a whole lot of cliff edges with funding. I have a particular interest in science, for example, and it would be crazy to suddenly stop the huge amount of science funding as soon as we leave. A lot of the money that is currently spent by the EU in this country, we will continue, some of it permanently and some temporarily. In some areas I would hope that the British Government, freed from the nightmare of Brussels, would choose to spend more money. However, that would be up to the democratic Government of the day.
Chair
You have said that it is not for you as an organisation to say what would happen, but you have said what should happen in a number of areas, have you not? You have said, “We will pay farmers at least as much as they get now.” I am reading that from your website. You have said, “There will be financial protection for all groups that now get money from Brussels”; again I am quoting from your website. That does sound to me like an organisation that is saying what it thinks should happen with this money.
Dominic Cummings
There are various MPs who have spoken at events we have had. George Eustice, for example, spoke about farming and the problems that he says every day with the CAP system. He suggested that there were various ways in which you would deal with the EU payment system after we vote Leave. We have given some indications, but we have not given a specific and detailed budget because it is not our role to. However, it is important to assure groups such as the Royal Society and farmers that none of the serious people that are likely to be part of the next Government and who are thinking about this, and in a position to make decisions on it, are arguing for a big cliff edge where suddenly this money is taken away. Whichever side of the argument you are on, it seems like a sensible way forward to not have any jarring process with funding.
Chair
We are agreed, are we not, that where you say there will be financial protection for all groups that now get money from Brussels, there will be a sum of money and a cost of that financial protection.
Dominic Cummings
Certainly. Of course.
Chair
Have you made an estimate of what that might be?
Dominic Cummings
No, because it depends on exactly what the Government of the day decide to do and how they decide to do it.
Chair
It has not interfered with your decision to continue using the £350 million per week figure for gross EU contributions, has it? Bearing in mind that we are not going to get anything like that sum if we are going to continue with all of this financial protection, are we?
Dominic Cummings
Bearing in mind that we are debited £19.1 billion per year, according to the ONS, then that sum will be ours to spend as we wish after 23 June.
Chair
The truth is that you are spending quite a lot of this money before you have even got it back, are you not? For example, you are telling people that there are opportunities for extra money to spend in the NHS, are you not?
Dominic Cummings
Certainly; but once we stop being debited £19.1 billion per year then there will be a lot of money to go around. That does not even touch all of the other costs that the EU imposes. I said before, “Imagine what will happen to the school building programme”—and I know this from personal experience, working with Michael Gove in the Department of Education—there will be billions saved over a decade on the school building programme once we are free of the horrific EU procurement rules. The £350 million per week figure that we use is an underestimate of the savings that we will make from leaving the European Union, not on overestimate.
Chair
What might the right number be?
Dominic Cummings
I do not know. At a guess I would say at least tens of billions more than the £350 million per week figure that we normally use.
Chair
Let us work off of annual figures. We have a £33 billion figure—
Dominic Cummings
Do you want to do a firm estimate whilst we are in the Committee—
Chair
Or we are talking about the £19 billion figure from the £13 billion that crosses the exchanges and the £19 billion that is identified in the ONS as a gross contribution. Which figure will we save, Mr Cummings?
Dominic Cummings
At the very least we will end the debit of £19.1 billion, which is a good start.
Chair
We are now talking about tens of billions, Mr Cummings. We are just trying to get a feel for how many more tens of billions.
Dominic Cummings
That is £20 billion. That is a good start. You then have the EU procurement rules and EU energy costs. There are huge amounts of ways in which the European Union costs us money. At some point in the campaign we will certainly be totting all of these up, and we will certainly send you a copy of the full bill.
Chair
Why are you suggesting that you might want to allocate to the NHS the whole of the £350 million per week that you say will be saved?
Dominic Cummings
Some of our supporters do. We have Labour supporters such as Gisela Stuart and Graham Stringer.
Chair
I am not suggesting that some of your supporters do; I am suggesting that you do as an organisation. Why are you as an organisation doing this?
Dominic Cummings
We often use the figure of £350 billion, which is an underestimate of what the actual figure is.
Chair
£350 million.
Dominic Cummings
£350 million, sorry. The actual number is £367.4 million. However, so as to not mislead anybody we rounded it down to £350 million.
Chair
I am just asking you why you are suggesting in some of your literature that you might allocate all of that to extra spending on hospitals. As an organisation you are proposing that.
Dominic Cummings
As an organisation we are saying that once we stop the £19.1 billion debit then we will have roughly £350 million per week to spend on our priorities, like the NHS. The NHS is the country’s top priority and is a fairly obvious target for where a lot of these savings would be spent.
Chair
I am asking you the same question a third time. You have made it clear that there are a number of other priorities that you personally may want to spend money on, such as science, and you have agreed that a number of other groups are going to get financial protection. Why have you nonetheless persisted with the idea that this same pot can be raided and used exclusively for the NHS? That is what I am asking you.
Dominic Cummings
We are not.
Chair
I have here one of your posters, which is available and you are encouraging your supporters to download. It gives a clear enough message. To any reasonable persons, that is telling you that we should give the whole of this £350 million per week to the NHS, does it not?
