The EU and the European Court increase the cost of living for consumers

Responding to claims by the IN campaign that the cost of living would rise if we left the EU, Matthew Elliott, Chief Executive of Vote Leave said:

‘Independent experts are clear, EU membership and the meddling court that comes with it have put up prices and hurt our economic growth. If we Vote Leave, we can take back control of the £350 million we hand to Brussels every week and spend it on our priorities. The EU is costly, bureaucratic and blind to the impact it has had on people’s wages and soaring energy bills. Not only is a vote to leave on Thursday a vote for democracy, it is also a vote for a more prosperous future.’

Notes to editors

Independent studies have shown the EU increases the cost of living.
The European Court has consistently increased the price of everyday goods and services, such as insurance, beer and the installation of solar panels.
If we Vote Leave, we will scrap VAT on household energy bills, saving £64 for each household each year.
The EU and European Court are putting up the cost of travelling on the West Coast Mainline by forcing the UK to create a new freight corridor, as the Government has admitted.
Sterling is currently higher than where it was shortly after the referendum was called. There is nothing to suggest a major devaluation would follow a leave vote.
The IN campaign wrongly assumes the UK would impose tariffs on imports.
The IN campaign claims its retail letter is ‘unprecedented’. Five of the signatories have already said the same thing. Another signatory is a Government Minister, another is a registered IN campaigner and the last recently resigned following a wave negative of headlines.

Independent studies have shown the EU increases the cost of living.

The independent House of Commons Library has concluded that EU membership actually increases the costs of consumer goods, stating that the EU’s Common Agricultural Policy ‘artificially inflates food prices’ and that ‘consumer prices across a range of other goods imported from outside the EU are raised as a result of the common external tariff and non-tariff barriers to trade imposed by the EU. These include footwear (a 17% tariff), bicycles (15% tariff) and a range of clothing (12% tariff)’ (House of Commons Library, 18 September 2013, link).

The European Court has consistently increased the price of everyday goods and services, such as insurance, beer and the installation of solar panels.

In March 2015, the European Court held insurance claims handling services were not exempt from VAT (Minister Finansów v Aspiro SA, Case C‑40/15, link). Richard Asquith, the Vice President of Avalara, said the judgment could increase the cost of car insurance policies by £14 per year in the UK (The Sun, 1 April 2016, link). Richard Insole, direct tax partner at Deloitte LLP, has said the decision could result in significantly increased operating costs for UK insurers and an impact on policy premiums as a result (Deloitte, 17 March 2016, link).
In March 2011, the European Court ruled that the EU’s Charter of Fundamental Rights meant that women could not be charged lower premiums than men, increasing the cost of car and life insurance (Test-Achats ASBL v Conseil des ministres [2011] ECR I-773, link).
On 12 July 1981, the European Court ruled that the UK’s low duty on beer ‘afford[ed] protection to domestic beer production’ and was therefore illegal under EU law (Commission v United Kingdom [1983] ECR 2265, link). In his 1984 budget statement, the Chancellor of the Exchequer, Nigel Lawson, said ‘we lost; and I am now implementing the judgment handed down by the court last year. Accordingly, I propose to increase the duty on beer by the minimum amount needed to comply with the judgment and maintain revenue: 2p on a typical pint of beer’ (Hansard, 13 March 1984, col. 302, link).
In June 2015, the European Court ruled the UK’s 5% rate of VAT on the installation of energy saving materials such as solar panels and wind turbines was illegal (Commission v United Kingdom, Case C-161/14, link). HMRC is now proposing to raise VAT to 20%, which will cost consumers £310 million between 2016-2017 and 2021-2022 (HMRC, 9 December 2016, link). The Solar Trade Association predicts that the cost of installing solar panels could increase by approximately £1,000 if the Government’s proposed changes are introduced (Solar Trade Association, February 2016, link).

If we Vote Leave, we will scrap VAT on household energy bills, saving £64 for each family.

European Union law prevents the UK from cutting VAT on household energy bills (Council Directive 2006/112/EC, art. 102, link).
If we Vote Leave, we will be able to scrap VAT on household energy bills, as the UK will have left the EU’s common system of VAT. Each household on average spends £25.80 per week on electricity, gas and other fuels, or £1,341.60 per year (ONS, 8 December 2015, link). Subtracting VAT of 5% would reduce this figure to £1,277.70, a saving of £63.89 per household.
This will benefit low income households in particular. The lowest decile on average spends 9.1% of average household income on electricity, gas and other fuels. The average UK household spends 4.9% of its income on energy, while the top decile spends just 3.1% of its income on energy (ONS, 8 December 2015, link).

