Success for Isolationist Isles

After the marginal victory of the Breixt campaign the majority of media focus, regarding the United Kingdom’s future economy, has fallen onto the hopeful deals politicians can broker with the European Union. The exit looks inevitable and negotiations are of utmost importance. Politicians are looking to play hardball and the future for a trading system like Switzerland or Norway will be a hard won slog. Our financial ties with the other member states of the EU are manifold and weaving them again under fresh circumstances will be a colossal labour. However, despite the Brexit camp’s claim to regain money poured into the continent and instill sovereignty, few progressive policies are being suggested (or the mainstream media are neglecting their coverage) to ensure the United Kingdom can withhold further austerity if negotiations aren’t favourable. In a sweep of arrogance I have listed some areas of the UK economy which are heavily dependent on either EU members or other international states and how control of these would ensure economic self reliance, potentially safeguarding a stronger financial future.


Energy Dependence


It’s no surprise that north sea oil and gas supplies are depleting. After all, fossil fuels are a finite resource and cannot last indefinitely. To base the UK’s energy needs upon them as well as to sell fossil fuels can only be a temporary measure. One solution has been to extend our dependency on fossil fuels through “fracking”. Read any article on the subject and it’s an obviously unpopular power source, sparking numerous protests across the country. Thus, we would assume that other means of sourcing energy would be high on the agenda. This isn’t the case. Instead, the United Kingdom has become increasingly reliant upon the import of fossil fuels.


The bulk of the UK gas supply derives from Norway. Some is imported from EU members such as Belgium and the Netherlands via the general European network (a series of pipelines running under the sea from Belgium and the Netherlands).[1] Other sources include Russia and in a liquid form from Qatar. This highlights that even though gas isn’t the primary fuel source it is still interconnected with several nations including the EU through Belgium and the Netherlands.


UK coal imports on the other hand are a more global affair. With a decline in home coal production, external sources have been the main suppliers. Trade with coal selling countries has escalated due to an increase in gas prices (material not household). In 2013, 93% of UK coal import came from three countries: Russia, the USA and Colombia.[2]


When we consider the origins of UK fossil fuel sources, with the exception the Netherlands and Belgium, it becomes clear that energy supply largely is traded outside the EU. When it comes to negotiations it would almost be safe to assume that energy prices are fairly secure. This is an incorrect assumption. Whilst the raw materials are imported from Non EU members, four out of six of the UK’s largest energy companies are EU countries:


1- British Gas (British)

2- Npower (German)

3- SSE (British)

4- Scottish Power (Spanish)

5- E.On (German)

6- EDF (French)[3]


These six companies, according to the BBC, supply around 95% of all household gas and electricity. This means that despite fossil fuels imports being from Non EU countries, a large percentage of household energy is either produced by EU countries or at least distributed by them. When it comes to Brexit talks, deals must consider how households fuel themselves and how large EU members are a pivotal aspect of that.


If the UK has dwindling finite fuel resources and must rely upon other countries, then the solution for energy independence is within low carbon and renewable energy such as wind, solar, hydroelectric, tidal and (depending of which side of the debate you fall on) nuclear power. Nuclear power is the only one of the above list that apart from the initial technology relies upon foreign imports- uranium.


There has been increasing move towards these low carbon sources, producing a varied mix of the UK’s energy origins. In 2011, renewable energy usage was 9.4% and increased to 11.3% in 2012. This trend continued into 2013 with renewable energy producing 15% of total consumption.[4] If this is considered alongside nuclear power, by the end of 2013, over a third of the island’s energy came from low carbon resources. This is a step both towards a greener and self controlled future. In order to secure this, government and industry must work towards an increasing use of these fuel sources; ween the energy companies away from fossil fuels and develop a solid renewable energy infrastructure in which the profits have the potential of remaining within the UK.


