The collapse of Labour and Conservative sister parties in the Euro area

It looks as if neither the Republicans (Conservative) nor Socialists (Labour) will have a candidate in the last two to be French President. It looks as if a third force party run by Mr Wilders will be the top performing party in the Netherlands election in March. Syriza came from nowhere to be the largest party and form the government in Greece. Pasok (Labour) have no seats in the present Greek Parliament. In Italy Grilllo’s 5 Star Movement is well ahead of the two old main parties in the polls. In Spain Podemos and Cuidadanos have made huge inroads into the traditional centre right and left main parties, making it impossible for either to form a stable government easily.

I find it extraordinary that these once great governing parties of the post war world in Europe have given up their pre-eminence so easily. It shows just how out of touch they have become. The main driver of their demise and of the popular discontent seems to be the bad impact of EU austerity economics and the Euro on their economies. When a country has half its young people out of work and around a fifth of its entire workforce laid off, it is no wonder voters seek a better way. The traditional parties are either deaf to the entreaties of those who want change, or impotent to change the things that matter because they have locked themselves into the EU and Euro schemes.

Whenever a country gets into a predictable governing crisis owing to its fractured party politics the EU proposes a technocrat led coalition government following the Brussels rules. When a country votes for decisive change, as Greece did when it elected Syriza to government, the EU works to ensure there can be no positive change and redoubles its efforts to enforce the very policies that have led to the political explosion in the first place. Economic failure can lead to a cry for strict controls on the movement of people, and a sharper nationalist rhetoric, as people hit out in search of a solution to a problem which their EU loving rulers scarce admit exists.

It is one thing for the traditional parties to decline, as they are. It is another for a single strong challenger party to emerge and take over government. That so far has only happened in Greece, though it could happen elsewhere this year. It is an even more difficult thing for that challenger party to break free from the shackles of conventional EU politics and improve the outlook. So far Syriza has been unable to do that, owing to voter ambiguity about the Euro project.

Marine Le Pen is made of sterner stuff than Syriza. Were she to win she would take France out of the Euro and run an economic policy she thinks would change France for the better. The AFD in Germany want to take their country out of the single currency, and have recently defeated the two traditional parties in Lande elections. They remain well behind Mrs Merkel’s party in polls for a national election.Sgnr Grillo is playing on the growing unpopularity of the Euro in Italy and may want to exit were he to win.

The ruling elite of the EU, with its single currency and panoply of Brussels controls, is on trial in this years elections in the Netherlands, France, Germany and probably Italy too. The triumph of Brexit and Trump show there could be an upset for the ruling EU group in one or more of these. Meanwhile the Euro elite fasten their seatbelts and proceed with the same approach.

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Contemporary democratic revolutions

There is a mood to sweep away the old centre left and centre right parties on the continent in a desperate bid to have something better . In the USA and the UK there is the wish to force change on the body politic by voting for Brexit and Donald Trump, within the traditional party structures. On both sides of the Atlantic and the Channel there is that same impatience with politics as it has been practised for the last twenty years, and anger at the way the governing corporate,civil service and Ministerial elites have behaved.

The anger is justified. The elites told us they knew best. They assured us they had the expertise. On the continent Tweedledum and Tweedledee parties alternated in government but little of substance changed. In the UK a puppet Parliament pretended to be in control whilst shovelling through thousands of pages of laws and many spending programmes that the EU required, with both parties claiming to support them without criticism or proper debate. In the UK we were made to live through the Exchange Rate Mechanism recession, the Banking Crash recession and the Euro crisis at one remove. The US was put through the Great Recession and the Iraq war. The Euro area had to endure the most economic pain with the ERM crash, the Banking Crash and the continuing Euro crisis.

People not very interested in politics, or pessimistic about their chances of changing anything for many years, have decided to take back control. In the USA Mr Trump first tossed aside all the serious professional well honed politicians of the Republican party to take their crown. He then went on to defeat the doyenne of political insiders, the darling of the elite, Hilary Clinton, who ran on a ticket of expertise and experience. The public said if it meant the expertise that had brought them the Great Recession and the Iraq war, they would rather try something new.

In the UK many groups of people with very varied political opinions united behind a campaign with the express slogan of Take Back Control. The more Remain paraded every great figure of the established governing and corporate bosses, the more the Leave case was supported. The experts who had led much of southern and western European economy into mass unemployment with their Euro currency were surprised when people did not believe their forecasts of gloom if the UK dared to vote Out. My belief Leave would win was strengthened at a big public meeting when many in the audience laughed and cried out their disbelief when the Project Fear forecasts were put before them.

If parties wish to run and support technocratic government it must at least be competent technocratic government. If they believe only they have the expertise to make the decisions and that the people just need bread and circuses, they must make sure everyone can afford the bread and get to the circus. The main reason the old establishment is being swept away is it failed to deliver.
Tomorrow I will look at the parlous light of the Conservative and Labour look alike parties on the continent.

