How complicated is Brexit?

I have often said that “Brexit could be easy”, and have gone on to explain how the army of consultants, Remain liking government officials on both sides of the Channel, and the EU Commission will doubtless slow it down and make it more complex.  My critics change “could” to ” will be” when commenting and claim I do not understand how complex people will make it.

Let’s have another go at explaining the dispute. At the high level Brexit is easy. The country leaving sends an Article 50 letter. Two years later it leaves, with or without a deal concerning the future relationship. It could of course leave sooner than two years were both sides to want to make it easy.  All the EU has to do is to confirm it wants tariff freee access to our market with no new barriers and we can get on with registering that as an FTA at the WTO. Otherwise the UK and the EU trade with each other as all non EU members trade with the EU today.

The EU however wants to get rid of the UK as a force to slow down monetary and political union, but is very keen not to lose the UK’s substantial financial contributions. Its negotiating  strategy is to delay at every available opportunity, as each month of delay is another £1bn. Each month’s delay is also another opportunity to watch the UK indulging in an  absurd negotiation with itself, leading some in the EU to conclude the UK is likely to prove weak. Some in the EU think if they play it long the pro EU forces that remain in the UK may succeed in demanding further large payments to the EU . Some hope for a  new subservient relationship for the UK which will remain in some close association of a legal kind that stops it gaining full control of its laws,  borders and budgets without offering the UK any influence over the EU approach to these matters.

The government’s official position clearly rejects any such approach. The government has rejected continued membership of the single market and Customs Union, on the basis that both the Leave and Remain campaigns said these would not be available without budget contributions, freedom of movement and the rest which we rejected in the referendum.  The government has discussed possible interim periods or implementation periods if things are agreed for our future relationship that take a bit longer to fix. They are not currently asking for any such thing in the talks, as you would need an Agreement first before deciding how you implemented it!

It is one of the stupid myths that asking for a comprehensive Transitional period would solve anything. One or two more years of full membership duties to spend more time arguing over the future relationship should suit neither party, and would increase the period of uncertainty for business.  You only need to ask for interim periods or delays if there is a good Agreement accepted by both sides with difficult technical issues that cannot be fixed quickly.

The scares of no planes flying, lorries sitting in jams at Dover and trade disrupted are irresponsible. It is in  neither sides interest on the day we leave to run their affairs so badly that they disrupt EU and UK citizens going about their business. Governments, EU and domestic, are our servants. The UK is getting on with putting in a customs and borders system that will work from 30 March 2019. Doubtless the EU will do the same, as they have to answer to the farmers, factories and businesses of the continent who will expect continuity and smooth running. Both sides have to conform with WTO rules, abide by international law and allow independent courts to uphold private contracts that will continue to operate.

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Productivity in education

Teachers want a pay rise. Schools lobby for larger  budgets. Ministers have now had a second go at producing their Fairer Funding formula. This combines a higher total with a different distribution, as under the current one some schools receive small amounts and some receive up to twice as much as the lowest funded schools on a per pupil basis. I have supported both the move to spend more, and the demands to have a fairer distribution. I want schools in Wokingham to have enough teachers to do a good job and for the teachers to be paid properly as professionals.

We need also to ask how can the budgets be spent better. The Conservative government has granted many schools more independence of action. Each school has a Governing body bringing together local people with suitable skills to lead and to debate and guide the school management’s use of the budget. Head teachers go on courses in school leadership, and most schools employ some combination of managers, executive secretaries, accountants and bursars depending on their size and the complexity of their tasks.

I am often told that productivity does not apply to schools. The argument runs that the main cost is that of teachers salaries, and the main aim of a better education requires increasing the number of teachers in relation to the number of pupils. Smaller class size is the holy grail of improvement programmes.

I of course agree that a school needs to have enough teachers so there can be sufficient one to one supervision of pupils as required, so that the marking work rate is  realistic and so class activities can be managed successfully. That leaves many other options for improving how things are done in a school without needing more staff or additional budget.

It is not true that all classes should be small. If a class takes the form of a lecture or explanation by the teacher, it is a good idea for more pupils to see and hear an inspiring performance. If the teacher is teaching sport then they will need a group of  22 to have one of our popular competitive games on the playing fields. Class size should be related to the methods of teaching and the needs of the pupils. As someone  who goes into local schools when invited to talk to pupils about the UK constitution or some other general topic I usually speak to a large group of pupils which makes sense as I can only do it once, as do other external lecturers.

More interesting is the question of what use if any should a school make of digital and recorded materials which allow star teachers or others with a good message  to appear in many classrooms at the same time. What is the role of electronic learning programmes, which  now figure so prominently in professional development and training when people leave school?

