My Speech in the European Affairs Debate, 15 March

John Redwood (Wokingham) (Con)

Before the referendum, I made a speech in the House saying that we had become a puppet Parliament. All too often, regulations came from the EU that we could do nothing about, because they acted directly. In many other cases, even if we had been outvoted or were not happy about a proposition, a directive instructed the House to put through massive and complex legislation whether it wished to or not. We had a situation in which the Front Benchers of the main parties, alternating in government as they tended to do, went along with this. The convention was that the Opposition did not really oppose, because they knew that Parliament was powerless and that the decision had been made elsewhere, whether the British people liked it or not. That even extended to tax matters, such as a number of VAT issues, including areas where we cannot change VAT as we would like, and to corporation tax issues, which included occasions when we thought that we had levied money on companies fairly, but the EU decided otherwise and made us give it back.

Many British people shared my concern, and that was why we all went out together and voted in large numbers to take back control. The British people wanted to trust their British Parliament again. Of course they will find times when they dislike the Government, individual MPs and whole parties, but they can live with that, because they can get rid of us. They know that come the ​election, if we cease to please, they can throw one group out and put in place a group who will carry out their wishes. They said very clearly to our Parliament in that referendum, “Take back control; do your job.”

A recent example is that of Her Majesty’s Government presenting a very long and complex piece of legislation to completely transform our data protection legislation. Because it was based entirely on new EU proposals, it went through without any formal opposition. The Opposition obeyed the convention and did not vote against it or try very hard to criticise it. I am sure that if the proposal had been invented in Whitehall and promoted actively by UK Ministers, the Opposition would have done their job, found things to disagree with and made proposals for improvement. We will have this “puppet Parliament” effect all the time that we are under control from Brussels.

Jonathan Edwards

Given the scenario that the right hon. Gentleman is putting forward, is it not the truth that the Welsh and Scottish Parliaments will also be puppet Parliaments post Brexit?

John Redwood

No, that is not true. In their devolved areas, they have genuine power, which they exercise in accordance with their electors’ wishes, but of course this is the sovereign United Kingdom Parliament, and the devolved powers come from the sovereign Parliament, as the hon. Gentleman well understands, which is presumably why he likes being here.

Sir William Cash

Will my right hon. Friend also bear in mind the manner in which laws are made in Europe? They are made behind closed doors in the Council of Ministers with no proper record of who votes, how and why—we are outvoted more than any other country—and then those laws come here and are imposed upon us in this Parliament.

John Redwood

I quite agree.

We wish to take back control. We will be a very different and much better country when this Parliament can settle how much tax we levy, how we levy it, how we spend money, how we conduct ourselves and what kind of laws we have.

My main remarks for the Minister and his colleagues on the Treasury Bench, however, concern the conduct of the negotiations. Like the Minister, I wish the Government every success. I hope that they get a really good deal—I look forward to seeing where they get to—but the EU is trying to make the process as difficult as possible by insisting on conducting the negotiations in reverse order. It says first that we have to agree to pay it a whole load of money that we do not owe. It then says that we have to agree a long transition period that coincides with its further budget periods, so that it can carry on levying all that money, and that is before we get on to what really matters: the future relationship and the questions of whether there be a comprehensive free trade agreement, what it will cover, and if it will be better than just leaving under WTO terms.

In order to have a successful negotiating position, the Government have rightly sketched out a couple of important propositions. The first is that nothing is agreed until everything is agreed. That is fundamental, and I urge Ministers to understand that they must not ​sign any withdrawal agreement unless and until there is a comprehensive agreement that is credible and that can be legally upstanding, because there is no point paying money for nothing. There would only be any point in giving the EU all that money if there was a comprehensive agreement that the Government and the country at large could be proud of, and which enough leave voters could agree with as well as remain voters.

The second thing that the Government have rightly said is that no deal is better than a bad deal. That, again, is fundamental to the negotiations. I have never made any bones about this, because I said before the referendum that no deal was quite a likely outcome, and a fine outcome. For me, no deal is a lot better than staying in the EU: it would give us complete control over our money, meaning we could start spending it on our priorities; it would give us complete control over our laws, meaning we could pass the laws and levy the taxes that we wanted; it would give us complete control over our borders, meaning we could have the migration policy of our choosing; and it would give us the complete right and freedom to negotiate a trade policy with the EU and anybody else. That would depend, of course, on the good will of the other side as well, but I would far rather be in that position than part of a customs union in which I had little influence and that was extremely restrictive against others. There is therefore an awful lot going for no deal.