Dominic Cummings
We could certainly give the NHS a very large portion of that, but remember also that there is all of the other money that we have saved as well. There is not just the £350 million per week that we save from the budget; there is all of the other money.
Chair
So we are going to put the whole of the £350 million in to the NHS and we are then going to fund all of these other things that you are keen on—science and the other financial protection that you are going to provide to all of the groups that now get their money from Brussels—from another pot, as yet unspecified.
Dominic Cummings
I specified a few different examples of where the pot comes from: energy regulation and EU procurement rules being two alone that offer billions. There are more than enough billions to go around to put an awful lot more money into the NHS, protect science and agriculture, and still have billions left over.
Chair
Billions left over; this sounds like Aladdin’s cave to me. I just want to touch on one more point. You are saying in your literature, in hospitals, that we can give a lot more money to hospitals, are you not? You are distributing literature to that effect. You are doing that, are you not?
Dominic Cummings
No, we are not. We have not distributed any literature whatsoever to hospitals.
Chair
I have a piece of literature here with your logo. Is this a pirated piece of literature? It says, “Vote Leave. Take control.” It is badged as your literature. It says, “Help protect your local hospital.” It has here at the bottom, “Vote Leave. Take control.org.” Is that not your organisation?
Dominic Cummings
It looks like it is one of our leaflets, yes.
Chair
So you are distributing these things to hospitals. This was picked up from Guy’s Hospital.
Dominic Cummings
I saw that story, I think, on a website.
Chair
I have one of the leaflets here, yes.
Dominic Cummings
Yes. I saw that story on the website last week. We do not have a clue where that has come from. It certainly was not done by us.
Chair
So is this pirated?
Dominic Cummings
No. Well, I have no idea. I very much doubt it.
Chair
I just want clarity.
Dominic Cummings
I am giving you clarity.
Chair
You have not yet on many of the points that I have been asking. Let me go through some very simple questions. Did your organisation print this leaflet?
Dominic Cummings
It looks likely that we did, but I cannot tell about any individual leaflet.
Chair
You do not know which leaflets might be printed by your organisation. You are running a campaign and do not know—
Dominic Cummings
You are misunderstanding what I am saying.
Chair
I do not think you are understanding the question. I am asking a straightforward and simple question. We are getting down to very simple questions. Is this a leaflet of your organisation?
Dominic Cummings
Do you mean that design of leaflet, or that individual leaflet?
Chair
I am asking you if this leaflet is one of your organisation’s leaflets.
Dominic Cummings
Yes, it is.
Chair
Good. We have answered question 1. Now let us try question 2. Is it reasonable that somebody might misconstrue this leaflet at first glance as a leaflet produced by the NHS, since it has an NHS logo in the top right‑hand corner?
Dominic Cummings
No. It says, “Vote Leave. Take control” at the bottom, with our logo.
Chair
What do you make of that NHS logo there?
Dominic Cummings
What do you mean, “What do I make of it”?
Chair
Does it look like the logo of the NHS?
Dominic Cummings
It looks roughly like it from here.
Chair
It looks roughly like it from almost any distance. Here is an NHS document encouraging you to eat better food and you will see that the logo is strikingly similar. They are in fact almost identical. It takes an expert eye to tell that the one is not the other. One of them is slightly italicised; the other is not. Now that you have had a chance to consider whether you did in fact produce this leaflet and you have agreed that it does look like an NHS leaflet at any reasonable distance, do you think it might be a good idea to think twice about putting out literature as misleading as this?
Dominic Cummings
No, I certainly do not and you are confused about what my answer was before. I thought you were asking me if the leaflet you were holding in your hand had been put into a hospital and had come from us, and I was saying, “No, it has not come from us”—as in we did not distribute leaflets to the hospital. We are as baffled as everybody else about the story that appeared on the website. That has not happened because of us or at my direction; nobody in the office knows why it has happened. That is what I was saying. If you are saying you have one of the leaflets from that hospital and you are holding it up in front of me asking, “Is this yours?” my answer is, “It looks like something that we have printed, but it is certainly not something that we have put into Guy’s Hospital.”
Chris Philp
I would like to start by asking about the costs and benefits of membership of the single market. You have published some figures in which you have assessed the net cost or benefit of the single market. Can you tell the Committee in summary what the conclusion of those figures was?
Dominic Cummings
Which document are you talking about?
Chris Philp
A briefing titled, “The Single Market is failing British business”.
Dominic Cummings
You will have to give me a copy of it if you want me to answer questions about it. There are all sorts of briefings all over.
Chris Philp
We have established that already. It says, that the benefits to single market membership are £37 billion and the cost of the UK’s membership fee and 66—not 100—66 single market regulations are £41.7 billion, and you have subtracted one from the other to say that the costs, less the benefits, are £4.5 billion per year. You are suggesting that there is a net cost of single market membership of £4.5 billion per year.
Dominic Cummings
From what you are reading out, what you are looking at is a bit of research in which we said, “Let us not take our estimate of the single market benefits, but what the European Commission’s best estimate is of the single market’s benefits, and then look at Open Europe’s cost of regulations.” If you give me a copy of the document I will be able to confirm it is, if you want me to. However, from what you are reading out, that sounds like it, i.e. that is not our estimate of the single market’s benefits; that is what the European Commission claims itself.
