Why is the Today programme losing its listeners?

“Today”  is losing listeners  (minus more than 800,000 last year) in part because its endless Brexit coverage is one sided and tedious. It strives to make most things as being about Brexit, when most things are nothing to do with Brexit. Yesterday morning a Minister was trying to talk about exports. She was  regularly interrupted by an interviewer who just wanted to shout Remain propaganda at her, claiming that a No Deal Brexit would be a disaster without providing a shred of evidence. This is all too common. Where were the good questions about the UK’s capacity to export, about the changing nature of our markets and the growth areas of our products and services? There was no single question to challenge the Minister or to draw out some new material on the UK as a trading nation. How will the UK fare as the digital revolution advances? Will the big build up of technology businesses in the UK stand us in good stead? Have all the EU trade agreements been novated to us as well as to the residual EU? Is it true that 90% of the growth of our trade will be with countries outside the EU? How is the Trade department’s budget best spent on trade promotion?  We almost learned that the existing EU trade agreements will novate to us and to them, but the interviewer fell short of pressing and confirming this.

Most economic news items like currencies, jobs or balance of payments  have the same explanations as before the vote. Interest rates go up and down thanks to actions of the Bank of England. Shares and currencies go up and down related to world economic changes and government economic policies. Most of us have no wish to hear recycled the same old Project Fear stories  about how trade will be affected after we leave, as explained by the so called experts who wrongly told us to expect a recession in the winter of 2016-17 after the vote along with big job losses, rising unemployment, plunging house prices and a collapsing stock market.

For years we have had to put up with a Today programme which has eschewed serious criticism or commentary on the EU project of economic, social, currency  and political union, and to put up with a refusal to properly  balance the endless pro EU speakers  with enough interviews of  serious minded and well informed participants who have forecast the outcomes of the Euro , the ERM and the moves to political union accurately. Any party or movement anywhere in Europe that wins elections by  challenging  some part of the EU scheme is seen as “extreme right” or “populist” and unhelpful.  Now they are taking the Today programme further away from being a sensible and well informed 3 hour consideration of the news by introducing quizzes, poor coverage of cultural matters , long  commemorations of popular artists when they sadly die and genuflections  to magazine lifestyle issues.

People used to tune in to Today to get a serious if not always balanced  debate and commentary on the business of the nation and the business of business. That’s now hard to come by on a programme which often caricatures itself.

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The UK Treasury makes a mistake and helps an industry grow

The 2016 budget is famous for the damage it did to the residential property market and buy to let homes for renting. Its high Stamp Duties and withdrawal of interest relief had the predictable effect of cutting transactions and investment, and reducing tax income as well. The 2017 budget did something similar to the car market.

The 2016 budget also cut taxes on North Sea oil production and profits. That has had the predictable and opposite effect to the tax rises. Output is now well up, as is profitability. And yes, the government will collect more tax from the North Sea operations this year than when the tax rates were higher. This has happened despite lowering PRT to zero, as a result of higher Corporation Tax receipts on higher profits given lower costs, no PRT and a higher oil price.

One expert firm is spreading the idea that the Chancellor might reimpose higher taxes on the North Sea now it is doing better again. That would be a great idea if his aim is to cut the output of the area and to reduce his own tax take, but a silly idea is he wants to promote UK prosperity.

How many more examples do we need to supply to get across to the government that lower taxes not only boost incomes and output, but can also lead to higher revenues?

 

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Non Tariff barriers – the EU has to play by WTO rules

One of the many absurd Project Fear scares is that we will be unable to export many goods to the EU without an Agreement because they will say they do not comply with EU rules any more once we have left. This flies in the face of the fact that they will still so comply, as the companies exporting will continue to meet EU specs for EU trade.

More importantly, the EU has built World Trade rules into its own legal structures. The WTO, for example, has  a  Technical Barriers to Trade Agreement to deal with just such issues, and a Sanitary and Phytosanitary Agreement for agriculture. These require a WTO state to accept product from another WTO state as complying with standards unless there is an objective reason to establish they do not comply. The EU has and uses powers to recognise the standards and competent authorities of third countries to be able to import their goods and to comply with its WTO obligations.

