Speaking for England

Productivity is an ugly sounding word from economics. Some are worried by it as they fear it means job losses, restructurings, making people work harder. Curiously enough it is a word which apparently unites the warring political parties. They all claim to want higher productivity. Some even understand that increased productivity is the key to higher real pay and better living standards. If business can produce more with less,  prices can be lower or specifications and quality higher, and we can afford to buy more or better.

Agreeing to support the general cause is as good as it gets. As we discovered again on Tuesday in the Finance Bill debate, productivity is also a word which divides, as different parties have different views of what you need to do to raise productivity, and where you might apply the policy.

I detected once again a distinct unease by Labour to discuss public sector productivity, for example. This is odd, given that Ministers- and indirectly MPs – have much more influence over how the public sector is financed and managed than we do over the private sector. I pointed out that during the long Labour years 1997-2010 there were no overall productivity gains in the main public services, at a time when private sector productivity was advancing moderately every year.It would be good to know from them why that was, and what they learned from the experience of presiding over a large sector with no clear gains.

The public sector has struggled with the digital revolution more than the private. The application of computer technology and robotics to business is transforming many areas of our lives. The UK public sector still does not have proper computerised records and controls in the NHS, tax has not yet gone fully digital and robotics are not much deployed.

The public sector has had access to substantial sums of capital to transform the way it does things, but has also had a disappointing record at implementing change through large computer programmes.

Today the pound got back to $1.36, a fraction off the pre referendum low earlier in 2016.

This follows hints that the Bank might put interest rates back up to 0.5% where they were before the vote. Given the wish to blame everything on Brexit maybe we shoukd say thanks to Brexit the pound has soared in recent weeks.

The decision of the UK to guarantee it would spend 0.7% of its National Income every year on Overseas Aid has been contentious. Some dislike the idea of committing to spend without assessing need and capacity to spend wisely. Some dislike the way the UK is one of the few countries to honour this international obligation whilst rich countries like Germany (0.5%), Italy (0.2%) and France (0.37%) do not bother. Some just think we have more pressing priorities at home and should confine overseas aid spending to crises and humanitarian disasters.

Most people in the UK probably agree with  the government -as I do – that  the UK should send immediate relief to British territories in the Caribbean to provide food, shelter, clothing, and medical assistance to those caught up in the disaster. Most probably also think the UK should help those countries rebuild their shattered towns and homes by offering practical and financial help. Surely this would be a cause for overseas aid that would unite more people than it would divide? What better use of part of our large overseas aid budget?

However, the spending of overseas aid is subject to rules and guidance from an international body. Apparently the Caribbean islands concerned did not have a low enough national income when the hurricane struck to qualify for overseas aid. I fear the hurricane has taken care of this in the short term, but international accounting definitions and data seem to be getting in the way of commonsense. I hope our Overseas Aid Secretary gets them to think again. I would like us to be generous to help these islands, and think it should be paid for out of our substantial Overseas Aid budget.

I expect the government to lobby for a change of definitions. As one of the few countries that hits the international target we should have some leverage on this matter.

While we are about it, they also need to review definitions of which military expenditure counts as Overseas Aid. When we commit our forces to peace keeping or peace making in a civil war torn country, that too should count. Peace keeping is often a crucial step to restoring or crating prosperity in a poor country. Without a peace businesses cannot flourish and people find it difficult to go about earning their living.

Mr Juncker’s speech yesterday about the state of his Union contains few surprises. He confirms that “the Euro is meant to be the single currency of the Union as a whole” and sets out a way to make it so. He reasserts the primacy of all EU law and of the European Court of Justice. He wants more majority voting to settle issues. He proposes a European Minister of Economy and Finance. The European Parliament should become the Parliament of the Euro. He wants a “fully fledged European defence union”. When I and others foretold this by quoting EU statements and websites before the referendum we were often told by Remain spokesmen that none of this was true. They thought it was still just primarily a single market.

What was more interesting in Mr Juncker’s speech was what he left out. He left out the UK altogether, save for one expression of regret towards the end. He referred throughout to the 27 members of the EU as if the UK had already left. I thought we had to stay in until March 2019, and thought we were still the second largest contributor to his salary and all the other costs of the organisation. I can forgive him misusing tenses and looking to the future without us. I cannot excuse him from issuing a new policy of the state of the Union without discussing the loss of a major member and setting out what future relationship he would like with that country. He might have given some indication of how they intend to shape their budgets without us, just as he clearly is impatient to consolidate Euro government into EU government once the main non Euro country leaves.