Chris Philp
You have come up with a negative number, minus £4.5 billion. Does that mean that, whether we are in or out of Europe, you want nothing to do with the single market because it has a negative effect?
Dominic Cummings
How would you define the single market?
Chris Philp
The single market. The trading market that exists, which European Union members and Norway are currently members of.
Dominic Cummings
The single market is of course not a trading arrangement.
Chair
It would be helpful if you answer questions rather than ask them, but do give us an answer to the question you yourself posed; I am sure we would be interested to hear it.
Chris Philp
You are suggesting that our single market membership carries a cost of £4.5 billion per year. Does that mean that we should not be part of the single market?
Dominic Cummings
We are saying that even if you take the Commission’s most optimistic prediction of what the benefits are and you take a reasonable assessment of some of the costs of it, you still get a negative number. That tells you something. If you look at the overall economic analysis over the last 30 years, people have not been able to come up with any convincing numbers on the benefit of the single market. Intra‑EU trade has in fact gone backwards since the launch of the single market.
Chris Philp
You are suggesting that this minus £4.5 billion may even be a worse figure than that.
Dominic Cummings
I am almost sure the true figure will be worse than that, yes.
Chris Philp
Does that mean—and this is really a “yes” or “no” question—you think we should not be a member of the single market, whether in or out of Europe.
Dominic Cummings
What do you mean by the single market?
Chris Philp
I mean the single market that we currently trade in and that Norway trade in. It is a “yes” or “no” question: should we be part of the single market or not?
Dominic Cummings
The single market is defined by the European Union as including membership of the euro and Schengen.
Chris Philp
That is not true, as we are currently members of it and are neither euro nor Schengen members, so that is clearly untrue.
Dominic Cummings
Exactly; that is the point. However, that is how the European Commission and European Court of Justice define the single market.
Chris Philp
We are currently members of it and that is not how it is operating. It is a very simple question that you are persistently refusing to answer.
Dominic Cummings
You are confused about what the single market is.
Chris Philp
We are currently a member of it. Norway is currently a member of it. Other EU members are members of it, whether or not they use the euro. It is a very simple question. Should we be a member of the single market or not: yes or no?
Dominic Cummings
The single market is a political project from Jacques Delors and it encompasses—
Chris Philp
Can you answer the question: yes or no?
Dominic Cummings
I am answering the question. It encompasses economic and monetary union, the Schengen area, and all sorts of other things, including procurement rules that are not to do with trade, and the Clinical Trials Directive, and all sorts of other things.
Chris Philp
If what you say is true can you then explain to me how come we are a part of the single market without being a part of Schengen or the euro?
Dominic Cummings
It is not a question of if what I am saying is true; it is a legal definition in the treaty. Do you want me to read it out to you?
Chris Philp
Are you saying that the UK is not currently part of the single market?
Dominic Cummings
No. You are misunderstanding what I am saying. What I am saying is that the European Union itself defines the single market as including economic and monetary union, and an area without internal frontiers—i.e. the Schengen area. We are already not part of two of the biggest aspects of the single market, and they are two aspects of the single market that are very damaging, in my opinion and the opinion of many people. Other people take a different view. The Chairman of this Committee was a very firm supporter of the euro and the ERM; other people have different attitudes towards different aspects of the single market project.
Chair
As a matter of fact I was an opponent of joining the ERM when we did and I have never been a firm supporter of the euro project either, but do not let it worry you, Dominic. It sounds as if you are as fast and loose with those facts as you are with all of the other facts that you have provided so far this afternoon.
Chris Philp
When I am asking about the single market, I mean the ability to trade freely in goods and financial services within Europe, which we, the United Kingdom, currently do, despite the fact that we are not members of the euro nor signatories to Schengen. You say that this arrangement for the UK costs us at least £4.5 billion and maybe more per year. Should we continue to be part of that arrangement: yes or no?
Dominic Cummings
“Even the strongest advocates of EMU will be hard put to argue that it would do better than the ERM.” That is from Andrew Tyrie, the Chairman of this Committee.
Chris Philp
With respect, I was not asking about what Andrew said 25 years ago.
Dominic Cummings
I am answering the point that the Chairman of the Committee made, that he was not a supporter of the ERM. I am just pointing out what the Chairman of the Committee said. If you are asking me about the single market, as I have explained, there are two major features of the single market, the euro and Schengen, which are very damaging. There are lots of other areas of the single market that are damaging. Overall, Vote Leave thinks that the single market project has been bad for Europe and Britain.
Chris Philp
I am being very precise now. The UK has single market access currently today. You think it costs us £4.5 billion or more per year.
Dominic Cummings
That is not what we said.
Chris Philp
You think it costs us money, right? It has a negative cost.
Dominic Cummings
Correct.
Chris Philp
Fine; we can argue about the amount later. Should we continue with single market access as the United Kingdom currently has it?
