Author: johnredwood

Yesterday I was asked onto the BBC World at One to explain how the UK will manage if we lose access to EIB loans. This was a rehash of a story Remain used in the referendum campaign.

Sir Brian Unwin did the usual thing of trying to undermine the UK position by telling us how crucial it will be to retain full membership of the EIB. He pointed out last year we received 10 % of the loans advanced. So many EU enthusiasts want us to have a whole list of demands like staying in this bank which would force us to offer all sorts of compromises we have no need to make.

The UK has put up 16% of the capital so it has not got its full proportion of the loans. Over the time we have been in we have received 8% of the lending, half our share of the capital.

We could offer a simple choice to our former EU partners. Either we stay in the Bank, and they need to promise a reasonable share of the loans for us, or they buy us out.
Our shares amount to around £12bn taking starting capital and share of accumulated reserves. This would enable us to set up our own Investment Bank. If it borrowed and geared on the same basis as the EIB it would enable us to lend another £100 bn or so for good projects.

If they wish us to stay in we need to remember we are liable to supply another £36 bn if they lose money and need capital top up. The EIB earns small margins on its asset base and has substantial gearing. It is certainly not worth offering anything in order to stay in.

It owns investments in government bonds, which it could sell to buy the UK out. The UK would probably be better off out controlling our own money, but we could life with a continuing shareholding in the EIB if they want that. WEx woukd need to take a continuing interest in the management if the bank given our underwriting if the bank

The BBC seem caught in a time warp. So often their idea of news is based on reheating old Remain stories and lines from the referendum debate. We have had to go back through the debate about early recession, late recession, property crash, loss of tax revenue and the rest that were exhaustively discussed during the referendum period itself. They still seem unable to grasp that there is no such thing as the Single Market detached from the full panoply of EU laws and policies which a state can belong to, nor that the debate is only about access to each other’s markets which should be relatively straightforward.

It starts early with Farming Today. That programme endlessly reviews Brexit despite there being no news as there are still no formal negotiations to report. The Today programme allows some positive economic news on, but even this is completely distorted by seeing it all through Brexit glasses. For example, when Burberry reported their figures the Today programme “expert” and the guest expert were unable to explain why the market had not responded more positively to the great news that Burberry’s UK sales were up 30% in the last quarter. It never occurred to them that Burberry is a global brand and sales elsewhere were disappointing, and the global licensing revenue is tailing off. When commenting on movements in sterling or interest rates it is usually seen through Brexit glasses, as if these things never moved before we decided to leave the EU!

The main driver of UK interest rates and sterling is often the policy of the Fed and US government, just as that is the main driver of moves in the Euro, yen and emerging market currencies. Markets are fixated by changes in Fed language on rate rises. In recent days bond yields have been going up both sides of the Atlantic and both sides of the Channel, and this has nothing to do with Brexit.

Can we have some commonsense and better based reporting, so listeners and viewers can be given a better understanding of what is going on in the world around them? The latest Chinese GDP figures, the oil price and the impact of the US election are all more significant to markets than the UK’s departure from the EU.

I am extremely busy with Parliament back in full swing. Some are sending in too many very long posts, or posts with references to other sites and non official sources which need checking. In order to catch up with the backlog I will have to delete some very long pieces or pieces with unknown references, as I want to get rid of the backlog.

Network Rail doesn’t like level crossings. They are difficult to manage, and present a danger to travellers if they are abused. They are a weak link onto the railway line, where the rest of the line is usually fortified or protected to prevent casual access.
Local communities often do not like level crossings either. In busy locations like Wokingham Station main roads are blocked for more than half the time at peaks, as the barriers come down to let a train in or out of the station, or remain down because a train is at a platform. Our roads are completely inadequate for the peaks to start with, without losing their capacity altogether every time a train arrives or departs.
As a result, there is a programme to replace level crossings with bridges. I have been one of its supporters, and have wanted to see more money spent on bringing about these changes. If you observe the morning peak from the air in much of our country, you see completely congested main roads, relatively empty railway lines given the restraints on train use of track, and maximum congestion at points on the road network where traffic is trying to get across the railway. There are too few bridges.
yesterday I talked to representatives of Network Rail about our local plight in Wokingham. The much sought after new road bridge still has not got off the drawing board, though it is now on the planning map and there is agreement by both Council and Network Rail that it is needed. The temporary footbridge over the railway is an ugly and poor structure which we would all like to see replaced as soon as possible with the promised smarter new permanent bridge.
I want to see the government’s investment plans this Autumn include local transport improvements. We could have a safer railway and a less congested road system if more is done to speed the removal of level crossings and their replacement with bridges and tunnels.

The French authorities say they will be closing the Calais camp in a few days time. They have a lot of work to do in the meantime, to find out who is there, what rights they have to stay or to work or to receive an education in the EU and how their futures should be taken care of. There are many adults, and all too many unaccompanied children.

The UK has said that it will take unaccompanied children who have family in the UK willing to look after them, and will help the French by also taking some children who do not have family members who can take care of them. The Home Office has sent officials to Calais to help the French talk to the migrants to see who should be eligible to come to the UK, and then to make the necessary arrangements. Of course the UK is a guest in Calais and has to work under French direction.

