Another election?

I have seen no need for another election any time soon. The Conservative party has the endorsement of the electorate from 2015 for its Manifesto for a Parliament. All the time Mrs May is happy with that Manifesto, which she supported at the time, there is no lack of mandate. The government also has a major mandate from the referendum to get on with Brexit. There would be little  benefit from fighting the referendum again by proxy in a General Election, where  the polling shows the pro Brexit Conservative party is likely to win. If the Election simply confirms the referendum it  adds little. Were parties against Brexit to do better it creates difficulties in implementing the wishes from the referendum. Anti Brexit forces would claim the public had modified their mind on Brexit. The pro Brexit forces would say the election result was mainly about non Brexit matters. It may  not  be clear in a multi issue election.  Many people in the public just want their government to get and do the things that need doing, without any short term need for a new public discussion and vote about the direction of the country. There is plenty to do, and the government has plenty of ideas and Manifesto/referendum  commitments to carry through.

Some of those who wish Brexit ill favour an early election. It might slow things down a bit, create new uncertainties. Some who favour Brexit want an early election, thinking it would lead to a good win by the pro Brexit forces, making it easier to pilot through the Repeal or Continuity of laws Bill which the House must take up as soon as the Article 50 letter has gone. The government’s critics delight in pointing out a favourable comment about the single market in the last Conservative Manifesto. That was of course superseded by the decision of the people in the referendum. Both sides in that campaign said leaving the EU meant leaving the single market, which electors then voted to do.

The case for an early election would have to rest on  an inability for the government to get through this Parliament what it needs to get through to carry out the wishes of electors from 2015 and from the referendum. Alternatively Mrs May could seek a new mandate if she wished to make material changes to the 2015 Manifesto. I would be interested in your views.

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The doctrine of the mandate in Scotland

In September 2014, less than 3 years ago, 2m Scots  voted to stay in the UK, and just over 1.6m voted to leave. It was a convincing  result. It was  a once in a generation question, as the SNP agreed at the time.

Since then the SNP has never gathered anything like as many votes as the Independence campaign secured.  The SNP managed 1.45 million in the General Election of 2015 , and only 1.05 million in the 2016 Scottish Parliament elections. There is no evidence in either of those  votes of more people deciding to back the SNP because they wanted to change their minds from the Independence referendum itself. It is difficult to see why the SNP argue their subsequent polling justifies asking the public again after such a short passage of time to re run the Independence referendum. It is interesting that since the referendum the SNP have not managed to get a significant number  of their referendum supporters to back them again.

Mr Brown has decided to have another go at the argument over Independence and devolution, just as he did in 2014 and when in office. He labours under one simple misapprehension. Offering Scotland more and more devolved power he thinks will end the pressure for independence.  The opposite seems to be the  case. The more power the Scottish Parliament is given, the more the SNP demand. They were quick to dismiss his arguments yesterday when he blurted onto the airwaves. Mr Brown may believe it when he claims he saved the Union by getting Mr Cameron to offer yet more devolution. From my memory of the campaigns, it was the absence of good answers from the SNP to how the money would work out, and which currency they would be using, that helped persuade a majority to say No to the SNP offer. If every time the SNP demand more powers the Union Parliament grants them, you should expect the SNP to go on asking for more. It is also better than having to be accountable for exercising the powers they do have, as they can always try to claim that they need the extra powers to be able to achieve something.

There does not seem to be any amount of authority that leads to the SNP saying they will now get on with using the powers they have got for the betterment of Scotland.

 

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Questions for the SNP to ponder

When I as a young man was on the losing side in the 1975 referendum on EEC membership, I did not think we should have a second referendum soon afterwards to try again to get us out. Indeed, more than 25 years past before I and others called for referenda on the Euro and the growing political union that the EEC had become.  A referendum is designed to answer a question and make a decision for a decent period of time when it is about these fundamental constitutional matters.

The SNP will have time to consider what went wrong with their last case for so called independence, and what has gone wrong for them since that event. At current oil prices, with the rapid run down in oil output, their economic arithmetic needs reworking over what a Scottish budget would look like.

