A short Committee meeting with a big consequence

Sir William Cash, I and others opposed the delay to our exit from the EU when the government embarked on it. We complained about the way the government agreed to the delay on the terms offered by the European Council and rushed it through in UK law by a Statutory Instrument that was not even debated. Yesterday, after much delay and argument, the government allowed Sir William a ninety minute debate in a committee where there was a secure opposition and government majority to approve the Statutory Instrument  anyway. I am grateful to him for securing this debate and for submitting an important legal case about the way the government pushed through delay to our exit.

Many of us attended the Committee though we had not been included as members of it because we wished to put the case against delay, and to support Sir William’s legal case concerning the imperfections of the Statutory Instrument which in his view made it void. In the Commons any MP can attend and speak at a committee, though only those made members of the committee can vote.  Time did not permit speeches from  most of those wishing  to speak, though a series of lively interventions made sure the case for  exit did not go unheard. I was allowed a couple of minutes at the end of the proceedings.

I said that it was sad day for Parliament when something of this magnitude fell to be debated in a small committee over just 90 minutes, As it entails the spending of additional £7bn or more on EU contributions, and submits us for many more months to EU laws and requirements, it should be debated by the whole House and voted on by every MP. I drew attention to the growing gap between many members of the public and Parliament over   honouring  the referendum decision. Many voters believe MPs  should  keep their pledges from the 2017 General Election when both Conservative and Labour promised to get us out of the EU by 29 March 2019 in accordance with the laws Parliament passed and the wording of the EU Treaty. I explained why our democracy needs us just to get on with it, to leave. When we voted to renounce the EU Treaty we did not vote to lock ourselves into two new Treaties.

The conventional media decided to ignore these heated and important exchanges between pro Brexit MPs and the combined ranks of the Conservative and Labour establishments. Labour simply failed to speak up for leaving and would not oppose the government.

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The reign of experts and the “post democratic”age

I like good experts. Modern science and technology has delivered some great advances which improve our lives. If I fell ill I would of course consult a doctor and seek expertise.

The problem is the present  age is cursed with some experts  especially in economics and government who keep getting it wrong yet they still expect the rest of us to accept their verdicts however damaging or daft they may be.

Lord Mandelson summmed up the direction of travel when he talked about transition to a post democratic age. Modern governments try to give away their powers and responsibilities  to international and national so called independent  bodies full of alleged experts. They seek to prevent elected governments changing things by locking future governments into the system by binding International treaties. For years our budgets and economic policy were first dictated by the European Exchange Rate Mechanism and then by the Maastricht debt and deficit requirements.Our energy policy is governed by Climate Change Treaties.

Some people want us to be democratic so they oppose locking ourselves into the rules and decisions of national and  international bodies in principle. Other people would not mind if those bodies made wise decisions and did well, but understandably get cross when they lead us to disaster.

The truth is you cannot say you live in a democracy if crucial parts of government are under independent expert control with no democratic accountability. In practice in a democracy like the UK Parliament and government are held responsible for big decisions even if they are taken by so called independent experts. In a later post  I will look again at how the Bank of England is not in fact independent and how wrong it has been on major issues of economic and financial policy over my adult lifetime. It is crucial that fallible expertise is subject to criticism and influence  by elected officials and can be overturned if necessary by the votes of the people. The EU has threatened this important part of our democratic settlement with its rigid legal structure. Those in the Eurozone suffer even more  from its defects.

 

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Our aim should be helping people out of poverty and into better paid jobs

One of the main arguments between socialists and conservatives is over the main aim of economic  policy. Conservatives want to raise living standards, to help people be better off. Socialists usually want to lower or remove inequality.

These two varying aims require different policy responses and achieve different results. Of course all sensible socialists would also want higher living standards, and all democratic conservatives agree the  tax and benefit  system should remove some of the inequalities market economies generate. Nonetheless deciding based around a primary  aim of betterment for the many or a primary aim of cutting inequality produces different results.

Mr Osborne adopted more of the socialist preoccupation in his budgets, worrying about measures of inequality more than about sluggish rises in average real incomes. He worked out how to administer a bigger tax hit to the wealthy and how to get rich people out of the country or to stay out of the country. One of the easiest ways to cut inequality is to offshore the richest people by having a hostile tax regime towards them. This may then reduce investment and job creation for everyone else as these people live and invest in a more friendly climate elsewhere. Both France and Italy are now wooing the rich with a better tax deal for that reason.

