Amidst all the arguments about the EU in the UK there is rarely much attention to what the EU really does and what people like or dilike about it. All we hear is from people who like trade who wrongly claim our trade is dependent on EU membership, when we can see many non EU members trading very successfully with the EU. So I am offering people for and against to tell us what they like and dislike about the EU.
I will start this debate by explaining the things I most dislike about the EU.
1. Its unqualified support for the Ukrainian government, which has been busy killing some of its citizens as its response to losing control of the east of its country. The rebals have resorted to violence, but the government kills too many with some of its indiscriminate violence.
2. The mass unemployment, particularly of young people, which EU policies have created in several countries. I think the disinterest in the consequences of the Euro for young people in Spain, Greece and elsewhere is a moral outrage. 50% youth unemployment is not a price worth paying for their integrationist dream
3. Dear energy. The EU’s crazy energy policies have driven more people into fuel poverty, as Labour calls it, and have driven many industrial businesses with their jobs out of the EU altogether.
4. The lack of democracy. There is no effective opposition to new proposals and laws in the EU – they proceed by cosy consensus, with the unelected Commission initiating and drafting the laws. The laws should be initiated by the elected Parliament, and vigorously opposed by parties and individuals there.
5. The lack of democracy in my country that flows from the way EU rules and laws accepted by one government cannot be repealed by a new government after an election. The EU has gravely damaged our democracy, especially because one Parliament does now bind future Parliaments if it accepts EU laws.
6.The overweening arrogance of the EU, poking its nose into all too many features and facets of our lives for no good reason.
7. The high cost of government in the EU, with too large a financial contribution placed on the UK.
8. The lack of control over our borders.
Some has asked how much the UK has at risk in the ECB. The UK’s shareholding is only 3.75% paid, so it works out at around Euro 55m or under 0.5% of the Bank’s capital. In contrast Germany has subscribed almost Euro 2bn or around 18%.
The Euro is a political project. It may masquerade as a high design created by independent and talented experts, but in the end it will be judged by unruly electorates by whether it helps make them more prosperous or not. The problem for the ECB and the other custodians of the Euro flame is how to reconcile the wishes and needs of the debtor nations with the wishes and needs of the richer surplus countries within the zone. If they get this balance wrong, or fail to meet enough of the legitimate and often conflicting wishes of the two groups, the scheme will perish by the votes of countries driven to elect non believing governments keen to push the Euro too far or even wanting out.
The other way the Euro could be lost is technical incompetence by the governing class. They demonstrated this in 2011 when the Euro was beset by a rolling crisis, as country after country amongst the financially weaker nations experienced large sell offs in their state debt markets, leading to a crisis in how to finance government in these territories.It was demonstrated again when the Cypriot banks got into trouble, and the Euro architects decided not to stand behind the Cyprus Euro or Cyprus banks within the system. They weathered both these crises by compromise and by diluting the pure doctrine of each state and bank having to run itself prudently so it does not strain the system.
The creation of E1.08 trillion will ease some of the tensions within the financial system. There is insufficient money and credit in circulation in several of the weaker states. That is thanks to the need for public and private sector austerity at the same time. The states have been spending too much and have to cut their budgets to cut their deficits, at the same time as the ECB is reining in their commercial banks, cutting private sector credit. The result is mass unemployment and long recessions in the worst affected countries. Printing money and trying to get some of it into these states will be a modest offset to the crunch created by the austerity policies. I have likened it before to the ECB and EU authorities driving the economies of Greece and Italy with the foot firmly on the brake – they are now pressing the other foot on the money accelerator.
The problem comes for them with the politics. The easing may not be enough to transform the economic prospects of the struggling small businesses and the unemployed of Greece or Italy or Portugal. It is quite enough to alarm a lot of Germans. Whilst the ECB claims they have avoided putting German taxes behind most of their interventions, time will tell if that is true. It is likely to mean court case challenges to the actions of the ECB. The main winners of all this are likely to be the lawyers. This action is sufficient to keep the Euro going, but not early enough clarity or action to solve the underlying structural problems of the Euro. It is only when the full weight of German taxes and revenues is put behind the currency and used in the poorer areas that it can start to work properly.