The rest of the UK would clearly insist on an independent Scotland leaving the pound. Being in a currency union requires each part of the Union to underwrite all parts of the Union socially, economically, and the banking system.  English, Welsh and Northern Irish taxpayers would  no  longer be willing to do this for an independent Scotland.

Scotland would be out of the EU whether the UK is still in or out itself. The EU does not wish to encourage separatist movements within EU countries by offering them easy membership. Spain is insistent on this point given its refusal even to allow a referendum in Catalonia. Nor would Scotland as an applicant country be likely to be offered opt outs from the Euro and Schengen, nor a contribution rebate as the UK currently enjoys.

I was interested to read that the SNP  now think maybe seeking to join EFTA would be better, so their argument that this is mainly about EU membership has not lasted a couple of days debate about a second referendum.

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Movement in EU thinking on Brexit and “populism”

There are signs that more governments on the continent are beginning to realise that the UK is not seeking continued membership of the single market or customs union, and accepts it will have a relationship based on friendship, collaboration, joint working and trade in a wide range of areas and activities.

Germany now grasps that they need continuing access to the large London financial markets which do so much to help finance continental business as well as to our lucrative car market. French, Dutch, Danish and other farming businesses on the continent do not want to see the quite high tariffs allowed under the otherwise low tariff WTO regime placed against their voluminous exports to us. The more realistic continental politicians see they cannot undertake the type of negotiation they expected. They thought the UK would be begging to stay in the single market, so they could impose requirements over financial contributions and freedom of movement. It is not going to be like that.

A good negotiation for the UK needs to be friendly, straight forward, and with limited requests of the others. Indeed, it is difficult to see that the UK wants anything from the negotiation that the rest of the EU does  not want and need more. They need tariff free more than us. They need good access to financial services and  banking. They want their many citizens resident in the UK to be able to stay here. They want the UK to continue to make the largest contribution to the European part of the NATO defence activity and budget.  The great news is they can have all that if they simply reassure our UK citizens resident on the continent about their status – which they will – and opt for tariff free trade which they would be wise to do in their own interests.

Many are breathing a sigh of relief in the Chancellories of Europe that the Dutch did  not give a larger vote to Mr Wilders, and made Mr Rutte the leader of the largest party. However, they would be wise  not to be complacent. Mr Rutte lost 8 seats and Mr Wilders gained 5  seats. Mr Rutte had to disrupt the EU’s relationship with Turkey to sound more like Mr Wilders in a bid which did swing some voters back according to the polls. In line with the progressive collapse of the Conservative and Labour look alike parties in Euroland owing to their inability to influence main economic policies, the Dutch Labour party had a disastrous election.

The EU without the UK  does have to find more tax revenue from the remaining members or cut back its spending. It is curious to see how all those pro EU forces who told us our net contribution was tiny before the referendum are now saying it will leave a nasty hole in EU finances when we are gone. Fortunately they need to agree a new longer term budget around the time we leave, so they can decide as a more homogenous group of countries, mainly in the Euro, how much collective spending and taxing they need for the new circumstances. As they build their more integrated Europe they would probably be wise to ensure it is properly funded, with sufficient cash to send to the poorer regions and countries. Other single currency areas send much more money around their unions as grants than the Euro area does.  That, however, is a matter for them,  not for us. They will benefit from not having the UK in the room trying to stop any budget increase when they turn to these important matters for their future.

 

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Time to see the UK’s strengths – steady pound since 2012

Amidst all the hyperbole over short term movements in sterling it is worthwhile looking at the longer trend. Today sterling is around the same level against the Euro as it was at the beginning of 2012. It is almost a fifth higher against the yen, and around one fifth down against the dollar. Over this time period the dollar has been strong against all major currencies, running with higher interest rates and expectations of higher rates than elsewhere in the advanced world. The yen has been particularly weak thanks to negative rates and the creation so many extra yen by the authorities.

One of the odd features of the protracted and often repetitious UK debate about Brexit is the wish of so many to look for weaknesses and problems on the UK side, and to fail to analyse the weaknesses and difficulties on the EU side in the forthcoming talks. On Tuesday I pointed out to the PM during the exchanges on her statement about the EU summit that the questions to be asked need to be asked of the 27.

