Author: johnredwood

It comes as no surprise that Mr Hague might vote to stay in the EU. In 1997 when he ran for Leader he would not rule out the UK joining the Euro. It was only later when Leader that we persuaded him to rule that out. He never made a speech saying we would be better off out.

His two reasons are bizarre for staying in. The first is the SNP will not like it. The SNP will use any argument to try to split the UK. This obvious fact cannot stop us doing the right things on important issues.

The second is we are important to democracy in eastern Europe.  The EU has not created democracies in Eastern Europe. The people and politicians of those countries have done that. They will not cease to be democracies if we leave the EU!

Note that his  reasons offer the people of England nothing that we want. Once again those in favour of us being in fail to make a positive case. Mr Hague couldn’t even think up negatives about us outside, but had to resort to negatives for the rest of them if we go!

One of the most bizarre features of the Better Stay in Europe (BSE)  campaign is their wish to line up business and political endorsements for staying in from the very people who have been continuously wrong on the European issue for many years. As the European Exchange Rate Mechanism and the Euro has shown, the UK has been too engaged with the rest of the EU to its own great cost. It has not suffered from  too little engagement.

John Major and the CBI were cheer leaders and prime movers in taking the UK into the European exchange rate mechanism in 1989. They told us that would give us a golden scenario of lower inflation and faster growth. Instead it delivered a devastating boom/bust cycle. Trying to keep the pound down in the early days of membership meant a rapid build up of loans and cash in the economy, boosting inflation. This was followed by the flight from sterling leading to cripplingly high interest rates and a nasty recession.

A few of us opposed it at the time, but were told we were wrong. I wrote a pamphlet explaining how we would either have a run away credit fuelled inflation or a nasty recession from the ERM  – only to find  we got both!

These same people then either recommended the UK join the Euro at its outset, or thought we should keep open the option of joining as they thought it could prove to be a good idea in due course. Fortunately the band of opponents to joining the Euro was larger than the group opposing the European Exchange Rate Mechanism, and we won. Just look at what happened to Ireland going into the Euro. The UK would probably have had a similar boom/bust experience, and may have brought the whole Euro down.  I suspect  they would have refused to support our commercial  banks, with overextended credit thanks to the rules of the Euro and the low interest rates that would have fuelled too much credit growth  in the early days. Ireland and Spain had severe boom/bust cycles thanks to the Euro. The Euro was just like the Exchange Rate Mechanism, with the added nightmare that you could not get out easily.

 

Now the same people, or people with similar views, tell us we must stay in the European Union as it has now evolved. They seek to play down the central importance of the Euro and the common borders to the whole project, deny the Five Presidents work on the need for political union, and try to keep the debate centred over technicalities about how we would carry on trading. They ignore the fact that 170 other countries round the world trade perfectly happily with the EU, and ignore the ability of the UK to regain her own seat on the World Trade Organisation and other bodies to have more influence in the world. The Leave campaign does not need to waste much time on scares about jobs and trade. The Germans have made clear they do not want to impose new tariffs and barriers on trade with us, as they sell us so much more than we sell them, so what is the problem?

Our task is to positive about taking back control. We will regain our freedoms and be better off. As always there is no positive case for membership from the Stay in people. They either spread scares, or spend their time refusing to defend the Euro, the common  borders, the welfare controls and the endless laws and regulations that make up the modern EU.

 

The Partido Popular  (Conservatives) and the Socialist party (Labour) have been the two major parties alternating in government in Spain for many years. Last week-end they managed to secure just one half of the vote between them.  The “winners” got under 29% of the popular vote, and were left well short of a majority of seats.

Two new challenger parties shot to prominence. Podemos is as party of the left against austerity, which also argued for a referendum on Catalan independence. They secured 21% of the vote. Cuidadanos, a party of the centre right, gained 14% of the vote. As a result there is no obvious stable coalition that can form the government. The only two parties with sufficient seats to form a coalition government are the Partido Popular and the socialists.  Unlike Germany where such a grand coalition has been constructed by Frau Merkel, it seems unlikely these two opponents can work together.