Dominic Cummings
Definitely not because single market access as we currently have is extremely damaging. The single market access that we currently have has forced us to implement the Clinical Trials Directive, which kills an unknown number of people every year because we cannot test cancer drugs properly. That is stupid. We will be much better off when we are outside of things like that.
Chris Philp
You finally said that you do not want to be in the single market. That took quite a long time, but we got there. The figure you quoted, the illustrative £4.5 billion that you think is very conservative, is one you have arrived at by taking the cost of 66—not the 100 we spoke about before—regulations costing, according to you or Open Europe, £22.6 billion per year, and you have added to that the £19.1 billion gross EU figure that you mentioned before, to that. You add those together and get the 41.7. Is it not misleading to use the full £19.1 billion when £6 billion of that never even leaves the UK’s bank account? In fact, were you to exclude that £6 billion, which seems reasonable because we never pay it out of our bank account, there would be a positive number and not a negative one.
Dominic Cummings
No. You have confused the numbers. As I explained before, the Office for National Statistics says £19.1 billion per year is debited from the UK. That is not me or Vote Leave saying it; that is the Office for National Statistics. If you do not like their definition of debit then you should take that up with the ONS, not with me.
Chris Philp
You may be talking about debit in an accounting sense. There is a simultaneous credit of £6 billion and in terms of cash physically going out of our national bank account, £13 billion crosses the border and goes to Brussels.
Dominic Cummings
However, you are then using this argument about the rebate, which has no proper purchase.
Chris Philp
In what sense?
Dominic Cummings
The rebate is not just our money. The rebate is something that has to be argued over and the European Union often says that we do not have it. I will quote the person who is running the In campaign, “It is not a unilateral decision of the British Treasury or the British Government to just say, ‘This is our rebate. We are entitled to it. Pay up.’ The way this works and has always worked is that there is negotiation with the European Commission.” That is a direct quote from the Chancellor of the Exchequer, the person who is running the In campaign, to this Committee.
Chris Philp
We do not have to ask them to pay up; we simply do not give it to them. We deduct it at source. We pay them £13 billion, not £19 billion.
Dominic Cummings
That is wrong. That is not what the Chancellor says.
Chris Philp
The fact is that we pay them £13 billion, not £19 billion.
Dominic Cummings
That is not what the Chancellor said. If that is true then you should bring the Chancellor back and ask why he has misled this Committee because that is not what he told you.
Chris Philp
I think I know who is misleading the Committee. You mentioned intra‑EU trade earlier; let us talk about that. Your website says, and you repeated it a few moments ago, that the EU’s own figures since 1999 show intra‑EU trade has declined. Can you comment on those figures and where they come from?
Dominic Cummings
Over the years I have seen all sorts of studies on this. The Fed in New York did a big study on it a couple of years ago. There are lots of different numbers floating around, but they all show the same rough picture: from when we joined the economic community in the 70s, our trade—
Chris Philp
I asked about 1999. Your website refers to 1999. That is the period to today and that is what I am asking about. You say that since 1999 intra‑EU trade has slightly declined. I am asking you to say where those figures come from and what they are.
Dominic Cummings
You have the document in front of you, not me.
Chris Philp
I have your quote from your website. I do not know where it came from, which is why I am asking you. You can enlighten me.
Dominic Cummings
They will be European Commission, Treasury or ONS figures, whichever one. If you make a note of it, I will send you the exact source for it.
Chair
It would be helpful if you made a note of it.
Chris Philp
I am looking at the figures from Eurostat, which you perhaps do not think is reliable, but which anyway shows that in nominal terms intra‑EU trade between 1999 and last year grew from €1.5 trillion to €3 trillion. Therefore it doubled in nominal terms. In real terms, adjusting for inflation, it was €2.2 trillion to €3 trillion, which is a 39% increase. Even as a share of GDP, the most conservative possible way of defining it, it grew from 17.2% to 20.8%. On any measure—nominal, real or as a proportion of GDP—intra‑EU trade grew in the period of 1999 to 2015.
Dominic Cummings
You have that set of figures. As I said, I will provide you with detailed sourcing for where the other ones come from. We always use official figures so they will be from the Treasury, ONS, or whichever. The fundamental story since the creation of the single market is clear: it was sold as a project that would lead to a huge boost in intra‑EU trade, which has not materialised. It has not materialised for Britain. It has not even materialised between Germany, France and Italy, the core of the eurozone.
Chris Philp
According to this it has gone up by 39% in real terms.
Dominic Cummings
You are looking at the wrong figures.
Chris Philp
You had better raise that with Eurostat because they come from Eurostat. We would be interested to see any alternative figures, should they exist.
Dominic Cummings
Certainly.
Chris Philp
One of my colleagues will be asking about post‑Brexit trade arrangements with the remainder of the European Union. I would like to ask one or two questions about post‑Brexit trade arrangements with non‑EU countries—the rest of the world.
Dominic Cummings
You are too clever and quick for me. I did not follow that.
Chris Philp
It is okay. I will try again. One of my colleagues in due course will ask about post‑Brexit trade arrangements with the rest of the EU. I would like to ask one or two questions about post‑Brexit trade arrangements with the rest of the world—not the EU. What is your straw man or proposed vision for how our post‑Brexit trade arrangements with the rest of the world might unfold? What will happen if we leave?