I began by asking how can a group of civilised democracies that are meant to believe in decent values not reassure British citizens living on the continent legally that they can stay there after exit?  I do not for one moment think the Spaniards will want to evict UK pensioners living in their own villas on the Costa Brava, for example. Nor do I see how they could do so legally. However, why is it asking too much of the EU and the Spanish government not to confirm that of course they are welcome to stay. After all, the UK government has been very clear that we would like all EU citizens legally in the UK to stay as long as they wish, but do need similar confirmation for our citizens on the continent.

I also asked for confirmation that it is clearly in the interests of business and governments on the continent to carry on trading tariff free, with no more barriers than they currently face, once the UK has left. The UK will willingly offer continental countries tariff free access to our market as long as we have the same to theirs. The choice rests with them, as the UK would recommend tariff free but can live with WTO most favoured nation terms.

Whilst we are about it, we should ask the rest of the EU how they intend to implement their Treaty obligation to have good relations with neighbouring states and to promote trade with them. As the EU is always keen to ensure we follow the letter as well as the spirit of the Treaty I assume the same applies on this important issue.

The UK voted to take back control of our laws, our money and our borders. We are doing so based on the referendum of the UK voters, and now also on the back of a Commons vote with a majority of 372 to leave. Under the Treaty we do not owe them any money apart from our regular contributions.

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No rise in National Insurance for the self employed

I am pleased the Chancellor has changed his mind on National Insurance. It is true the previous Chancellor defined the Manifesto promise as relating to NI for just  the employed when he legislated to implement the promise, but there was no such limitation in the Manifesto or in the election speeches and broadcasts to warn the self employed they were not covered. It is always a good idea to keep the spirit and the letter of promises made.

I did speak in favour of not taxing the self employed and small business more, and put in representations from constituents against the Budget proposal. Removing this tax increase removes £325 m extra tax from 2018-19, and around £600 m in each of the next two years. I see no need to replace this “lost” revenue, as I expect the economy to grow a little faster than the official forecasts, which will generate more extra revenue than this policy change. Fortunately the sums involved are  small against a total revenue of around £800 bn annually  in the relevant years, so this item is under 0.1% of the total.

 

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The future of Scotland

I was pleased Mr Cameron gave the Scots a referendum on the future of Scotland in the UK. I sought assurances in the Commons that the SNP would accept the result, just as I and others who supported the Union agreed willingly to accept the result. The SNP made clear they thought it was a once in a generation opportunity. They said of course they would accept the verdict of the people.  It is therefore disappointing that their Leader now thinks they need a second referendum in less than five years from the first one which they lost.

Her argument is that leaving the EU represents a major change in circumstances. Apparently leaving the EU single market would be bad news, yet leaving the UK single market which is four times bigger for Scotland’s trade  would be good news. She wants a referendum before the UK has left the EU, based on a guess as to the final terms of any Agreement on our future relationship. It is difficult to see why this makes any sense. Surely if the departure from the EU is important, the SNP would wish to see it completed and see how the new Agreement works out before asking Scottish voters again to express their wishes on membership of the UK.

I trust the PM will explain that the Union Parliament will not grant a referendum all the time we are seeking to implement the results of the last on  the EU. Polls indicate there is little demand in Scotland for a second referendum. There is more demand for the SNP to use the substantial powers they already have to govern Scotland better. A referendum on the future of Scotland in the Union is a matter for the Westminster Parliament. I would think it would be wise to review the matter after the next Scottish election. If the SNP have done well in that standing on a ticket of wanting a second referendum then the UK will have to consider the request carefully.

I only want volunteers in our Union, and am glad we settle these things by referendum votes. I also think we need reasonable periods of constitutional stability between major referenda, so governments can use the powers they have got for the purpose intended-  the improvement of public services and the pursuit of a more prosperous and decent society. The UK is a serious democratic country. Occasional referenda on big issues are part of that. Constant repeats of referenda would turn us into a debating society with government constantly diverted from the day job of governing well.