So hear this all you Project Fearmongers. The EU is a legal construct which also has to live by the rule of international law. Under WTO rules non tariff barriers have been dealt with, so the EU cannot legally mount a Napoleonic blockade against UK goods once we have left. After all, the day following our departure UK produce and products still meet all existing EU standards. I still find it odd that those who most love the EU think the EU would want to try to do this. It would also, of course, be a violation of the EU Treaties themselves which require the EU to develop positive relationships with neighbouring states and to promote trade with them.

The WTO has done good work in recent years to make it illegal for countries to impose new non tariff barriers to impede trade. The EU has built these requirements into its own law codes. People on both sides of the Channel will continue to honour contracts and buy and sell to each other after our exit. To suggest otherwise is silly scaremongering.

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Jeremy Hunt damages the UK’s negotiating position

I thought Jeremy Hunt was a good Health Secretary. He was very positive about the NHS, but insistent on improved transparency and higher standards. He did much to encourage good outcomes by his approach to reporting “never” events and revealing what had been going wrong in some hospitals in earlier years. He did not make mistakes with what he said.

It was therefore a double disappointment to hear some of Mr Hunt’s recent comments as Foreign Secretary. They seemed designed to undermine the UK’s negotiations, which require us to prepare thoroughly to leave without a deal if necessary and to show the UK will do just fine with No Deal. Instead Mr Hunt said that leaving without a Withdrawal Agreement and Future Partnership Agreement “would be a mistake.. and would inevitably change British attitudes towards Europe”. Some of his language was open to interpretation that he thought there were worrying downsides to just leaving.

Let me have another go at explaining the background to Mr Hunt. The UK has had a very troubled relationship with the EU throughout its membership. Pro EU Prime Ministers have ended up in strong dispute with the body. Margaret Thatcher rightly thought we got a rotten deal on financial contributions, and successfully cut them after a bruising set of encounters. She subsequently realised our membership was a bad idea for the UK and came round the view we should leave. John Major had a particularly punishing  exchange with them over the way they damaged our beef industry, which he lost. He also had a running argument with them over the Euro and possible UK membership and only made Maastricht possible by getting us an opt out from its main point, the single currency. Tony Blair sought to reform the Common Agricultural Policy. He made major concessions on our financial contributions, only to be double crossed by the EU who failed to deliver the promised agricultural reform. Gordon Brown reluctantly signed the Lisbon Treaty but denied the press access to the signing ceremony  as we were told in Parliament nothing significant had  happened! It is difficult from this history to share Mr Hunt’s strange belief that we have great relations with the EU that will be irretrievably damaged by a no Deal Brexit.

The UK has a long history of refusing to join major parts of the EU scheme. Originally opted out of the social chapter by a Conservative government, Labour joined that but rightly kept us opted out of the Euro and Schengen, the common borders policy. This reluctant European approach has always caused friction with the EU and has led to policy and legal devices to drag us more under its control despite our refusal to join up to the more obviously centralising policies.

Mr Hunt also seems unaware of the large economic upside we will enjoy if we just leave in March 2019 without the impediment of a Withdrawal Agreement delaying us. The UK economy can receive a major boost from spending the £39bn we would otherwise send to the EU on our public spending priorities and tax cuts here in the UK. We will also be able to draw up a tariff schedule more suited to UK needs and strengths, and sign trade agreements with many countries around the world. If we insist on just leaving, the EU is very likely to seek tariff free trade with us. It is only because they think the UK will give more ground in this negotiation that they are hanging tough on the trade issue.

Many pro Brexit MPs agree that leaving and trading under WTO arrangements is a good option with plenty of economic upside for the UK. The government still believes there is a better deal available than this. If they want to get such a deal they need to show the EU we are serious about leaving without one, and explain the many benefits of so doing in public. Pro Brexit MPs are not going to vote through the legislaiton necessary to slow down our exit and pay the EU more money for no good reason.

Future relations with the EU will  not be mainly determined by how we leave. They will in the future, as in the past, be determined by the interests of the EU and whether they coincide with the interests of the UK. The interests of the two have rarely coincided all the time we have been in the EU, as the UK has persistently refused to accept the clear direction of travel towards full economic, monetary and political union. Removing this major cause of friction should improve relations once we are out. The longer we stay half in and negotiating, the worse relations will get.

