The revolt of the motorists

The French gilets jaune movement has in part been a protest against the attempts of the elite to limit people’s uses of cars and vans. The movement began with demands to cut the taxes on petrol and diesel, and to resist more moves to make motoring ever dearer. Some of the protesters then went on to damage or obscure the cameras checking car speeds on French highways, rapidly taking a majority of them out of use.

The car to many is not merely an important symbol of personal freedom, but a vital means of getting to work, going to the shops, taking children to school and enjoying leisure time away from home. Many people want to learn to drive and acquire a car as soon as they are able, recognising how much more scope they will have to do as they wish in their lives if they have their own transport. The establishments of Europe see the car instead as an enemy of their vision of the future. They impose high taxes to reduce use of vehicles and to price people on lower incomes off the road altogether. They impose tougher regulations to limit the use of certain vehicles in certain places and at certain times. They are now threatening the whole car park of diesel and petrol cars, wanting to push people into owning an electric vehicle or giving up on personal transport altogether. They seem to think people can and should take the bus or train even when they live in rural areas with little or no access to such services.

Of course governments need to impose some rules on car drivers to ensure safer roads. It is sensible to have a testing regime for drivers and vehicles, and sensible to have road markings and road rules to avoid collisions. No-one disagrees with good measures to keep us safe. The problem comes when the rules and requirements multiply to the point where they can be a distraction or a problem for the safe driver, and where the whole exercise is one large attempt to take more money off the motorist with tax placed on tax to drive, own, buy and operate a vehicle.

The intervention in the market by the EU and member state governments to get more people to buy diesel cars worked well, only for the EU then to change its mind and tell us we had been wrong to follow their advice. Now they wish us to believe that if we take on an electric car we will in future be subsidised or taxed a lot less. People are very sceptical, fearing that if electric cars become popular then the subsidies will end and new taxes will be imposed as governments will want to replace the huge lost revenue from taxes on diesel and petrol. They also worry lest some unseen environmental problem with batteries emerges as emission issues arose late in the day with diesels.

In this vexed area of policy the car and van using public see hypocrisy from those who govern them. They seem to have plenty of access to prestigious cars without a thought for the cost as they are provided by the state. If cars are good enough for Mr Macron to get around in, aren’t they also necessary for French men and women as they go about their work?

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67 days to Independence Day

Let’s countdown to Independence and get ready to celebrate our exit.

There are only 36 days left when Parliament is in session and able to try to mess up or delay our passage to Independence.

Write to your MP today if they are showing signs of wanting to stop Brexit and remind them of their Manifesto promises and the result of the referendum and General Election.

The government should be discussing how we commemorate one of the great days of UK history, the day we restore an independent self governing democracy to these islands.

The government should also be publishing our tariff schedule, getting its Brexit bonus budget ready for March, taking back control of our fishing grounds and setting out a food and farming policy that is good for the UK.

When we joined the EEC there were commemorative stamps and coins. There were more coins for the 25th anniversary of our membership. What should we do for March 29 2019?

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Getting growth back worldwide

Whilst the UK has been preoccupied by Brexit a far more important struggle for our prosperity has been going on globally about growth in the world economy. Markets have been signalling that Central banks are tightening money too much, and governments are still too wedded to austerity outside the USA.

The Euro economy has suffered most, with German national income and output falling in the third quarter of 2018 and still weak in the fourth quarter. Car output in particular has been hit by the Chinese slowdown, by regulatory change from the EU and by the pace of technical and regulatory change workdwide. The UK economy has performed better despite both a monetary and fiscal tightening last year of some severity.

The world’s two giant economies, USA and China, have both followed tight money policies which have slowed them down. Interest rate sensitive areas like homes and cars have seen sales hit by dearer and scarcer credit.The Chinese stock market fell to half its elevated high of 2016, and Wall Street had a sharp sell off in November and December. It now looks as if both these leading economies will abate the severity a bit, which is necessary to sustain growth. China has announced lower reserve ratio requirements for banks, and the Fed has backed off full support for a more aggressve set of rate rises in 2019.

