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Brexit and the EU referendum: the big four issues

What do UK industry and academia think about being in or out of the European Union? Tereza Pultarova and Chris Titley talked to both camps to sift facts from myth.

Should we stay or should we go? The question has been dominating British news ever since the Prime Minister, David Cameron, fired the starting gun on the European Union in-out referendum in February. It’s only going to get more heated in the run up to the ballot on 23 June.

Like the rest of the country, it seems that Britain’s engineering sector is split on what to do for the best. A poll by EEF (The Manufacturers’ Organisation) found 61 per cent of members wanted to stay and just 5 per cent sought to leave. Yet more than a third of those responding to a survey by ‘The Engineer’ thought “pulling out of the EU would free up UK manufacturers from regulation”.

Polls only tell you so much of course. We went out to canvass opinion from a range of voices in the sector. This is what they told us.

1. Access to markets

One of the most frequent arguments put forward for staying in the EU is that it gives access to a single market made up of 500 million customers. EU countries buy 44 per cent of everything the UK sells abroad, making it the country’s biggest trading partner by far.

“There is simply too much at stake for the UK to leave the EU,” says Matt Ainscough, chief executive officer at Ainscough Industrial Services. From its 10 UK bases, it provides a suite of specialist engineering services on projects across Europe.

Ainscough says: “A vote to leave would seriously risk jeopardising the expansion and commercial viability of UK engineering companies like AIS, currently thriving by supporting manufacturing projects on the continent.”

Ton Van Keken agrees. He is senior vice-president of operations at Interface in Europe, a division of US-based Interface Inc, which designs and makes floor coverings. He says: “Great Britain deciding to leave the European Union in June will have significant implications for engineering, with the sector being arguably the most exposed to the referendum result.

“Given the employment opportunities, economic stability and trading relationships borne through membership of the EU, coupled with the benefits of an open market – not to mention the significant influence it has on policy-making – membership is absolutely crucial for the British manufacturing industry to excel long-term.”

If the UK did leave, he adds, “the global reach of engineering companies based here will be at risk and re-establishing trade relations will take time, causing a possible business void in the interim”.

Yet time is on our side, argues Ian Brown. He is MD of Portsmouth-based electrical and mechanical engineering company Industrial Maintenance Services Ltd (IMS) – and he’s also south-east chairman of Business For Britain, an independent campaign calling for a ‘leave’ vote.

“We certainly won’t lose the market. Anyone who thinks we’re going to stop trading with the EU when we leave is just being silly.

“For two years nothing’s going to happen anyway – there’s a negotiation period of at least two years. In the Lisbon Treaty it says that any country that leaves the European Union must have a trade agreement. We will write a trade agreement which will be very similar, if not identical, to what we’ve currently got – because that’s in the interests of everybody.”

Outside the EU the UK will be free to write its own trade agreements, which will open up markets far beyond Europe, Brown argues.

“The EU has been trying to do a trade deal with India now for seven years, and it still hasn’t got there. We can do a trade deal with India and other countries much quicker on our own, and that can only benefit our economy and our exports.”

However, Peter Rolton, chairman of Rolton Group, Midlands-based construction and engineering specialists, believes Brexit will leave the nation isolated and vulnerable. “I cannot see where the UK fits globally as a stand-alone country outside of Europe,” he declares.

“There are not enough manufacturing companies left in the UK, and the reason that many are here is so that they have access to the European markets and customers. If we vote for a Brexit, the trade door will be closed and bolted behind us.”

Terry Scuoler is chief executive officer of the manufacturers’ organisation the EEF. “We have got a startling statistic: about 90 per cent of our member companies export in some way or another, and the majority of those export to the EU.”

Crucially the EU also acts as a gateway to other markets around the world, he says. “The Netherlands is a very easy country to export to: the law is easy to understand, English is a spoken language” – and because of the international links, a company already exporting to the Netherlands finds it easier to export to Brazil.

2. EU standards

Another contentious issue is that of EU standards. Do technical standards applied across the 28 member countries make life easier for exporters, or cause unnecessary headaches?

The EEF represents more than 5,000 businesses. “The message we hear back from members, and one I would support, is that EU-wide standards are a good thing,” says CEO Terry Scuoler.

One member company that manufactures and exports washing machines told Scuoler that it was a huge advantage not having to change the product specifications for each individual EU country. “Selling one washing machine across the EU was great for their productivity and for business,” he says.

However James Dyson disagrees. The founder of the Dyson vacuum cleaner business told the BBC in 2014 that “in our particular field we have these very large German companies who dominate standards-setting and energy-reduction committees, so we get the old guard and old technology supported and not new technology”.

This argument is challenged by Vicky Ford, MEP for the East of England. She says: “Dyson has a specific problem – his vacuum cleaners work the same when they are half full, while vacuum cleaners of other makers work best when they are empty. The problem is that when the testing standards were being set, Dyson refused to be involved early on and so other makers got their way.

“The message for Dyson is that if we leave and he wants to keep exporting his products to the EU, he would still have to comply with these rules, but he wouldn’t have a chance to influence them. I think that the answer is not leaving the EU, but getting more involved in discussions at an early stage. We need to get better at scrutinising EU laws, and firms who want to sell into the EU should get involved in setting these rules.”

For Rolton, “without such standards and foreign investment it is possible that we could see a decrease in not only the high levels of service and expertise that we are able to offer to the rest of the world, but also the demand for these skills”.