More bizarre still was his treatment of the topic of trade. He sets out a policy for the EU to negotiate and sign more Trade treaties in the future than they have managed in the past, yet manages to say nothing about whether that includes a Treaty with the UK! If we are to take his new Union enthusiasm for free trade seriously surely he will want to accept the UK offer of a comprehensive zero tariff low barriers trade Agreement with what is the EU’s single most lucrative and important export market. Instead he holds out the prospect of doing trade deals with New Zealand and Australia, knowing that they are keen to do deals with the UK as we exit the EU

Mr Juncker may also be personally ambitious. He proposes merging two of the 3 EU/Euro Presidents by offering to amalgamate his role as President of the Commission with the role of President of the Council. Step by step the EU is edging towards the idea of a single President with a world profile. As a reminder that Germany still retains disproportionate influence, he grants Mrs Merkel’s wish that they will not proceed with Turkish membership after all. It was not so long ago they signed a comprehensive Partnership Agreement, opened their borders to Turkey and looked as if they were speeding up preparations for membership.

Lord Bridges, the Minister in the Lords who recently resigned from the Brexit Department, advises us we should offer continuing contributions to the EU for a transitional period. He tells us Brexit is very complicated.

There is nothing complicated about what we are doing. We had a long debate. The public decided to leave. We notified the EU or our intention to leave in accordance with the Treaty, and we will leave on March 29 2019 automatically under the rules of the Treaty. All that is easy. One of the main things we need to do is to spend our current EU contributions on our priorities from March 2019.

We are willing to discuss our future relationship with the EU and await their pleasure in doing so. If they do not want to agree a special relationship then we will have a relationship with them based on international law and World Trade rules. We wish to be friendly and positive about our future relationship and have no plans to cancel features of our current trade and collaboration. We are not proposing to take any action to damage their trade or transport links with us. After all the arguments and rhetoric we have no idea if they do want to damage their trade with us, which they can only do within WTO rules. The EU itself has to abide by the strong and complex framework of international law designed to stop states harming each other.

It was amusing to read yesterday morning that the UK has emerged as the second most influential country in the world after the USA in some new assessment of power, influence and diplomatic success in the year after Brexit. This position can be strengthened if the UK sees through Brexit in a positive and outward looking way.

UK voters who voted for Brexit had confidence in our ability govern ourselves, to spend our money on our own priorities and to make our own way in a world where power and economic might is shifting to the Pacific regions.

Now many Remain voters also agree that we should get on with implementing the decision. The fears about the short term economic consequences put round by the Remain campaign have been proved comprehensively wrong.

The oddity is how negative so many in the UK establishment are. It is senior lawyers, large company executives, senior civil servants and some MPs who are the ones who refuse to take back control and have such a low opinion of our country and its capabilities.

Some senior officials seem to want to stay wedded to Brussels instructions instead of fashioning a new global presence and UK policy. Trade associations that have spent the last forty years trying to stop or amend EU regulations now often want to protect every last one and sign up to all future ones as well. When MPs and MInisters urge the UK machine to develop the capacity it needs to develop new UK solutions there is often a reluctance to welcome the freedoms we will soon enjoy fully.

The UK has much to offer the world. We wish to remain a reliable ally and partner of the EU, but can see ways to improve and amend our government for the conditions of the modern world. It makes it strange to see so many of the establishment huddled in the EU legal cell, the door now wide open, asking to be shut in again as they think the world too big and interesting for them. They should take heart from this latest survey, and ask themselves how we can we do more to enhance the lives of UK citizens and to contribute more to the exciting growing world as a whole.

The twelve month CPIH, the government’s preferred inflation measure, rose 2.7% in the year to August 2017. “The largest contribution to the 12 month rate is housing….electricity prices and Council tax” (0.6%) followed by transport at 0.4%. In the latest month clothing prices have risen. The narrower CPI rose 2.9%.

Overall shop prices were down 0.3% in the year to August, showing that competition kept prices down, and the currency effect on import prices was not as many forecast.

I am not going to claim the pound has risen in recent months against the dollar because of Brexit. It is up by 10% from the lows. I am sure anti Brexit commentators would have been full of how it was a result of Brexit if we had fallen against the dollar. Recent events remind us that the main forces shaping leading currencies have nothing to do with our vote. Sterling often sits somewhere between the Euro and the dollar, reflecting our substantial trade with both sides of the Atlantic, and our monetary policy which is also currently mid way between the two. We are witnessing a big move in the value of the Euro relative to the dollar.