A test of which motivation predominates in a policy maker is that of the Laffer curve. If a Chancellor insists on imposing a tax at a rate that reduces the tax take, we can assume he does so to create more equality at the cost of less income and lower living standards. The decision of Mr Hammond and Mr Osborne to levy Stamp duties that cut the revenue must be based on this, and their  persistence with a 45% higher rate of income tax which also lowers revenue.

I want a policy based on a more rapid reduction in low incomes and no incomes. That requires a policy  which allows entrepreneurs, footballers and great entertainers to keep more of their earnings  so they stay here and pay tax here. They then also buy more things here, invest more here and employ more people here. Jealousy is a nasty emotion, and not a good policy. It makes us all worse off, with less money to spend on public services. As you achieve more growth you can then also lower tax rates on the rest of us, where lowering the rate cuts the revenue for any given level of economic output.

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Treasure Island

Facts4EU.org have posted today a useful guide to the continuing huge trade surplus in goods the EU continues to run with the UK. Since the referendum vote they tell us the EU has earned itself a wonderful £250bn trade surplus, so no wonder they want to try to lock us in to their trading terms and laws  to keep it going.  It is a reminder of how good a negotiating position the UK failed to use during the talks on our exit, and is worth a look on their site.

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Good prices and plenty of choice

Whilst shopping on Saturday I was struck again by the huge range of choice of products, the good displays and by some of the keen prices on offer on the High Street.

I saw a Potato masher made of good strong stainless steel with a pleasant wood handle for just £3.99. Assuming a 50% only mark up by the retailer that means it was bought for just £2.67 from the manufacturer, including all packaging and shipping costs. Maybe the mark up was higher and the item cost just £2 delivered half way round the world. It had come from China by ship and truck. What UK manufacturer could match that cost?

Or take a well made and strong pair of kitchen scissors for £5.99. They came with plastic handles over the steel, good cutting edges, and all encased in a rigid see through plastic pack for ease of getting home. They may well have cost the shop between £3 and £4.

There is plenty of manufacturing capacity in the world for everything from clothes to housewares, offering a great array of different styles, colours and specifications. The excess capacity in China and elsewhere means strong downward pressures on the prices of many goods. The family budgets are under pressure thanks to the cost of government – Income Tax, Council Tax, VAT, fuel tax, car park charges, vehicle and broadcast licences, rail fares and the rest – and the increases in prices of various services with a higher labour content.

Consumers are spending relatively more on services and less on goods. As real wages rise so people can afford a few more luxury or discretionary items, with basics taking less of the budget. The new Wokingham Town Centre has a higher ratio of restaurants, coffee bars, specialist food bars and cocktail parlours, reflecting the wish of shoppers to afford an experience as well as simply buying more goods. The digital pound is also surging, with more being spent on mobile phones and tablets, on film downloads, on internet papers and magazines and various specialist apps.

The public sector needs to get smarter at adapting modern technology so it too can be more flexible in the services it offers and keener in their costing or pricing. The USA is pushing back on China to stop it dominating in tec as well as consumer goods, and to protect their data and networks.

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Where is the Withdrawal Treaty Bill?

Will Mrs May really ask us to vote for a fourth time on this unpopular Treaty by bringing forward the Bill to ratify it? She says they will. Why then does she  not publish it so we can talk about it properly? Is it so bad it must be kept secret?

Mrs May’s refusal to change her mind on this draft Treaty means she must resign after so many defeats for it.

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Further comments on Stephen Barclay letter

A couple of correspondents have asked me to provide a more detailed response to  the Barclay letter.

In the main areas his letter confirms what I said about the draft Treaty. He agrees that as long as we are in so called transition the UK is “subject to existing and new rules as if we were members” and pays full budget contributions. I have  always pointed out we lose vote and voice so we are no longer full members with rights, but we would be entirely subject to EU laws, rules and budget requirements. That does not sound like leaving. We then need to negotiate our way out, which according to the government will entail locking us into yet  another EU Treaty to be determined. Its a very expensive invitation to more talks about leaving.

