Author: johnredwood

Day after day I hear scare stories on the media that the UK car industry may suffer  if some undefined friction were created at our ports impeding the inflow of components after we have left the EU. I have proposed no tariffs on any parts coming in, so there would be less friction on non EU parts than today, and the government may well adopt such a proposal. They have certainly not ruled it out. No-one has yet explained why we will mess up our ports in ways which delay deliveries to car plants. Just in Time systems anyway flex according to how far the components come and the journey conditions they experience in the regular course of business.

What I do not hear is analysis and concern about the very real damage being done to our car industry whilst we remain full members of the EU. The collapse in car sales since the Spring of 2017 has nothing to do with Brexit and everything to do with the high Vehicle Excise Duties, the tax and other regulatory attacks  on diesel cars, and the tough guidance to banks to cut down the car loans imposed by the UK authorities. As a result car sales have fallen by almost one quarter, and car sales by Jaguar Land Rover have been hit much harder given the high proportion of expensive cars and of diesels in their mix.

Why doesn’t the media take up these unhelpful policies, and make more of them than the silly scare stories about why might  happen if we just leave the EU?

It would also be good to have more informed comment and discussion of a real economic problem worldwide, rather than the false worries about Brexit. The rest of the world is talking about the general move to slow money and credit growth in the USA, the Eurozone and China as well as in the UK. Car sales are very dependent on  credit and get hurt early on when rates rises or when cash is restricted in banking systems. Car sales in China fell heavily last month. US car sales peaked earlier this year and are also in decline. The German car industry got hit badly this autumn. It was largely attributed to changes in EU regulations delaying certification and sales of new vehicles, but it is probably also about the turning of the credit cycle and the decline in underlying demand in the world car market.

I have often said that whilst Brexit is a very important political and democratic event for the UK, it is unlikely to have much impact on the world economy, and will have just a modest positive impact on the UK economy once we leave if the government follows sensible policies. We should try to prevent endless scare stories and the Groundhog day coverage that is the current UK media from stifling debate on the things that do have an economic impact. The media should  be expressing some alarm about what monetary tightening is now doing to the world car industry. There is no obvious inflation threat in the advanced world, and clear signs of economic slowdown.

The Prime Minister needs to understand that her Agreement cannot pass the Commons. All the Opposition parties oppose it. The DUP hate it. Around 100 Conservative MPs have stated in public they do not agree with it.

A substantial number of those MPs might change their vote on the Agreement if the Northern Ireland backstop were removed completely, or if there was an unambiguous and straightforward way for the UK to end it unilaterally once imposed. Whilst the vote on  the Agreement would then be narrower, there would still be a substantial group of Conservative MPs who would oppose the Agreement for wider reasons often set out here.  The Prime Minister ignores these other problems – the large sum of money committed for nothing, the indeterminate period left in the customs union, the vulnerability of our economy to new laws and regulations that could hurt us – all summed up as the opposite of the Leave we voted for.  She assumes she could get practically every DUP and Conservative MP to change their minds.

She also assumed in the Confidence Vote meeting that  the EU will offer some legally binding text which does scupper the Backstop. That looks extremely unlikely, given the stance of the EU so far. If we assume they are not bluffing when they say they will not re open the Withdrawal Agreement text it is difficult to see any reassurance or political declaration about the Backstop persuading the DUP and other critics, as what matters is the law as written rather than statements of how a future EU might behave. One of the problems with that is the imminent European Parliament elections and a new Commission, so what is the value of any promises by the current set up?

I have the following questions for the PM

What legal text have you tabled to remove the Backstop? Will you share it with us as we might agree with it?

What indications if any are there that the EU will moderate its stance and resume talks about legal change to the Backstop part of the Agreement?

If there is no new text and no prospect of talks to change this draft law, how do you envisage getting the DUP back on board to support the government?

If the DUP remain largely detached, how can the government proceed with its wider programme of work?

What action if any are you taking to deal with the other large  problems with the Agreement as around 400 MPs see it?

If there are  no good answers to these questions, then the PM should come to the Commons and announce that unf0rtunately the Agreement cannot be fixed so she is withdrawing it. She should then return to the EU and discuss the best way to proceed to exit, with accelerated work on the various agreements it would be nice to have to make it easier for both sides.  She should finally get round to tabling a Canada style free trade agreement and set out again how the Northern Ireland/Republic of Ireland border can be handled much as now. This present currency, Excise, VAT and anti terrorist border could also be a customs and regulatory border, with most of the checks done well away from the border and the information shared electronically in advance of the border crossing. Managed exit without a Withdrawal Agreement is what most Leave voters want, given the penal and one sided nature of the Withdrawal Agreement.