So why is the dollar falling and the Euro rising? The Euro is strengthening because markets think the European Central Bank next year will have to tighten monetary policy and stop buying up so many bonds with created money. Meanwhile markets have revised their view of how quickly the US will move up interest rates, presently concluding no further increase is likely this year. There are spare places to fill on the Fed’s Policy Committee, where Mr Trump is likely to push for more dovish participants. Meanwhile Mr Draghi at the ECB is under German pressure to reduce the stimulus that Bank is pumping into the Euro area economy.

The Japanese authorities are still trying to keep their currency down. They plan to carry on with a large programme of money creation and have pledged to keep their ten year borrowing rate at zero, which makes it cheap for the state to spend more than it raises in taxes. The pound fell against the yen after the vote and has now risen back almost to where it was before. It is up from an October low of 126 yen to £1 to 143 yen.

So out of the big four reserve currencies used as SDRs, the dollar is the weakest and the Euro the strongest for the time being. Sterling and the yen lie in between, with sterling the recent stronger of the two. The recent move will help US and UK exporters to the EU, and hit EU exporters to the US. Mr Trump is having his way so far in the currency market, as he wanted a weaker dollar after a long period of dollar strength. Mr Draghi at the ECB has a new dilemma thanks to these changes. He does not want a stronger Euro as he is still trying to boost both inflation and output. A stronger Euro limits price rises and makes exporting more difficult.

The EU claims it bases its foreign policy on the wish to promote democracy and the freedoms of countries and people living near it. If they mean this it should be good news for us as one of their neighbours.Under the Treaties the EU is required to be both friendly and to promote trade with neighbours.

They pursue something called a European Neighbourhood policy towards the countries to the east of the EU, and the Middle Eastern countries to the south. For these groups of states they encourage political association, economic integration and increased mobility of people. The Eastern Partnership of the EU with Moldava, Ukraine, Armenia, Belarus, Azerbaijan and Georgia has proved fraught. Russia is worried by aspects of it, and the EU’s intervention in Ukraine has not proved well judged.

To the south the EU intervenes in Syria and Libya, both troubled countries. It seeks peace between Israel and Palestine based on a two state solution. It is concerned about the Iranian nuclear programme.

The EU sees itself as giant as it has a large collective economy, but it is not of course a military giant. It has two battle groups available to intervene on a small scale when it wishes, but relies for its bigger force on contributions from member states. In practice the EU cannot defend itself against a serious enemy without NATO support and the security guarantee provided by the USA.

So far EU foreign policy has not been successful in either the east of our continent nor to the south in the Middle East. The EU borders some very troubled states. Its proximity to Turkey and the Association Agreement it signed with Turkey has also caused difficulties, leading to Mrs Merkel’s recent harsh words about Turkey. She is now seeking to stop Turkey’s application for EU membership proceeding, after years of the EU encouraging Turkey and signing an Agreement for close relations.

In the synthetic debate about so called Henry VIII clauses in the EU Withdrawal Bill all seem agreed that Henry was a tyrant who ruled without reference to Parliament. Ignorance of history is clearly one of the pre requisites for the opposition to implementing the referendum. Whilst Henry during his reign did make decisions using royal prerogative that we would find unacceptable today, what is remarkable about his decision to reduce and then remove the power of Pope over English taxpayers and churchgoers was how he preceded at every step by Act of Parliament. He escalated the conflict when the Pope did not respond to the opening pressures, designed to allow England to stay in the Catholic Church whilst securing some independence for the secular government. It was a failed lengthy negotiation leading to schism.

Wanting Rome to consent to his divorce, he widened the disagreement by bringing in issues over dealing with the crimes of the clergy and having to pay taxes to Rome. Public opinion was ready to submit clerics to the same criminal law as everyone else, and willing to send less tax to the Papal see. To bring this about MPs sympathetic to the King proposed and promoted the 1529 Act to remove legal privileges of the clergy, the 1532 First Act of Annates to reduce the annates tax to the Curia, the 1533 Act in restraint of appeals to cancel the power of the Roman court over English courts, the 1534 Act concerning Peters pence to cancel another Papal tax and finally the 1534 Act of Supremacy to create the King as Head of the Church in England.

Today we are proceeding also by a series of Acts of Parliament for the things that matter and where we wish to change current practice and EU law. The EU Withdrawal Bill or continuity bill, will be followed by primary legislation on customs, trade, fishing and farming, and migration. The secondary legislation will not take the form of royal proclamations by-passing Parliament, but will be Parliamentary regulations subject to debate and vote where Parliament wants that.