He confirms that the Northern Ireland Protocol  creates different government for Northern Ireland over customs, trade and the single market. Of course he is right if the rest of the UK accepted EU requirements and changes as Northern Ireland would have to we could avoid separation of conditions between NI and the rest of the UK. Again that does not sound like leaving.

He confirms that we will face full budget bills up to the unclear  end of transition and will have further obligations up to 2028. He says the further adjustments made up to 2028 might be downwards, but clearly they could  be upwards from an EU that is cash hungry and inventive on claims.

He suggests £35bn to £ 39 bn is a small sum. I beg to differ. He also concedes this is just an estimate . Given the vagueness of the headings I think it could well be a lot bigger. He concedes the EU has a big role in calculating and sending the  bill and adjudicating disputes.

He doesn’t disagree we have been short changed on the EIB by losing our share of accumulated  reserves.

He agrees we have to meet pension liabilitues and payments to Turkey, but says this is fair.

On individual Articles he usually argues continuing ECJ powers and related matters up to 2028 that I listed relate to matters that occur up to the end of transition. I object to this long tail, providing an enduring opportunity for the  EU to demand more cash or  legal observance because they say something started or occurred before we left. It gives them a lever which could be damaging to us

He agrees the ECJ continues to rule all the time  we are in so called transition. This would  be a binding  Treaty which would greatly reduce our capacity to govern ourselves. There is less disagreement than the general remarks of his letter might suggest. He places  a favourable construction on how the EU would behave if we signed.I think they might push the  clauses against us rather more.

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China telecoms

This week President Trump issued an Executive Order requiring tougher regulation and bans of telecoms equipment from unnamed “foreign adversaries” that threaten the US national security. At the same time briefing occurred that he has in mind China in general and the Huawei  company in particular.

It is clear the US thinks Chinese involvement in digital systems can pose a future threat to their security and might give the Chinese state access to secrets and the ability to disrupt should it wish to do so. Most comment has concentrated on whether Huawei would ever act for the Chinese state in this way, and whether they have a possible “backdoor” into the systems and data on systems in the west where they provide hardware. They deny both suggestions.  There is also the issue of the nature of the US/China relationship that underlies these concerns, with the USA effectively calling China an adversary and treating the Chinese state as a potential threat.

Should America’s allies adopt the same posture as Mr Trump wishes? This will be an issue when he next visits.

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The Attorney General writes me a letter

I know some of you thought it odd that the Attorney did not reply to my letter, but I eventually got a reply from the Secretary of State for exiting the EU. You will be pleased to know that yesterday I did also get a reply from the Attorney himself, so any criticism on that score is misfounded.

I am used to government departments sending letters to other government departments for reply. I am also used to the idea of collective responsibility, so I assume the government department that sent it to another agrees completely with the answer the responding department offers, and has had an opportunity to comment on the line taken when the matters covered were settled by government or when the letter is answered.

I thought I should share the Attorney’s letter with you as people will want to make up their own minds about the balance of argument on this important constitutional matter.

The Attorney wrote:

“I am writing further to your emails of 14 and 18 April concerning the Withdrawal Agreement.

The Secretary of State for Exiting the European Union has now responded to your queries on behalf of the Department for Exiting the European Union, which is the department responsible for overseeing negotiations to leave the EU and establishing the future relationship between the EU and the UK. I have seen the letter dated 14 May 2019, the substantive contents of which I agree with.”

This is an unusual letter, as normally the government only sends one reply to a query. It is interesting that it explains to me how the negotiations over the EU are conducted without mentioning the prominent roles of the Prime Minister, Mr Robbins and the Cabinet Office who I thought had been leading the talks. It is also interesting because it does not simply say the Attorney agrees with the government’s letter, but he agrees with “the substantive contents” which are not separately identified.

 

 

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Book launch and talk at All Souls College High Street Oxford Friday 17th May at 2pm

Just a reminder that I am giving my talk in Oxford tomorrow, when I will demonstrate the collapse in support for major traditional centre left and centre right parties, the impact of the Euro and the EU scheme on those parties, and the general disillusion with the establishment that we see on both sides of the Atlantic.

“We don’t believe you” Why populists reject the establishment (via Amazon)

Signed copies available tomorrow at the launch.

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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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