Author: johnredwood

The UK referendum contains within it a battle between the haves who enjoy the golden privileges of office and access to the corridors of power in Brussels, and the have nots, the rest of us who have to pay the taxes to keep them going and follow their rules, however unpalatable.

In a functioning national democracy public opinion can force changes to policies and decisions that are unpopular. This present government has rightly been required to abate its cuts to disability benefits and to alter its stance on tax credits. It is now coming under pressure to stand up to the EU and big business over some of the undesirable features of the proposed Transatlantic Trade and Investment Partnership which they are negotiating, mainly behind closed doors with too little transparency for the rest of us.

When governments do not listen enough to public opinion, and when they mess up the economy and life chances of the citizens, they get swept from power in an election. Revenge is sweet for the long suffering public, and hope swells as a new team is chosen.

The problem with the EU is it does not respond to public opinion in the same way. Nor can we remove the Commissioners by popular vote. The EU blundered on for far too long with its Exchange Rate Mechanism., causing recession. That meant lost jobs, lost businesses, a house price crash and much other damage.

Then the EU decided to do the same thing all over again to Euro member states. The long deep recessions in Greece, Spain, Ireland, and Portugal were made worse by savage austerity cuts which no sensible democratic state would have embarked on. The election of anti austerity parties and even governments in member countries did not deter them from their chosen course.

The EU is determined to destroy a large amount of EU industry by its very dear energy policies, making so many firms uncompetitive on world markets.

The EU refuses to listen to UK public opinion when we make it clear we want to control our own taxes and spend our own money o n jobs and public services in the UK.

It is high time right and left combined to renounce the EU’s austerity economics, renounce their unwarranted interference in our budgets and taxes, and renounce their harmful fishing, energy, agricultural and other policies that have cost us jobs and lost us businesses.

We want out democracy back. The EU’s bad model is fuelling anger and more extreme parties across the continent in frustration at the way it will not listen, mend its ways and leave more to national democracies to manage and handle.

One of the strange things about the Labour leadership is their willingness to support any measure, however bad, if it is a requirement of the EU. Sometimes they put their party on a 3 line whip to vote for it. Other times they let them go home early or discourage them from voting, so Conservative Ministers and the SNP can defeat Eurosceptic Conservative MPs and secure the Euro measure.

Pro EU people are thankful that Labour behaves “responsibly” in this way. Critics of EU legislation are increasingly angry that the official Opposition in Parliament will not normally oppose anything that has made in Brussels stamped on it. Let’s hope the vote to leave the EU next month changes all this.

The need for Conservative Ministers to rely on Labour votes or abstentions to get through all the EU legislation they are required to pass is having an impact on the conduct of government generally. Yesterday’s Queen’s speech programme was clearly designed to build bridges with Labour, to avoid provocative policies which might jeopardise the implied informal coalition with Labour which is so necessary for the half of our law which now comes from the EU. Neither front bench wish to have a major row with Brussels over for example their insistence on the tampon tax or their Court judgement to make us put up VAT on green products. It is extraordinary that Labour will provide no effective opposition to these tax requirements from the EU.

The left in Parliament is generally quiet on the enforced and self defeating austerity of the Eurozone scheme. They decline to champion the cause of the unemployed in Spain or the poor in Greece, despite claiming to be good enthusiastic and committed Europeans. They confuse Europe with the EU, and seem to think it is their duty to defend all that the EU does, however indefensible. It creates a lop sided and dishonest politics, where the big issues of EU poverty, unemployment, slow growth or no growth are simply not debated. The more that Brussels does, the less a national democracy can function.

We have seen how the democratic will in Greece has to be overwhelmed by Euro area economic policies. The UK still has some democracy left thanks to our opt outs. In an increasing number of areas the UK, like Greece, has to accept whatever Brussels lays down. The refusal of the official opposition to oppose EU measures is the price we pay for this bad way of governing a once independent democratic country.

The government pledged to reduce migration substantially at the last election. One of its main reasons for doing so is the pressure rapid large scale migration places on public services and housing, making it difficult for the country to keep up with demand. When we welcome people to our country we want them to enjoy a decent standard of living and to be a successful part of a community which is well off by world standards.

Some analysis which shows low paid migrants make a contribution by paying more in tax than they receive in benefits does not tell the whole story. Some of it does not even tell the whole story on tax and benefits, by leaving out Housing benefit. Relying on averages can be misleading. It is clearly true that a low paid migrant will pay some VAT and other charges, even if their NI and Income tax contribution is low. What this analysis rarely shows is the capital costs the state and others need to undertake to provide for the needs of a large new migrant inflow.

