Mr Corbyn’s dilemma

Over the next two weeks Mr Corbyn can determine the fate of Mrs May’s EU Agreement. If he placed a three line whip on Labour MPs to vote for the legislation necessary to bind the UK into this new Treaty, he would give Mrs May enough votes to secure the matter. There might well be more Conservative rebels against such legislation, but not enough to prevent a grand coalition of Mr Corbyn and his loyalists with Mrs May and her government appointees putting through the necessary law. So far Mr Corbyn has been unwilling to do this, even though Labour has not made much of a case against the terms of the so called Withdrawal Agreement. We saw the kind of votes we could expect in such circumstances on the vote about the latest delay to our exit. Delay won by 400 to 120, with only 133 Conservatives voting for the delay despite a three line whip to do so.

Instead Mr Corbyn has concentrated on criticising the attached Political declaration. Understandably he has argued that signing the Withdrawal terms does not place the UK in a good position to secure the kind of eventual exit from the EU that he and others would like. He has placed considerable emphasis on his wish to see the UK stay in a customs union with the EU, though he has also hinted that he would still like some independent trade policy. It is difficult to see how these two usually incompatible positions could be negotiated with the EU. He has also made it official Labour policy in certain circumstances to have a second referendum to endorse any Agreement, though he seems more flexible about this than the Blairite wing of his followers.

Mr Corbyn now has to recognise that Mrs May could end up conceding the customs union. If she has her way and puts indicative votes to the Commons again, the customs union proposal without a Conservative whip on to oppose might get through. It has been voted down several times before because it was Conservative policy in the last election to oppose it, and because 3 line whips were placed against it. It would only take a handful of Conservative rebels against the Manifesto to tip over the vote, assuming all opposition parties coalesced around the proposal. Mrs May would probably then change her own mind and recommend the customs union.

This could place Mr Corbyn in a more difficult position. Why would he wish to take responsibility for the Withdrawal Treaty and for rescuing Mrs May’s government? Why would he hand her a big win, finally vindicating her tenacious support for a Treaty which is opposed by a big majority of the public? More Labour than Conservatives might end up voting for the legislation it needed. He still has a couple more options. He can argue that he dislikes other features of the proposal as well as the absence of the customs union to avoid commitment. He could help her win the first vote but then find detail in the legislation he could not support, creating subsequent chaos amidst allegations of bad faith.

The way out appeared to be to rewrite the Political declaration, as the EU used to say there was some flexibility about that document. That seems to be closed off by the tough terms of the recent extension, where they categorically rule out any further discussions of the future partnership until the Withdrawal Treaty is adopted in UK law.

Mr Corbyn’s safest course is to find another reason why he cannot bring himself to back this Treaty, He has been talking about worries over who the next leader of the Conservatives might be, what kind of future partnership the Conservatives would want to negotiate, what trade deals they might do elsewhere and other related matters. He could even start to expose some of the undesirable features of the Agreement. Were he to give the government support not just for the first vote but to get through a very contentious and important piece of constitutional legislation to enforce the new Treaty he might unleash uncontrollable forces amongst his own voters and members.The curse of the Agreement might gravely damage his party. This is a draft Treaty which unites many Leave and Remain voters in opposition to it. Labour MPs in Leave voting seats would be particularly uncomfortable, whilst the left would make unusual supporters of Mrs May.

The worst outcone for Labour would be securing a second referendum. The party would then become a pro Remain party and lose most of its Leave voters. It would be scorned by at least half the electorate as anti democratic for going back on its word to accept the result of the original referendum. It would need to defend its new found enthusiasm for all things EU including its austerity economics.

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What would a Manifesto for the European elections say in the UK?

As someone who wants us to leave now and not fight the EU elections, I think the parties will struggle to write their Manifestos for May 22nd.

Presumably the Brexit party and UKIP will write similar documents urging a WTO exit as soon as possible They should look forward to not having to take their seats or to giving up their seats after October 31st on the assumption we have then left the EU. Their problem will be differentiating their approaches from each other and avoiding splitting their pro Leave votes.

The Conservative party will presumably draft a Manifesto today based around Mrs May’s Withdrawal Agreement. The problem with that approach is if her Agreement were to pass with Labour support anytime soon then the elections will be cancelled, as the UK’s new status of in the EU without vote and voice would then kick in removing the entitlement or need for MEPs.