The EU and European Court are putting up the cost of travelling on the West Coast Mainline by forcing the UK to create a new freight corridor, as the Government has admitted.

The EU is in the process of forcing the UK to create a rail freight corridor between London and Glasgow and London and Felixstowe as part of the North Sea - Mediterranean Freight Corridor by 1 November 2018. This could mean international freight trains have the right to operated instead of passenger services (Regulation 2013/1316/EU, Annex II, link; Regulation 2010/913/EU, art. 14, link; European Commission, June 2015, link).
On 13 March 2014, Transport Minister Robert Goodwill stated that the EU’s decision to create the corridor ‘circumvented requirements under EU legislation’ and constituted ‘unlawful competence creep’ (HM Government, 13 March 2014, link).
Mr Goodwill stated that the Decision left ‘the UK exposed to some potentially significant risks’, including that the EU will ‘have more influence on decisions of infrastructure use and transport planning that fall within Member State competence’ and that Network Rail could have ‘to set aside more capacity for international freight at the expense of well-used passenger services’, with particular consequences for ‘the heavily used West Coast Main Line’ (HM Government, 13 March 2014, link).
Mr Goodwill accepted that ‘there are likely to be... financial costs and physical impacts to the UK’s rail network’ (HM Government, 13 March 2014, link).
On 12 November 2015, the European Court rejected the UK’s attempts to annul EU legislation extending the North Sea — Mediterranean rail freight corridor from London to Glasgow by 2018. The Court ruled that the UK had no veto over the creation of such corridors, stating ‘it would not have been necessary to seek the consent of the United Kingdom’ (United Kingdom v Parliament and Council, Case C-121/14, link).

Sterling is currently higher than where it was shortly after the referendum was called. There is nothing to suggest a major devaluation would follow a leave vote.

Sterling is higher than where it was shortly after the Prime Minister's deal. The value of the currency has increased from to 1.3871 $/£ on 26 February to 1.4624 $/£ today (Bloomberg, 13 June 2016, link).

The IN campaign wrongly assumes that a fall in the currency would necessarily lead to higher inflation. After Black Wednesday, the pound fell and did inflation.

It is simply wrong to suggest that a fall in the currency would necessarily lead to higher inflation. Consumers might choose to buy domestically produced goods instead of imported goods.
Following Black Wednesday, the pound fell from 2.002 $/£ on 16 September 1992 to 1.474 $/£ on 25 March 1993 (Bank of England, June 2016, link).
Far from leading to a spike in inflation, leaving the ERM led to a reduction in inflation. Inflation in the third quarter of 1992 was 3.3%. This was not exceeded until the second quarter of 2008 (ONS, 12 April 2016, link).

The IN campaign wrongly assumes the UK would impose tariffs on imports.

The UK will strike a free trade deal with the EU, as leading IN campaigners have accepted, so there is no prospect of new import duties being imposed. The UK's former Ambassador to the EU and leading supporter of the IN campaign, Lord Kerr of Kinlochard, has admitted: ‘there is no doubt that the UK could secure a free trade agreement with the EU. That is not an issue’ (Lords Hansard, 2 November 2015, col. 1492, link). The Foreign Secretary, Philip Hammond, has admitted that a free trade agreement in goods ‘would be relatively simple to negotiate’ (Hansard, 26 February 2015, col. 501, link).
In any event, there is no obligation under World Trade Organization rules to impose tariffs on imports.

The IN campaign claims its retail letter is ‘unprecedented’. Five of the signatories have already said the same thing. Another signatory is a Government Minister, another is a registered IN campaigner and the last recently resigned.

Dalton Phillips ‘walked away from the supermarket [Morrisons] with nearly £3m and could get a further £1.6m in payouts over the next two years, despite presiding over a collapse in the company’s profits, losing customers to discount rivals Aldi and Lidl and overseeing a tanking share price’ (The Independent, 28 April 2015, link).
Four of the eight signatories, Sir Terry Leahy, Justin King, Marc Bolland and Sir Ian Cheshire, signed a letter supporting the IN campaign a few weeks ago (Mail on Sunday, 21 May 2016, link).
Andy Clarke signed Number 10’s pro-EU business letter in February (The Times, 23 February 2016, link).
Lord Price was appointed a Minister of State at the Department for Business, Innovation and Skills and the Foreign and Commonwealth Office in April (HM Government, June 2016, link).
USDAW, of which John Hannett is the General Secretary, is a registered IN campaigner. John Hannett is the ‘responsible person’ registered with the Electoral Commission (Electoral Commission, 23 April 2016, link).