The Minister and his colleagues must stick to the proposition that they will recommend a deal to the House only if it is manifestly better than no deal. They need to keep reminding the EU negotiators that no deal offers Britain most of what it wanted when it voted to take back control.

Anna Soubry

Will my right hon. Friend confirm whether he has seen the Government analysis—apparently it involves excellent modelling and is far better than anything they did in the run-up to the EU referendum—showing that if we were to crash out without a deal and rely on WTO tariffs, our projected increase in productivity and economic growth would be reduced by 7.7%? Is that what his remain-voting constituents—the majority—voted for?

John Redwood

No, of course it is not, but that is not true. I have written at great length about that elsewhere. Unfortunately, I do not have time to go into a detailed rebuttal of those proposals, but we know that the Treasury modelling got entirely the wrong answer for the first 18 months after the referendum. Its short-term forecast, which should be easier to make, was massively wrong and predicted a recession. I and a few others put our forecasting reputation on the line during the referendum by saying that there would be growth after an out vote, rather than what the Treasury forecast. We were right.

I assure my right hon. Friend that I have not voted for anything that will make us poorer. We will be growing well, as long as we follow the right domestic policies. It is complete nonsense to say that there will be that kind of hit. It implies that we lose over half our exports to the European Union, and it is not a proper reflection of what would happen to our trade adjustment were anything that big to happen. I want to concentrate on the customs union.

Vicky Ford

Will my right hon. Friend give way?

John Redwood

I am sure that my hon. Friend wants me to concentrate on the customs union, because she shares my wish that the Government will be well supported if the Opposition decide to have a third go at voting through a customs union or customs union membership.

I remind the House that we have twice had big votes in the Commons in which Members have voted by a very large majority against our staying in the or a customs union. One was on an amendment to the Queen’s Speech motion, and the other was on an amendment to the European Union (Withdrawal) Bill. I hear that some Labour Members may have changed their minds and want to vote again. I am a democrat, and the Opposition have their own ways of doing what they want to do, but I urge them not to vote to stay in the customs union.

Above all, are Labour Members not at all worried about poverty in emerging markets? Do they not think it is wrong that we place huge tariffs on poor countries’ tropical produce—produce that we cannot grow for ourselves? Would it not be great, when we are outside the EU customs union, to be able to take down those tariffs and give those countries more hope of promoting themselves by good trade, while at the same time benefiting our customers because they would be able to buy cheaper tropical products? Can we not do good trade deals with those emerging market countries across the piece? The tariff barriers are too high, and we could make mutually advantageous changes if we were free to do so. I urge the Labour party to remember its roots in campaigning against poverty and to join me in saying that the best way to get the world out of poverty is to get down the high tariffs on emerging market countries that the EU imposes, which I certainly do not agree with.

The Minister must remind Labour Members that no deal is better than a bad deal, and that no deal allows us to take back control of all the things that he and I promised to take back control of. He must also remember that we do not owe the EU any money. It would be fatally wrong to pay it loads of money if everything else does not work in the way we want.

Vicky Ford

Will my right hon. Friend confirm that he agrees with the Prime Minister that we should look for a deal that covers many sectors that are not covered by the WTO, such as aviation, data exchange and having a mutual recognition of financial services, so that trade in those areas can easily continue?

John Redwood

I am afraid that I am out of time, so I cannot go into detail on all these matters. I believe that we should negotiate strongly and positively. I wish my right hon. Friend the Prime Minister every success, but I wish to strengthen her hand by saying that out there in the country, the message is, “Get on with it.” If that means leaving with no deal, that is absolutely fine.

