Author: johnredwood

The Euro is a political project. It may masquerade as a high design created by independent and talented experts, but in the end it will be judged by unruly electorates by whether it helps make them more prosperous or not. The problem for the ECB and the other custodians of the Euro flame is how to reconcile the wishes and needs of the debtor nations with the wishes and needs of the richer surplus countries within the zone. If they get this balance wrong, or fail to meet enough of the legitimate and often conflicting wishes of the two groups, the scheme will perish by the votes of countries driven to elect non believing governments keen to push the Euro too far or even wanting out.

The other way the Euro could be lost is technical incompetence by the governing class. They demonstrated this in 2011 when the Euro was beset by a rolling crisis, as country after country amongst the financially weaker nations experienced large sell offs in their state debt markets, leading to a crisis in how to finance government in these territories.It was demonstrated again when the Cypriot banks got into trouble, and the Euro architects decided not to stand behind the Cyprus Euro or Cyprus banks within the system. They weathered both these crises by compromise and by diluting the pure doctrine of each state and bank having to run itself prudently so it does not strain the system.

The creation of E1.08 trillion will ease some of the tensions within the financial system. There is insufficient money and credit in circulation in several of the weaker states. That is thanks to the need for public and private sector austerity at the same time. The states have been spending too much and have to cut their budgets to cut their deficits, at the same time as the ECB is reining in their commercial banks, cutting private sector credit. The result is mass unemployment and long recessions in the worst affected countries. Printing money and trying to get some of it into these states will be a modest offset to the crunch created by the austerity policies. I have likened it before to the ECB and EU authorities driving the economies of Greece and Italy with the foot firmly on the brake – they are now pressing the other foot on the money accelerator.

The problem comes for them with the politics. The easing may not be enough to transform the economic prospects of the struggling small businesses and the unemployed of Greece or Italy or Portugal. It is quite enough to alarm a lot of Germans. Whilst the ECB claims they have avoided putting German taxes behind most of their interventions, time will tell if that is true. It is likely to mean court case challenges to the actions of the ECB. The main winners of all this are likely to be the lawyers. This action is sufficient to keep the Euro going, but not early enough clarity or action to solve the underlying structural problems of the Euro. It is only when the full weight of German taxes and revenues is put behind the currency and used in the poorer areas that it can start to work properly.

This week there was a final round of consultations of Conservative MPs by William Hague in order to make decisions on the implementation of the recent White Paper on English votes for English issues.

It is clear that the Conservative leadership now agree that we do not want a narrow English votes for English laws but the wider English votes for English issues. The question, for example, of how the English local government grant monies voted by the Union Parliament are divided up between the various English Councils should be a matter for English MPs alone, as the Scottish Parliament and Welsh Assembly make the comparable decisions in their parts of the UK. England’s rate of Income Tax should not be voted on by Scottish MPs as Scotland will choose her own Income Tax rate.

The leadership also seems to agree that the obvious way to bring about English votes for English issues quickly and simply is to amend the Standing Orders of the House. Most Conservatives wish the House to have an early opportunity to debate and vote on this matter.

The leadership also seems to agree that the second of their three options, the weakest version of English votes for English issues, is not the one to adopt.

The remaining question lies between Option One, straightforward English votes for all English issues, and Option 3 which introduced an English veto on Bills prior to third reading, along with other measures. I favour the simple and general English votes for English issues, and hope they will conclude in favour of that one. It is the one that seems closest to the Prime Minister’s promises in the Downing Street speech, and to past Manifesto wording.

On Monday at lunch time I joined an invited audience in the Speaker’s House in the Commons to debate democracy for the BBC. They filmed and recorded 90 minutes of debate.

They invited an American Professor to lead the discussion. He was intelligent and articulate but not grounded in the realities of UK democracy. His starting issue was John Stuart Mill’s idea that well educated people should have more votes than anyone else. This out of date and unpopular idea was never going to fly, but he was determined to find someone in the audience who would argue for it, for no obvious reason. We wasted the opening minutes on an anachronism.

I was not allowed to comment throughout most of the programme despite trying to do so. I listened patiently to a long debate about proportional representation and new systems of voting. Some there seemed to think this would solve the problem of the disjunction between many voters and current politics. The Professor seemed in BBC style to encourage this viewpoint, and he had himself introduced the topic as his second important issue. He did not of course point out we have recently had a national debate about this and voted against a change in voting system. Nor did he or anyone allowed to speak on this topic point out that where different voting systems have been adopted – for EU and devolved Parliament elections – it has not resolved the problem of the gap between voters and politicians.

When I was finally allowed to speak at the very end of the session I made two big points. The UK debate about accountability, relevance and the relationship between electors and elected is dominated today by the questions of who is the demos and what powers remain for the government? The Professor had not mentioned or called anyone else likely to mention the words European Union or devolved governments. You cannot today talk about democracy in the UK unless you examine the transfer of substantial powers to the EU and ask what that has done to democratic accountability. Nor can you understand UK democracy without examining the relative and changing roles of the Scottish Parliament, the Northern Irish and Welsh Assemblies and the Westminster Parliament.

