Author: johnredwood

The EU is labouring under various misapprehensions about the UK. It seems to think if it hangs tough the UK will make more generous offers. It feels it has no need to engage on trade as if their access to our market will stay the same whatever the outcome of the talks. They need to realise if we leave without a deal we will put in the current EU tariff schedule  with the EU  outside our border paying the tariffs  to comply with WTO rules.  They apparently think if they block an open border proposal made by the UK for Northern Ireland the UK will give in and agree that all or part of the UK has to stay in the customs union.

It is in everyone’s interest involved with the Republic of Ireland and N0rthern Ireland to uphold the various Agreements and to retain an open border. The UK has set out clearly how that can be achieved. Outside the customs union the UK would have an electronic border for the goods of recognised traders, allowing their trucks through without stopping through number plate recognition against filed documentation  in advance. Small Irish and Northern Irish traders regularly crossing the border would be exempted from tariffs and other new barriers. We will install this unilaterally if there is no deal. The EU will have to decide if it wants to put up its own more restrictive border on the Republic side. The Republic of Ireland needs to sort out with its EU colleagues just how they will operate their side of the border.

The papers published on Monday on Customs and Trade make clear the UK has a solution for our borders with No Deal or with a Trade Agreement with the EU.  We will adapt the current registered Economic Operators approach, so most of our trade will be notified in advance of the truck or container reaching our port.Goods from approved traders will go straight through without extra customs checks compared to today, with any duty settled electronically as part of the account. Ro Ro ports which mainly handle EU trade will be brought within this same system as EU trade becomes foreign trade if we have no deal.

The UK government is well advanced with changing EU trade agreements with other countries into UK trade agreements with those countries, as it is entitled to on splitting from the EU. There is no cliff edge. A Transition period may only be needed if the EU and the UK come to a late agreement next year which requires computer and physical changes to our border arrangements that need time to implement. Getting on with implementing a customs and border check system for No Deal covers most of the issues anyway.

There is growing resistance amongst Brexit voters and many businesses to the idea of a long further period of delay. Uncertainty is reduced by preparing for No Deal in ways which allow a deal. If the EU as I fear says the UK has not done enough to warrant trade talks anytime soon the government needs to redouble its work to make a success of No Deal. Maybe then the EU will see they have overplayed their intrinsically weak hand.

It was Brexit day again in the Commons yesterday. The EU continued its  miserable commentary. Earlier this week it talked up talks  with Mr Corbyn in the hope that would split the UK. Yesterday they decided to reject the PM’ s friendly offer.

Prime Minister set out where we are with the talks. Good progress is being made on issues including healthcare, the Irish border and the rights of EU citizens in the UK and UK citizens in EU countries. There is no meeting of minds on money, and no agreement yet from the EU side to talk about the future relationship.  From the UK’s point of view there is nothing to be gained from the so called divorce, and every reason to discuss all relevant matters about the future as soon as possible. We would not need any implementation period if we  used the remaining eighteen months before exit intelligently.

The Prime Minister is right to remain optimistic, positive and friendly, offering a good future partnership on trade and security to the other EU states. She is also right to plan for No Deal, as she stressed she is, just in case the EU continues to overplay its hand by resisting talks about the future relationship in good time. Showing No Deal can work  is not only  prudent in case the talks fail, but also sensible as it reminds the EU that an Agreement is only worth having if it is better than No Deal.

It never ceases to amaze me just how much the media make of no news on talks. There could  be months more of this shadow boxing. We may not know for a year whether there is going to be a deal or not. We must use this time to show business how trucks will move through ports, planes will fly, financial services will be traded and laws will be enforced after 30 March 2019 without a deal. There is no cliff edge. The rest of the world trades with the EU without belonging to it. The UK can transfer its trade account from Brussels to Geneva and to the WTO where we will be welcomed as an advocate of free trade, and can use the various agreements and protocols of that organisation to ensure smooth trade.