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The IFS offers more gloom

The IFS tells us in their latest forecasts that we can look forward to more years of tax rises and spending cuts. They expect the UK economy to slow this year, and slow again next year.  They are out of touch with the mood to banish austerity and go for growth.

They are more pessimistic about the Eurozone than about the UK. They have lowered their 2017 growth forecast to 1.5% for the Euro area, whilst proposing 1.6% for the UK. They run one scenario which looks at what weak European banks and Brexit could do to their forecast – an unusual pairing with no explanation of why they are lumped togather or the relative contributions to their extra gloom on this basis.

They do confess that there are “increasing chances that the forecasts may be too pessimistic”. They accept that the UK consumer carried on spending post the referendum when most forecasters said they would not. They admit that business investment rose a little faster after the vote, instead of falling off the cliff as in many forecasts. They agree that trade which had performed disappointingly last year might add a bit to our economy in 2017.

They confess that “real levels of day to day public service spending have actually fallen very little overall in the last three years”. If they checked the Red Book figures they would see the cash growth in overall public spending actually rose faster than inflation over that time period.  They now think removing the deficit should be the priority, which leads them to conclude political parties have to offer some combination of higher taxes and lower spending.

Politically it is much more attractive to square the circle with more growth. More growth brings in more tax revenue without tax rate rises. It cuts the costs of benefits as people move from no pay to low pay, and from low pay to better pay. The issue before us should be what more can we do to promote growth.

I do not accept that growth will be as low as they say in 2017 or 2018. That still makes me keen to find more measures which can promote more growth. A tax rate cutting budget could help, especially if we cut those tax rates that are damaging the revenue collected. Spending enough on social care and health is a cross party priority, and we have to accept these services will continue to need  more cash in the future. Investing more when long term interest rates  are still so low should make sense, though the state needs to show commonsense over projects chosen and where possible harness the private sector to ensure a proper profit test on the project.

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Parliament votes for an independent UK

Parliament voted 494 to 122 to notify the European Union of our intention to leave.

Parliament voted to carry out the wishes of the people, as expressed in the referendum.

Parliament, after much debate, self examination and passionate exchange, voted to take back control.

The puppet Parliament of recent years, nodding through countless laws from Brussels, decided it must take responsibility again.

 

Over the last two weeks of debate, Parliament has come to life.

Many MPs wanted to be in the chamber.

Many MPs wanted to speak.

MPs who voted Remain in the referendum agonised over the conflict between their own view and the decision of the people which they had sought.

MPs who voted Leave spoke  to reassure their Remain voters that once independent the UK can thrive and prosper.

 

The decision of Parliament, backing the decision of the people, will be formally communicated to Brussels.

As lawyers on both sides in the Supreme Court case argued, once sent the country will leave the EU.

That is why the decision mattered so much.

 

I was impressed by the size of the vote to leave, and the scale of the majority.

It is true the Lords needs to do the same

But how can the unelected House reject the will of the people in the referendum and the will of the Commons by such a big majority?

 

The people are sovereign.

Parliament can be  sovereign between elections, once we are out of the EU.

It can only preserve the trust of enough people if it carries out their wishes.

After all the passion, the self doubts of individuals  and whole parties, after the technical arguments and legal sophistries

Parliament understood.

 

Tonight Parliament  has grasped that the once sovereign Parliament can be sovereign again.

It has understood that it can only hold that power if it pleases the people.

All UK democrats can sleep well in their beds tonight.

The people’s will has prevailed.

Parliament is ready to serve again.

Parliament voted to take back control.

 

 

 

 

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That article 50 letter

Yesterday the various amendments proposed to the Leaving the EU Bill were voted down. Labour decided not to press one of their main ones to a vote because the government offered assurances that Parliament will get to vote on the final deal, to be held before the European Parliament votes on it. That vote will be about whether to accept the new Agreement or to leave without one.

During the exchanges the fundamental question of whether sending the Article 50 is irrevocable or not came up.  I argued it is. The Treaty makes no provision to withdraw the letter or to cancel exit two years later, which is automatic with or without a deal. The Treaty says if you start to leave and change your mind you need to reapply for membership. You do not simply keep or reinstate the membership you proposed to quit.

I reminded the Commons that both the Attorney General and the Remain lawyer in the Supreme Court case argued that the  notice to leave is irrevocable. In finding against the government on one count the Supreme court had to rely on the irrevocability of the process. It is only because the change of leaving becomes inevitable when the letter is sent that allowed the Court to say Parliament therefore had to pass an Act and could not just do it by debate and vote. Predictably the Remain side who were so keen to use this argument to win in court now have changed their mind and say it may not be!

I will post the exchanges later today.