The Calais camp is what happens when large numbers of migrants and refugees are allowed to enter the EU elsewhere without proper consideration of their legal rights and needs. It is not good for the travellers or for the host nations. Putting off making a decision about their eligibility and needs leads to delay and to these worrying encampments which are far from satisfactory for those living in them.

The priority in dealing with the children should be in putting them back with family members capable of looking after them. Presumably some adult put the child on the long road to Calais and provided money to pay for the perilous journey. It would be good to know in each case who did this and what help they or other responsible adults in the family can now offer the child if they are not resident in a war zone.

We can only negotiate free trade deals with the USA, China, Brazil, India, Canada, New Zealand, Singapore, Australia and the others if we leave the EU and its internal market. If we stay part of the customs union or if we stay in the EU we are banned from even discussing freer trade with these important partners abroad. As the government has set up a department expressly to promote our trade in this and other ways, it follows they rightly intend to take us out of the EU and its internal market.

People object and say that it takes many years to construct a Free Trade Agreement. They point out when we leave the EU we will end up with WTO tariffs on the schedule the EU imposes on other foreign countries already. This would enable us to trade reasonably with the EU, but there is no reason why they and we would wish to limit our ambitions to such an outcome.

The reason it often takes a long time to conclude a free trade deal is each country negotiating actually wishes to protect certain features of its economy and limit free trade. A process of bargaining ensures to try to get the barriers removed to your exports whilst keeping up some barriers against imports. Our negotiation with the EU would not be like this, as we already have barrier free trade in goods with them and reduced barriers in services! If we and they wish we merely say we want to carry on with it, and it is already negotiated and recorded.

To speed it all up and get rid of the uncertainty the easiest cause is to say either carry on as we are, or go to WTO existing terms. Neither needs renegotiating and each is already written down. Our current deal would be registered as an FTA with the WTO to make it legal for a non member of the EU. It would take longer to sit down and negotiate a half way house deal, less freedom than now but more freedom than under WTO. As WTO suits our profile of trade better than theirs we might as well just offer either our current arrangements or WTO.

Under WTO we would have the nice problem of how to spend all the tariff revenues on their large imports into the UK. Spent intelligently this would remove adverse effects from tariffs on our exports.

If Scotland wishes to be independent then it needs to leave the UK. That means ending the supremacy of UK law and taking back control of its own laws, borders, money and currency.

I am happy for Scotland to stay in our Union and glad they voted to do so. If they truly want to be independent then of course they are free to do so following a referendum. Its not the sort of thing we should expect to have votes on every couple of years, as you have to assume people made a longer term decision than that. Current polling shows Brexit has made little difference to the balance of opinion on independence. A new referendum would require a decisive shift in Scottish opinion to be worthwhile and for the SNP to risk it anyway.

The SNP got into a muddle over the currency during the recent independence referendum. Of course an independent Scotland cannot stay in sterling. Nor would Scotland be independent if it did manage to continue with the UK currency!

Now the SNP is in a big muddle over single or internal markets. It says it is crucial to stay in the EU internal market when this is not possible as we leave the EU. Yet the SNP recommends leaving the UK which similarly entails Scotland leaving the UK internal market which is a far bigger proportion of Scotland’s trade than the rest of the EU.

True nationalists would want out of both the EU and the UK, to take back control. The SNP always seem to be shuffling various kinds of dependence, not independence, with a strong bias to control from Brussels rather than London. It gets them into all sorts of contradictory arguments. The advantages of internal markets can be exaggerated. Getting out of an internal market which is also a currency union is both more difficult and more expensive than getting out of an internal market with different currencies.

It may suit the SNP to spin the myth that the UK can stay in the single market whilst leaving the EU, but we know that is wrong. The Single European Act which helped create the EU’s version of a more regulated and coordinated market has long since been folded into the Treaty of European Union. No-one on the continent is proposing splitting out single market laws from the rest and letting the UK belong to that. Nor are they wanting to do a side deal with Scotland rather than the UK, given the problems that could create in Catalonia, Venice, the Flemish part of Belgium and the rest.

The EU’s internal market, wrongly called a single market, comes with freedom of movement, budget contributions, the supremacy of EU law and the all the rest as part of the deal. It only comes with membership of the whole EU. Many of us explained at length in the referendum campaign that we would leave the single market as well as the EU as they are the same thing. The government also warned people that was true. The issue was always what access we will have to the EU internal market once we have left, not how we could “stay in” it, when “it” has no separate legal identity from the EU.

That was why the Remain campaign not only warned we would be out of the single market, but kept saying we would need to do a Norway or Swiss type deal to buy access to the market with concessions on budget contributions and freedom of movement. Again the Vote Leave campaign endlessly ruled out such an approach, as more importantly now has the new government. Vote Leave always pointed out all other countries have access to the single market through world trade rules, and there is every reason to think the rest of the EU would want a better trade deal than the average with the UK given the large amounts they sell to us.

The one ray of hope in the SNP blizzard of propaganda is they would like more powers for the Scottish Parliament when the EU powers are removed. That is a more productive conversation to hold. It is a of course a contradiction of their wish to stay in the so called single market, which would leave the power to decide firmly in Brussels. When the UK comes out, then of course Scotland can discuss with the Union Parliament what powers it should have over its own fishing, farming and other policies that are currently controlled from Brussels. Coming out of the EU is about taking decisions that matter closer to home, so it is a good conversation to have on the balance of power returned to the UK Parliament and given to the Scottish Parliament.