I have spent the last three weeks with Parliament in recess talking to various business audiences  and in meetings to hear the worries of traders. No new issues have emerged above the ones we have often discussed on this site.  It is a pity the EU cannot put in place a proper mandate for its negotiators soon, as there are good ways of improving on No Deal that would help both sides. The issue the EU has to get round to answering is how many barriers and tariffs do they wish to place on their trade with us, bearing in mind they are limited in what they can do by world trade rules. It is bizarre that both sides say they support free trade and prosperous commerce, and both agree they have a good basis for trade at the moment. So does one side, the EU side, really want to damage it?  If they do they will find they do more damage to themselves than to the UK, given the big imbalance in trade and the nature of the goods and services traded.

Meanwhile as the PM reminded Parliament voted to take back control of our money , our laws and our borders. The government has  to deliver that as soon as possible. Its such a pity the EU overplays its weak hand, which takes the EU closer to facing self imposed barriers on its access to our lucrative market.

Being neither a Spaniard nor a Catalan I do not take sides in the current political dispute over the future of the Spanish Union. I am interested, because it goes to the heart of the identity politics that have come to play a more prominent role in recent years throughout the EU area and in bordering states like Ukraine.  The EU itself where we remain members until 2019 has expressed a view, supporting the rule of law of the Spanish Union against the subordinated democratic Parliament of Catalonia and its wishes.

If the Spanish state had approached the Catalan independence movement as the UK Parliament did the Scottish independence movement, there may well have been a referendum in Catalonia that gave a victory to the Union. Instead the Spanish state denied Catalans a legal referendum under the Spanish constitution, and tried to prevent by force the referendum organised by the government of Catalonia which did not enjoy the legal backing of the Spanish Parliament. The use of force to close polling stations and to prevent people voting created bad scenes for world television, and has led to adverse comment when the Spanish Prime Minister claimed the force shown was proportionate. It seems likely that more Catalans would now vote for independence than before recent events.

This week the world waits with bated breath as the two sides plan their  next move. The Spanish state could use the national constitution to close the Catalan Parliament and demand new elections, or could seek to close down devolved government altogether. The Catalan government might  declare independence based on the results of its recent referendum even though this would be illegal under the national constitution. The Catalan nationalists might claim they had a popular mandate from their own elections and from the referendum, and were forced to act against the rules of the Spanish state owing to the unwillingness of Madrid to offer them legal means to pursue their democratic objectives. Would the Spanish state then seek to arrest the Catalan politicians? Would the Spanish state seek to displace police and officials loyal to the Catalan government, with police and officials loyal to the Union government?  We all hope this can  be handled peacefully without large demonstrations getting out of hand. It looks today as if  both sides want the other to make the next  big move, as they are engaged in a battle for support from those not strongly committed to either side.

Opinion is now split three ways in Spain. In Catalonia itself there is a strong movement for independence, though there is no definitive vote to tell us the true balance of opinion for or against. In Spain outside Catalonia and the Basque country there is a strong block of opinion behind the proposition that the state should enforce Spanish law against the Catalan government. There is then an emerging third force throughout Spain that wants the two sides to talk, to try to find a legal and democratic way through. The Spanish government does not welcome this, as it wishes to take a tough line to what it sees as a simple matter of law enforcement.

The Spanish government has facilitated businesses who want to take the precaution of switching HQ from Catalonia to somewhere else in Spain. This may be just to increase pressure on the Catalan government, as it is otherwise a sign that the Spanish state thinks secession possible. The Spanish state needs Catalonia, as the region contributes around 20% of Spanish national income whilst receiving around 11% of public spending.

This conflict evokes memories for some Spaniards of troubled twentieth century conflicts between Catalonia and the Spanish state. It highlights how the rule of law is  the important underpinning of free societies and prosperous democracies.

The rule of law  is a necessity for a flourishing commerce and for the safe enjoyment of people’s property and family lives. This rule of law depends on the consent of most of the people most of the time to the origins of that law in Parliament, and to the special powers of police and the courts to uphold it. These deep disputes about identity threaten that framework. If enough people in a democracy say they no longer accept a given Parliament, backed by a police force and court system, as the originators and enforcers of their rule of law, the politicians do have to work out how they can design a new framework which does command respect. If a small minority break laws they find inconvenient the state has an enforcement problem and the support of the people to enforce the law. If a majority of people no longer accept the law of a democratic  state the state has to think again.

The role of the elected politician is to develop policy, to choose priorities, to raise revenue and to spend budgets in ways that meet the needs and views of voters.