The Eurozone will have to announce no rate rises for the foreseeable future and no move to Quantitative tightening if it wants to avoid recession. It may end up allowing a little bit of fiscal relaxation as France struggles to respond to the gilet jaunes and as Italy’s government insists on just a little less austerity. The problem is that without proper transfers within the Eurozone from taxpayers in rich countries to the poor in lower income countries they do need to keep up a stricter discipline. This bites more on the poorer areas in the zone, causing political tension and fuelling populist movements.With the AFD doing better in polls, the German government will need to get even tougher about budget controls on weaker Eurozone members, and reaffirm a no new grants or bail outs policy.

There is no great inflation problem the Central banks need to pre empt or control. There is a shortage of demand and slow real wage growth which sensible economic policies need to combat. The UK economy needs the £ 39 bn to spend over the next two years on a mixture of public service improvements and real wage boosting tax cuts.

There does need to be a better policy response in the UK to the collapse of car sales. The UK has made the general global situation worse at home by its big hike in Vehicle Excise duties and the uncertainty over future tax and regulatory policy towards diesels. With so much change in the air over future engine styles, autonomous vehicles and extent of urban controls over cars the traditional car makers are struggling. On both sides of the Atlantic monetary policy is also affecting the price and availability of car purchase loans.

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Coalitions in the Commons?

To win a majority and sustain a government you need to be able to count.
A majority in the Commons is 321 supporting MPs, when allowing for the Speaker and Sinn Fein who do not vote.
The natural majority is therefore Conservative 317 plus DUP 10, giving 327.
The Conservatives could also form a majority with the SNP or Lib Dems on numbers, but there is clearly no wish on either side to do so, and huge differences of policy and attitude over Scottish independence, second referendum on the EU and other matters.
Labour would only form a majority coalition if it consolidated every party bar the Conservatives, which is also a political impossibility given the attitude of Labour to Northern Ireland and the DUP.

Some say as parties are split there could be a new coalition of the willing to put through a second referendum, or a Norway solution, or to cancel Brexit altogether. There simply are not the numbers to do that, all the time the two main parties oppose a second referendum and say we must leave.

We now know there are 71 Labour MPs willing to defy Mr Corbyn to speak out for a second referendum. With 35 SNP MPs and 12 Liberal democrats, also wanting a second vote, that makes a total of 118. In the unlikely event of Mrs May changing her mind over the desirability of a second vote, there would still be no majority for it, as at least the 110 Conservative anti Agreement MPs and the DUP would oppose it, a more numerous force than the 118 on the opposition benches. Mrs May does not want a second referendum. She presumably does not want to split the Conservative party on the issue. She must understand on current numbers a second referendum cannot pass. It is also very likely more than 110 Conservative MPs would defy any suggestion they voted for one.

We cannot be sure how many MPs want the so called Norway option. It is not official Labour policy and seems to have fewer Labour supporters than a second referendum, so similar considerations apply as with the second referendum. It has a couple of additional major problems. It would require the consent of the EU to a delay in Brexit, which would probably leave the EU saying the UK would still have to accept the Withdrawal Agreement and use the 21 month negotiating period in that to set it up if possible. It would also require the consent of existing EFTA members, and EU consent which would come if at all at a price. It would need the government to adopt that to carry out the negotiations.

There is then the official Labour policy, somewhat vaguely and erratically expressed, of staying in a customs union. This is sometimes linked with also being able to negotiate our own trade agreements, which would be incompatible with customs union membership. It is difficult to see how a majority would coalesce around this unless the government also made it official Conservative policy, which would detach more than 110 Conservative MPs from supporting the government and make much of the Department of International Trade redundant. It is unlikely the EU would ever consent to the UK being in the customs union, having its own different trade arrangements with others, and not having to observe the laws and freedoms of the single market and make financial contributions at the same time.

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The German establishment wants the UK to stay in the EU – of course they do

There should be no surprise that senior German government figures want the UK to stay in the EU. They show their scorn for democracy by asking for that and take us for fools. They want the UK to keep on paying huge sums of money to help with the costs of their political and monetary union which we have never wanted to join. They want the EU to write our laws for us to help their commercial interests. They want to keep UK tariffs high on cars and food from the rest of the world to ensure they run a huge trade surplus with us at the expense of UK consumers. If I were a German politician I would be desperate for the UK to sign the Withdrawal Agreement or cancel Article 50 as that would be great for Germany. It would also mean the UK looking stupid in the eyes of the rest of the world as we dithered and then climbed down over our future, saying we cannot manage to be independent and govern ourselves.

