Building bridges to the USA

This week the UK welcomes the President of the USA. Let me risk criticism by saying I wish this to be a successful visit, stressing the things the USA and UK can do together to make the world a better place. As good hosts we should not be in the business of taking public political shots at the President or stressing the things some in the UK do not like about his stance. In private of course the government can make representations where it disagrees.

There are many areas where we can and should make common cause. Both the USA and the UK believe in NATO, and believe that to be a fair and strong alliance all its partner states should spend a minimum of 2% of GDP on their contribution to the mutual assurance. As one of the few members who does so we should help the President make the case with other members, and should show we are determined to increase our spending to be a decent ally and helpful partner.

President Trump thinks President Obama was wrong to tell the UK that we would be at the back of the queue for a trade deal. He is willing to get on with one. The UK should respond positively and progress the talks. It would be good to have an Agreement ready for ratification as soon as the UK leaves the EU.

The President is a big advocate of lower taxes. His dramatic tax reform is boosting the US economy. US companies are busily repatriating profits and spending more money on wages, investment and dividends. US families have more money to spend thanks to the income tax cuts. The UK should congratulate the President on his success with this, and should add income tax reductions to the corporation tax cuts we have carried out.

The President has published a study which finds that some Chinese companies steal or obtain western ideas on the cheap. He is trying to get improved conduct from China. There are UK companies who have experienced Intellectual Property difficulties with their own brands and products. The UK should share its knowledge of this with the USA and discuss what might be a good agreement with China to improve the position. The Chinese authorities have themselves said they oppose IP abuse.

The President is pushing both China and the EU for lower tariffs, better market access and “fairer trade”. Where the demand is for a lower tariff or for easier market access, the UK can be sympathetic. Clearly we do not support the unilateral imposition of tariffs to try to force the pace of change, and wish to avert a trade war. This week is a chance to influence the President by offering positive ways that we can help get Chinese and EU barriers to trade down.

I suggest we keep off the topic of walls. The EU has helped financed a long border defence for Turkey, and has seen a number of border fences or walls spring up in recent years, so we are not in a strong moral position to lecture the USA on this sensitive subject. The UK herself wishes to tighten controls on migrant numbers.

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No deal is better than a bad deal

I returned after a busy day to see people deliberately misrepresenting my first sentence. I will repeat what I have always said and still believe:

No deal is better than a bad deal

Any deal we accept has to be better than No deal to make it worth accepting.

No deal means no payments of any money after March 2019
Freedom to undertake our own trade deals
Settling our own migration policy
Deciding our own laws

I think there are two main options open to the negotiating parties. One is the WTO so called No deal option. The other is a comprehensive free trade agreement for goods and services.

The latest UK government statement is going to be expanded in a White Paper to be published soon. I will comment on it when it is available. This will be the second such White Paper and will presumably make compromises and changes compared with the first.

It seems unlikely it will be accepted by the EU. It needs to avoid surrendering control of our money, borders and laws. I have also always said you do not have to pay to trade, so have never favoured offering the EU money by way of a withdrawal present. As nothing is agreed until all is agreed, the UK should make clear the money is not a firm promise.

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The Chequers statement

Any deal has to be better than No Deal to be worth accepting. No deal gives us all our money back and restores control over our laws, our borders and our trade policy.
We need to take back control of our laws, borders, money and trade policy.
It is unlikely the EU will accept the Chequers position and will demand more.
The EU has always made clear that customs union membership comes with freedom of movement and the supremacy of EU law, which is why I have three times helped vote down the idea of seeking to stay in the single market or customs union, in support of the government.
The red lines that we do not accept the jurisdiction of the ECJ, do not pay them more money, and have our own migration policy remain very important.

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The international rules based system

I hear a lot these days from people who say we need to defend the international rules based system. I thought it might be a good idea to see which rules people think are really important, and to check those who believe in the rules based system believe in it regardless of the decisions reached. May I suggest some good rules for the better conduct of open democracy?

1. Where a country holds a legal referendum which attracts a substantial turnout the government accepts the need to implement the wishes of the people, whether it was in favour of the result or not. If it does not wish to do this it should give power to a government that does.

2. Where a country or region within a Union or larger country has a strong body of opinion that wants to be independent, and evidence in elections that that body of opinion is prepared to vote accordingly, there should be a referendum on whether to create an independent country or not. The result should be binding. There should not normally be a repeat of such a vote for at least a generation, with all agreeing to accept the result.

3. Where a part of a country elects a large number of nationalists to elected bodies but is not granted a referendum, those elected should not be arrested for wishing to pursue an independence agenda by peaceful means.

4. Unelected international bodies have to respect the views of elected governments. They may of course insist that the government adheres to binding Treaty commitments made in the past by that country, or agree to arrangements for the country to leave the organisation if the disagreement persists. International law should not be used to prevent a fairly elected government pursuing a chosen course of policy which meets normal standards of behaviour towards others.