This week there was a final round of consultations of Conservative MPs by William Hague in order to make decisions on the implementation of the recent White Paper on English votes for English issues.
It is clear that the Conservative leadership now agree that we do not want a narrow English votes for English laws but the wider English votes for English issues. The question, for example, of how the English local government grant monies voted by the Union Parliament are divided up between the various English Councils should be a matter for English MPs alone, as the Scottish Parliament and Welsh Assembly make the comparable decisions in their parts of the UK. England’s rate of Income Tax should not be voted on by Scottish MPs as Scotland will choose her own Income Tax rate.
The leadership also seems to agree that the obvious way to bring about English votes for English issues quickly and simply is to amend the Standing Orders of the House. Most Conservatives wish the House to have an early opportunity to debate and vote on this matter.
The leadership also seems to agree that the second of their three options, the weakest version of English votes for English issues, is not the one to adopt.
The remaining question lies between Option One, straightforward English votes for all English issues, and Option 3 which introduced an English veto on Bills prior to third reading, along with other measures. I favour the simple and general English votes for English issues, and hope they will conclude in favour of that one. It is the one that seems closest to the Prime Minister’s promises in the Downing Street speech, and to past Manifesto wording.
On Monday at lunch time I joined an invited audience in the Speaker’s House in the Commons to debate democracy for the BBC. They filmed and recorded 90 minutes of debate.
They invited an American Professor to lead the discussion. He was intelligent and articulate but not grounded in the realities of UK democracy. His starting issue was John Stuart Mill’s idea that well educated people should have more votes than anyone else. This out of date and unpopular idea was never going to fly, but he was determined to find someone in the audience who would argue for it, for no obvious reason. We wasted the opening minutes on an anachronism.
I was not allowed to comment throughout most of the programme despite trying to do so. I listened patiently to a long debate about proportional representation and new systems of voting. Some there seemed to think this would solve the problem of the disjunction between many voters and current politics. The Professor seemed in BBC style to encourage this viewpoint, and he had himself introduced the topic as his second important issue. He did not of course point out we have recently had a national debate about this and voted against a change in voting system. Nor did he or anyone allowed to speak on this topic point out that where different voting systems have been adopted – for EU and devolved Parliament elections – it has not resolved the problem of the gap between voters and politicians.
When I was finally allowed to speak at the very end of the session I made two big points. The UK debate about accountability, relevance and the relationship between electors and elected is dominated today by the questions of who is the demos and what powers remain for the government? The Professor had not mentioned or called anyone else likely to mention the words European Union or devolved governments. You cannot today talk about democracy in the UK unless you examine the transfer of substantial powers to the EU and ask what that has done to democratic accountability. Nor can you understand UK democracy without examining the relative and changing roles of the Scottish Parliament, the Northern Irish and Welsh Assemblies and the Westminster Parliament.
The rule of law and habeas corpus democracy is 800 years old this year, and the English Parliament at least 750 years old. On these large anniversaries we need to ask ourselves the fundamental question, is our democratic inheritance compatible with our current terms of EU membership? What do we do about all those laws and decisions that are made by the EU, which we cannot change if we change the MPs and government in the next Parliament? Those self same laws cannot be changed by our MEPs either. When if ever will there be an EU demos? And do we want to be part of it?
Maybe it was accident that these matters did not get discussed. Maybe it was by design. Maybe next time the BBC could ask one of us UK acadmeics and political thinkers to lead the discussion, or at least to be allowed to point out what the real UK issues are today. They are certainly not the question of giving educated people more votes. They include do we get a vote at all to influence the European laws that rule us? And does England get a vote to decide its issues?
In today’s debate on the NHS in Parliament I asked Labour why they only wish to talk about England’s NHS when we are in the run up to a UK election, and why they do not explain the poorer performance of the Welsh NHS over waiting times and A and E. The following figures illustrate the differences:
To start treatment Wales 13.7 per cent of patients waiting more than 26 weeks.