Correct taxation of corporations


Since the inception of the David Cameron led Conservative government in 2010 it has been hard to ignore the increasing shift towards economic austerity. Public spending cuts and financial tightening have been a central aspect of the Conservative and the once coalition parliament. Benefit fraud was made center stage in the press and pushing people into zero-hour contracts became policy. This focus upon the poorer strata cheating society has lead to an ignorant public opinion. In 2013 a parliamentary report explained that Britons believed 24% of all benefits were claimed fraudulently. This public estimation was 34 times greater than reality, with the government estimation for fraudulently claimed benefits being 0.7%.[5]


At the same time as the media attention on benefit fraud there was an increasing illumination on corporate tax avoidance. The attention was less severe possibly because information on large multinational business is harder to obtain or perhaps the press believed it more acceptable (the BBC article I take the following corporation tax examples from questions whether shaming these companies is fair). In either case, the figures do not change: Amazon with 2011 UK sales of £3.35bn only paid a tax expense of £1.8m; Starbucks had UK sales of £400million pounds(2011) but managed to pay no corporation tax; and Google paid £6m the same year after a turnover of £395m.[6] These figures demonstrate that, whilst not yet illegal, tax avoidance is hemorrhaging the UK of money. If the Brexit campaign based a large aspect of their argument on saving money from EU member costs and the government has consistently targeted the poorer sections of society, then surely claiming fair tax from multinational American corporations should also be high on the agenda. After all, should the USA receive preferential treatment from the UK when they are unwilling to pay the country correctly?


Lost tax is not only confined to multinational companies. There is a large loss in personal tax from the affluent sections of society as well. The UK government estimated the 2013/2014 tax “gap” to be £34bn. Of this figure £14bn was suggested to be a result of uncollected income tax, national insurance and capital gains tax as well as £13.1bn in uncollected VAT.[7] Naturally, part of this figure can be attributed to bureaucratic and human errors. However, it’s unlikely those mistakes could accumulate into such a ridiculous loses. The recuperation of this money in unlikely but moving forward the UK needs to ensure such high levels of tax aren’t avoided in favour of private or corporate wealth. Doing so will only strengthen the economy and provide social programmes with healthier funding


Until recently it appeared that little movement was being made towards curbing tax evasion but evidence is demonstrating this to be changing. Within the UK a new policy that would require Multinationals to publicly declare country by country tax and profits has recently been passed.[8] This forward taxation policy comes in the wake of the landmark European commission order for Apple to pay back £11bn in taxes to Ireland. Given these two policies it seems that both the EU and the UK are making moves towards tightening the minimal tax restraints on international companies. If this direction can be maintained then the loses to the UK economy through unfair tax contributions can be reduced and the people who make the money may see it placed back into their country.


Fair Wages within the Food Chain


It’s public knowledge that UK farmers and those throughout the EU have been financially supplemented by subsidiaries from the common agricultural policy(CAP). Estimates suggest that UK farmers benefit from £3bn annually.[9] A leave from the EU would probably remove farmer’s access to this directive. If we aren’t an EU member state then why would they buffer UK farmer’s income? The only reason UK farmers may still benefit from CAP is that the policy has large environmental ties such as wildlife protection and preservation of unpolluted waters. Perhaps the EU may wish to continue this to safeguard a greener future for all of Europe. If they chose not to then UK farmers will start to lose a serious aspect of their incomes.


Given the consistent pressures for cheaper dairy and other food products, the loss of CAP funding could push UK food providers into an even lower wage bracket. This may result in a disregard of environmental concern if produce can be made cheaper by encroaching on once protected wildlife or using agricultural substances that are damaging to the ecosystem . In order to prevent this there are two obvious options. Firstly, pay UK farmers properly for their produce. This seems highly unlikely seeing as supermarkets and other food providers are consistently pushing for cheaper products, in order to bolster profits, regardless of the effects on producer. But without a supplemented income from the EU this cannot continue.


The second option for safeguarding UK agriculture is on a governmental level. Aspects of CAP can be introduced to UK policy, providing farmers with the subsidiaries they currently receive as well as preserving the environmental aspects that EU directives have worked towards. Furthermore, new policy can be tailored for specific UK needs either enhancing eco protection or fairer wages for farmers.


In either situation the protection of UK agriculture is imperative. It is a large proportion of the UK food chain as well as providing products that can be sold both at home and abroad. Ensuring the farmer’s future is pivotal to the UK future economy and it must be imperative within governmental discussion. Preparation for agriculture without CAP subsidies will stand the UK in good footing when they almost inevitably no longer available.










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