Part of the solution to the problem of how to govern Spain now rests in the hands of the Catalans. The attractiveness of the Podemos offer of a referendum on Catalan independence reduced the numbers voting for independence parties. The Republican left of Catalonia won nine seats, and the independence party called Democracy and Freedom secured 8 seats. The Catalan nationalists and their friends in Podemos will presumably try to gain an official referendum on independence as their price for co-operating in any government. Podemos is in the paradoxical position of wanting a referendum but wanting to oppose independence, and now has 12 Catalan seats which places it in the middle of this row.

It seems unlikely that a minority government of PP and Cuidadanos would be willing to do a deal on a referendum for Catalonia, as they are strongly against. This makes it more difficult for them to win votes as they seek to build from their strong minority vote, which would be thirteen short of winning on its own .

In contrast a coalition of the Socialists and Podemos could just get over the line if they could reach agreement with the Catalan parties. That would be no problem for Podemos, but would require a change of heart by the Socialists.

Catalonia may still not get her referendum, but this result has put it back in play. It serves as  a timely reminder of how the EU project can be very destabilising of member states. The dreadful economic performance visited on Spain by the Euro, the austerity policies and the poor regulation of her banks by the Euro authorities has undermined support for the two main pro Union parties. I am myself, of course, entirely neutral on the constitutional future of Spain and Catalonia. It is a matter for them. The recent election has shown yet again how damaging to traditional parties the EU scheme can be, and how that in turn then leads people to question their loyalties to country. It makes working out why these traditional major parties are so keen on this political project, when it does such damage to them as well as to their countries. We saw this in Greece with the collapse of the two main parties there, and may see this spreading to France and elsewhere in the Eurozone.

I am pleased to see the US, the UK Russia and the regional powers have pressed ahead with a peace conference for Syria. When we had the long debate about bombing Syria there was an absence of informed discussion of Syrian politics. The solution to Syria’s woes has to be a new political settlement, where more people will accept the authority of the government and where the government is able and willing to govern by peaceful means, using less force.

There were two obvious reasons why there was little debate about a Syrian political process. The first is all too few UK MPs understand the parties, factions, religious groupings and terrorist cells that characterise modern Syria. Few of us have met any of them, few have visited the country or been able to read definitive briefings on the complexity of Syrian political movements. The second is those who have read a bit have come to understand that the West cannot impose a political solution on the Syrian people. It has to emerge from the parties, factions, cells and armies on the ground when they think it is better to talk than to fight.

This does not mean the West is without power or influence. Recent events have shown that working with allies in the region, and working alongside Russia, it is possible to push forward a peace process. The aim agreed this week is to help Syria move towards elections and a new national government within eighteen months. The West thinks Assad must go to allow this to happen. Russia thinks the Syrian people should be able to decide between Assad and others, but may well privately have come to the same view that Assad has to  be replaced by a less contentious leader. Success is not going to be easy to achieve, but there will be even less chance if no-one tries.

 

Meanwhile I am pleased to see the UK is not undertaking many air strikes against Syria and seems not to have used the Brimstone missiles yet which we heard might be useful. I am glad they are taking care in identifying targets and seeking to avoid civilian casualties. There has been no early pre-emptive move against Raqqa.

As Daesh are a movement which does not recognise state frontiers, the Coalition forces being used against them in Iraq and Syria need to understand that Daesh now has an important stronghold in Libya. It would not improve western security if military action flushed Daesh terrorists out of Raqqa or elsewhere in Syria/Iraq only for them to turn up in  Libya that much nearer to ourselves.

Progress was also claimed in seeking to create a single legitimate government in Libya to replace the competition between two  Assemblies and various military bands. That would also be welcome. The West should not rush to give military aid to any such new government in Libya until it can see that such a government does have decent popular support, and is well enough established. The West should not allow its military resources to be used by one faction amongst many in these civil wars. Only if and when there is a government of Libya with reasonable traction over most of their country should the West consider any request for military assistance.

