Author: johnredwood

We live in a very regulated world. Modern governments are very powerful, both in laying down detailed controls over business and in commanding huge spending power. We have just seen how this interplay works with vaccines. As government will be the main buyer of the products they have considerable say over the development and production. Whilst the ideas and production emerges from the private sector, government was involved in setting the challenge, offering seedcorn money and advance contracts. There are many other areas where this model has to be used to get breakthroughs given government importance. Energy today is dominated by government rules and controls, with government organising markets for competing businesses to win contracts to a government specification. It needs to get better at what it specifies and how much power it conjures for our use. Defence is of course dominated by government procurement. Railways now are effectively nationalised.

It is important that we do not allow all this to become an argument for more things to be carried out by fully nationalised industries under government direction of innovation, cost structures and production. The UK tried that for some 30 years after the war and fell further and further behind in coal mining, steel production, car production, shipbuilding and other affected areas. The joy of not for profit became the woes of heavily loss making businesses in need of perpetual taxpayer subsidy, arguing over what to close next and who to sack. The well meant five integrated plant investment in steel struggled from the first and spent years of recriminations over which of the works to shut. The coal industry was a major source of industrial tension over how long to keep open high cost mines. We witnessed a bitter retreat from shipyards around the UK. A nationalised industry often hit customers with high prices and sacked many employees at the same time as it wrestled with poor productivity, poor innovation and better overseas competition. The nationalised telephone system backed an out of date mechanical switching system as the USA leapt ahead with new electronic technologies.

We need to make the case again for competition, choice and profits. Competition drives innovation. Monopoly encourages sloth , resting with what the monopolist already has. Allowing consumers choice keeps companies honest. Above all profits are essential to pay for research and development, to make new investments in products and production, and to help pay for new jobs and growth. Profits made by our larger companies are shared with millions of UK citizens through dividends paid to pension funds and insurance companies that look after people’s savings. The government needs to work with the private sector and liberate it more. We need to ask ourselves why the USA has been so much better than the UK/EU at powering the digital revolution and developing most of the great success stories of the digital age in the free world.

It has been a long time since I last got my hands on a leaked letter or memo from Dame Lucy. After her long service on Brexit issues she appears to be deployed today on outstanding matters from the Withdrawal and Future Trade Agreements in the Cabinet Office. I thought I should share the letter with you.

Dear Mark (I’m not sure who this is but also clearly a senior official)

It is most important at this difficult time when Ministers are understandably preoccupied by the pandemic response that we provide the necessary continuity in other areas. We do have a duty to minimise the change that the upheaval of Brexit could create. We should be pleased that so much of the accumulated law and practice of the EU has been successfully transferred to the UK legal canons. We can be content that Northern Ireland remains partly under EU control as a reminder of the need for compromise with the EU over various matters. It of course entails regular Ministerial contact and negotiation over a range of issues through the Joint Committee. We must also ensure that Ministers are given every opportunity to adopt parallel laws and regulations to the changes going ahead in the EU, to avoid too much drift apart. We should remind Ministers of the desirability of equivalence, and the hard tests the EU is likely to apply to ensure equivalence, which will be much like identical measures. We should be keen to work with the EU on important matters like digital regulation and the green agenda. We as the custodians of continuity in government must preside over and enforce all existing rules and procedures unless and until Cabinet and empowered Ministers insist on change.

I am worried in case the divergence over vaccines leads Ministers to think divergence elsewhere is always likely to be right and better. Ministers may have had a success, but at the price of further deterioration in already difficult relations with the EU. The EU is upset about priority of deliveries to the UK, and has had various worries about the Astra vaccine in particular. We do not wish to see such disputes cross over into sensitive areas like fish, agriculture and energy. We need to remind Ministers of the complex supply chains, the inter dependence and the sensible nature of many EU rules and requirements. I think it is good news that the Treasury is continuing with the Maastricht debt and deficit criteria, and welcome that there is a further five years transition before the UK controls its own fisheries fully. I look to you to assist in portraying the realities of the new relationship to Ministers.

Yours etc

I recently wrote to the main supermarkets about customers being able to buy more locally and UK sourced food. I have received the enclosed responses from Morrisons, Tesco and Asda which they said I could share with you. I am happy to reproduce the other replies if they wish when I receive them. I encourage any UK based food retailer to do a good job selling and promoting UK produced food. They are in alphabetical order. Tesco gave the most rapid response.