The main areas for raising productivity lie outside teaching. Like any other organisation there are smarter and less smart ways of organising building maintenance, cleaning, administration, procurement, use of supplies and the rest. Like every modern organisation schools assisted by their Governors need to work away at improvements in all these areas.

 

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The Boris article

I do not see the Boris article as a leadership bid or an offside comment. It is a clear statement of the possible gains from Brexit, by a senior member of the government speaking for the government.  It is a  reminder of how we can and should be better off by implementing the decision of the voters.  It was good to see the reminder that we want to be able to scrap VAT on items that should not attract it when we take back control of our taxes, and to be able to spend more on public services when we get our money back.

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Productivity

Productivity is an ugly sounding word from economics. Some are worried by it as they fear it means job losses, restructurings, making people work harder. Curiously enough it is a word which apparently unites the warring political parties. They all claim to want higher productivity. Some even understand that increased productivity is the key to higher real pay and better living standards. If business can produce more with less,  prices can be lower or specifications and quality higher, and we can afford to buy more or better.

Agreeing to support the general cause is as good as it gets. As we discovered again on Tuesday in the Finance Bill debate, productivity is also a word which divides, as different parties have different views of what you need to do to raise productivity, and where you might apply the policy.

I detected once again a distinct unease by Labour to discuss public sector productivity, for example. This is odd, given that Ministers- and indirectly MPs – have much more influence over how the public sector is financed and managed than we do over the private sector. I pointed out that during the long Labour years 1997-2010 there were no overall productivity gains in the main public services, at a time when private sector productivity was advancing moderately every year.It would be good to know from them why that was, and what they learned from the experience of presiding over a large sector with no clear gains.

The public sector has struggled with the digital revolution more than the private. The application of computer technology and robotics to business is transforming many areas of our lives. The UK public sector still does not have proper computerised records and controls in the NHS, tax has not yet gone fully digital and robotics are not much deployed.

The public sector has had access to substantial sums of capital to transform the way it does things, but has also had a disappointing record at implementing change through large computer programmes.

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Pound hits $1.36 -because of Brexit?

Today the pound got back to $1.36, a fraction off the pre referendum low earlier in 2016.

This follows hints that the Bank might put interest rates back up to 0.5% where they were before the vote. Given the wish to blame everything on Brexit maybe we shoukd say thanks to Brexit the pound has soared in recent weeks.

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Where is Overseas Aid when you need it?

The decision of the UK to guarantee it would spend 0.7% of its National Income every year on Overseas Aid has been contentious. Some dislike the idea of committing to spend without assessing need and capacity to spend wisely. Some dislike the way the UK is one of the few countries to honour this international obligation whilst rich countries like Germany (0.5%), Italy (0.2%) and France (0.37%) do not bother. Some just think we have more pressing priorities at home and should confine overseas aid spending to crises and humanitarian disasters.

Most people in the UK probably agree with  the government -as I do – that  the UK should send immediate relief to British territories in the Caribbean to provide food, shelter, clothing, and medical assistance to those caught up in the disaster. Most probably also think the UK should help those countries rebuild their shattered towns and homes by offering practical and financial help. Surely this would be a cause for overseas aid that would unite more people than it would divide? What better use of part of our large overseas aid budget?

However, the spending of overseas aid is subject to rules and guidance from an international body. Apparently the Caribbean islands concerned did not have a low enough national income when the hurricane struck to qualify for overseas aid. I fear the hurricane has taken care of this in the short term, but international accounting definitions and data seem to be getting in the way of commonsense. I hope our Overseas Aid Secretary gets them to think again. I would like us to be generous to help these islands, and think it should be paid for out of our substantial Overseas Aid budget.

I expect the government to lobby for a change of definitions. As one of the few countries that hits the international target we should have some leverage on this matter.

While we are about it, they also need to review definitions of which military expenditure counts as Overseas Aid. When we commit our forces to peace keeping or peace making in a civil war torn country, that too should count. Peace keeping is often a crucial step to restoring or crating prosperity in a poor country. Without a peace businesses cannot flourish and people find it difficult to go about earning their living.

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The state of the European Union

Mr Juncker’s speech yesterday about the state of his Union contains few surprises. He confirms that “the Euro is meant to be the single currency of the Union as a whole” and sets out a way to make it so. He reasserts the primacy of all EU law and of the European Court of Justice. He wants more majority voting to settle issues. He proposes a European Minister of Economy and Finance. The European Parliament should become the Parliament of the Euro. He wants a “fully fledged European defence union”. When I and others foretold this by quoting EU statements and websites before the referendum we were often told by Remain spokesmen that none of this was true. They thought it was still just primarily a single market.