In political parties backbench MPs and members of the party are usually free to criticise the leadership if they wish, to seek change to policies and to ask for changes at the top. I find it disappointing if not surprising that Mr Farage has reacted so angrily to Mr Carswell’s question as to whether UKIP now needs new leadership with a different approach to its policies and its message.

Mr Carswell is still the only person to have managed to win a Westminster seat in UKIP colours at a General election. It is true he had previously won the seat as a Conservative, and only won again in 2015 for UKIP with a reduced majority. He has, however, both won a by election and a General election for UKIP in a single seat, something which has always eluded Mr Farage. Maybe Mr Farage could learn from Mr Carswell’s different language and approach to politics. If UKIP are sensible  they will not seek to embarrass their only MP through some public denunciation, and will instead invite him into private talks about the direction of their  party.

The crucial task now for UKIP must be to put much else  aside and to help win the referendum for Leave, as that presumably remains their prime reason for existing. For the Out campaign to win, we first need to understand the numbers. Let us begin with current national polling intentions (average of recent polls):

Conservative  39%

Labour   33%

UKIP  12%

Liberal Democrat  7%

 

To win the referendum we need at least 51% of the vote. We should be able to assume that all UKIP voters will vote for Leave. It would  be odd indeed to be a keen supporter of UKIP but not to believe in their central proposition. A majority of Conservatives wish to leave. We need to get the proportion up to 70%, which is roughly  the proportion of Conservative members who wish to leave. Labour is a pro Stay in party, but we should be able to call on at least one quarter of Labour voters, as there is a long standing left of centre anti EU tradition as well. Labour voters do not want the EU’s trade treaty provisions with US corporates and are worried about the influence of big business on EU policy generally. We would then need to pick up 5% from the rest:

Contributions to Leave vote

 

Conservative 51%

UKIP  24%

Labour 16%

Others  9%

 

Possible sources of votes in the overall referendum to win for Leave

Conservative   26%

UKIP        12%

Labour      8%

Others     5%

 

Total  51%

These figures remind us it could be a tight result. It should also warn us that crucial to winning will be reassuring Labour and other voters that voting to leave is safe and sensible, restoring our democracy and returning more of our money to spend as we see fit. That’s why we  now need messages which unite our side, and bring more people to agree with us. The uniting message must be to restore control, to bring back our democracy. There is no point and considerable danger in trying to push out an ever narrower and more sceptic message to the faithful, when we need to win over the waverers.

 

The issue of migration will not go away. Some good questions have recently been asked about the large number of National Insurance Numbers issued to EU arrivals in the last four years, and whether this tallies with the smaller numbers of migrants acknowledged in the workforce. Have a large number come and gone?

The ONS has sought to give us some guidance about the longer term trends. They estimate that the population of 64.6 million in 2014 will grow to 69 million by mid 2024. They think a little over half the growth will come from new migrants. They also expect the newer migrants to boost the birth rate, adding to the natural growth of the population. The ONS is saying that migration will run at an additional 250,000 people a year. This is a drop on the current level, but well above the government’s target rate of under 100,000. Maybe Ministers should ask the ONS why they think the government will fail to limit migration as promised and learn from the ONS about the reasons why migration is still so high. For its part the ONS has to explain why it has been understating the recent rate of increase in its forecast.

It seems likely that the UK will continue to attract substantial numbers of new arrivals, all the time the economy is flexible and growing. The lure of the large number of new jobs the UK creates compared to the stubbornly high unemployment of much of the Eurozone will prove strong, both to the Europeans and to travellers coming through the EU from elsewhere.

Mr Cameron’s renegotiation has as its fourth aim controlling immigration from the rest of the EU. He has stated the need to cut the numbers of people coming into the country pointing out the strains it creates on NHS provision, housing and school places. He wishes to crack down on the abuses of free movement, allowing easier removal of foreign criminals and tightening rules on EU migrants bringing in non EU fiancées.
He seeks a four year ban on EU migrants receiving benefits or having access to social housing.