The politician Minister can choose the experts he wants to help. He can subcontract the work to his officials who in turn may well use outside expert help. The skill of the Minister rests in choosing the right priorities, and then choosing the best experts to see the task through. The Minister has to apply commonsense and political judgement to the professional advice he receives.

In recent years it has been popular with the media and many in the political class to want to delegate or give away more and more areas to be run by experts. This is not a good trend.

Ministers can delegate anything they like, but it does not absolve them of blame or responsibility if things go wrong. If we have a great recession as in 2008  partly  owing to  mistakes by the so called independent Bank of England the public does not forgive the Labour Chancellor who had overall authority through Parliament to avoid a crash and maintain a strong economy. Nor could a previous Conservative government wash its hands of blame for the early 1990 s recession, brought about  by the European Exchange  Rate nechanism strongly recommended  by the experts at the Bank  and Treasury.

The crushing defeats of Conservatives and Labour after disastrous expert advice plunged the economy into slump reminds us that in the end the politicians are accountable. Evidence of the last two crashes says that the elected officials have to get more sceptical about official economic policy advice, not less.

Today the Bank is tightening roo much. The government’s line is they can do so because they are independent. It will be the government that takes the flack for the resulting needless slowdown. The UK has been dogged by very poor official advice on economic policy for much of my time in politics. Much of it has related to the experts wanting to copy or stay close to EU policy. The ERM and the banking crash were but two examples. It was also damaging to have a period shadowing the German currency, and to burden the UK economy with the substantial balance of payments damage that EU membership brought with it.

 

The ONS tells us productivity is still not rising. They say they got their forecasts wrong again and need to serve up worse figures for the UK outlook just in time for the budget.

I am not surprised they got the numbers wrong. They usually do get them wrong. They were fashionably too pessimistic for the year after the Brexit vote. It is a difficult task to get right.

Nor am I surprised they and others are worsening their figures for next year as growth is slowing a bit. I have forecast continuing problems in the housing and car markets thanks to tax attacks by successive Chancellors and to credit tightening by the Bank of England.

Productivity is stagnant for good as well as bad reasons. The UK economy continues to generate a lot of extra jobs in lower value added activities, whilst high value added like oil production and some banking services are in decline. Its good news we are creating more jobs. Industrial productivity is doing fine. The bad news is the weak productivity performance of the large public sector.

 

So what should the Chancellor do? Instead of going gloomy and saying there is no money for spending or tax cuts he should have a budget for extra growth.  Selective tax cuts to boost incentives and enterprise should  figure prominently. As I have often described, the right tax cuts can also pull in more revenue. The public sector does need a bit of extra spending and needs to help people work smarter. We need to make sure all EU contributions stop in March 2019 to help pay our bills.

I do not support Mr Shapps in his view that we need a Conservative leadership election.

I note that the other 29 MPs he has hinted are with him have not spoken out or let their names be known. They are either surprisingly reticent rebels, or they do not exist.

The media say he needs 48 MPs to sign a letter for a leadership election. They need to  add they would also need to find 160 Conservative MPs to vote for a leadership election, as a motion of confidence follows the letters. This is not going to happen.

Growing up as I did  in a settled country with a strong but flexible constitution, the issue of government  legitimacy and democratic consent were ones for the history books.

The transfer of major powers to the EU changed all that. I came to realise I was caught up in a re run of the democratic struggles of earlier centuries in the UK, as many people and some in Parliament  came to challenge the authority of government – not this time of the King, but of the EU.  We have now found our resolution, through the ballot box. We have also resolved the issue of Scottish nationalism through a democratic vote of the Scottish people, which was agreed to be a once in a generation matter by both sides prior to the vote.

In Spain they are far from finding a resolution. The Spanish state has always had tensions between the powerful regional states and the centre in Madrid. The Basque country has chafed at Spanish rule, and Catalonia has long had an independence movement.  These feelings have attracted more support as a result of the EU demanding more austerity year after year from the Spanish budget, and because the EU has assisted with a general economic policy which has failed to deliver good levels of employment and income.

