John Redwood's Diary
Incisive and topical campaigns and commentary on today's issues and tomorrow's problems. Promoted by John Redwood of 30 Rose Street, Wokingham RG40 1XU.

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My Intervention on the UK Internal Market SI – 20% of goods

John Redwood (Wokingham) (Con):

It has been said that maybe 80% of goods moving from GB to NI will be able to use the internal market lane. Why will 20% not be able to do so, and why would the UK Government, who I was told were in charge, not want to ensure that practically all goods use the internal market lane?

Mr Baker (The Minister of State, Northern Ireland Office):

With great respect to my right hon. Friend, with whom I have gone a very long way in this cause, he might like to revisit the text. The point is that the 80% of goods going on that route are staying in Northern Ireland; they are UK goods. The other 20% are goods that are going on to the European Union. That is the point: 80% is UK internal market trade, and 20% is trade going on to the European Union.

My Intervention on the Windsor Framework Motion 2- Stormont Brake

Stephen Farry:
Does the shadow Secretary of State recognise that there is a different school of thought from some people and businesses in Northern Ireland around the Stormont brake? If there is a degree of delay or uncertainty in the application of an updated EU regulation, that could inadvertently undermine Northern Ireland’s dual market access, by creating uncertainty for businesses seeking to invest or remain in Northern Ireland. By far the better way is for Northern Ireland institutions to talk to the European Union at the start, to make sure that our concerns are reflected as fresh EU law is undertaken or updated.
Hilary Benn:
The hon. Member makes an extremely powerful and useful point. The businesses that I have spoken to in Northern Ireland support Northern Ireland’s access to the EU market. In choosing to pull or not pull the Stormont brake there are many considerations, which I am sure elected politicians in Northern Ireland will take into consideration. Let us be honest: it depends on what we are talking about. What impact will it have? Will it have a really bad effect, in which case people might reach for the brake? Other times it may be a perfectly sensible change and nobody needs to worry about it. But there is a mechanism that gives Northern Ireland politicians and the Assembly the chance to decide between the two.

John Redwood:
Further to that point, which is a very good one, would the EU not decide to use its powers if Stormont tried to use the brake too often and change the amount of EU law that applied?

Hilary Benn:

The Stormont brake was the result of a negotiation between the Government and the European Union. It was a really big step forward‚ÄĒit is why we are having this discussion now, and I support it. Anything is possible in the future with regard to what one or another party that is engaged in continuing discussions and negotiations may seek to do, but we have a deal with the European Union and it expects us to honour the Windsor framework‚ÄĒa point I have made in the House many times before‚ÄĒand we would expect the EU to do entirely the same. Nobody can guard with absolute certainty against what may happen in the future; we have to deal with the world as it is today.

My Intervention on the Windsor Framework Motion 2 – Green lanes

John Redwood:

Someone wanting to send goods from GB to NI would naturally expect to use the new internal market lane‚ÄĒthe green lane. Who decides whether they would not be allowed to do so? Would it be the EU, the UK Government or the Stormont Executive?

Chris Heaton-Harris (Secretary of State for Northern Ireland):

It is the UK Government in that area.

My Intervention on the Windsor Framework motion 1 – VAT

John Redwood (Wokingham) (Con):

If the Chancellor of the Exchequer wishes to lower the VAT rate or to take something out of VAT altogether, will that be a good law for Northern Ireland as well as for the rest of the UK, and can we now set taxes for the whole country?

Chris Heaton-Harris (Secretary of State for Northern Ireland):

On the example my right hon. Friend has given of VAT, that has just been done for a number of different things. I believe the latest one was solar panels, but I will check with those in the Box. There are various other products, and I will get an answer for my right hon. Friend. But, yes, is the answer for VAT, and also for tax.

The regulations address the concerns that have been expressed in parts of the Unionist community in Northern Ireland that its status has been diminished. Let me say from the outset of our discussions that what the Government wanted and the Democratic Unionist party wanted, and which we had, was our shared determination to strengthen our Union.