It is difficult to see how if he were granted all of this it would cut migration back enough to reach the promised levels. Many would still want to come for the jobs and better wages than in their own country. This pressure will be increased by the payment of the living wage. Meanwhile there remain disagreements between the UK and the rest. Most other EU countries wish to preserve freedom of movement, and wish to avoid discriminations between nationals and the citizens of other EU states.

Mr Cameron may end up with compromise which forces the UK to amend its benefit rules to comply. It is possible, for example, that a contribution driven system would be allowed and would keep recent arrivals out of claiming entitlements. The problem with this is could the UK find a way of entitling UK residents, without it being based on their nationality?

Red Riding Hood – a very modern fairy tale of life in the European woods

Once upon a time a lady called Britannia was taking food to her grandmother Anglia at her cottage in the middle of the wild woods. Britannia was a very grown woman, but she liked to be known by her childhood nickname, Red Riding Hood, based on the old fairy story of the same title. Because she was no longer a child, she dropped the “Little”, though she secretly hoped sticking to the nickname would conjure an image of her with eternal youth.

On the way to the cottage she became increasingly aware of some man stalking her. She thought she could see him through the trees, but as she turned he vanished behind the foliage. When she did see him he was quite pleasing on the eye, so she showed him a friendly face. He came out of the dense vegetation to talk to her.

It soon appeared that he was a handsome fellow. Dressed in a well fitting Italian suit, which showed off his trim form to good effect, he had obvious Gallic charm. As the conversation developed it appeared he had a well paid job in Germany which in some ways sounded even better. He said he was called Mr European Economic Community which sounded a bit of a mouthful. Recognising this he said call him Common for short, as apparently his English nickname was Common market. Common said he was having a get together with some of his continental friends, and they were now all in some kind of club. Wouldn’t Britannia like to join them?

Britannia had had an unhappy life with foreign men in the past. Years ago there had been an abusive relationship with Rome which had ended in divorce and in a fight with a Spaniard called Phillip. Then there had been a bust up with a very aggressive Frenchman called Napoleon. Perhaps worst of all had been the rows with a German called Adolf, even though she had first tried to keep out of his way when she saw him bullying others. She reminded Common of this and said she didn’t want anything more than a few club nights trading together. There was to be no moving into a common European home, or trying to share bank accounts. Common said he fully understood, that was all they had in mind at the moment. She wouldn’t have to do anything she didn’t want to do. She could always so No to what the more raucous members of the club might get up to later.

Britannia signed up. It mainly seemed to go alright at the beginning, though soon she realised she had signed away her fishing rights and her food seemed to get dearer. Worse still when the bills came in for the common market she said she wanted, it seemed to cost her a lot more than it cost them, so she was always in deficit. Common might have a well paid German job, but none of the money came her way. He kept selling, not buying, which was how he stayed rich. She had a temporary spasm that maybe she should leave the club quite early on, so they did improve the terms a little and she stayed.

After a few more years it became obvious to her that not only did she always seem to owe them more than they bought from her, but the club subscription they had imposed was also very big. So she complained, and sure enough she got a rebate. So she soldiered on.

A few years later all the other members of the club led by Common and by his German friends recommended that they change things quite a lot. Common altered his name by deed to Mr European Union, and said he was happy to be known by his new nickname, Euro. They set out a range of new agreements saying that it was no longer just a trading club to buy and sell things, but a much wider club covering all the main features of their lives. They started to share a bank account, share a common home, share their energy, have the same views about foreigners and decide for each other how much they could spend and earn.

Britannia kept saying she had not agreed to any of this. She dug in when it came to the bank accounts, and kept her own.

Then one day when she arrived at her grandmother’s house as she always did to take her some of the dear EU food she thought there was something strange about her grandmother in bed. Her grandmother was telling her that it was now time for her to share her home with Mr EU. She said it obviously made sense to have the same bank account, to pool all the expenses, and to be guided in how to live by Mr EU and his very clever German friends.