Dominic Cummings
After we vote Leave we will be outside the EU’s common commercial policy. We will regain the power to make our own trade deals. We will regain an independent voice in the World Trade Organization. We are at the moment represented in the World Trade Organization and global trade talks by a European Commission, which is dominated by France and French interest, which has scuppered many an attempt to expand international trade over the years. Once we take back control of that ourselves, we will be in a much stronger position to expand free trade and push for a generally more open trading system in the world.
Chris Philp
Does the British Civil Service, which you have worked closely with in the past, have the institutional capability to do that? Is it of a high enough calibre?
Dominic Cummings
I have written about this extensively. There are huge problems with how Whitehall operates these days. There are huge problems with diversion of clever people away from Whitehall. I certainly would not be confident now with the Foreign Office and the rest of Whitehall negotiating almost anything. We have seen what an appallingly cack‑handed job they have just done of the last EU negotiations; a lot of these guys cannot negotiate their way out of a paper bag. In the short term, no; there would have to be a huge amount of work done in order for people to raise their game.
Chris Philp
Yes, you made all kinds of comments about them, saying that they want to run the country, but they cannot run their own diaries. You said that they have the wrong people, with bad education and no training, and that it is a bureaucratic system gone wrong so that duff people are promoted. To rely on these people to negotiate annual arrangements seems like a bit of a stretch.
Dominic Cummings
When we vote Leave it is only one part of a general process of national renewal that we need. As I have also written on many occasions, it will be very foolish to think that simply voting to leave the European Union and repealing the 1972 European Communities Act is going to solve all of our problems like a sword of Damocles that comes down and with one chop solves everything. That is not going to happen. There are profound problems with the modern Whitehall, and with the training and selection of senior decision-makers. It is, generally speaking, appalling.
Chris Philp
Who would be top of your list for a bilateral post‑Brexit trade negotiation, ex EU?
Dominic Cummings
An obvious start would be to look at which countries we currently have the closest relations with in general. Since shortly after 1945 the closest relations we have had with countries have been with America, Canada, Australia and New Zealand—the Five Eyes intelligence sharing agreements. They are at the core of national security.
Chris Philp
Would the US be top of the list? They are the biggest economy in the world.
Dominic Cummings
Those five countries are an obvious beginning. We historically have deep ties with them and the same common law system, unlike almost all of western Europe.
Chris Philp
I have got it. Are you at all deterred or disheartened by a comment made by Michael Froman, who is the US Trade Representative, who said, “We are not particularly in the market for free trade agreements with individual countries. We are building platforms that other countries can join over time.” It sounds like Mr Froman is not going to be terribly receptive to our overture.
Dominic Cummings
No, I am not worried. We have been in the EU for 40 years and the EU has made zero progress with any kind of sensible trade agreement. They are now in the process of creating this awful hybrid of TTIP, which is not a proper free trade agreement and is aiming to prop up the interests of various multinational corporations that should not be propped up. After we vote leave, we will be able to negotiate directly with America, Australia, and these countries. These are our friends. These have been our friends over 200 years. This will be much simpler for us to negotiate these things than it will be via the French middle‑man in Brussels, which has scuppered trade.
Chris Philp
Is the current Trade Commissioner not a Brit, rather than a French middle‑man?
Dominic Cummings
We all know that trade negotiations have been dominated by the French for 50 years. That is the case now. It is why the recent negotiations with India were scuppered yet again over the French film industry, which happens once every seven years or something; it is a tradition.
Chris Philp
Thank you, Chairman. We have established that Vote Leave do not want to be part of the single market.
Dominic Cummings
Most of the members of this Committee do not want to be part of the euro or Schengen, at least now if not beforehand, so that is not a controversial perspective.
Rachel Reeves
Mr Cummings, your colleague Matthew Elliott said that for an EU referendum, “It would be far more preferable to have two clearly defined options. For such a momentous decision, voters deserve concrete alternatives with clear definitions, allowing the debate to be about two precise positions thereby reducing the scope for mudslinging and the spread of misinformation.” Mr Cummings, can we assume that clarity from your side is imminent on what that alternative would be?
Dominic Cummings
Michael Gove was clear yesterday about all sorts of things. Once we vote to leave we will end the supremacy of European Union law and the supremacy of the European Court of Justice. In time we will repeal the 1972 European Communities Act, particularly section 2 of it. We will end the free movement of people in particular. We will have a different arrangement with Europe. We will take back control of trade. We will end the menace of the Charter of Fundamental Rights, which gives the ECJ power to rule on practically anything that they want to from now on. It is a clear agenda; it is not a controversial picture either.
Rachel Reeves
Mr Cummings, even today we have not had clarity for example on whether this money that you believe would be saved would go on the National Health Service, farmers or science funding. It would be fair to say we are lacking—
Dominic Cummings
There is plenty of money to go around for all of these great causes.
Rachel Reeves
Sorry, I have not finished the question. It seems even today we are lacking that clarity on what life outside the European Union would look like.