The rule of law and habeas corpus democracy is 800 years old this year, and the English Parliament at least 750 years old. On these large anniversaries we need to ask ourselves the fundamental question, is our democratic inheritance compatible with our current terms of EU membership? What do we do about all those laws and decisions that are made by the EU, which we cannot change if we change the MPs and government in the next Parliament? Those self same laws cannot be changed by our MEPs either. When if ever will there be an EU demos? And do we want to be part of it?

Maybe it was accident that these matters did not get discussed. Maybe it was by design. Maybe next time the BBC could ask one of us UK acadmeics and political thinkers to lead the discussion, or at least to be allowed to point out what the real UK issues are today. They are certainly not the question of giving educated people more votes. They include do we get a vote at all to influence the European laws that rule us? And does England get a vote to decide its issues?

In today’s debate on the NHS in Parliament I asked Labour why they only wish to talk about England’s NHS when we are in the run up to a UK election, and why they do not explain the poorer performance of the Welsh NHS over waiting times and A and E. The following figures illustrate the differences:

Waiting times
To start treatment Wales 13.7 per cent of patients waiting more than 26 weeks.[1]
England 12.5 per cent of patients waiting more than 18 weeks.[2]
A&E Wales 19.0 per cent of patients waiting more than 4 hours in December 2014[3] England 10.2 per cent of patients waiting more than 4 hours.[4]
Diagnostic and therapy services
Wales 31.0 per cent of diagnostic patients were waiting more than 8 weeks.[8] England 1.2 per cent of diagnostic patients were waiting 6 weeks or longer at the end of November.[9]

Ambulance Responses (category A calls)
Wales 56.9 per cent of ambulances arrived at the scene within 8 minutes.[10] England 71.8 per cent of Red 1 & 68.4 per cent of Red 2 ambulances arrived on the scene within 8 minutes.[11]

There is a big battle going on over the future of the Euro. If the easy money people win, the issue is will Germany stand behind all those bonds the ECB buys up? Will German taxpayers after all be expected to stand behind Greek and Spanish banks if they get into trouble? Will the Euro architects find a way of allowing newly created Euros to find their way, if indirectly – into financing the deficits of less fiscally prudent countries within the zone?

Indeed, the question is how can Germany avoid being dragged in to Quantitative easing if the zone as a whole decides on that route? By virtue of being the largest shareholder in the ECB, Germany will become the proud part owner of a wide range of government bonds from other countries in the zone as the ECB seeks to do what the Fed, Bank of Japan and the Bank of England have already done. If those bonds subsequently lose money, Germany surely loses as well.

Some say they have found a way round this dilemma. Why not, they say, empower the individual national central banks of the zone to simply buy up their own government debt, and to take the losses if losses there subsequently are. However, the individual central banks do not have the power to create euros. So presumably they will have to borrow the euros from the ECB to buy these bonds. What if they get into trouble? How do they repay the ECB? Surely there has to be recourse by the national central banks to the ECB, so in the end Germany will be pushed into supporting the whole edifice.

There is also the little problem of the Swiss franc. When the Swiss authorities wisely decided to quit their link to the Euro, their currency shot up. Markets revealed just how depressed the Swiss unit was by its forced association with the Euro. Imagine what the value of the DM would now be against the Euro if Germany had done what Switzerland did, and declined to actually join the Euro.

The Swiss event and the agony of QE reveal the continuing strains of the Euro project. If it is to work in the longer term Germany has to put her tax revenue and banking system behind it. She is still reluctant to do so. It is a bit like London refusing to stand behind the rest of the UK – an absurd idea which would damage the pound greatly if anyone tried it.

750 years ago today England made an important democratic advance. The so called De Montfort Parliament met at Westminster. It was not the first Parliament, and it was the idea of a rebel government that had outmanoeuvred the King. They invited two knights from each shire and two burgesses from each important town, as well as nobles.

This was far from the first time powerful people in the land had instituted formal discussions with the King, the executive government. After all, on June 15th we will celebrate 800 years since Magna Carta. That too was a negotiation between Crown and powerful forces in the country. That established the idea of more meetings between Crown and barons to keep the King honest and to ensure follow up to promises. Subsequently Parliaments of varying composition had been called.

The central underpinning of this proto democracy was a simple one. Those who paid tax and offered allegiance to the King, should be able to seek redress of their grievances before granting more money. They should look to the Crown to offer impartial and fair justice for all, so disputes could be sorted out and criminal conduct dealt with in an independent and acceptable way.

Parliament grew from these origins. There was a strand of work gradually widening the franchise, until all adults came to enjoy the vote. There was another strand of political action, tightening the grip of Parliament over taxation, so monarchs first had to deal with Parliament to get supply, and then became figureheads as Parliament took over the administration of the executive and its budgets.

This impressive story of the growth of democracy was interrupted by our membership of the European Economic Community. It is still causing troubles, as there is no proper redress of our grievances with the EU before they take our tax revenue. There is no easy way of removing the EU government if it no longer pleases us the voters. That is why we need to have a constitutional debate about our relationship with the EU, and need to sort it out. This year of anniversaries reminds us of how precious our early development of freedom under the law, habeas corpus and Parliamentary representation was. It also reminds us how it has been damaged by EU administration and jurisprudence.