England 12.5 per cent of patients waiting more than 18 weeks.
A&E Wales 19.0 per cent of patients waiting more than 4 hours in December 2014 England 10.2 per cent of patients waiting more than 4 hours.
Diagnostic and therapy services
Wales 31.0 per cent of diagnostic patients were waiting more than 8 weeks. England 1.2 per cent of diagnostic patients were waiting 6 weeks or longer at the end of November.
Ambulance Responses (category A calls)
Wales 56.9 per cent of ambulances arrived at the scene within 8 minutes. England 71.8 per cent of Red 1 & 68.4 per cent of Red 2 ambulances arrived on the scene within 8 minutes.
There is a big battle going on over the future of the Euro. If the easy money people win, the issue is will Germany stand behind all those bonds the ECB buys up? Will German taxpayers after all be expected to stand behind Greek and Spanish banks if they get into trouble? Will the Euro architects find a way of allowing newly created Euros to find their way, if indirectly – into financing the deficits of less fiscally prudent countries within the zone?
Indeed, the question is how can Germany avoid being dragged in to Quantitative easing if the zone as a whole decides on that route? By virtue of being the largest shareholder in the ECB, Germany will become the proud part owner of a wide range of government bonds from other countries in the zone as the ECB seeks to do what the Fed, Bank of Japan and the Bank of England have already done. If those bonds subsequently lose money, Germany surely loses as well.
Some say they have found a way round this dilemma. Why not, they say, empower the individual national central banks of the zone to simply buy up their own government debt, and to take the losses if losses there subsequently are. However, the individual central banks do not have the power to create euros. So presumably they will have to borrow the euros from the ECB to buy these bonds. What if they get into trouble? How do they repay the ECB? Surely there has to be recourse by the national central banks to the ECB, so in the end Germany will be pushed into supporting the whole edifice.
There is also the little problem of the Swiss franc. When the Swiss authorities wisely decided to quit their link to the Euro, their currency shot up. Markets revealed just how depressed the Swiss unit was by its forced association with the Euro. Imagine what the value of the DM would now be against the Euro if Germany had done what Switzerland did, and declined to actually join the Euro.
The Swiss event and the agony of QE reveal the continuing strains of the Euro project. If it is to work in the longer term Germany has to put her tax revenue and banking system behind it. She is still reluctant to do so. It is a bit like London refusing to stand behind the rest of the UK – an absurd idea which would damage the pound greatly if anyone tried it.
750 years ago today England made an important democratic advance. The so called De Montfort Parliament met at Westminster. It was not the first Parliament, and it was the idea of a rebel government that had outmanoeuvred the King. They invited two knights from each shire and two burgesses from each important town, as well as nobles.
This was far from the first time powerful people in the land had instituted formal discussions with the King, the executive government. After all, on June 15th we will celebrate 800 years since Magna Carta. That too was a negotiation between Crown and powerful forces in the country. That established the idea of more meetings between Crown and barons to keep the King honest and to ensure follow up to promises. Subsequently Parliaments of varying composition had been called.
The central underpinning of this proto democracy was a simple one. Those who paid tax and offered allegiance to the King, should be able to seek redress of their grievances before granting more money. They should look to the Crown to offer impartial and fair justice for all, so disputes could be sorted out and criminal conduct dealt with in an independent and acceptable way.
Parliament grew from these origins. There was a strand of work gradually widening the franchise, until all adults came to enjoy the vote. There was another strand of political action, tightening the grip of Parliament over taxation, so monarchs first had to deal with Parliament to get supply, and then became figureheads as Parliament took over the administration of the executive and its budgets.
This impressive story of the growth of democracy was interrupted by our membership of the European Economic Community. It is still causing troubles, as there is no proper redress of our grievances with the EU before they take our tax revenue. There is no easy way of removing the EU government if it no longer pleases us the voters. That is why we need to have a constitutional debate about our relationship with the EU, and need to sort it out. This year of anniversaries reminds us of how precious our early development of freedom under the law, habeas corpus and Parliamentary representation was. It also reminds us how it has been damaged by EU administration and jurisprudence.