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Groundhog day again

So today, just for a change, the Cabinet discusses our possible future relationship with the EU. If they agree what they would like the EU will probably turn it down, as they have turned down most of the positive proposals the government has put forward so far. I have been urging the government to table a comprehensive free trade agreement with the EU and ask them to respond, as that offers a way through if the EU wants any deal.

If we just leave in March 2019 life will go on much as it did before. Planes will still fly into Heathrow from the continent. Just in time deliveries will still pass through our ports with electronic manifests and off site supervision as they do from non EU sources today. Germany will still be selling us plenty of cars, the Netherlands plenty of salads and vegetables, France plenty of cheese and wine. Most UK exports to the continent will flow tariff free under WTO tariff schedules, as there are no tariffs on services or goods like aerospace, and low ones on everything else apart from agriculture and cars. We and the EU will trade under the WTO’s Facilitation of Trade Agreement, which deals with non tariff barriers. Where tariffs go on the UK will expand domestic production to meet more of the home market demand and will have the opportunity to import more cheaply from outside the EU as it wishes. As we have a large trade deficit in cars and food with the EU they will lose more from tariffs, so it is in their interest to agree tariff free as we propose.

The UK economy will get an immediate boost from spending an extra £12bn a year on public services or through tax cuts as we will save the money as soon as we leave. We can rebuild our fishing industry once we control our own waters and fish stocks. We can put in place our own migration policy, that is fair between EU and non EU migrants.

Above all the UK will be a self governing democracy again. So will the Cabinet rise to the challenge? Wouldn’t it be good if they came out from their meeting with a range of plans to use the new freedoms, rights and cash leaving will bring. Brexit offers considerable scope to improve our lives and services here at home and to grow our economy faster.

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Let’s have a good water supply

I am disappointed but not surprised that a few warm days without rain and the water industry is already saying we need to be careful about use. Hosepipe bans are being introduced in some places.

This winter January, March and April all saw rainfall well above average. It was a wet and cold winter, with February and March well below average temperatures of the last 40 years. I remember urging the industry to collect enough of the large quantities of rainwater and snow melt that we experienced just in case we got a hot summer.

From the forecast and the temperatures so far this is not going to be re run of the very hot and dry 1976 nor of the even drier 1995. It is a bit more like a hot summer of yesteryear than some more recent overcast and cooler summers. We need to plan for these events, as they are well within our range of experience. Water is a glamorous growth product. As people get better off so they want to use more water to wash their cars, water their gardens, fill their children’s paddling pools and take more showers when it’s hot. As water is an entirely renewable resource, the industry needs to put in enough capacity to meet our needs. The industry needs to remember that in parts of the country like the south east the population is growing quickly, which means the need for more piped water.

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The Chequers meeting

There should be two options on the table for the discussions on Friday. There is the World Trade option, which does not require consent from the EU. This allows us to take back control of our laws, our money, our borders and our trade policy as promised on 29 March 2019. It avoids the uncertainty of a long transition and saves us a lot of money. I would advise that the extra £13bn of tax collected as tariffs on EU goods – prior to trade adjusting to more home production and non EU sourcing – should be given back to UK consumers as a tax cut.

Then there is the Free Trade Agreement option. This is much in the EU’s interest. If they thought it was a simple choice of a Free Trade Agreement or WTO, they would be likely to choose the Free Trade Agreement. Whether they do or not depends on how sensible they are, and on whether they believe we will otherwise simply leave with no agreement.

Under both these options the EU will try to argue it creates a border problem between Northern Ireland the Republic of Ireland. I do not see why it should do so. That complex border today works fine, even though it is a currency, Excise, VAT and people movement border. All the UK need say is it has no plans to put up watch towers or to delay trucks whilst they work out the VAT and customs dues. IT would then be up to the EU what it intends to do on its side of the border.

Some will seek to invent or reinvent some kind of Customs partnership or EEA membership as a third option. These variants fall foul of the PM’s promises to leave the single market and customs union, and delay or prevent taking back control of our laws, our trade policy, all our money and our borders. The PM was quite clear in the Commons on Monday that she does intend to take back control as required by the referendum vote. She was equally clear Northern Ireland leaves the EU in the same way as the rest of the UK does.

We are told to expect another White Paper on Brexit. The last one was clear and fairly detailed. It stated that “We will bring to an end the jurisdiction of the Court of Justice of the EU in the UK”. “We will design our immigration system to ensure that we are able to control the number of people who come here from the EU. In future the Free Movement Directive will no longer apply.” “The government is clear that no deal for the UK is better than a bad deal for the UK” The government should repeat those decisions.

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Reforming planning – a five year supply of land

The biggest planning issue that confronts my constituency of Wokingham is that surrounding the pace of housebuilding.

The government and planning system lay down that Wokingham Borough, not the same boundaries as my constituency, has to allow the construction of 900 new homes a year. To do this the Council needs to set out in a local plan where the homes should go, and has to grant sufficient planning permissions to allow this to happen. The government planning system requires a Council to make available a five years supply of residential plots. If the Council does not do this, there is every likelihood that additional planning permissions will be granted in the Council area on appeal by Planning Inpsectors. Failure by the Council to make 5 years available gives the Inspectors the right to override the Council’s local plan, and to grant additional permissions elsewhere.