The ONS in their National Balance Sheet work has a figure for the end of 2013 saying that each UK resident is supported by on average £119,000 of capital assets. Housing is the main asset in each case, but we all needs road, trains, power stations, water works, doctors surgeries and schools as part of the community backup for us and our families. If one extra migrant arrives there may be no need to build a new surgery or add a new power station, but if hundreds of thousands arrive we do need to expand physical capacity and add buildings and equipment as well as hiring more public service staff.

The £119,000 figure is an average, and includes a lot of expensive housing in some parts of the country. It would therefore be wrong to suggest we need to provide £119,000 for every new migrant, or that all that money has to be spent on public provision. It is , however, the case that every migrant will need a home and many will need state or social housing as they will find home prices too dear. Some will rent from the private sector, but will seek Housing Benefit assistance as rents are often high.

One of the reasons we need more accurate figures for new arrivals is to plan better. We need to ensure the right number of new homes, extra school places, GP surgery capacity, adequate water and electricity supply and the rest. Each migrant will need several tens of thousands of pounds of backing investment on average to ensure they can all be housed and provided for to a satisfactory standard. There are said by the government to be 64.5 m people in the UK, but there are 68.4 m registered with GPs.

The third EU Commission Report on progress in Turkey fulfilling EU requirements has changed the language a bit in its latest version, but still contains interesting comments on the EU approach to borders.
Item 10 requires Turkey to deploy sufficient “well trained and qualified border guards” (including military personnel)with “efficient infrastructure, equipment and IT technology, including through a more extensive use of surveillance equipment, in particular electronic means, mobile and fixed,video surveillance, infrared cameras and other sensor systems”. There are to be double lines of defence. “Land border detachments are based in border stations and observation towers near the border…patrolling…six kilometres into the territory from the border. A second line of surveillance is handled by the Gendarmerie.”
“The Turkish authorities have strengthened controls along the Syrian border through the construction of obstacles, fences, illuminations and patrolling roads”.
EU funded projects are helping strengthen these force deployments along the borders.
In other words the EU does now approve of physical barriers along stretches of the Turkish border to try to keep migrants out of Turkey and the EU. EU taxpayers are helping pay for better barriers, more surveillance and improved border defence forces. In return the EU becomes more dependent on the success of the Turkish authorities in policing their long borders with Iraq, Iran and Syria as the visa free area between Turley and the Schengen area of the EU takes shape.
It is a curious policy. Within the EU the EU is against physical borders and boundaries and in favour of free movement. The EU favours proper border controls on the EU’s external borders, but here along the Turkish border there is now an ambivalence as some of the attention shifts from the EU/Turkey border to the Turkey/Syria border. What is clear from the language and budgets is that the EU does now have a Trump element in its borders policy, helping finance tough border barriers to stop migration. The difficulty rests in the great length of the external frontiers and in combining this with visa free policies.

One of the reasons so many voters are unimpressed by Mr Cameron’s renegotiation is he did not stand up to Mrs Merkel.

It looks as if he asked her advice and was told to ask for very little. His demands fell far short of the requirements set out in the Bloomberg speech, and did not include gaining control of border policy with the rest of the EU. She then gave him even less than the modest demands he made.

Much of it was presented as the UK negotiating with Germany, just as the Greek crisis is usually presented as Greece negotiating with Germany, and just as the Turkish Agreement and migration arguments are usually led by Germany. Whilst some of this is media simplification, much of it is true. Germany is the lead country by a long way. It is German policy which dominates the economic policies of the Euro area, and German policy which has dominated the border issues. It will be thus, because Germany runs a massive surplus not just with us but with most other countries in the EU and has become the paymaster of the Eurozone.

The problem is German policy is proving damaging and destabilising to much of Europe. Germany’s insistence on austerity policies for the southern and western countries of the Eurozone left them deep in recession for much of the last eight years, and with high unemployment in most places.

It has destroyed the life chances of many young people, leaving as many as half of all young people of working age without a job in the troubled parts of the zone. Germany will not accept the need for larger transfers of money around the zone that are normal in mature single country currency unions, whilst Greece, Portugal, Spain and Italy are unable to make themselves as competitive as Germany and sell enough back to Germany to right the imbalances. They cannot devalue as they used to, and wage cuts so far have not succeeded in removing their deficits as Germany suggests should happen.

German migration policy has sent conflicting signals. First Germany offered a welcome which brought many more migrants into the EU, then Germany bowed to political pressures and proposed a less welcoming policy. Various countries decided to ignore the Schengen rules and impose new fences and walls at their borders, inviting migrants to find new and more dangerous or longer routes into the EU.