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The Netherlands government picks a diplomatic fight with Turkey

It looks as if the strong polling of Mr Wilders and the PVV in the Netherlands has worried the government led by the VVD. They have recently denied access for Turkish Ministers to their country on the grounds that their visits would be inflammatory.  The Foreign Minister was stopped from coming and the Family Minister was ushered out of the country. Turkey is of course a NATO ally and has recently agreed a comprehensive and close Association Agreement with the EU. This Agreement includes the free movement of people from Turkey to EU Schengen countries which include the Netherlands.

It will be interesting to see tomorrow if the idea of acting in this manner serves to reassure those otherwise thinking of voting for Mr Wilders and the PVV, or whether it simply highlights Mr Wilders agenda in a way which helps him. Turkey is angry about the actions of Mr Rutte and his VVD party, and have asked the Netherlands Ambassador to remain out of Turkey. Meanwhile protests about this in the Netherlands have led to the use of water cannon and ugly street scenes.

None of this is good news for the EU/Turkey relationship, and brings the whole issue of the EU/Turkey Association Agreement back into contention. Many voters in the Netherlands have been worried about these Association Agreements, but so far the Dutch government of Mr Rutte has gone along with them at EU level, so they do apply to whole EU Schengen area including the Netherlands. This row may serve to remind unhappy voters about these developments.

It does not look as if Mr Wilders can win enough seats to be part of a future Dutch government, but if he wins more seats than any other party it will add to the stresses and strains on the ruling coalition which emerges from the election.

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Voting for the Brexit Bill

Today I will be voting to ensure the Brexit Bill at last passes the Commons again unamended , so the government can send the Article 50 letter. I do so because I campaigned to give UK voters a referendum, and made clear before and during the referendum campaign that the people’s decision would be implemented by the government.

I am pleased the Bill has passed with a large majority in the Commons, and trust the two Lords amendments will be removed by the Commons who rejected these views before.

As I stressed in my speech on the Bill, the letter itself marks the end of the UK’s membership. The one thing I agree with Lord Pannick about, the lawyer who led the Gina Miller case in the Supreme Court, is that the notification of leaving is irreversible. Under the Treaty you can only leave legally by notification. Once you have notified you have up to two years remaining in the EU to seek an agreement about the future relationship, but are out  without such an agreement at the two year stage, or sooner with an agreement. That provision was put into Article 50 deliberately to ensure the EU cannot delay unduly the exit of a country in order to get more money out of them in the form of their regular contributions as members. The rest of the EU should not be able to delay exit unduly when a country has decided it wants to leave. The EU, after all, is meant to be an association of democratic freedom loving states, so their freedom must include the freedom to cease to belong.

I  am surprised to see the rest of the EU is still using the misleading analogy that this is a divorce. It is not. It is a country leaving an international treaty arrangement which no longer suits it, because that Treaty based organisation has changed so markedly compared to one the UK agreed to join in 1972.  There are no provisions in the Treaty to make additional payments to leave or to carry on making payments after leaving.

The main question to be settled about our future relationship is whether we trade under WTO Most favoured nation status in future with the EU as we do successfully at the moment with the rest of the world, or whether we carry on tariff free. The UK would be happy to carry on tariff free despite being in large deficit on this basis, so it is a simple choice for the rest of the EU. It is high time UK media started putting this basic question to the other member states and Commission, instead of trying to find holes in the UK stance.

At the same time they could ask the rest of the EU why they have not yet reassured all UK citizens living on the continent they can continue to do so after Brexit, as we wish to do for all  continental EU citizens currently settled in the UK. The UK government is not a threat to either tariff free trade or civilised treatment of EU citizens living in a different country to their home one. I find it odd that the EU might be a threat to these straightforward common decencies. Why is the people who most like the EU that have a such a low opinion of its likely conduct?

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The Foreign Affairs Committee gets it wrong – Parliament should just enable the letter to be sent

Parliament will have every opportunity to debate the progress of the Brexit negotiations over our future relationship with the EU. Right now Parliament needs to show resolve to get on and send the letter under Article 50. It is annoying many on the continent that the UK has delayed this process.  The government is right to want a simple unamended Act of Parliament to allow the letter to go, to show that Parliament is united behind the democratic wishes of the public as expressed in the referendum. That is the way to increase the chances of a better deal for our future relationship. If Parliament seeks to bind the government it will be seen as a weakness by the rest of the EU  in the talks that follow.

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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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