UK divergence from the EU

When I voted for Brexit I voted for change.     I saw how far the EU was lagging behind the USA, and behind Switzerland, Norway and Iceland, three small countries  not in the EU in income per head. The latest IMF figures show that the USA now has twice the level of GDP per head, at $80,000, than the EU average at $41,000. The UK at $49,000 is usefully above the EU average but well below the US.

I have watched with concern at EU performance as the US has founded, grown and developed the world’s large digital companies, pioneering on line shopping, social media, search, software applications and now artificial intelligence. The EU has looked on, sought to regulate these activities but had to¬† buy the goods and services for what is a US led digital revolution. All 10 of the largest companies in the world by market value are US and 7 of them are in the digital sector.

Remain was so wrong about what would happen after Brexit. The opposite happened to their forecast of fewer jobs, early recession, falling house prices. They now tell us our way to faster growth is to rejoin the EU, or align ourselves more fully with the vast array of rules and regulations   that the EU specialises in. Many of these rules prescribe how products must be designed and made. This often adds to costs and can stifle innovation.   A flourishing single market just needs a simple rule that if a product is of merchandisable quality in one country it should  be permitted to offer it for sale in another that is part of the same market. If there is to be supranational regulation then require good safety standards, require proper labelling but do not tell people how to design and make any given product.

The US has a common law system. We used to depend on our common law system, then had to see superior code law from the EU bolted on top of that more flexible system.¬† ¬† ¬†The battle over the Northern Ireland Protocol is partly a battle over the UK’s right to diverge. Ministers¬† now say we can. So then, get on with it. We have plenty of historical evidence that the EU model means slow growth, high costs and Europe slipping further and further¬† behind the world leaders in living standards. Why want to tie ourselves back into a system which can thwart enterprise, be hard on entrepreneurs, promotes high taxes and costs and fails to encourage innovation?

Headroom for tax cuts

Briefings from Treasury and OBR say little room for tax cuts. This is all based on OBR forecasts which have been wildly wrong in recent years. They have mainly been too pessimistic about revenues, greatly exaggerating the deficit.

The government must help itself by curbing spending and correcting obvious forecasting errors. Here are some key items.

1 Debt jnterest has soared thanks to the addition of the non cash item of indexing debt to the genuine cash payments and costs of higher interest burdens. Having terrified us with a surge to over £100 bn of so called debt interest, we should see a big drop of at least £35 bn in interest costs going forwards as the inflation rate this year subsides. They only showed £17 bn of this in the budget numbers.

2. The government has promised to cut legal migration by 300,000. This will create substantial savings on additional subsidised  benefit top ups, revenue costs of extra  NHS and education service and the additional capital costs of extra provision. New arrivals need subsidised homes, school places for children and health capacity.  This should save  £75 bn over the next few years using the old EU number on costs adjusted upwards  for recent inflation.

3.There should be a write back for losses on Bulb which were probably overstated in the provisions

4.Cancel gilt sales by Bank of England.  With overall Bank losses currently running at £34 bn so far this year, ending market sales at low prices would save a substantial part of this

5. Get public sector productivity up by half the amount lost since 2019. Thus would save an estimated £15 bn

6 Re phase and require much larger private sector contributions to any carbon capture and storage projects. We cannot afford £20 bn public money or anything like it on this.

7. Railways  РRequire faster reduction of deficit and grants

My Intervention on the Telegraph Media Group: Proposed Sale to RedBird IMI

John Redwood (Wokingham) (Con)

As owners expect to have influence over editors and the editorial line, why do we not have a policy of ruling out all Government ownership of such organisations, which would make it much simpler?

Julia Lopez, (Minister for Media, Tourism and Creative Industries):

I thank my right hon. Friend for making that simple point. It is one that I am sure will be considered once this case has passed.

The Northern Ireland Protocol

The Northern Ireland Protocol and the absence of early return of all our fishing grounds led me not to vote for the final Brexit settlement. I would have preferred to leave the EU on WTO terms, and felt we paid a high price for the Free Trade Agreement. As a heavy net importer from the continent the Trade Agreement was always likely to help them more than us. This was reinforced as with all EU trade deals by its concentration on goods where they are strong and its weak provisions on services where we are strong.