If the Agreement does not pass, this would leave Conservative candidates with a Manifesto made irrelevant by events.

If instead the Conservatives draft a Manifesto based on the proposition that the Agreement has not gone through, they follow a logical but politically dangerous path of hypotheticals. What then should it say? I would want it to say because there is no support for the Withdrawal Agreement we are leaving without signing it. That invites the response of “Get on with it, and spare us the election”. Alternatively the Conservatives have to set out in the document how they might get talks with the EU retriggered even though the EU has made clear its refusal to re open the Withdrawal Agreement. Likely tough responses from the EU make that a fraught approach.

Labour too has a difficult task in compiling a Manifesto. It faces all of the above problems facing the Conservatives over what to offer, with added grief from the factions wanting dilution or cancellation of Brexit within the party. If it includes a second referendum it is alienating all Leave voters who see no need to answer the same question again. If they leave out the second referendum they upset many of their pro Remain MPs and supporters especially in heavy Remain areas like London and Scotland. If they stick with their wish to enter a Customs Union they will be asked why they have failed to support Mrs May’s Agreement which is a necessary prelude to a customs union solution according to the EU. They will also generally be asked why they have been such an obstacle to leaving the EU and why they rule out leaving without an Agreement which most Leave voters and some Remain voters saw as necessary leverage in the talks.

The Lib Dems, Greens and nationalists who want us to stay in the EU have the easiest task. They will presumably set out why they think the people were wrong to vote to leave and how they wish to reverse the decision. They can then go on to explain how they want to spend 5 years in the European Parliament voting on EU laws, budgets and taxes. They will write off any chance of winning votes from more than half the public who want to leave or accept we need to leave in the light of the referendum result.

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More jobs in the UK and wages rising

The February figures show the UK economy generated another additional 179,000 jobs. Wages rose by 3.5%, usefully ahead of prices. This all occurred against a backdrop of Italy in recession and the German economy stuttering badly.
All those commentators who wrongly ascribe any bad economic news to Brexit should be rushing to thank Brexit for this good news.

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The Agreement to delay our exit is not one the UK should have signed

The EU have required the UK to accept there can be no re opening of the terms of the Withdrawal Agreement during the delay in our exit. They have also stated we cannot start discussing the future partnership despite it being sketched vaguely in the Political declaration, until the Withdrawal Agreement is signed.

This new agreement says if the UK does not fight the European elections we will automatically leave on 31 May. That would be the best outcome from here, and is to be recommended to a government that does not really want to hold the elections yet seems drifting to them for want of accepting the Withdrawal Agreement is not about to pass.

If the government wants to carry on with the delay despite the fact that it cannot be used to renegotiate anything with the EU, then the UK is subjected to major constraints on its rights as a continuing member of the EU. despite paying a big financial contribution and acting as importer of last resort for many continental producers, the UK is required to behave in a way the EU finds acceptable. The Agreement says ” The UK shall facilitate the achievement of the Union’s tasks and shall refrain from any measure which could jeopardise the attainment of the Union’s objectives, in particular when participating in the decision making processes of the EU. ”
Worse still they act as if the Withdrawal Agreement is in effect when the delay has been caused by the unhappiness of most voters and many MPs with it. “Any unilateral commitment, statement or other act by the UK should be compatible with the letter and spirit of the Withdrawal Agreement, and must not hamper its implementation.” This is an unusual idea that a country has to follow an international treaty which its Parliament refuses to ratify!

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Letter to the Attorney General about the legal impact of signing the wrongly named Withdrawal Treaty

Dear Geoffrey

Let me have another go at getting a reply from you concerning the way the Withdrawal Agreement stops us leaving the EU. Would you kindly confirm

1. If we sign this Treaty we will be locked into the EU and have to obey all its rules and pay all the bills it sends us for a period of at least 21 months, and probably for 45 months if we have not surrendered further to reach an exit agreement at the 21 month stage. This would mean remaining in the EU for at least 5 years from the decision to leave and probably for 7 years. The EU would be able to legislate and spend against UK interests during this period, whilst we would have no vote or voice in the matter.