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The tax revenue pours in – but not from all taxes

Mr Osborne’s policy of cutting the budget deficit always relied primarily on a big boost to tax revenues. That is also the policy of his successor, Mr Hammond. Total tax revenue of £604bn in 2014-15 is expected to rise to £699bn in 2017-18. By 2022-23 they want to be taking £815bn from us. In 2009-10, the last Labour year, they collected just £476.4bn. Tax revenue in 2017-18 will be a massive 47% higher.

They expect Capital Gains tax receipts, Stamp duty on shares and self assessment Income tax to fall in 2017-18.The main gains in 2017-18 are forecast to come from National Insurance and environmental levies assisted by PAYE Income Tax and VAT. There is a substantial reduction in forecast for all years for Capital Gains Tax, reaching a £2.3bn fall in 2022-23. Capital Gains will bring in not much more than in the last Labour year before the crash, when rates were lower. There is a reduction in the Stamp Duty land tax forecast revenue in every year as well, reaching a £0.6bn cut in 2022-23.

This is no surprise. The Treasury underestimates how sensitive to the rate of tax these sources of revenue are. Rich people who pay much of the CGT and all of the top end Stamp Duty do not have to undertake a transaction, and are clearly in many cases not doing so because they do not intend to pay the combined high CGT and Stamp Duty charge. The higher rates of Stamp Duty and the maintained higher rate of CGT on property have brought about a substantial reduction in higher priced property turnover, hitting the revenues.

If you want to follow a higher tax revenue strategy on this scale successfully it is important to fix rates that maximise the revenue from each tax source. The Treasury is still struggling with finding out that revenue maximising rates are lower than they think.

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Scarce water?

There’s plenty of rain in the UK in a typical year, and plenty of rivers that take the water back to the sea.
That does not mean we can relax about having an ample and good water supply. It still needs an industry to collect and process the water to the required standard, and to pipe it to homes and businesses on demand.

The authorities seem keener on regulating demand than on boosting supply. They rightly point out that some of the older pipes in the system are leaking, with quite high levels of suspected water loss in transmission. There are programmes to remedy this, but they can be very expensive as they usually entail digging up lots of roads and replacing miles of pipe, some of it still in good working condition. We need to decide a pace and realistic cost for moving to fewer leaks.

The authorities also like water meters. Charging people for what they use has its merits, and apparently produces a one off drop in water consumption as people adjust to the unit pricing of what they consume. Water meters help pin point leaking pipes on customer land and encourage water users to eliminate such waste by mending their own pipes.

When it comes to accepting that substantial rises in population requires more water, there remains a range of options. There is the possibility of cleaning up more waste water to a higher standard and re using it. There is the ability to put in desalination plants as there’s huge quantities of water all around us in the sea. That is not about to run out. There is the opportunity to extract more water from natural aquifers. Finally there is the obvious possibility of simply storing more of the water from rivers when they are running high or in flood for the times when there is little or no rain and the rivers are running low.

It is not good practice to extract large quantities of water from rivers when they are running low in hot weather, and not a good idea to run down supplies in natural aquifers too much. Given the great growth of population and water use in London and the south east I do think we need to plan for a substantial new reservoir to add to the flexibility of our system and to improve our resilience in dry times. I am writing in support of the proposal for a major reservoir near Abingdon, which I would like to go ahead sooner, not later. The new reservoir over its long life would provide cheaper water than desalination and would also provide a place to take excess water in times of flood.

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One cheer for the OBR

With spectacular bad timing the OBR last autumn lowered their forecast for growth in the UK economy based on turning very negative about productivity growth. They did so just in time to see productivity suddenly spurt forward, and for the growth rate to come in 13% higher for 2017 than their forecast. That takes some doing, making that kind of error for the year in question when the forecast went out in the penultimate month of the year!

This time the OBR have second thoughts on 2018, and have edged their growth rate forecast up by 7% to 1.5%. I expect they will need to revisit this as the year progresses. I can only give one cheer for the OBR being a little less pessimistic. The upward revision to 2017 came about because the actual figures showed they had got the forecast wrong again. I remember being criticised for complaining that official forecasts since the Brexit vote rushed to be wrong by being too pessimistic, but so it has proved. These latest errors are not on the scale of the forecast winter recession in 2016-17 which the Treasury had to write out of its script when growth accelerated in the second half of 2016.