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More homes

The government’s White Paper today needs  to look at ways to provide more homes, all the time we remain in the EU and have to accept more than 300,000 additional people each year coming to stay in the UK. Even after we are out it is likely we still want to invite in a large number of people. Ministers have made clear we will still welcome talent from around the world, whilst controlling the numbers seeking low paid employment. It’s no good inviting people here if we do not provide homes for them to buy or rent, and if we fail to provide all the other public services people expect in a rich country.

Much has been made of the need for more homes to rent. We should not forget that there are many more people wanting to buy who currently rent, than there are people who currently own who want to become tenants. Many of the people who now settle for the rented option do so because they cannot afford the deposit or think they will have problems getting the mortgage to buy.

Nor should we forget that it is much dearer over a lifetime to rent than to buy. If someone needs a home for 60 years as an adult, it will be much cheaper to take on a 25 year mortgage and pay it off over the 25 years, leaving you free of any rent or mortgage costs for more than half your life, than to have to pay rent for all 60 years. The joy of owning comes in retirement when you have no rent or mortgage payments to make, and when you also have a capital asset which you can sell to pay the nursing home fees in a home of your choice if need arises. In rented accommodation you will be paying the highest rent of your life as a pensioner, because rents always seem to rise. You have no asset to fall back on if you need to move to a care home.

The good news today is more mortgages are available and mortgage rates of still very low  by historical standards. The bad news is house prices are high, and saving for the deposit even with the help of government schemes can be difficult.

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Bias, balance and alternative facts

The BBC regularly says it must be getting it right because  both sides accuse it of bias. The problem is there are more than two sides in many cases.

I have never argued the BBC is biased against the Conservatives and in favour of Labour. I understand the lengths they go to criticise  both Conservative Ministers and Opposition Spokesmen, and grasp their idea of balance, offering an alternative  view in many cases.

The issue of bias and alternative truth takes more subtle forms. There is firstly the bias in the selection  of stories. The BBC loves running endless Brexit and climate change stories. It loves making other news items into Brexit or climate change stories, when many of us think there is little or no link. There is the endless sourcing of “the government should spend more” stories, because there are so many lobby groups with that as an objective.  People who want less government, who like Brexit, or are sceptical about the theory that man made C02 is driving damaging climate change do  not feel properly represented. Scientists are not interviewed with a view to highlighting errors, inconsistencies and poor research in the way politicians are.

Then there is the unintentional bias of the questions. Ministers are regularly put under pressure for not spending enough. It is very rare to hear Ministers under pressure for spending too much, for presiding over government waste, for failing to find cheaper and better ways of doing things. There is nearly always an automatic assumption that spending a lot in any particular part of the public sector is good, and spending more is even better. There is little probing behind the slogans to find out what the real numbers are, and to ask why in some cases so much is spent to so little good effect.

There is the permanent anti Brexit bias in many scripts and questions. The interviewer or journalist starts from the assumption that Brexit must be damaging. Good news is then recorded “despite Brexit”, often with a caveat that it could deteriorate in the future when Brexit  bites more. Never do you hear an interviewer asking the other side to comment on how the Brexit vote has triggered higher car output, more homes being built, higher consumer activity, better confidence levels.

Prior to the referendum there was always a bias against Brexit or Eurosceptic speakers. We had to be introduced with unflattering descriptions, interrupted more, and usually assumed to  be wrong. I remember when I was warning about the banking crash and had a proposal on how to handle it, I was competing with Lib Dem Vince Cable. I wanted controlled administration of overstretched banks – the system they now say they will use in future – whilst he wanted bank nationalisation. He got many more interviews than I did. He was often introduced as an expert because he had had a former job as an economist at Shell. I was introduced as a Eurosceptic with my past roles in  business and investment ignored, though they were more relevant experience.

I’m all in favour of them asking me tough questions, but I just want them to do the same for all the so called experts as well.

 

 

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Double standards – no democracy on EU matters

Most people in the UK currently pay for and take instructions from at least  three or four governments – EU, UK, County, District or Unitary Council.  Many also have Parish Councils.

One of the reasons people voted to get rid of one of the layers of government is that we have too many competing layers, seeking more money and imposing more rules on us than are needed. Sometimes the competing layers seek to achieve different things or impose contradictory rules and requirements. Defra, the Agriculture Department, often lost cases in the ECJ because they found it impossible to implement EU policy in a way which did meet with the satisfaction of the European Court. They were trying to comply!