2. In order to “leave” in your terms at the 5 to 7 year stage the UK will need to stay in the customs union and accept all single market rules and laws, unless the EU relented over the alleged Irish border issue. 3 years on and the EU has given no ground on the made up border issue, so why would they over the next two years? Isn’t the most likely outcome we would remain in the single market and customs union contrary to the government promise leaving meant leaving them in its referendum literature ?

3. After the 45 month period fully in the EU, the UK still would face financial obligations under the Withdrawal Treaty. The bills will be decided by the EU and we will have to pay them. Any attempt to query them would be adjudicated by the EU’s own court! The longer we stay in the more the future bills are likely to be. The £39 bn figure is likely to be a considerable underestimate.

4 The Treaty creates a category of super citizen in the UK. EU nationals living in the UK when we “leave” the EU will have their access to benefits guaranteed in a way the rest of us do not for their entire lifetimes. So we will not be taking back control of our benefit system.

I am also concerned about a number of Articles in the draft Treaty that expressly extend EU powers and jurisdiction for a further 4 to 8 years beyond our departure date after the 21 to 45 month delay.

Article 3 asserts EU legal jurisdiction over Gibraltar and British overseas territories in general terms, where disputes about the extent of EU control would fall via the Agreement under the European Court of justice.
Article 5 reintroduces the powers of the European Court and enforces “sincere co-operation ” on us as they do not want us impeding their plans for economic, monetary and political union.
Article 31 imposes social security co-ordination on us.
Article 39 gives special protection to EU citizens currently living in the UK from changes to social security for the whole of their lives, protection which the rest of us do not enjoy.
Article 51 applies parts of the VAT regime for an additional 5 years after the long transition envisaged in the Treaty
Articles 92-3 imposes the EU state aids regime on the UK for 4 years beyond transition
Article 95 imposes binding decisions by EU quangos and bodies for 4 years beyond transition
Article 99 requires us to pay for access to records to handle issues over indirect tax where the EU keeps powers for 4 years beyond transition
Article 127 applies the whole panoply of EU law throughout transition, including the right to legislate any way they wish against our interests and enforce it on us via the ECJ
Article 130 prevents us taking back control of our fish any time soon. Doubtless more of our fishing rights would be given away trying to get an exit deal.
Article 135 allows them to send extra bills up to the end of 2028
Article 140 imposes on us financial liabilities up to December 2020 and carry over into 2021
Articles 144 and 150 prevent us getting back accumulated reserves and profits from our European Investment Fund and EIB shareholdings
Article 143 imposes adverse conditions on us over pension and loan liabilities of the Union
Article 155 requires to make continuing payments to Turkey under an EU programme after we have left
Article 158 gives the European Court continuing power for 8 years after transition
Article 164 makes a Joint Committee an effective legislator and government over us
Article 168, the exclusivity clause , denies us access to normal international law remedies in the event of disputes. Presumably this closes off use of the Vienna Convention to renounce an onerous Treaty where there has been a material change of circumstances.
Article 174 requires any arbitration to be governed by ECJ judgements on the application of law in disputes
The Protocol on Northern Ireland will require us to stay in the Customs Union with regulatory and legal alignment with the single market, or split off a separate place called UK (NI) which will be governed differently to the rest of the UK on an island of Ireland basis.
There is much more I could object to. This is no Treaty to take back control, no Treaty for a newly independent nation. It does not quantify the financial liabilities, which are open ended and could be much larger than the low field £39bn Treasury estimate. We have little power to abate the bills and no power to abort the bills. It would probably result even in failure to take back control of our fishing grounds.
Mrs May needs to go back to the EU and explain why the UK people and Parliament have opposed this Treaty, and ask them to think again if they want an agreement before we leave. She needs to make it clear we now intend to leave without signing the Withdrawal Agreement prior to the European Parliamentary elections.
John Redwood

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The puppet Parliament becomes more pathetic

This Parliament is determined to thwart the will of the voters who decided to leave the EU. It is equally determined to show it does not want to take back control. MPs queue up in debates to tell us EU laws and rules are best, and try to find ways of extending or protecting them. They have no faith in our collective ability to choose wise and good laws for ourselves. They doubt Leave MPs when we assure them we will keep the good laws from the EU, as they will all be incorporated into UK law. What I want to change are some of the VAT laws that make us impose tax on green products and domestic fuel,the corporation tax decisions that cut the tax we imposed, the fishing laws and the others that have done economic damage to us.