The OBR says they now do not know whether “growth slowed down, speeded up or remained stable between 2016 and 2017”, so it is difficult to see how they can ascribe anything to the Brexit vote! Their forecast error in 2017 comprised underestimating private consumption, private investment and government spending, but also overestimating the favourable impact of overseas trade. There was no decline in private investment in the way many establishment forecasts had expected. They have had to admit that a weaker sterling did not depress imports as forecast. Nor was the price effect as strong as some thought.

The OBR reminds us in their numbers just how much extra money the UK would have to send to the EU after we have left if a deal is concluded. It will need to be a very good deal in every other respect if it is to be worth £37bn. There’s a lot of good we could do at home with that sum, and spending it at home instead of sending it to the continent would give a timely boost to our national output and income. No deal is definitely better than a bad deal!

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Roads – are they the worst nationalised industry?

Road provision in the UK has all the hallmarks of a nationalised industry. It is a monopoly, provided free at the point of use. There are various specialist taxes just paid by motorists which mean users of the roads pay several times over the cost of provision. The state sees motorists as a great source of income, keeps us short of capacity, provides a very poor service, and goes out of its way to be use regulation not just to aid safety which is an excellent thing, but to produce a further source of income for the state from fines and parking fees from needless or complex rules. Some traffic management schemes seem designed to impede vehicles as much as possible.

The state takes particular delight in traffic mismanagement schemes which seem designed to try to collect more fine revenue. There are the frequent and sometimes inexplicable changes of speed limits within the same urban corridor. There are the bus lanes that allow you in them at certain times of day, only to switch to excluding cars at all times of day along the same stretch of road. There are the box junctions that you can caught in by error if the vehicle ahead of you stops in a way you were not predicting.

There are state owned car parks with unclear rules – do they allow free parking on a Sunday? What is the position on a bank holiday?

There are then the many bad junctions which impede traffic and are often unsafe. Sometimes the purpose of the different lanes is not clear unless you know the road well, leaving some vehicles stranded in the wrong lane when they come to cross or turn at the junction. The system is chronically short of capacity into most of our towns and cities. Quite often the issue is a lack of bridging points to get over rivers and railway lines.

The authorities compound the inadequacy of the capacity they provide by allowing or encouraging the main utility companies to put all their pipes and wires under main roads. This means whenever they need to repair, maintain or replace they need to dig up the road and close it in whole or part. No-one would think of putting utilities down the side of railway lines and diverting trains everytime you need to access the wires and pipes.

Government authorities themselves are constantly fiddling with the road layouts, kerbs and lanes so they too directly create long delays from roadworks.

We have discussed before the agreed wish to keep the provision free at the point of use. This leaves us with how then we persuade local and national government to provide more road capacity and to manage the capacity they have more effectively. An authority like Wokingham is putting in substantial new road space to catch up with past demand and to deal with the current rate of new housebuilding, but it also needs extra capacity on the national trunk and motorway network. More of the money taken from motorists and commercial vehicle owners should be spent on providing better roads.

Only the motorways segregate motor vehicles from cycles and pedestrians. They are as a result our safest and our fastest roads. All train tracks are segregated from pedestrians and cyclists despite having great straight shortest distance routes into our urban centres to assist rail safety. Where we have to run a mixed road, used by pedestrians and cyclists as well as motor vehicles we need to make decent provision for all and recognise the need to keep pedestrians and cyclists away from moving traffic where possible as mixed used junctions are particularly dangerous.

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Tariffs and trade

Tariffs can be damaging to trade. That is why I want us out of the EU customs union, because it imposes high tariffs on lower income countries wishing to sell us better value food. I want us to be able to negotiate a lower overall tariff package for ourselves than the EU wishes to do with the rest of the world. It is particularly foolish and unfriendly to levy high tariffs on food we cannot grow for ourselves because it comes from a non EU country.

I find it curious that the EU claims to be scandalised by Mr Trump threatening a 10% tariff on German cars which sell in large numbers into the US, when the EU itself imposes just such a 10% tariff on US cars into the EU. Germany runs a colossal trade surplus with both the UK, inside the EU tariff wall, and with the US, outside the tariff wall. Mr Trump identifies the asymmetric tariffs and some other barriers as one of the reasons the trade is so lop sided, and wishes to do something about it.