One of the odd things about UK Opposition politicians and the media that feeds off them was the complete absence of any informed opposition to the EU government whenever the Conservatives were in office. All the government had to do was to claim some law, payment or decision had come from Brussels, and the Opposition parties backed off. They either acquiesced in not even debating it, or they went through perfunctory motions of asking a few polite questions and then voted with the government or abstained  so the measure could pass. Bill Cash, aided by a few good Labour MPs who did wish to probe and question, led his European Scrutiny Committee to require the important issues to be debated in the Commons chamber itself. These debates were usually peopled by a stalwart group of Eurosceptics pointing out the problems or undesirable features to a disinterested House. Government Ministers whichever side was in office always sought to make the debates low profile and could avoid answering any difficult question, safe in the knowledge that there was always a front bench consensus so they would win easily any vote we forced . The media rarely covered them, on the grounds that government and the official opposition both supported whatever measure it was.

This lack of democracy on EU matters allowed Ministers to push through a vast library of new laws and controls, and large amounts of public spending with effectively no democratic check or balance. Whole areas of government, from fishing and farming, through the environment, to trade, energy and business received this treatment. The EU was  brilliant at extending the acquis by increasing the occupied field -their language for the process of establishing their dominance in area after area. Once the EU had legislated on a  subject, the UK Parliament then had to leave it alone or work round the EU laws and rules, never contradicting or modifying them in unapproved ways.

It will take years for successive Parliaments to review and modify where it wishes what was done in our name without our proper consent. Legislation and decisions are better for a probing and sometimes hostile opposition forcing Ministers to think things through and sell them to the public as necessary and desirable. EU laws were pushed through on a vast scale in a lazy way. It meant many people in our country had little idea just how much is now controlled by the EU, and how little room for change the UK has all the time it accepts this legal framework.

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The Malta declaration on migrants

At Malta the EU once again paraded its lack of common decency. The 27 failed to reassure all UK citizens living in other member states that they are legally and morally entitled to stay! The UK of course has offered those assurances for EU citizens legally settled today in the UK on a reciprocal basis.

 

There are two main problems with the EU’s decisions on migrants at Malta.

The first is the EU has effectively shifted the responsibility to stem the rapid flow of migrants across the Mediterranean to the Government of National Accord in Libya. This government is struggling to exert its control over Libya, which remains a deeply divided country with a rival government in Tobruk and areas of the country under tribal and rebel control. No doubt it will welcome the money promised to strengthen its coastguard and for related purposes, but can it spend it nationally to achieve the EU’s aims? Will it be tempted to spend it for other purposes related to its own difficult position?

The second is the request for a policy to return people who have  already arrived  in the EU following illegal migration. How are they going to do this? Why do they bring people in to the EU in the first place if they want to take them back to countries like Libya? Will it be legal to require people to leave? What will they do if they refuse?

 

It is difficult to believe this statement will work to stop the flow. It is also difficult to see how it squares with the EU vision of itself as a home to welcome migrants as outlined by Mrs Merkel last year. How does this differ from Mr Trumps wish cut numbers crossing the Mexican frontier?

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The Malta Summit

Today the EU  Heads of state and government will meet in Malta. Their background text will be the pessimistic and alarmist letter from Mr Tusk that we talked about on Wednesday.

The meeting will mainly be concerned with strengthening the EU’s external borders, with special emphasis on the problems of Libya. There are in the EU’s view too many migrants coming across the sea from Libya. The EU wishes to work with the Libyan authorities – to the extent that there are authorities in charge there – to reduce the flows. The EU may also wish to beef up its naval force, though so far this has been used to offer safe transit to the EU for those who have taken to the seas in dangerous and overloaded boats and got into trouble. The EU will wish to take stronger action against people smugglers, though that too will require co-operation with governments on the African continent.

All this illustrates the cruel dilemma of Mr Tusk’s letter. He does not wish the EU to give concessions to people he calls populists or to political parties that challenge the elite view of the EU. Yet he feels the need to hold a summit largely devoted to the populist issue of trying to reduce the flow of migrants and to strengthen the EU’s external borders.  He is ambiguous about the elite themselves, saying they genuflect too far towards populists, yet saying they are losing faith in the democracy which is driving the populist movements. I guess Mrs Merkel felt the need to change her permissive immigration policy owing to the pressure of public opinion. Does Mr Tusk think this was the wrong thing to do?

Important though Mr Tusk is within the EU, he is but the servant of the Council which is made up of the Heads of state and government. If they say they wish to shift policy in the so called populist direction, he has to allow them an agenda to do so. It will  be fascinating to see what emerges from their consideration yet again of migration and borders.

I do hope they take up the UK’s request to lift the uncertainty they have created for British citizens living in other EU countries. If they just agree they are all welcome to stay, the UK can confirm the same for all EU citizens legally settled in the UK. It is the right and decent thing to do, so why won’t they do it? I am sure Mrs May will ask them again. I thought civilised values were part of their idea of the EU, but they are  not showing them on this matter.

The later afternoon session will be for the EU 27 only. They plan to discuss how to celebrate the 6oth anniversary of the Treaty of Rome, which they think the UK could not help them with. It will be fascinating to see what celebration they want to hold, and what they think are their main achievements to trumpet.

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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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