Asda
“Thank you for your email regarding British sourcing. As a company established by a group of
Yorkshire dairy farmers, this is an important issue for Asda.
We keep our fish sourcing under review, but due to the need of having to maintain a
sustainable supply, this does sometimes come from overseas. However, we do support small
suppliers, such as Downies of Whitehills Cullen Skink and ScottyBrand Smoked Salmon.
Some of our seafood is UK sourced, including Atlantic Herring, Mackerel and Edible Crab.
We have a dedicated local sourcing team, who enable small suppliers to supply Asda stores,
including the facility to be stocked in a single local store. This covers a wide range of different
products.
As you may be aware, Asda has recently had a change in ownership. With this change, we
have pledged to source 100% British beef, 100% British dairy and increase our sourcing of
bread wheat to 100% British.
You may be interested in the results of a recent customer insight survey we carried out,
where we asked about attitudes to buying British. This showed a divide in attitudes depending
on age, with 56% of 18-34 year old customers saying it is important, rising to 81% of 55+. The
overall importance of buying British was listed as the eighth biggest issue for our customers,
with them viewing recycling, reducing food waste and tackling antisocial behaviour as their
biggest issues.
While this does show differing attitudes towards British sourcing, we are keen to do all we can
to support small British suppliers throughout our stores, and constantly keep sourcing under
review.”

(their survey showed 76% thought buying British was important. )

Morrisons

“Morrisons is committed to buying British and giving our customers a great – and growing – choice of locally sourced food and drink.

We are the nation’s largest fresh food manufacturer and operate our own abattoirs, food manufacturing sites, and produce pack houses. We have recently added to this capacity with the acquisition earlier this month of Falfish, a family-owned processor of sustainably sourced seafood based in Cornwall.

For customers, this acquisition will mean further improvements to the range, quality and availability of fresh fish and shellfish at our in-store counters. Following the deal over 80% of Morrisons fish and shellfish – both in our 497 stores and in our online business – will come from Morrisons wholly-owned seafood operations (Morrisons already owns two seafood processing sites close to the docks in Grimsby).

This deal is a real commitment to the South West fishing industry which we believe will benefit the local economy as well as offering our customers an improved range of freshly caught fish and an investment in our in-store fishmongers.

You also asked about local produce. One of our core priorities is ‘local integration and serving the community’ and we have made positive strides on this in recent years. Prior to the pandemic, our buyers were touring the nation and hosting ‘local foodmaker’ events which offered local producers the opportunity to showcase their products. Through our ‘local foodmaker’ programme we have now surpassed a key milestone of 1,000 new, local products (from 220 local suppliers) which we have sourced from 37 events held across Britain in the last few years. This programme continues although with the onset of Covid we have been forced to hold events online.

Many local food producers are continuing to expand their geographic reach through their relationship with Morrisons and more of our stores have local products on offer. As an example, our store at Lake, Isle of Wight, is one of our most integrated stores so far, stocking locally supplied milk, cheese, cream, coffee, eggs, meat, tomatoes, biscuits and garlic.”

Tesco
“At Tesco, our ambition is to be British agriculture’s most trusted partner, helping to secure a successful future for farming, food and fisheries.

As part of our commitment to a competitive and productive UK agriculture sector, we’ve set up a number of Tesco Sustainable Farming Groups (TSFGs). The Groups, led by our suppliers, farmers and Tesco colleagues, are organised by sector and are central to our work of building long-term relationships with our farmers. We’re also supporting new entrants and young farmers through our Future Farming Foundation, which each year provides 50 young farmers from across the UK and Ireland with guidance, support and training.

In store customers will find that all of our milk is British, sourced from British dairy farmers who are guaranteed a fair price for every pint through our Fair for Farmers Guarantee. We support our dairy farmers through the Tesco Sustainable Dairy Group, which was the first of the TSFGs to be set up in 2007, and now represents the largest group of dairy farmers working with a retailer directly. In addition to this, 100% of our beef, chicken, eggs and cheese is British and Irish. Alongside this we have a dedicated local sourcing team to evaluate and identify locally-sourced products, which are then sold in store – giving customers access to top quality, British products.