Dominic Cummings
I do not think so. Michael Gove was pretty clear yesterday. Of course, the fundamental heart of the argument over the European Union is: are we going to be a normal, self‑governing democracy, or are we not? If you are a normal, self‑governing democracy, by definition the public make choices in elections and vote people like you with your priorities in or out, and the chips fall where they may. Of course one cannot say, “This is exactly what the future will be. This is how things will work out”. That is not the point of it. The point of it is not for us to say, “Here is our blueprint of what Britain should be like” in any detailed way. The most important thing about the EU is not any individual policy; it is institutions for error correction. Do you have a system in which you can correct errors quickly, learn from things fast, and adjust, which has been one of the great strengths of the Anglo‑American system over 200 years, or do you have a system in which bureaucrats and a judicial system entrench ideas in bureaucracy that is extremely slow to move, change, adjust, and adapt to errors? The Clinical Trials Directive is a classic example. 10 years of Nobel scientists saying it kills people; nothing happens.
Rachel Reeves
Mr Cummings, if you look specifically at the macroeconomic impact of Brexit, will the Vote Leave campaign be setting out their analysis of the macroeconomic impact of leaving the European Union?
Dominic Cummings
We will, but we will not be indulging in publishing any of these snake oil “models” that the Treasury published, no. It is the work of charlatans.
Rachel Reeves
When will you be publishing that macroeconomic impact, and who will be doing it?
Dominic Cummings
We will be publishing all sorts of things on the macroeconomic impact of leaving, but we will not be publishing these spurious numbers like £4,300.
Rachel Reeves
Mr Cummings, I have heard what you will not be publishing, but what will you be publishing?
Dominic Cummings
We will be publishing all sorts of analyses about international trade and how we think things will improve.
Rachel Reeves
A macroeconomic impact assessment is not just about international trade; it is about GDP, inflation, the currency, productivity, and all those range of issues. Mr Cummings, what I am asking—and if the answer is no, you can tell us that—is whether the Vote Leave campaign will be setting out their analysis of the macroeconomic impact of Brexit?
Dominic Cummings
We will set out our analysis of the macroeconomic impact of Brexit, but it will not look like the spurious documents that came from the Treasury.
Rachel Reeves
Mr Cummings, I have heard what you will not be doing. What I am asking is what you will be publishing.
Dominic Cummings
I have answered the question. Of course we will be publishing that.
Rachel Reeves
Mr Cummings, I also asked who will be doing that analysis for you.
Dominic Cummings
You will find out when we publish it.
Rachel Reeves
And when do you intend to publish it, Mr Cummings?
Dominic Cummings
You will find that out when we publish it. We do not publish our grid for everyone in the campaign to look at.
Rachel Reeves
I look forward to reading it when it becomes available. Vote Leave recently said that it would be exposing the false claims and scaremongering of Bank of England Governor, Mark Carney, and Deputy Governor, Sir Jon Cunliffe. This seems like as good an opportunity as any to do that. Do you think that the Governor’s comment that Brexit was the biggest domestic risk to financial stability was an attempt at scaremongering?
Dominic Cummings
There are a lot of things that the Bank of England has said recently that are scaremongering, yes. I was campaign director of the anti‑euro campaign 15 years ago. I heard all of this back then: “The skies will fall; there will be plagues”—
Rachel Reeves
I am not asking about something that happened 15 years ago, Mr Cummings. I am asking about the recent comments that the Bank of England’s Mark Carney made at this Committee: that Brexit was the biggest domestic risk to financial stability. Do you believe that those comments from the Bank of England Governor were scaremongering?
Dominic Cummings
They were not wise.
Rachel Reeves
Do you believe they were scaremongering?
Dominic Cummings
I just said. I used my own words. They were not wise or accurate. The Governor of the Bank of England has made all sorts of mistakes in how he has intervened in this debate, but he is also entitled to share his view with people. Of course other distinguished figures such as Mervyn King have given a very different picture of what they think on these issues.
Rachel Reeves
Mr Cummings, the reason that I used the word “scaremongering” is because it is the word that Vote Leave has previously used, and you have said that you will be exposing the false claims and scaremongering of Bank of England Governor, Mark Carney and his deputy, Sir Jon Cunliffe. Have you changed your mind; is it not scaremongering?
Dominic Cummings
We will be exposing all scaremongering as effectively as we can do in the next few weeks.
Rachel Reeves
I will ask again: when the Bank of England Governor said to this Committee that Brexit was the biggest domestic risk to financial stability, do you think that was scaremongering?
Dominic Cummings
I do think it was scaremongering.
Rachel Reeves
The Monetary Policy Committee said that “a vote to leave the EU might result in an extended period of uncertainty about the economic outlook, including about the prospects for export growth.” Are the Monetary Policy Committee scaremongering as well?
Dominic Cummings
The establishment operates on the basis of herding around conventional wisdom. It is why the establishment has got every big foreign policy decision wrong since trying to deal with Bismarck in the 1860s. Whitehall and Parliament have unfortunately got all the big things wrong since then; and they herd—it is what happens all the time. They herded behind the ERM; they herded behind the euro; now they are herded behind supporting the EU. However, conventional wisdom changes when crises hit. Look what happened in 2008: all these people did not predict that. An eclectic group of other people, often from outside the economics profession, politics and the establishment, are the people who accurately said, “The financial system is going to fall off of a cliff.” It was not the people that you are quoting.