I voted for the legislation the Johnson government proposed to fix the border issues. There was always a ready fix of mutual enforcement, where we would police goods exported from NI to the Republic for them by ensuring such goods met their standards, and they could do as they wished for goods they are sending to NI. The UK had no wish to impose a north/south border and no need for one. The volumes of trade are low over that border. Far bigger were the volumes of trade between GB and NI which should be internal matters for the UK with no need for border controls. I was annoyed when this legislation which had passed the Commons was abandoned.

I voted against the Windsor Framework. This did impose a border between NI and GB, requires checks on GB to NI trade and requires all business whether for export or not to be EU law compliant in NI. It meant NI faced new EU legislation which it had no part in debating or amending which the rest of the UK did not have to adopt as a non member of the EU. It was no wonder the DUP felt they could not work in Stormont all the time they were treated differently to the rest of the UK and all the time they faced new laws with no representation.

I wish to see the draft law the government is now proposing which the DUP leadership says will address these two crucial issues. I look forward to seeing the guarantees the DUP has won on EU law and border controls to GB.  It is important NI is fully part of the UK internal market with no additional controls on a sea border between NI and GB.



The magnitude of the net zero task

Just 20% of world energy is delivered as electricity, and just 30% of that electricity comes from wind, solar and hydro power as renewables. That means that just 6% of the current world energy takes the form of renewable electricity, so beloved by the campaigners for an early and energetic move to net zero. To get to net zero China and India, the two world giants still increasing their CO 2 output need to go through major changes. To get there the bulk of energy currently burned in petrol and diesel engines, in jet engines, in domestic gas and and solid fuel heating systems and powering most of the world’s factories needs to be converted.

Those who say the world can easily switch over to renewables in the form of solar and wind power need to understand the magnitude of the ask. They need to tell us where and when there will be a massive expansion of electricity grids to take all this extra power. Presumably we will need three or four times the present miles of cable and numbers of pylons.  They need to say how most people and businesses will be persuaded to switch to heat pumps, electric cars and electric factories and how they will afford this. They need to tell us what the CO 2 impact will be of making all the things for this massive transition, and how the West will gain from this all the time China has cornered the markets in rare earths, minerals for batteries and the manufacture of EVs, solar panels and turbines.

If we are to rely more on renewables we need to know how they will handle periods of no wind, low sun power and an absence of water in hydro schemes. We need to know whether they will go for making plenty of hydrogen and its derivatives out of renewable energy so we will have synthetic fuels for our transport and heating? Will they want to up the percentage of green gas or liquid used in transport fuels and domestic heating or do they really think there can be the conversion of most to electric equipment?

This all has to be practical and affordable. It requires huge buy in by billions of people, and needs them to have the capital to replace all their current equipment. People will want cheaper and more practical proposals than a Tesla and a heat pump.

EU borrowings are a new burden the UK will not share

The EU in 2020 made a momentous decision. With the UK no longer having voice or vote to oppose, they decided to go ahead with large borrowing programmes at EU level. Germany was reluctant to see the EU become a transfer and collective borrowing union but was persuaded to let it pass.

Prior to 2020 the EU had borrowed just 30 bn in its own name. Now it has borrowed 400 bn. It plans to borrow the best part of 1 trillion Euros this decade, with 806 bn ear marked for the NextGenerationEU  fund and other money for SURE, the unemployment fund. Whilst some of the NextGen money is loans where the ultimate borrowing countries are meant to repay, the overall borrowing is on the EU account. The EU is evolving into a transfer union with a single larger budget.

Had the UK stayed in the EU the totals  borrowed may have been larger.We represent 15% of total EU plus UK Gdp. Member states are liable for their Gdp proportion  of the total. In practice though markets will hold all EU states jointly and severally liable for EU debt and the EU could demand higher proportions in a future decision for any member state.

So the UK would have added at least  120 bn euros to our state debt burden by accepting 15 % of this new debt. That is more than £4000 for every UK family of extra  debt we have avoided by leaving the EU.

The EU has also upped the amount member states have to pay into the annual budget of the EU by 0.6% of GDP. That would have been another £14 bn a year of contribution by taxpayers before any rebate.