Recognising the demand from our customers for homegrown, seasonal produce, we work with trusted growers across the UK to deliver this all year round and include our Best of British Union Jack on packaging to help customers identify fresh fruit and vegetables which are 100 per cent homegrown. We are also using this partnership approach to foster innovation across all sectors, including our Incubator Programme which is helping suppliers to grow their brands and bring new, innovative products to market.”

Waitrose (added on April 1)

“Thank you for your recent email regarding Waitrose’s sourcing of British products in our shops.

It is great to hear that your constituents want to be able to buy more UK produce in their local shops. We know this is something our customers are particularly passionate about. Searches on Waitrose.com for British chicken, beef and vegetables doubled last year and our recent Waitrose & Partners Food and Drink Report 2021 found that 74% of people want to see more food businesses in the UK express their ongoing support for local British producers.

All of our fresh and frozen beef, chicken, pork, eggs and milk are 100% British sourced, and from this Summer all our lamb will be 100% British sourced all year round. Many of Waitrose’s local products are from companies that produce food within a 30 mile radius of a shop. Waitrose has a team of buyers dedicated to seeking out local and regional sources of the best quality food that often cannot be found in other supermarkets.

We have also seen strong growth in demand from our customers for British seafood. Sales of fresh oysters and mussels increased by 74% and 25% year-on-year last year, and searches for ‘seafood’ on Waitrose.com have more than doubled.

In July last year, Waitrose became the first major UK supermarket chain to sell MSC certified British clams and cockles from the Dorset Shellfish Company, one of the leading specialists in the country and a key supplier to some of the top restaurants in the UK. Clam sales were very successful, selling more than double than predicted volumes. We also expanded our fresh British fish range to include five different MSC certified native British fish varieties, including Coley and Whiting. ”

The UK is likely to have a substantial surplus of vaccine doses over home needs, thanks to its early and substantial actions to help firms develop and produce them including placing advance orders. The UK success also included working with Astra Zeneca who came up with the cheapest vaccine on offer and promised to sell it profit free, thanks to the UK taxpayer backing the project in its early days. It is perhaps understandable that some other countries, some higher charging companies and the EU are jealous of this success.

The UK took a big risk, as no-one could be sure which companies if any would succeed when the UK made investments and offered contracts. As a result of good choices the UK will have substantial supplies of vaccines from other companies as well as Astra. This will allow the UK to offer many millions of doses of various vaccines to others. The issues arise, which countries should we choose and on what basis should the additional vaccines be supplied?

There is a case to be made to supply some of our surplus free of charge to low income countries who did not have the rich country advantages of a strong domestic industry to develop the products, or the cash to forward order in quantity. This would be a good use of our overseas aid budget, paying for the vaccines from that source. It is difficult to see why we should similarly supply free to any higher income country that would like our diverted orders. There is a case for charging them what they cost us. Some might argue we should charge them a higher market price. In the case of Astra product that would raise the issue should any part of a UK taxpayer profit be shared with Astra who otherwise have a break even price, and might raise issues for Astra about their promises over general pricing and supply. There is also the issue of what criteria we should use to select the countries that we help. I suspect many UK taxpayers would be unhappy to help any country that had recently imposed trade bans, restrictions or sanctions on us or who had tried to undermine the reputation of Astra product. I would be interested in views.

Let us remind Ministers that in U.K. government the civil service provides continuity. They will carry on energetically implementing past policies until the Cabinet or a Minister with the authority tells them policy is changing. It is the job of Ministers to propose new directions, argue them through against civil service objections and sell them to Parliament and the public.

In a few areas Ministers have seized the initiative and changed policy from the overarching EU laws and decisions which came to dominate most areas in recent years. The notable decision to opt out of the EU approach to vaccine development an£ procurement shows what can be done. Yet in all too many other cases Ministers are still to change and improve the EU approach which governs.

The Treasury for example has still not removed VAT from a range of items where the U.K. thought it wrong impose the tax. Why is there still VAT on boiler controls, heat pumps, drought excluder and insulation for starters? Why are we still reporting under the debt and deficit rules of Maastricht? Can’t we have a pro growth anti inflation framework of our own to replace Maastricht austerity rules?