It is important to understand Germany’s view of the evolution of the EU. She sees the Euro and the common borders as central features and thinks all countries should join them in due course.She sees these main policies as part of the so called single market, which is much more than a trade arrangement as far as Germany is concerned. Germany believes that if more power over weaker countries is exercised from Brussels they will become stronger and will not need more transfers from German taxpayers.

In the meantime Germany is apprehensive about the Euro 600 bn of accumulated surplus she holds at the ECB matched by the accumulated deficits of Greece, Spain, Italy and Portugal. The Greek part of that is unlikely to be repaid in full and on time, and that could set a bad precedent.

Whilst in more recent months there has been some recovery in Spain, the Eurozone still struggles. None of this is stable. The UK leaving will help, as the last thing the EU needs at the moment is a semi detached member taking attention away from the big issues that the main EU centred on the Euro and Schengen need to tackle. The UK will be a good European if we leave and let them sort it out without the complication of a large non member of parts of the scheme always wanting something different.

I can’t see why we would want to stay in a German led Europe where there have to be bigger transfers to the poorer areas.

Last night at Eurovision I read we were not quite alone – we managed 24th out of 26th with a small points tally.
I noted, however, there were no points from France, Germany, Spain and Italy for the UK. The EU don’t seem to appreciate us, as usual.
Thank heavens Australia now qualifies as a European Song Contest competitor, as they seemed to like our offering to put some points for the UK on the board.

The Remainians love being negative about what might happen in the future. They should be asked more about all the damage their beloved EU has done to us, our jobs, industries and economy so far.

Let us take the case of the European exchange Rate mechanism. I wrote in 1989 why we should not go into it. I stated that the actions required under the scheme were “intrinsically destabilising”. I set out in detail how it would lead to higher inflation, more debt and more interest charges, which it did. I explained that the systematic undervaluation of the DM in the scheme would boost German exports at the expense of the rest of us. It did. I went on to subsequently forecast the recession that it finally induced.

The IMF, UK Treasury. Bank of England and World Bank supported this scheme and did not forecast the recession it generated.

Let us remember the case of the Euro. The good sense of the UK voters prevented the UK elite following the advice of the IMF, World Bank and other leading institutions to join this currency. I wrote a couple of books explaining the damage it would do. I pointed out “If you cannot devalue your currency when your costs are too high, you have to sack people and close factories instead. ..History shows that rigged exchange rates do not work. The Gold standard, pegging currencies to gold,bankrupted many businesses and caused mass unemployment. The Exchange Rate Mechanism caused a bad recession, and then collapsed. The single currency is an Exchange Rate Mechanism you cannot easily get out of.” I went on to show how the poorer regions of the Euro area would be worse off with high unemployment in the single currency.

I pointed out that the Cecchini Report promised us 3% extra growth from the 1992 single market programme. Instead in the two years of the introduction of the 1992 programme the UK was in recession, thanks to EU policies.

In 2007 none of the IMF, World Bank, UK Treasury or Bank of England predicted the forthcoming great recession, brought on by their policies. I wrote early in 2007 the following:

“There is considerable uncertainty in world markets about how far the Federal Reserve Board, the ECB and the Bank of England will go in raising rates to squeeze inflation out of the system. They must know there are huge pyramids of debt throughout the system, and inflation will not be killed unless the appetite for more debt is blunted. They must also know that if they push interest rates too high for too long they will bring the debt structures crashing down, as we have seen with the sub prime mortgage collapse in the USA, leading to falling asset prices, rising unemployment and even recession”

Apparently the Central Banks did not after all understand these points, and chose to switch from being far too tolerant of debt build up, to bringing the whole edifice they had allowed or created to come crashing down with terrible effects on jobs and employment.

These same institutions now ask us to trust them in their judgements on UK membership of the EU.

They all ignore two obvious points. The first is the stimulus effect of spending our own money in the UK on jobs and services here, at a time when the world economy is slowing again. They also ignore the point that the rest of the EU will not wish to impose tariff and other barriers in the way of their trade with us.

Project Fear has become absurd. It just serves to remind us how wrong its authors have been in the past.

As spending our own money will add 0.6% to our GDP, my forecast is for a small improvement in UK incomes and output from Brexit . Any short term confidence and market response will not be sufficient to offset all the positive effects of the extra spending and the reduced balance of payments deficit. The authorities seem to want lower sterling to help exports, and are clearly determined to try to talk the pound down. They should put into their forecasts the upside on exports if they put in the negative assumptions. There is a general slowdown this year so far in the main advanced economies which they need to address.