3. Collaborative research

If the result of the June referendum depended only on engineers, scientists, technologists and manufacturers, it seems that Britain would remain in the European Union. So what makes some of the country’s brightest minds so fond of the problem-ridden European bloc?

In a recent survey conducted jointly by the Campaign for Science and Engineering (Case) and the Engineering Professors’ Council, 93 per cent of the 400 respondents said that EU membership is a major benefit to UK science and engineering. A poll conducted by technology trade association techUK found that 70 per cent of its members support the Remain side, 15 per cent are undecided and the remaining 15 per cent would prefer to leave. In a survey by the Institution of Chemical Engineers, 75 per cent of the 1,000 respondents said they will vote for continued EU membership. While the campaign Scientists for EU has over 53,000 followers on Facebook, the rival campaign Scientists for Britain only had 18 individual likes at the time of writing.

Case director Sarah Main argues that benefits for the research community are many. “From what the respondents to our survey told us, the main benefits are on one hand the funding streams coming directly from the EU for research, but also quite significantly the access to the collaborative network, facilities, equipment and expertise that they thought was provided by the membership in the EU,” Main says. “In particular, they value the wider research community, in which they can participate actively through collaboration and sharing of skills and expertise.”

While the Leave proponents point out that the UK contributes much more to the EU budget than it takes out, the picture looks quite different from the perspective of scientists and engineering researchers. Thanks to its world-leading universities and research institutions, what the UK is able to win in EU-funded research grants exceeds what it contributes towards the research and development budget.

According to the Case data, between 2007 and 2013 the UK contributed €78bn (£63bn) to the overall EU budget. Of this, €5.4bn was earmarked for EU R&D programmes. Over the same period, the country received €48bn overall from the EU but €8.8bn for research, development and innovation. €6.9bn of this came from the competitive Framework Programme (FP7) and €1.9bn from the European Regional Development Fund and European Structural Funds.

“The UK is very successful in winning competitive funding,” said Vicky Ford, Conservative MEP for the East of England, who spoke at the annual meeting of the Engineering Professors’ Council. “Especially in engineering, more UK people are applying for grants than any other country and we come second after only Germany in the amount and value of grants that we receive.”

However, exit supporters say that none of that would be lost, thanks to the excellence of the UK’s research centres. If the worst comes to the worst, the post-Brexit UK government could easily make up for any lost EU research funding, as it would now have much more money in hand. Moreover, it would not be bound by what some see as over-stringent European regulations and administrative requirements.

“I have been on these FP7 framework programmes as a referee/adjudicator and it is a programme that I do not feel happy with any more,” says Angus Dalgleish, professor of oncology at St George’s Hospital, whose research into cell-based vaccines was stopped due to the EU clinical trials directive. “Initially it encouraged collaboration among European scientists, with money for meetings, and that was very good. Now, it wants to dictate what we research, where the money goes.”

Professor Dalgleish, a member of the UK Independence Party, was one of the witnesses at the House of Lords’ Science and Technology Committee inquiry into the relationship between EU membership and the effectiveness of UK research and innovation. Speaking on behalf of Scientists for Britain, he expressed confidence that in a post-Brexit Britain, international research collaboration would thrive as it has always done. “If we leave the EU, we do not leave Europe and we do not leave collaborating with the rest of the world.”

4. Skills and immigration

In a potential post-Brexit Britain, curbing European immigration might well become an apple of discord. Free movement of people, one of the core principles behind European integration, has enabled a massive surge of low-skilled workers to enter the UK. According to the Office for National Statistics, in the 12 months to June 2015 the UK saw a net rise in immigration of 82,000, of which 42,000 arrived from the EU and 36,000 from non-EU countries.

Although the popular belief that immigrants drain the social welfare system is largely incorrect, the number of new incomers puts pressure on the housing market, schools and wages.

Some Brexit proponents believe that abolishing free movement would allow the UK to better cherry-pick who it lets in – focusing on the skills and talents it needs to plug its well-documented skills shortages and leave low-paid bar-tending and house-cleaning jobs to local people or those that are already in.

“The EU membership restricts how the UK government can achieve its target of reducing immigration to the tens of thousands it wants,” explains Matthew Pollard, executive director of the think tank Migration Watch UK. “Because it has no control over EU migration, they can only target non-EU migration, so the argument that if we left the EU, it would allow more non-EU scientists and engineers to be recruited, has some validity.”

In practice, it is expected that the system would issue work permits to EU workers in a similar way to what is currently done with applicants from outside the European Economic Area (the EU plus certain other states). However, industry and academia alike are very much against such a solution, which, they say, is placing excessive financial and administrative burdens on employers.

“The ability to recruit a non-EEA worker, because of the framework that we have in the UK, is restrictive,” says Tim Thomas, director of employment and skills at the manufacturers’ organisation EEF, which is a vocal supporter of EU membership. “If we want to apply the same framework to other workers from the EU, then it would be very difficult indeed to recruit the skilled workers that our sector needs.”

The most common way to ‘import’ non-EU engineers is via the Tier 2 route for skilled workers with a job offer at graduate level or above. Tier 2 also covers employees of multinational companies who are being transferred to the UK. The current cap only allows 20,700 visas to be awarded every year for jobs that pay at least £35,000. But there are other obstacles. “You have to conduct the Resident Labour Market Test to prove that you can’t recruit those people in the UK, which is quite frankly just a burden and a delay,” says Thomas. “You then have to apply for a certificate of sponsorship from the Home Office – just to bring in an engineer.”

Read the IET's statement on the EU referendum

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