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Parliament cannot be the executive

There are good reasons why governments propose and Parliament approves, improves or rejects. Parliament is well set up to challenge government, hold it to account, modify or remove its more foolish measures. Parliament is not set up to run competing policies, competing budgets and competing legislative programmes. That way chaos lies.

The rules of Parliament give certain advantages to the executive to allow budgets to be set and policies to be pursued. Those who divide up the jobs within the executive have to show they are in charge of the ruling party or governing coalition, and can command the House on big votes. It would not be wise to change all these rules today just because this particular government lost its way on its Brexit negotiations and lost its Agreement by ignoring many of its own usually loyal supporters. If Labour is serious about wanting to run the government in the future it is also not in their interests to create a Parliament which cannot accept government on any sustained and consistent basis.

When I told Parliament last week it is on trial, I meant it. The public are showing their disapproval at the negative approach of Parliament to Brexit and good government. They dislike the failure so far to deliver a good policy in the national interest to fulfil the promises made on Brexit during the referendum and in the 2017 election. These promises were made by both main national parties that hold the bulk of the seats in the Commons.

We have learned a few things over the last week. We now know there are 110 Conservative Eurosceptics – and 8 Remain Conservatives – prepared to defy a 3 line whip against a bad deal and bad policy towards Brexit. We know there are 71 Labour MPs who defy their leader by demanding a second referendum. Mrs May would be unwise to do a deal with them, the SNP and Lib Dems for a second referendum, as between them they would be fewer MPs than the 110 plus the 10 DUP she would lose over it. There would also be more Conservative MPs who strongly rule out a second referendum.

I hear repeatedly there is no majority for leaving without a deal in Parliament. That is clearly right, were Parliament to have an academic motion on that topic. If , however, Parliament wants to stop Brexit without a deal whilst honouring the referendum, the only way is Brexit with a deal. No grouping within the Commons has come up with a possible deal that would both be agreeable to the EU and would command a majority of the Commons. It is also no use the Commons voting for some vague proposal if the government, charged with the task of actually negotiating with the EU thinks it undesirable or unachievable. The Commons rightly condemned a very bad deal this week. It has previously legislated to leave. So what then is the deal that could achieve the stated aim of those who want to leave with a deal?

The ERG favours the government tabling a comprehensive Free Trade Agreement as soon as possible. If the EU then agree to negotiate such an FTA after we have left in March this year, the WTO would let us carry on trading on tariff free terms similar to today whilst we sought to finalise an FTA. That looks like the best way forward to leave with a deal.

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Sterling strengthens

Parliament votes down the Withdrawal Agreement and sterling strengthens a little against the dollar and the Euro. I have often said I do not think sterling is mainly driven by views on Brexit, but it has been noticeable the absence of comments from the usual suspects. They are doubtless disappointed that sterling has edged up at a time when the only deal on offer has just been voted down.

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The EU moves to control taxation

I was pleased to see the EU is moving as planned to set more tax rates and tax policies at the EU level just as I have been predicting. The EU needs to centralise more to back the Euro and to complete its political union. It also underlines why many of us do not want this future for the UK, where we want to vote for those who tax us and have the right to sack them if they displease. As The EU’s latest document says, it wants to stop member states offering lower taxes as incentives to businesses or rich individuals. It wants ” a fair tax environment for all” which they say only the EU could guarantee for member states.

The ideas set out in “Towards a more efficient and democratic decision making in EU tax policy” concentrate on removing the ability of a state to veto a tax proposal. The EU also wants to introduce powers for the European parliament in this area. They are keen to press on with a common corporate tax system, VAT, a Financial Transaction Tax and a Digital Services Tax. They claim “co-ordinated EU action in taxation is essential to protect Member State’s revenues”. They claim “In today’s larger, modern and more integrated EU, a purely national approach to taxation no longer works and unanimity is neither a practical nor an effective way of decision making”. They want a standard system of VAT with a single form instead of 28 varieties as at present, and the ability to stop Ireland and others undercutting corporate taxes to attract business.