In December 2016 the Spanish voters elected a Parliament which was simply incapable of forming any kind of government. Another election ensued in June 2017. Again no majority government could form. Instead the second largest party, the socialists, agreed to abstain so the leader of the largest party could win a vote to head a  minority coalition government. Mr Rajoy, the PM, was elected on a ticket of no tax rises, but has to put some into his budget to try to comply with EU deficit rules.

It is this very weak type of government that has to handle the Catalan crisis. It is true Mr Rajoy can count on more Parliamentary support from Spain outside Catalonia, the Canary islands and the Basque country. Most of the rest want to keep Catalonia in Spain, where it makes a substantial contribution to tax revenues above its share of public spending.

The Spanish government’s decision to deploy national police to take control by force set public sector workers employed by the Spanish state against public sector workers employed by the devolved Catalan government. It has shaken the whole question in many Catalan’s minds, of who should have the authority and the power over them? Mr Rajoy may come to appreciate  that in a democracy those with the power must behave in a way which preserves the implied consent to the system by most of the people for most of the time. If too many people come to resent or challenge the democratic authority, the fact that it was elected does not solve the problem. When elected to office, particularly in a weak coalition that cannot even command a majority as a coalition, office holders should understand the need for sufficient consent to exercise their constitutional powers.

The new car market was growing before the Brexit vote, grew well after the vote and continued growing after the Article 50 letter.It turned down in April of this year as a result of Tressury  and Bank of England policy.

The Bank has required banks to rein in car loans. The Treasury hit buyers with higher VED on dearer vehicles. The government put question marks over diesel and petrol vehicles leading people to worry about future values. This continued decline was to be expected and I have explained this before on this site.

There is no greater gift that we can pass on to our children than the gift of living in freedom.

I was born into a free country. I valued the democratic traditions, the rule of domestic law, the ability to fire the government through the ballot box, the right to voice a view and debate what was wrong.

I watched with growing apprehension as the decision to join a common market morphed into the wholesale loss of our freedoms.

We surrendered the right to make our own decisions about what taxes to impose,  what laws to pass,  what tariffs if any we should impose on our imports and how the government should spend the money it has raised. The European Court struck down our duly enacted legislation, made us repay corporation tax to large companies, and often found our country in violation of their wishes.

The decision to leave the EU changes all that.

Today, in the EU we are not allowed to remove VAT from female hygeine products as Parliament would like to do. We have to place taxes on a wide range of green products from insulation to boiler controls, that Parliament would like to abolish. We have to impose high tariffs on a range of foodstuffs coming to us from the Commonwealth and the wider non EU world, making food dearer and punishing developing countries. We see our fishing grounds run down under an EU policy that manages to be harmful both to the fish and to our fishermen. We have gone from being a large exporter of fish prior to joining, to being  a net importer.

Leaving the EU gives us all the chance to change things for the better.

Where we like an EU law or regulation we can keep it. Where an EU law or tax is unjust or damaging we can amend or remove it.

Young people will be particular beneficiaries of the change leaving generates. It will create great opportunities for enterprise, for creativity, for better government. It will strengthen the voices of the young and give more power to their votes. They will inherit a political system which allows them to shape or dismiss the governments that rule. We are not turning our backs on Europe. There will still be plenty of joint working, cultural exchanges, movement of people to visit, learn,  shop and invest in each other’s countries.

Just look at the opportunities it will offer us for more and better jobs. There will be big scope to replace imports with domestic food and industrial products. This will provide opportunities for well paid jobs and for establishing new businesses. If the EU opts for tariffs and other barriers as they seem to want, our farmers will supply us with more of our own food, and our car factories will produce more of the cars we chose to drive.

Just look at the opportunities it will offer to improve our laws and make our government bend more to the popular will. We will be able to spend the £12bn a year we currently send to the EU and do not get back will help in many ways. We need to debate more how we should spend this Brexit windfall, whilst reminding our government we do not want to go on sending money to rich countries in the EU once we have left. Education and health are priorities which we can spend more on once we have left.

Above all where young people see an injustice or want to follow a cause for a better country they will be able to do so safe in the knowledge that we have the powers here at home to adopt the remedy. Where today the answer is so often Brussels will not allow us to do that, tomorrow once out we will be able to do as we wish.

Freedom is heady. It teems with opportunity. Let us unite in confidence that when the UK is a free country again, it can also be a better country as  a result.