Rachel Reeves
Mr Cummings, your campaign is being championed by the Mayor of London and the Justice Secretary; if they are not part of the establishment, I am not sure who is. This is not an issue about the establishment versus everyone else.
Dominic Cummings
It is very much about establishment thinking, conventional wisdom, and herding.
Rachel Reeves
Would you not agree that the Mayor of London and the Justice Secretary are part of the establishment as much as the Governor and Deputy Governor of the Bank of England?
Dominic Cummings
No, I would not. They are champions of anti‑establishment, anti‑conventional wisdom and thinking, and Michael Gove has been like that for many a year.
Chair
Like that product of Eton?
Rachel Reeves
Yes, I was going to say, “Did his anti‑establishment credentials start before or after he went to Eton College?”
Mr Rees-Mogg
Lots of old Etonians are anti‑establishment.
Dominic Cummings
Exactly. You took the words right out of my mouth.
Rachel Reeves
I would argue, Chairman, that Mr Rees‑Mogg might also be part of the establishment. The point is that this is not the establishment versus everybody else. You have mentioned former Bank of England Governor Mervyn King and the former Chancellor Nigel Lawson; this is not the establishment versus everyone else. Different members of the establishment have taken different views on this referendum and we will find out what the country thinks on 23 June. My question remains. The MPC have made those remarks. Do you regard them as scaremongering, or are they just wrong?
Dominic Cummings
They are wrong. As I have explained, when you have big institutional setups like the European Union, which have been around for many decades, and the whole global architecture is built on them, there is an inevitable great reluctance from the other elements of that bureaucracy to see it shaken up. When the ERM blew up a lot of people said, “Stay in it. Fight at all costs to stay in it. Do not discredit the idea.” You have seen that the euro is now mangling the Greek economy into a nightmare; what is the view of the overall international bureaucracy? Try to prop the system up. Try not to face the fact that we, the guys in charge, cocked it up.
Rachel Reeves
The Greek people had a referendum, I believe, and they chose that they wanted to stay within the EU. Maybe they are part of the establishment that got all of that wrong as well.
Dominic Cummings
Yes, with a gun held to their head. It was a very sad picture and I thought you as a Labour party member would not have liked that.
Chair
Order, order, Mr Cummings. Await the question.
Rachel Reeves
Thank you very much, Mr Chairman. I do not think you not know anything about me or my politics, Mr Cummings, so maybe you do not want to comment on those things. Coming back to some of the points that Chris Philp mentioned in his questions on the speech by the Secretary of State for Justice yesterday, in the speech he said, “It is sometimes claimed that we will only get free trade if we accept free movement, but the EU has free trade deals with nations that obviously do not involve free movement. You do not need free movement to have free trade and friendly co-operation.” Of course that is true, but let us not confuse free trade with the single market, going back to the point that Chris Philp mentioned earlier. Is it not the case that you may be able to get free trade outside of the EU, but if you are outside of the single market you will categorically not get that same trade in services that we get today?
Dominic Cummings
As I explained before, there are many aspects of the single market that have been very damaging not just for Britain, but for the entire continent. I also question your assumption that a single market in services is a good idea. I make two points about that. The first point is that people have been talking about this for a long time and it has not developed. The second thing is that a single market in services would actually be deeply destructive for Great Britain. We attract the biggest proportion of investment into the European Union precisely because we have a different legal system to Greece, Italy, Portugal, Spain, etc. We have a common law system, we have similar courts, contracts, insurance, etc, which is the reason why we suck in all this money from all around the world. The idea of harmonising our rules on all of this with Greece would be disastrous for these investment flows, so I reject your premise. The idea that we want a single market in services is false. Harmonisation of all of these rules is often damaging. Occasionally it is a good idea, but also when it is a good idea it increasingly makes sense to make those rules at a global level and not at a regional level. There is a very good reason for that: when we make them at a global level, we can then have choice and flexibility about how we implement them. When we take it via the EU route, the ECJ is in charge of how we implement it and stops us ever getting out of it if it goes wrong.
Rachel Reeves
I am not sure if this is answering my question. In the city where I am a Member of Parliament, in Leeds, financial services are a very big part of our local economy; they are huge employers in the city, so a lot of jobs depend on financial services. At the moment, there are passporting arrangements; if you are abiding by the rules in your home country, you can operate in other European countries as well. That is because we are part of the single market. If we were to leave the EU, you may get free trade agreements, so no trade tariffs, but given the comments of people like Wolfgang Schäuble, it is hard to see that you would have the same sort of trade in services outside the European Union. Would you agree with that? You may think it is a good thing, but would you agree with it?
Dominic Cummings
The single most important thing with the City and financial services is that we control the wide boys in Goldman Sachs and JP Morgan who drove the economy off a cliff in 2008. These banks often behave disgracefully. They pay themselves disgracefully. The most important thing is we control their behaviour in this country. Allowing the current system in which Goldman Sachs and all of these people spend millions in the corrupt Brussels lobbying system to rig the rules for themselves is a disaster and we should bring that to an end.