You cannot be an independent country and have others impose taxes o n your citizens and set your budget. The UK is getting out just in time. If we stay in or bind ourselves to their laws after technically leaving we could end up with their new taxes that would damage our businesses and our consumers.

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What now?

The predictable and large defeat of the PM’s main policy is unprecedented in my time in the Commons. I have seen governments forced into climb downs on unpopular policies, but never seen a PM put so much effort into defending a policy which united a large element of her own party with all the forces of opposition. It is difficult to fathom why she carried on with it. She knew the DUP would oppose, so that was the end of her majority. She knew 22 people had resigned from government and party posts in protest at the policy, so how were they ever going to support the policy they had so visibly opposed? She knew an active group of more than 60 Eurosceptics who had helped her secure the EU Withdrawal Act and had offered much well researched advice on how to handle the negotiations were in complete disagreement with Chequers and the draft Agreement. Maybe she decided she needed to show both the UK and the EU that the best Agreement on offer from the EU was completely unacceptable to Parliament and a clear majority of the people Parliament represents.

There is no point in going back to the EU to try to fix the Withdrawal Agreement. Even if the EU was prepared after this to take the Irish backstop out of the Agreement there is still no majority to carry the proposal, though maybe half the Conservatives against it in its current form might think again. Why would the EU offer anything when that too is likely to be rejected?

Instead the PM should come to the House to make her considered statement saying she will return to the EU with two proposals from the UK. The first is to complete rapidly the various agreements underway or needed to ensure a smooth transition on exit on 30 March 2019. The second is to table a full Free Trade Agreement based on the best features of the EU/Canada and EU/Japan agreements which we know the EU can accept. If the EU expresses interest in negotiating such an agreement and agrees broadly with the proposition it should be possible to avoid any introduction of tariffs and other barriers on trade pending the negotiation of a full FTA, under clause 24 of the WTO treaty.

Either way, exiting without a dreadful deal is the right course to follow. The PM was correct to stress No Deal is better than a bad deal. Parliament has just rightly decided that was a very bad deal. Indeed it wasn’t a deal at all. It was a very expensive invitation to more prolonged talks about a possible deal.

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Does Parliament want to deny the people their voice, vote and freedom?

Today UK democracy is on trial in Parliament.
The people voted, yet a large number of MPs want to deny them the results of their vote.

Some Remain MPs are too clever by half and too clever for the good of Parliament. They argue that Parliament will take back control, as people wanted, but their idea of Parliament taking back control is to return massive powers to the EU or to prevent us leaving EU control in the first place. What an unpleasant irony! They wish to go to war with the people, and deny them the result of the People’s Vote, cynically misrepresenting that as taking back control.

The large Remain side in Parliament never wanted to debate EU matters before the referendum. They told us they were technical, that the EU had little control over us, and that those of us who wanted to talk about the growing power of the EU were wrong and out of touch with the real issues of the day. Now we have voted to leave they want to talk about nothing other than EU membership. They endlessly repeat the arguments that lost them the referendum and carry on hectoring Eurosceptics and trying to terrify us into changing our minds. It is high time we put this debate behind us and left the EU. If we cannot negotiate a good deal in 2 years 9 months before giving the EU what they want, there would be no chance of negotiating a good deal for the future in 21 months more if we have given away the main bargaining advantages we have through the Withdrawal Agreement.

The people made a decision. They were promised by government and Parliament it would be implemented. Today Parliament should vote down the Withdrawal Agreement, which is the stay under EU control agreement. Parliament should also make clear we must now leave on 29 March. The PM should return to the EU to ensure smooth passage out, as it is in their interest as well as the UK’s. She should also offer free trade agreement talks for as soon as we are out. The UK can trade just fine with the rest of the EU under WTO rules. The government should immediately publish our schedule of tariffs for March 30th, which should be lower than the EU schedule and should include zero tariffs on components needed by UK industry and zero tariffs on food we cannot grow or rear for ourselves.

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  • About John Redwood

    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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