Author: johnredwood

The US briefing is very positive for the first Trump/May meeting. They have happy memories of President Reagan’s achievement, and fond recollections of the part Margaret Thatcher played alongside the US. Together they pursued and won the Cold War. Together they faced down the opposition of many Europeans to the Star Wars initiative which brought the USSR to the conclusion they could not longer compete without major reform. Together they cut taxes and promoted growth.

I remember well the day I took a translation of one of Mr Gorbachev’s speeches to Margaret Thatcher. At first she could not believe that Gorbachev would have made statements in favour of free enterprise economics in the way he did. Once she accepted the source, she realised the opportunity that dialogue might bring. It was the reward for the strong stance she and the President had taken in earlier years, as the failing USSR strained every sinew to try to keep up with the space and arms race. It did so only at the expense of a huge expenditure of resource from its relatively low income per head. It fell behind when computer and digital technology and its related creativity came to the fore.

The UK will want to argue that today is a different global agenda and Mrs May and Mr Trump are different people from the then Prime Minister and President. Where Reagan and Thatcher had to deal with the cold war, the armed threat to the west from the USSR, and the plight of the countries of Eastern Europe under Soviet control, President Trump and PM May have the complex threats of terrorism and aggressive movements in several countries around the world. Where the Soviet Union prevented the movement of people in Eastern Europe under threat of death for those who tried, today we have the worry of excessive movements of people fleeing economic failure and civil war elsewhere.

There are some similarities. In the USA Mr Trump like Mr Reagan does want to cut and simplify taxes on a large scale. He does want to pump up the US growth rate as Mr Reagan did. All US Presidents are persuaded to say the US/UK relationship is special, but only a few mean it. Ronnie did. I think Mr Trump will too.

A BILL TO

Confer power on the Prime Minister to notify, under Article 50(2) of the Treaty on European Union, the United Kingdom’s intention to withdraw from the EU.

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:

1 Power to notify withdrawal from the EU

(1) The Prime Minister may notify, under Article 50(2) of the Treaty on European Union, the United Kingdom’s intention to withdraw from the EU.

(2) This section has effect despite any provision made by or under the European Communities Act 1972 or any other enactment.

2 Short title

This Act may be cited as the European Union (Notification of Withdrawal) Act 2017.

Some commentators are surprised. The new President is doing exactly what he said he would do. The worldly wise well educated pontificators  who confidently predicted Mr Trump would metamorphose in office to someone more like the various well honed expert politicians he defeated are having to change their minds.

Mr Trump told us he did not accept the idea that the US has to place climate change at the centre of its industrial and economic policies. References to that set of policies and beliefs have been taken down from the White House website. Instead Mr Trump has taken executive actions to make it easier to exploit US hydrocarbons and transport oil to market by pipeline. He understands cheap energy is an essential underpinning of an industrial strategy.

He told us he would get US corporations to invest much more in the USA. There has been a procession of business leaders in to see him to be asked to step up their domestic investment. Doubtless they have been told they will get tax cuts and regulatory changes to make the US more competitive. They will also have seen the reputational damage if they do not make suitable statements about their commitment to US manufacture. The car makers are now planning more capacity in the USA.

He has said he wishes to control inward migration, and to tackle the problem of foreign criminals operating in the USA. He has made some executive orders and is investigating his further options over the Mexican frontier.

He expressed hostility to multilateral trading agreements that he thought were not fair on the USA. He has pulled the USA out of the Trans Pacific Partnership, a complex large agreement which was not ratified by Mr Obama. He has begun the process of renegotiating NAFTA where he thinks Mexico has un unfair advantage. As this is ratified he will need to deal with the Congress on how to proceed.

The critical commentators will probably shift their ground from proposing he will change, to arguing the realities of government  and the limits on Presidential power will now prevent him doing much of what he promised. It is true his tax cuts require action and goodwill by Republican Congressmen and women. Repeal of Obamacare and changes to existing trade treaties will need the approval of the legislature. Mr Trump is at his most powerful in his early days as President, and all the time there is a Republican majority in the Senate and Congress. He may again surprise his critics by being able to cut deals with the legislators to secure tax cuts, Obamacare change and other important items in his manifesto.

Mr Obama came to office promising to shut Guantanamo, pull out of Afghanistan and press for peace in the Middle East. He got wobbled off all of those and defined his Presidency by securing a deeply unpopular healthcare reform. Mr Trump needs to make sure when he spends his political capital with the legislators he buys something worth having which makes them and him more popular.  Tax cuts might well do just that. The replacement for Obamacare may prove more divisive and difficult.

 

 

Surveys of opinion can be unreliable. In July 2016 the CBI survey showed a dreadful minus 47, compared to a minus 4 in January 2016. At the time I thought it an odd reading predicting a downturn we would not experience, as time proved to be the case.   Today’s survey shows a surge to plus 15 for this January, implying good growth to come. It’s a great turn round in sentiment from ultra pessimism last summer.

More reliable order book figures show plus 15 this January, compared to plus 5 last January. This is a better indicator of more growth to come. Why are some forecasters still expecting a big slowdown?

 

 

Yesterday Opposition MPs shed crocodile tears about the need for a sovereign Parliament. They were under the misapprehension that Parliament has no proper role in the Brexit process. They seemed to think only unelected Judges could uphold the sovereignty of Parliament against a government determined to implement the wishes of the electors as expressed in the referendum.

Let me explain a few home truths to them. The first is we do not currently have a sovereign Parliament. That was the main point at issue in the referendum. All too many MPs in recent decades have voted away the powers of Westminster, passing authority on issue after issue to the EU. The public voted to reverse that. I have spoken out against the puppet Parliament we currently suffer from. All too many laws, budgets and policies are determined in Brussels in ways the UK Parliament cannot gainsay.