Since I wrote this piece it has become clear that the EU is not in the business of re-opening the Agreement at all. They have also moved away from offering more formal reassurances which seemed to be on offer in draft. Instead  more of them saying the disagreement between the Commons and the Prime Minister on the Agreement is another reason to need the backstop insurance. The Prime Minister has changed her language back to reassurances from legal  changes.

It is difficult to see the  DUP coming back on b0ard given the lack of any legal text to remove the  backstop. Were there to be a change of heart by the EU in the new year on this matter, there are still considerably  more Conservative MPs than the government  majority with the DUP  who oppose the Agreement for a wide range of reasons including sending them too much money, delaying our exit without a clear end date, and putting us under EU rules for an indeterminate period with no vote or voice on what new burdens and requirements they might impose.

On Wednesday Mrs May gained 63% support from Conservative MPs, or as Jacob Rees Mogg points out lost the support of around 70% of all those MPs who do not have some job granted to them by her. This assumes all those who express public loyalty to her in office voted accordingly. I imagine most of them did. Most of those who could not do so have already resigned.

Earlier in the day it appeared that her team was worried about the vote. She therefore changed her position on two important matters. She told us she no longer planned to lead the party into the next General election, assuming that is in 2022. There were various MPs prepared for her to carry on for a bit longer who were nonetheless saying they wanted a new leader for the election . She also told us she was returning again to the continent to seek legal changes to the Irish backstop arrangement. This was different from previous language, when in line with the EU she was talking about gaining clarifications and reassurances without changing the text of the Withdrawal Agreement.

She did not clarify if she would lead the Conservatives were there to be an earlier election. Nor did she clarify what kind of legal change she was seeking or how she will persuade the EU to re open the text of the Withdrawal Agreement. She also has said that any re opening could re open features of the Agreement like Gibraltar and fishing that some in the EU want to make worse from the UK point of view, so it is an option with risks.

What difference does this make? It has revealed to the  government and public that there are 117 Conservative MPs who lack confidence in the PM, which is largely related to their opposition to the Withdrawal Agreement she has made her own. It is therefore difficult to see how Mrs May can present her Agreement to the Commons and secure support for it. She says she plans to get a change to the Irish backstop. The first test of any new words forthcoming from the EU will be the reaction of the DUP. If the DUP do not accept the revisions as sufficient to banish the Irish backstop, the government will remain with no reliable majority, subject to endless alarms over trying to sustain its position in Commons votes. The DUP have always made clear the whole backstop has to go. Many Conservatives want it out or want a clear legal ability of the UK to cancel it unilaterally, which of course means it is not then the kind of backstop the EU insists on. The significance of the backstop is it would treat Northern Ireland differently from the rest of the UK, and would create a border between Northern Ireland and the rest of the UK. I and others have made clear our opposition to the backstop, but also to several other important features of the Agreement. Even if they could delete the backstop I would still oppose the Agreement.

The Prime Minister needs to rebuild her support amongst Conservative and DUP MPs as an urgent priority. Winning the confidence vote is only a first step. She now has to adopt an EU policy that can command support within her coalition, which the current Agreement lamentably fails to do. Any attempt to find a way of harnessing Labour votes to offset the large slice of Conservative and DUP votes she does not command on this issue is likely to be a fruitless quest, given Labour’s understandable wish to have a General election and unwillingness to name a particular proposal for exit that they can unite to support. Any attempt to woo Labour would also increase the numbers of Conservative MPs who oppose the Prime Minister.

One of the sillier Project Fear scares has been that if we just leave the EU there will be no agreements in place to allow planes to fly to and from the EU  and the UK.

The Transport Secretary has recently reported that  the UK has now concluded all of the third country aviation agreements needed with non EU countries, save four small countries still to  be completed.  Those agreed include the USA, Canada, Switzerland and Israel.

Within the EU the Commission has made clear that in all circumstances including a so called No deal exit there will be an agreement between the UK and EU after Brexit allowing routine aviation to continue as before between the UK and EU.

Individual member states have also expressed a willingness to  put in place any arrangements needed to ensure continuation of air services.

As I have pointed out, leading UK and continental airlines are busy selling tickets for after March29 2019, and have every reason to suppose they will  be able to honour those contracts. People can book their business trips and holidays as normal, and expect the planes to fly subject only to the usual things that might delay or lead to flight cancellations which have nothing to do with Brexit.

Some Remain supporters have been worried that somehow it will be more difficult to travel, to visit the continent, to share cultural events or enjoy each other’s facilities and places of interest. There are no grounds to suppose there will be new restrictions. There were no visas required before we joined the EU, and none are likely to be imposed once we leave. Were the continent to refuse to recognise UK driving licences the Post Office will be able to issue acceptable international permits for £10.