What was more interesting in Mr Juncker’s speech was what he left out. He left out the UK altogether, save for one expression of regret towards the end. He referred throughout to the 27 members of the EU as if the UK had already left. I thought we had to stay in until March 2019, and thought we were still the second largest contributor to his salary and all the other costs of the organisation. I can forgive him misusing tenses and looking to the future without us. I cannot excuse him from issuing a new policy of the state of the Union without discussing the loss of a major member and setting out what future relationship he would like with that country. He might have given some indication of how they intend to shape their budgets without us, just as he clearly is impatient to consolidate Euro government into EU government once the main non Euro country leaves.

More bizarre still was his treatment of the topic of trade. He sets out a policy for the EU to negotiate and sign more Trade treaties in the future than they have managed in the past, yet manages to say nothing about whether that includes a Treaty with the UK! If we are to take his new Union enthusiasm for free trade seriously surely he will want to accept the UK offer of a comprehensive zero tariff low barriers trade Agreement with what is the EU’s single most lucrative and important export market. Instead he holds out the prospect of doing trade deals with New Zealand and Australia, knowing that they are keen to do deals with the UK as we exit the EU

Mr Juncker may also be personally ambitious. He proposes merging two of the 3 EU/Euro Presidents by offering to amalgamate his role as President of the Commission with the role of President of the Council. Step by step the EU is edging towards the idea of a single President with a world profile. As a reminder that Germany still retains disproportionate influence, he grants Mrs Merkel’s wish that they will not proceed with Turkish membership after all. It was not so long ago they signed a comprehensive Partnership Agreement, opened their borders to Turkey and looked as if they were speeding up preparations for membership.

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A short reply to Lord Bridges

Lord Bridges, the Minister in the Lords who recently resigned from the Brexit Department, advises us we should offer continuing contributions to the EU for a transitional period. He tells us Brexit is very complicated.

There is nothing complicated about what we are doing. We had a long debate. The public decided to leave. We notified the EU or our intention to leave in accordance with the Treaty, and we will leave on March 29 2019 automatically under the rules of the Treaty. All that is easy. One of the main things we need to do is to spend our current EU contributions on our priorities from March 2019.

We are willing to discuss our future relationship with the EU and await their pleasure in doing so. If they do not want to agree a special relationship then we will have a relationship with them based on international law and World Trade rules. We wish to be friendly and positive about our future relationship and have no plans to cancel features of our current trade and collaboration. We are not proposing to take any action to damage their trade or transport links with us. After all the arguments and rhetoric we have no idea if they do want to damage their trade with us, which they can only do within WTO rules. The EU itself has to abide by the strong and complex framework of international law designed to stop states harming each other.

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Let the UK flourish as an independent country

It was amusing to read yesterday morning that the UK has emerged as the second most influential country in the world after the USA in some new assessment of power, influence and diplomatic success in the year after Brexit. This position can be strengthened if the UK sees through Brexit in a positive and outward looking way.

UK voters who voted for Brexit had confidence in our ability govern ourselves, to spend our money on our own priorities and to make our own way in a world where power and economic might is shifting to the Pacific regions.

Now many Remain voters also agree that we should get on with implementing the decision. The fears about the short term economic consequences put round by the Remain campaign have been proved comprehensively wrong.

The oddity is how negative so many in the UK establishment are. It is senior lawyers, large company executives, senior civil servants and some MPs who are the ones who refuse to take back control and have such a low opinion of our country and its capabilities.

Some senior officials seem to want to stay wedded to Brussels instructions instead of fashioning a new global presence and UK policy. Trade associations that have spent the last forty years trying to stop or amend EU regulations now often want to protect every last one and sign up to all future ones as well. When MPs and MInisters urge the UK machine to develop the capacity it needs to develop new UK solutions there is often a reluctance to welcome the freedoms we will soon enjoy fully.

The UK has much to offer the world. We wish to remain a reliable ally and partner of the EU, but can see ways to improve and amend our government for the conditions of the modern world. It makes it strange to see so many of the establishment huddled in the EU legal cell, the door now wide open, asking to be shut in again as they think the world too big and interesting for them. They should take heart from this latest survey, and ask themselves how we can we do more to enhance the lives of UK citizens and to contribute more to the exciting growing world as a whole.

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Council tax, utility bills and petrol pushes up annual inflation

The twelve month CPIH, the government’s preferred inflation measure, rose 2.7% in the year to August 2017. “The largest contribution to the 12 month rate is housing….electricity prices and Council tax” (0.6%) followed by transport at 0.4%. In the latest month clothing prices have risen. The narrower CPI rose 2.9%.

Overall shop prices were down 0.3% in the year to August, showing that competition kept prices down, and the currency effect on import prices was not as many forecast.

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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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