Any opposition there is  to implementing the wishes of the people should properly concentrate on the Parliamentary process. It should not need to go to the courts. The courts themselves need to be careful not to think it is their job to set the Parliamentary agenda. If there was a big body of MPs who wanted to reverse the decision of the  referendum and thwart the will of the people, there are ways they can seek to do so. The opposition parties have days allocated to their choice of business. They could use any one of those to hold a debate and a vote to prevent Brexit. They can use government debates on the EU which are available in abundance to make their case. They can make it during the various Statements the government issues. They can seek Urgent Questions on matters they rank as important. They can use their seats on the Brexit and European Affairs Committees to put their case. They can oppose the repeal of the 1972 European Communities Act when we get to it, when there will be government led votes which they can vote against.

The fact that they have chosen to do none of these things tells you that they rightly judge they must not been seen to deliberately seek to countermand the decision of the voters in the referendum. The Commons voted 6 to 1 in favour of a referendum, described as transferring the decision to the people by the government introducing the Bill. How can MPs who voted for the referendum go back on its central promise to let the people choose?  Both the Remain and Leave campaigns in the referendum agreed the people would decide.

If only more of these Opposition MPs would grasp that we do not currently have a sovereign Parliament. What a cruel irony that some Members of Parliament pray in aid the idea of a sovereign Parliament, whilst doing all they can to stop one being recreated. At least the Supreme Court was right to tell the Scottish Parliament that our membership of the EU is a matter for the whole UK and for the UK Parliament. Scotland does  not have a veto on this national decision.

 

The government has published its Green Paper designed to boost industry and productivity, and to spread investment and prosperity more widely around the UK.

One of the main improvements   I have been seeking is improved public procurement. The paper stresses the need for change in this area. The public sector buys all too many items from overseas, when acting as an intelligent customer and partner of UK business would allow it to buy good value goods and services here in the UK. The public sector would then benefit from the taxes levied on that business activity and on the incomes of the employees involved, and there would be a saving on the balance of payments.

The Defence department has ordered a large number of Ajax light tanks from Spain. Given the long term production runs needed the government could have worked with a UK company and design. It is importing steel for our new submarines on the grounds that our industry does not make the right specification. Surely it could have been worthwhile to discuss with our steel industry how they could invest in transforming their base steel into the required material?  We are importing large quantities of building materials and components for the UK public housing programmes executed by Housing Associations and Councils. This again is work that could be done at home.

In our overseas aid programme large sums are sent to foreign institutions, charities and companies to spend for us. I want to see us concentrate our aid activities on specialist areas like disease eradication and the provision of clean water. If we did we could have sufficient purchasing power to allow companies to invest in producing the vaccines and water plants here in the UK instead of importing them from other rich countries. Overseas aid is best spent in the country you are helping. Where that is not possible it should be spent on things we are good at here.

The Green Paper also covers R and D, skills, infrastructure, start ups, exports, affordable energy, world leading sectors, spreading investment around the whole UK and creating institutions to assist. Tax cuts would  also be a big help in generating enterprise and growth. Ensuring proper competition and preventing take over by large groups wanting to reduce competition will also be essential.

 

 

Dear President Trump

I congratulate you on your installation as President. Your vision  to create more jobs, revitalise US infrastructure, boost US take home pay and inject more life into  US economic leadership is a bold one. We in the UK are also embarked on a similar task as we leave the EU. We too need to build more roads, railways, bridges, energy plants and water supply facilities. We too need to make more things for ourselves and import less to narrow our trade gap. Our two countries can indeed trade with each other more, as ours is a fair trade with a reasonable balance of imports and exports for each party.

Your proposals to produce more realistically priced energy will help restore your manufactures. Cheap energy is a vital part of a flourishing industry. Your plans to cut corporate and individual tax rates will energise entrepreneurs, spawn more investments, and allow people to keep and spend more of their earnings. That in turn creates demand which generates more jobs.  The USA in recent years has pioneered much of the digital revolution and has done well in creating more companies and jobs in technology, but has suffered from Chinese, German and Mexican imports of industrial goods which could have been made more extensively in the USA.  Tax reform, cheaper energy, a better regulatory climate and a President who supports manufacturing will make a difference.

Both the USA and the UK could benefit from an early free trade agreement between our own two countries. Fair trade  which results in a sensible balance between the trading parties can enrich and enhance both sides. If our two countries  draw one up and sign it, it will show the world that the USA is not afraid of fair trade, and it will put more weight behind the UK’s intention to be an even more successful  world trading nation open for business globally.

I was pleased to read you are planning a summit in due course with Mr Putin. The West has made mistakes in recent years with its military interventions in the Middle East. Some carefully planned joint working with Russia which also has a presence and diplomatic interests there might help achieve the important but more limited objective you have set in combatting ISIS. Past policy has suffered from conflicting and ambitious aims which have resulted in all too many civil and religious wars in the region.

The UK and the US can make common cause to strengthen NATO for our mutual defence. As one of the few countries that does hit the minimum 2% GDP target for defence spending, the UK is a natural ally in your campaign to get all NATO members to spend at least the minimum. If I tried only paying a portion of the insurance premium I owe to insure my home the insurance company would cancel the cover. Why are countries that want their allies support any different if there is a minimum? The EU does not allow its members to pay a lower subscription, and none of our EU friends short change the Commission.

I am pleased our Prime Minister will visit on Friday. There is plenty of scope to increase our joint working on intelligence, defence, trade, economic policy and general foreign policy. I wish you every success in tackling the problems in the USA that you have identified.

Yours etc