Labour’s attempt to make a crisis out of the modest slippage in the English NHS seeks to ignore the far worse performance on waiting times in the Welsh NHS which they run.
Labour of course do not describe the fact that nearly one in five people in Wales have to wait for more than the target four hours for attention in A and E as a crisis. However they do think that if one in ten have to wait more than four hours in England that constitutes a crisis. This language is designed to politicise the NHS, and makes running the English NHS a bit more difficult.
Politically it is a weird strategy. Labour wish to go through a whole UK General Election talking about the English NHS. That means they have no message for Scottish or Welsh voters at all, as they hope to avoid talking about NHS Wales which they run, and of course the SNP and the Edinburgh Parliament run NHS Scotland. They wish to highlight anything that is going wrong, inviting comparison with Wales, and with their record of running NHS England in the previous decade. It reminds us of the disasters at some hospitals, with major lapses in care standards.
A more honest approach would be to confess they have problems and a worse A and E performance in Wales, and set out how they will remedy this. It might also be wise to talk about some of the topics in the General Election which apply to all of the UK, and not just England. It is an irony that Labour do not understand their own devolution settlement and what it means for General Elections.
The more I think about the halving of the oil price, the more significant it seems. The scale of the change makes it difficult for commentators and forecasters to think it all through and understand the magnitude of what has happened so far. There is reluctance to simply assume that in future oil revenues will be under half the levels of last year. Prices might go up again. Some of the oil is under long term contract or special arrangements which may limit the price damage a bit. Some of the industry’s commitments to put in new investments and sustain programmes of maintenance and development cannot be easily cancelled in the short term.
However, until the price rises again the safe assumption to make is that oil revenues will be well down. This means the cancellation of a large number of new projects to find and exploit oil in places where it is dear to find it and get it out. It makes the development of shale gas provinces in Europe a less immediate prospect. It means delays and cancellations to new projects in the USA. It means bankruptcies or refinancings of projects recently completed in high cost areas. It means a gradual reduction in future output to bring the market back into balance, barring some crisis to the output of one or more of the major oil producing countries or areas. Banks may need some of their new reserves to deal with extraordinary losses on oil financings.
It also means sharp contraction in state oil revenues. This will be most marked in Venezuela, already struggling with debt problems, and in Russia where oil dependence by the state is high. It also changes the once easy budget positions of various Middle Eastern countries, who have started to spend up to the revenues that oil at over $100 a barrel gave them. It will cut the oil based revenues in the UK more rapidly than the decline in output was already doing. Do not expect any PRT revenue now, and expect a big fall in oil based corporation tax receipts in a year or so. Scotland’s contribtion to UK revenues has just taken a large knock, just a few weeks after the SNP assured the people of Scotland that Scottish oil could buy them a better future.
The bad news for the few is offset for the world by the good news for the many. This level of price fall is a big boost to the large consumers like China, Japan, India and the Euro area. It takes the inflation pressure off as well, allowing easier money for longer. In the UK it is good news for the government. Although the government cannot claim it brought about the price fall by its actions, government gets blamed for anything that goes wrong on its watch and gets some benefit from what goes right, even where it is not the cause. Labour’s cost of living campaign does not look on the money now real wages are rising. Petrol at a little over £1 a litre- maybe soon at below £1 a litre – is a great refutation of Labour’s crisis talk. The banks may lose more on energy accounts, but some of their other loans may now be easier to service and refinance as many companies benefit from lower energy prices.
Overall this is good news for the world economy and good news for the real incomes of many.However, if these prices persist we should not underestimate the possible damage to the energy sector. They face, at least temporarily, the prospect of income cuts, job losses, and refinancings as they struggle to rebalance their busiensses at very different price levels.It will also change the balance between nations, putting Russia under more severe financial pressure and reducing the incomes of the Middle East.