Rachel Reeves
This may be an interesting point, but it is not answering the question that I posed to you. Goldman Sachs do not have any branches or any employees in the city of Leeds. What I was asking about was the passporting arrangements and whether we would have the same sort of access to the services market across the European Union if we were outside. That is not about regulation, it is about the passporting arrangements that currently exist.
Dominic Cummings
Passporting is part of regulation; that is the whole point. The point is who makes all these regulations. Passporting is one aspect of it. My point is the most important thing is that Britain controls the financial regulation for these companies.
Rachel Reeves
So if we left the European Union, you would accept that one of the consequences of that is that we would not have that access to the single market in services.
Dominic Cummings
No, I am not accepting that. What I am saying is how the precise details of passporting are worked out is something that will have to be worked out, but of course there is a huge reason why Europe will want to do that. That is because Britain has the number one financial centre in Europe. They want to be here using our services. There is a great incentive for them to sort out the passporting system, the same as there is for us. My main point is that is not the most important thing. The most important thing is we control the banks. We do not let the corrupt institutions of Brussels control the banks.
Chair
Sorry to interrupt, but I just want to clarify something. A moment ago, you said that a single market in services would be deeply disruptive for the UK and that we do not want it. Is that correct?
Dominic Cummings
Correct. A single market equals harmonisation in Brussels, equals the rule of the ECJ, equals the rule of a legal system, which is not the common law system, which equals the destruction of one of the most valuable assets this country has.
Chair
It is important that we have clarification. Therefore, the premise on the basis of which policy under successive governments has been pursing is erroneous. That is, basically, since the Single European Act an attempt has been made to construct a single market in services, which has had a measure, many would argue, of success—not whole but partial. You are arguing that that whole enterprise was a catastrophic mistake by the UK.
Dominic Cummings
The whole enterprise has been misconceived from the beginning. Whitehall totally blundered at the very start of this entire process—
Chair
You are saying yes to what I said.
Dominic Cummings
I am saying definitely yes. Cockfield and Delors set the whole single market process away. They conned Thatcher over what it meant. Whitehall has never figured out what on earth is going on with it since. That was all about a single market in services and it would be damaging.
Chair
I am sorry to have interrupted you, Rachel. I just wanted clarification of that point. Do carry on.
Rachel Reeves
Thank you, Chairman. Not being part of the single market is not something you would regard as a sacrifice. You think one of the reasons to leave the European Union is to leave the single market.
Dominic Cummings
I think that one of the great reasons to leave the European Union is that we end the jurisdiction of the ECJ and the Commission over all of these things, this whole regulatory regime, of which the single market is the biggest aspect. I would remind you that the ECJ and the Commission’s definition of “single market” includes the euro and the Schengen area.
Rachel Reeves
We have already had this discussion, Mr Cummings. We are not part of the single currency. We are not part of Schengen. We are not going to be part of those things, but we do have, as you know, access to that single market across the European Union for the sale of goods and services.
Dominic Cummings
We are partially part of the single market now.
Rachel Reeves
Let me just come back to one of your answers. You said that other European countries would want to do deals with us because they want to access, for example, the financial services in London. Would it not be more likely that if we left the European Union, other countries might want to have some of those financial services centred in their capital cities or in their financial centres rather than in London, Leeds and Edinburgh, where financial services is dominant today? Instead of them wanting to do deals, for example, on financial services, they would see this as an opportunity to take jobs from this country to their own countries, and there is a real risk that instead of the UK being the pre‑eminent centre for financial services across the European Union, we may find that Paris or Frankfurt take jobs and business from London, Leeds, Edinburgh and other cities.
Dominic Cummings
Good luck trying to get the Americans to leave Chelsea and move to Frankfurt. It is not going to happen.
Rachel Reeves
Or to Paris.
Dominic Cummings
It is not going to happen. We heard all of the same stuff over the euro and it never happened. London’s position has strengthened since we stayed out of the euro. We have heard all these scare stories before. They do not mean anything. I have talked to people at Goldman Sachs and these other banks about this sort of thing and what do they say? They say privately, “Of course we have to be in favour of the single market in public. We have to negotiate with the European Commission every day. They have us by the balls. Of course we have to go along with this, but do you think I am going to go and move to Frankfurt? Of course I am not”.
Chair
Just to be clear, the evidence that they have given, both to this Committee and in other fora, making clear that in their view there are benefits to their organisation from membership, net, is false.
Dominic Cummings
There are two different things.
Chair
I just want to be clear: is that correct? I am giving you a very straightforward, simple question. Is it false or not?
Dominic Cummings
It is partially correct, partially not. They do think that the current system they have rigged with the European Commission is in their interest and they are right in lots of ways, because they spread their money around Brussels very liberally and they buy regulations that help them. However, the idea that if we vote to leave, these Americans are going to leave Notting Hill and move to Frankfurt I think is for the birds.
Chair
I just want clarity on that point as well. What you are saying is that they are using cash to bribe their way in Brussels to obtain regulations that suit their firms’ interests.