At DEFRA we still await details of how the U.K. is going to rebuild its fishing fleets and take control of our fish, catching sustainable quantities and landing them in the U.K. At Business there is no sign of a better regulation Bill to slim and improve the vast annals of EU legislation, some of which the U.K. opposed or wished to improve when first drafted. Pledging high standards is good, but improving the way they are defined and enforced would also be good. At the FCO There is little riposte to the abuses of trade between the EU and ourselves, particularly on the island of Ireland. We still do not have new procurement rules, nor a better self reliant energy policy.

We did not leave the EU to preserve all its legislative works from the outside. We left to make things better. Some Ministers need to alert officials to the huge opportunities which Brexit can bring.

The immediate reason why Honda is closing its Swindon car assembly plant is the lack of demand for its cars throughout Europe. The company’s sales in Europe peaked in 2007 at 313,000 and is now under half that. Contrary to referendum rumours their closure has nothing to do with Brexit. They are also ceasing production in Turkey and do not want any production in Europe for the future.

The second reason is the EU/Japan trade deal. The prospective ending of 10% tariffs on imported cars from outside the EU will make Japanese produced Hondas in future 10% cheaper. Why not make them in Japan and get greater economies of scale from manufacturing there where they need output for the home market as well?

Which brings me to the third reason. Honda needs to launch new models that are all electric for the market of the future. This requires a complete rethink on how you make cars and where you make them. Honda will put its battery capacity into Japan and get the economies of scale there for the European market production at the same time.

This Honda story is a warning to the UK and to other established centres of car production in Europe. The transformation of the car means new plant and new equipment and may well mean a different pattern of industrial location as a result. Brexit was never a threat to the UK car industry. Electrification is. For the UK to keep its current level of capacity and to grow its industry it needs to take bigger strides to invest in and control the raw materials, component production and assembly of the electric cars of the future given the determination of the USA, EU and UK governments to force this transition. Until enough people freely buy electric cars this means the industry investing in advance of demand and government offering suitable assistance to help make the new products more affordable and acceptable to customers.

Meanwhile the Honda factory will become warehouse space. Let’s hope it will not just be filled with more imports.

President Biden’s more diplomatic approach towards the EU comes at a price. Last week the USA persuaded the EU to put its name to sanctions against Chinese officials and to make a statement condemning China’s treatment of the Uighur Muslims. The EU had been negotiating an Investment and Trade Agreement with China, and had been careful not to criticise China’s approach to human rights. The 5 Eyes grouping of the USA, UK, Canada, Australia and New Zealand had been more outspoken and Australia had borne the brunt of Chinese denials, rebuttals and complaints.
The US Secretary of State also made it crystal clear that the USA remains implacably opposed to the Nord Stream 2 gas pipeline from Russia to Germany, despite it being almost finished. He stated it was a “bad idea” for the EU a well as for her western allies. He added to Trump’s strategic criticisms the added criticism that the project gets in the way of EU climate change objectives as well, a new US sensitivity which the EU is meant to share.
The USA under Biden has more time for allies, but expects them to rally round a new aggression towards both China and Russia. President Biden dislikes these states. He alleges they undertake state sponsored cyber disruption, interfere in western elections, fail to uphold human rights for all and are building up their military power whilst creating a series of client states. The German model of doing plenty of business with Russia and China is being put under some strain. For her part China is testing out both Biden’s power and the cohesiveness of the western alliance. The trends are clearly towards a US led system and country grouping, and a Chinese led one. Biden’s team are trying a tough public stance on political matters, whilst trying diplomacy to settle some of the trade issues with China in private.
I would be interested in your comments as well on where the UK should now position its foreign policy towards China.

Yesterday I was one of a few MPs who voted against a six month extension to the powers of the Coronavirus Act. I did so because I wish to hold the government to its promise of an end to lock down this June. I did so because I think the powers are too sweeping. We need to restore our liberties and let people make judgements for themselves about their conduct and their health risks. I did so because I do not think government can protect us from all harms, and has to avoid taking so much action against one threat that it leaves us vulnerable to other threats.

I and others will continue to question and to seek to persuade the government to remove this raft of restrictive measures. Without the Official Opposition also opposing we lack the votes to change things, but we have voices and public support which we need to represent.