Meanwhile it is typical of the EU that they are telling the UK that we cannot exempt ourselves from the US steel tariffs, though we would probably be in a good position to do so on our own. It is reminder of why we need to get on with our exit so we do have control over these matters. I also read that the EU is still pursuing tax cases against us and argues that we owe them E2.7bn of underclaimed customs dues which the UK Treasury contests. We have lost a lot of revenue before from EU tax cases and now have to argue against making yet another additional payment to a body we are leaving. Clearly they think we should be levying higher tariffs on non EU imports than we think are owing because they wish to keep these products out, and to harm UK consumers.

This is not the wonderful free trade EU some think we must stay in at all costs.

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How about some new subjects for media interviews about Brexit ?

The mainstream media seems to have got lost in repeats on their news and comment shows. Every day is Groundhog day. They do the Irish border story, the various alleged barriers to trade stories, and various sectors at possible risk stories. Most of it fans baseless fears or perpetuates misunderstandings of what the current position is and how WTO works. It usually assumes both that the EU will be out to damage their trade with us, and that they will have the power to do so even though we are no longer under their jurisdiction!

If they wish to do a Brexit story every day when there is precious little news in these very slow moving negotiations. I have some thoughts on some new topics that many of us would be interested in. They could also provide a bit of balance.

Let’s ask the various parties how they would like to spend the Brexit bonus, the £12bn we will save when we are finally out. And let’s have some discussion on whether we should pay the EU additional money after 29 March 2019, and if so why and for how long.

Let’s look at our options for designing a much better fishing policy for the UK once after March 2019 we have taken back control of our waters and fish stocks. How much more fish could we land in the UK and sell at home or for export, whilst doing a better job than the CFP has done on conserving stocks, owing to discards.

Let’s get on with debating a modern UK farming policy, with an emphasis on how much more food we can grow for ourselves as we used to before entering the CAP.

Let’s discuss which are the best prospects for new trade deals around the world, and will the government ensure we can sign these quickly once out of the EU?

The government is rarely asked about its leaving preparations, and the Opposition rarely asked about what it wants the country to do with its new freedoms once out.

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A new migration policy

Many people in the UK would like to see a better balance between supply and demand for homes. Houses are dear in many parts of the country, rents are high and people struggle to get on the housing ladder as owners.

Many people would also like congestion on the roads reduced so they could get their children to school and themselves to work and back more easily each day.

Many want our air to be cleaner, and for the UK to make a bigger contribution to reducing pollution.

We all want our power and water supplies to be good enough for all conditions, at a time when our capacity in both is quite constrained.

A new migration policy in line with the governments own aims and targets would make a contribution to all of these aspirations. If we welcomed in fewer economic migrants each year, limiting the numbers eligible to take lower paid jobs and benefits, it would help. We would make the task of tackling housing shortages easier as there would be less additional demand. Fewer people means a bit less congestion, fewer vehicles with emissions, less need to generate extra power. We need to plan properly for all the extra people we do invite in to make sure they can live to decent standards with housing, healthcare, transport and utility provision of a high standard. We need to adjust our various targets to take into account likely population growth and to make sure it is all sustainable.

The government’s aims and targets allow plenty of scope for people with skills, investors, those coming into senior roles in companies, academics and others to come to our country and to contribute as they do now, and they will be most welcome. It does not require any new border arrangements or controls on tourists, visitors, people wishing to support themselves here from their own savings and assets.

A new migration policy requires two things. It needs the government to extend the work permit system from the rest of the world to the whole world as we leave the EU, creating fairness between people from Europe and from anywhere else. It then can set limits to the numbers admitted for lower paid work, and can give sector and regional specific permits out where there is a clear need that cannot be fulfilled from our present population.

It also needs the government to set sensible rules over eligibility to benefits, requiring people coming here to wait before gaining eligibility until they have been taxpayers and settled residents for a reasonable period of time.

I look forward to the government publishing a paper on just how it will run these matters after March 2019.