It didn’t take Red Riding long to work out that Mr EU had commandeered her grandmother’s house and was planning to run her home and life as well. It was Mr EU in bed dressed very unconvincingly as Grandmother. Mr EU tried to reassure her. He told it was all inevitable. It was all going to be fine. She could have a bit longer before they shared a bank account and a bed if she liked. He realised it was all a bit of a shock, but it would be so much better for both of them. He had transferred Grandmother for her own sake, as she wasn’t safe in the cottage anymore.

When Britannia didn’t agree to his wishes he started to threaten her, in a gentle sort of way. He told her they could make it tough for her. All that trade she wanted might not be so easy to come by. When she retorted that she always seemed to be paying out for the trade and there lots of other places she could trade with, Mr EU seemed to change and became very cross.

Mr EU told her that her half sister Caledonia was on his side. Did she not realise she might become a real handful if Britannia didn’t behave and go along with Mr EU? Britannia was not inclined to believe him about this, as she had just had a long argument with Caledonia who had finally agreed to stick with the rest of the family, though she did know there could be a strong minded side to her half sister’s views.

So what did Britannia do next?

There are two variations on how this fairy story ended. Some say Britannia turned the tables on Mr EU, stormed out of the house, and lived happily ever after without him. Others say she timorously gave in, became his ward, and was made to work ever harder to meet his demands in their common European home. I am leaving it to you to make the choice. That’s the way modern fairy tales work. I know I prefer the happier ending.

The government has put the finances of the Union and of local government into play. It is time to think of how they can be remodelled in line with the promises made. It is also time to think of England.

The government has pledged to Scotland the right to collect and spend its own Income tax along with its property tax, Air Passenger duty  and a portion of its VAT revenues. Northern Ireland now has control of its own Corporation Tax and is cutting the rate. English local government is being offered control of its own business rates.

None of this is easy to mix into the present complex arrangements for transferring large sums  of money from the richer to the poorer parts of the country, whilst assuring common levels of service and benefit payments around the Union. It starts to undermine the proposition that most  tax revenue wherever collected  is a national resource, to be allocated according to need. As the government allows Scotland to collect and spend much more of its own revenue it will have to reduce the block grant it normally pays to allow for the extra revenues. It needs a system of adjustment which leaves Scotland with an incentive to grow its revenues, and with some risks to spending if it misjudges the level of tax the Scottish economy can withstand. After the adjustments Scotland will still be part of the UK and will expect some underlying insurance to its revenues from the rest of the Union. The rest of the UK will expect Scotland to take some of the risks once it is responsible for more of the revenues. The government’s illustrative projections stress the mechanism has not yet been finalised. Scotland needs to benefit from changes of tax policy which produced more revenue, and to have less to spend if they chose to collect less. The aim is not, however, to make Scotland worse off than the current settlement by withdrawing a disproportionate amount of UK grant.

So what of England? Once again England misses out on the devolution that Scotland will enjoy. English MPs need to be a collective voice for England, so that we do not end up with a situation where Scotland enjoys the benefits of any extra revenue it raises, but is insured against all revenue loss by the taxpayers of England. More independence must mean some loosening of the financial guarantee.

The English business rate also poses big problems over transfers. Not even the most optimistic Council supporter thinks each Council can collect and spend all its business rates. The City of London Corporation would have a huge endowment of income which would far exceed what it wishes to  spend on its limited number of inhabitants. Councils outside London and the South East would not be willing to cut their services to the level that their business rate revenue allowed. There will have to be some new system of removing some business rate from the places and areas with substantial business  rate income and sending the money under a formula to the areas not so endowed.

One of the binding ties of the Union is the pooling of revenues and the pattern of spending based on need. It is the UK’s unwillingness to enter similar arrangements with the rest of the EU that lies behind our wise judgement to stay out of the Euro. We now have to answer some difficult questions nearer to home. In  the sterling union how much money do we need to continue to transfer from rich to poor? How far can we go in rowing back from pooled revenues?  The more each part of our Union looks at its own revenue, the more there is likely to be argument between the different countries of the UK over the fairness and balance of spending and revenue.