The behaviour is worrying and bizarre. Why get yourself elected to a body designed to make laws and to influence government policy if you want our laws to be made across the Channel instead? Why draw a salary if you think you cannot improve on what the EU does?

Parliament usually wants the government to spend more on the favoured causes of MPs and some of their constituents. Yet when it comes to finding a big pot of money to spend at home by stopping sending large sums to the EU, most MPs flip over and tell us we must keep on sending as much money to Brussels as possible, even after we have left.

Many MPs have torn up their promises to their electors from 2017 when all Conservative and Labour candidates fought on a ticket of implementing the referendum. They have done so knowing they will alienate the Leave majority in the country, and will not impress the many Remain voters who want Brexit finished with and who accept the majority verdict. It is difficult to grasp why so many only want the votes of the minority who reject the verdict of the referendum who presumably voted Lib Dem in 2017.

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If you want to talk about Brexit

Respond to this post.

I have not changed my view on how we should leave and want us to get on with it. I am currently planning a letter to the Attorney General to explain again how the Withdrawal Agreement stops us taking back control to implement Brexit.

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The need for a rethink by the Central Banks

The Fed, the Bank of England and some other leading Central Banks set interest rates based on the idea that if unemployment falls too far there will be inflationary pressures on wages. This requires them to put up interest rates and deter more credit being advanced, to reduce the pressure of excess demand in the economy.

In the last century it was the case that the USA, UK and other leading economies were prone to wage inflation when potential demanded exceeded potential supply and when unemployment fell to a low level. The so called Phillips curve illustrated this trade off. Whilst there were monetarist economists who preferred a money based explanation of inflation, and other economists who pointed to the role of external shocks and commodity price trends in inflation, the mainstream view based on capacity and employment was bedded into the forecasts and intellectual framework for rate setting.

I have long queried the idea of national capacity linked only to employment in an increasingly global market. We have seen how economies capable of creating many jobs and expanding capacity invite in large amounts of migrant labour, as in the USA, UK and Germany, reducing the upwards pressures on wages. We have seen how the US and UK simply import a lot more goods and services when their domestic capacity is insufficient to meet demand, tapping into vast numbers of unemployed and underemployed people elsewhere in the world capable of doing the work. There is also the option of putting more capital to work with labour saving investment.

The Governor of the Bank of England has acknowledged this in a speech which said the Phillips curve is now very flat – in other words there is not much of an inflation threat from low official unemployment figures. The Fed has recently announced a major rethink of its approach, and has stated that in the USA now the curve is also fairly flat. In the USA employment rates are still low at a stated 60.6% of the working age population, and as the economy improves more people find work who were not registered as unemployed. There are also strong migrant flows into the country to take up new jobs. Low unemployment is not a good guide to wage growth.

So what is a better guide for a Central Bank seeking to set rates? I prefer them to consider money figures more, where the figures show too much tightness in the UK and a modest rate of expansion in the USA that should not lead to an unsustainable rise in inflation. Of course they need to listen to markets and watch the trends in output and prices generally as important guides as well. The markets saved us from too much tightening in the USA late last year. What will it take for the UK authorities to follow a more pro growth policy? Given the strict fiscal squeeze, there is an even better case for a looser money policy in the UK. The US is lightening up the money supply even though the government has embarked on a big fiscal relaxation as well.

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UK law to delay our exit

The government is seeking to delay our exit until October 31 by a negative resolution Statutory Instrument. This is a law which they can make without needing Parliamentary approval first, subject only to a vote in Parliament after the event if Parliament insists on one. I have put my name to the list of those wanting this to be debated and voted on.

Posted in Uncategorized | 40 Comments

The Easter recess

My Parliamentary office will be open today and next week as usual, closing for Good Friday and Bank holiday Monday only for Easter.
I will be mainly in the constituency for the two week-ends and next week, and will provide my usual 7 day a week response service to constituents with emails and urgent problems.
I have made my views clear on how the UK should now proceed to leave the EU, and will write at greater length about that next week again.

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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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