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The Brexit Vision

Following the rejection of the UK’s very generous offer to the EU by the Commission and the Parliament, I am reminding people why we voted Leave by publishing the relevant section from my recent lecture.
The negotiating mandate put out by the EU falls well short of a Good Deal for us and for them, as it seeks to tie us down in far too many ways without offering a good reason to accept their terms.

The main benefits of Brexit come from once again being a self governing country

I find it extraordinary that so many who make their living out of government and politics

Are so defeatist about this greatest of countries

Why do they doubt our abilities to shape good laws

Frame a good economic policy

And trade with the five continents of the world based on what we are good at?

Why do they both say they love the EU

Yet have such a low view of it that they think its main aim will be to do us down

Why do they tell us every clause and line of the Treaties has to be enforced against the UK

Yet all those great clauses in the Treaties that require the EU to be a good neighbour and trading partner of nearby states will in their view go unenforced and unheeded

If the EU is as logical and legal as they say our future friendly relationship is assured

And if it is not and the Treaty is made for breaking, it need not concern us what it says, especially once we are out

Anyone who walks the corridors and great rooms at Westminster

Must see there the heroic story of our islands

There on the walls and in the sculptures are the establishment and the rebels

The winners and the losers, the great moments of our history

There is the signing of Magna Carta, the taming the King in the seventeenth century,

The union of the crowns,

The saving of Europe from Napoleon,

The passage of the Great Reform Bill and the triumph of the suffragettes

So many made common cause to put the people in charge through their vote

And to put Parliament in charge of carrying out their wishes

All the time we remained in the EU there were an increasing number of laws we could not change

More taxes we could not control. More money that someone else spent away from our shores

This system took away the very freedoms our ancestors fought for and established

Once back these powers will be used well and sometimes badly, but always as a result of strong argument and heated votes here at home,

We will doubtless have economic reversals out of the EU as we did in it

But the difference matters

Next time when mistakes are made they will be our mistakes

They will be mistakes the British people can punish and put right

More importantly

Taking back control gives us immediate opportunities

To legislate wisely
And to grow our prosperity

That is why I voted for Brexit

That is why many of the 17.4 million voted for Brexit

That is why many who voted Remain

Will be winners too from this course

Once we are at last out of the EU.

This great people

This once and future sovereign

Will have many contributions to make to the world

As we have in the past

Let us be a voice for freedom

A strong arm for peace

And a force for good around the globe

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The Italian election

The BBC and other parts of the media seem to be very quiet about the Italian election. You would have thought this stunning result was worth a bit of comment, analysis and discussion. Just as we saw in Greece, Germany, the Netherlands and elsewhere in the Eurozone the traditional centre right and centre left parties have been dashed aside. 5 Star, a fairly new movement, has swept through the south of Italy, whilst the Lega has dominated in the northern Italian plain, taking much of Lombardy, the Veneto, Trentino and Piedmont. The centre left governing party was left holding on to Tuscany, whilst losing in most of the country. It slumped to just 18.9% of the vote, with the centre right party Forza that had displaced the Christian democrats some years ago only polling 13.9%.

Both 5 Star and Lega are Eurosceptic. Mr Salvini who leads Lega speaks for the centre right coalition as its largest party. The coalition has 37% of the vote. Mr Di Maio, the leader of 5 Star, speaks for 32.3% of the vote. One of them should be Prime Minister, though coalition talks could I suppose find some other combination of parties which gave the job to someone else. The Lega campaigned for Italy to leave the Euro and to remove the Maastricht,Nice, Amsterdam and Lisbon Treaties from Italy’s constitution. 5 Star dropped its wish to leave the Euro, but made clear its opposition to EU budget and Euro austerity policies and proposed spending more with tax cuts.

Lega representatives have made clear their view that the EU should change its approach to the UK and try and rescue an Agreement which they think would be in the EU’s interests. They had already upset the EU authorities massively, so that will not make much difference to the relationship.

The Italian result is another in a long series showing growing anger and frustration with the economic and budgetary policies of the Euro, high levels of unemployment, and the EU’s migration policy. It will probably make Brussels corral the waggons of integration more and will doubtless entice them to try to influence the government formation talks which will now be fascinating. The collapse of Italy’s governing party to 18.9% does at least make Mrs Merkel’s 26% vote share for her CDU look good!

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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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