Wokingham has granted 11,000 permissions for individual new homes that have not yet been built. Commonsense tells you that this means the Council has made available a 12 year supply of land for the 900 a year build rate. Until recently the planning establishment took the view that Wokingham had a supply lower than five years. They came to this conclusion from looking at the actual build rate achieved, rather than at the outstanding permissions. Developers were also suggesting they could not build and sell at the required rate from the four main areas for housing expansion in the local plan and reflected in the permissions granted.

It is possible for a developer to get substantial permissions granted on one site in a given district, to build out at a slow rate, and to gain planning permissions on appeal on other sites it has acquired in the same district. Or it may be that some other landowner benefits from the slow build rate. Sometimes it may be true that the developer cannot build and sell at a fast enough rate. Other times it could be gaming the system, deliberately going slow on an agreed site to win permission on a contested site.

I am currently in discussion with the government over how this system can be reformed. A local authority like Wokingham which is co-operating fully with the national policy aim of increasing housebuilding should not be undermined by grant of permissions on appeal elsewhere in its area outside the local plan. The whole point of a local plan is to set a sustainable pace of building, and to concentrate the development to make it easier to provide the additional roadspace, schools and health facilities a growing community needs. Such planning is more difficult and dearer if the Council loses control of where the bulk of the new homes will be.

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Reforming planning – 1 An underlying conflict

Post war planning controls were brought in to speed development, encourage the right type of development in the right places, and to protect the heritage and best parts of our landscape. Private interests owning land were to be more strongly controlled by government deciding how land can best be used. There were high hopes of a better world from the substantial increase in state control.
In practice the planning system has left many frustrated by its high costs, delays and complications. The truth is there is no easy way of reconciling neighbours who have different views of their neighbourhood, no single answer to what is worth preserving and what modern developments look good or are appropriate, and no convincing way of controlling what everyone does do with their land, whatever the law may say.
Let’s take a common simple disagreement within a community. Mr X lives on the edge of a beautiful Home Counties village adjacent to fields. He paid a premium to buy the house with the views, and called his home Field View House to reflect his priorities. His neighbour, Mrs Y, bought some agricultural fields and wants to make a living from them. She did not have enough money to buy a farm, as even agricultural land values are high and rents low as a proportion of the capital value if you just let the land out to a farmer.
Mrs Y recognised the shortage of things for the young people of the village to do. She proposed a Go Kart course on her field, with her organising the events. Strong village opposition resulted in planning permission being refused, to the relief of Mr X who did not want loud karts revving past his garden.Mrs Y is now pursuing a planning application for a skateboarding park. In the meantime she has offered the land on a short lease to a local farmer, who is using it to fatten pigs. Mr X now has a view of corrugated pig shelters and a once greenfield that is now a dust or mud hole.
The planning authority is caught between these two very different views of what the edge of the village should look like and how working land should be used. They cannot stop agricultural uses as it is currently demarked as farmland. They can prevent the owner from gaining permission for new business uses, and do prevent housebuilding in many such contexts.
In such a situation what should the planners do? Who should make the decision about what Mrs Y can do with her land, and what rights should Mr X have to enable him to enjoy the peaceful use of his garden? How far should the law go in laying down answers, and how far should landowners be free to do as they wish with their land?

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The EU wants to rely on the WTO as the UK leaves to be an active member and supporter of the WTO

The EU spent hours arguing over migration policy, with Italy opposing the draft Council conclusions. Finally they reached agreement with a few face saving formulas for the disputants.

Mrs Merkel got language into the document about countering “secondary movements of asylum seekers between member states” The German Interior Minister is demanding a stop to migrants moving from Italy across the German border to take jobs, benefits and housing in Germany. I don’t see how this weak phrase solves that problem, nor see how the EU with freedom of movement and Schengen rules could prevent a lawful refugee from moving from country a to country B if they wish.

Italy got language in about exploring how migrant centres could be set up outside the EU to process applications. There is no commitment to implement such a policy, no special budget, and as yet no idea of where and how this could be done. It may be enough for the Italian PM for the summer, but Mr Salvini will need some tangible answers. Italy wants an end to boats arriving with many migrants now.

The end of the Council presented a friendly face because no-one had lost or been slapped down. Instead the issues drift on to another Council. The one positive out of it for all of us was a new found enthusiasm for the World Trade Organisation. The EU agreed unanimously to commit to ” a comprehensive approach to improving…the functioning of the WTO” and to promote the “strengthening of the WTO as an institution”. As the Uk shifts from reliance on EU membership to direct reliance on WTO membership for all trade matters, it is good to know the EU takes its membership of the WTO seriously and wants to work with the UK and other like minded members of the WTO to cut trade costs and remove more barriers.

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  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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