 

 

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What might happen next to Turkey’s relations with NATO, the USA and the EU?

There is no mechanism in NATO to evict a member and no sign that Turkey wishes to leave. The base case is Turkey stays in, with increasing tensions for the time being over policy and what can be shared and done together. The more Turkey cosies up to Russia, the less likely the US will share technology and secrets with Turkey. NATO is not about to turn against the Kurds that have helped it in Syria, though no-one seems to have a solution to the Kurdish problems.

Syria is likely to complete its brutal re conquest of the country with Russian help. There will be countless displaced people in Idlib seeking a new home. Turkey will have to decide how many and whom it might help, and look to its border defences if it wishes to say No to large numbers whose natural exit from Syria will be across the Turkish border. The EU will want to keep its arrangement with Turkey going that refugees stay in Turkey and do not travel on to EU members on the continent. This means the EU may well have to offer more financial and other assistance to Turkey to handle her border issues and look after refugees.

The EU has already provided substantial sums to help Turkey build a 911km wall with a height of 3m, with barbed wire at the top. The EU supplied some of the surveillance technology and military vehicles to enforce the border ban on people crossing from Syria. Presumably the EU and Turkey will use this tough border to make it difficult for refugees to flee Idlib into Turkey, with more deaths in Syria the likely result.

Turkey will continue to negotiate with Russia, who will generally wish to encourage Turkey  to destabilise the eastern end NATO. Russia, however, will not agree with Turkey’s wish to have a buffer zone in northern Syria. It will be easy for Russia to appear as a better friend to Turkey than the USA all the time President Trump is waging what President Erdogan calls economic war against him.

The USA will want to keep inner NATO secrets from their formal ally. The President seems determined to pursue his trade war with Turkey which will drive Turkey further from the Western alliance. It will be another case where the US pattern of alliances and interests will diverge from the EU’s.

The EU is in the  most vulnerable position. Their Association Agreement with Turkey makes Turkish policy of considerable interest to the EU. The current drift of Turkish policy is not the one the  EU intended, as they sought to bind Turkey more firmly into western ways. The EU’s Association Agreements are contentious items. The one with Ukraine lay behind the secession of Crimea, where Russia was able to exploit the tensions caused by the EU policy within the former Ukraine.The Turkish one is not going to lead to a splitting up of the country, but it could lead to an important rift between the West and Turkey. The EU in its March 2016 Agreement offered Euro 3bn to Turkey in return for her keeping the migrants and not allowing them passage to the EU. The EU helped finance and strengthen the border fences which will mark the limit of Assad’s reconquest of Syria by force.

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The dollar is surging against all currencies – this has nothing to do with Brexit

I see that the usual suspects in the pro Remain press and BBC are out and about arguing that the recent falls in sterling against the dollar are the result of Brexit speculations. What nonsense. The pound has been  very stable against the Euro in recent weeks, staying around 1.12 to 1.13 Euros to the pound. Sterling has risen against the vulnerable emerging market currencies. It bought 5.7 Turkish lira in May and now buys 7.4. It has been stable against currencies like the Australian dollar and the New Zealand dollar, not currencies which are experiencing any Brexit effects either!

The dollar is going through a period of great strength for a variety of economic reasons. It is proving very uncomfortable for many emerging market countries and companies that have borrowed in dollars. That is the story, not Brexit. Some of the journalists and commentators involved claim to be independent well informed people providing fact based  analysis, so can they begin by explaining these simple facts about recent currency movements?

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Turkey at the crossroads

Turkey is a member of NATO and has a comprehensive and complex Association Agreement with the EU. In some senses Turkey’s border is the EU’s border given the provisions on movement of people. Germany is friendly towards Mr Erdogan, not least because the EU welcomes Turkey’s willingness to provide a home for refugees from war torn parts of the Middle East. The EU offers Turkey financial assistance with the refugee programmes, and with strengthening the long Turkish border with Middle Eastern countries. All this implies Turkey remains an important part of the Western system.

Turkey also has a complex set of relationships with Arab countries to the south.  An opponent of Islamic State and similar terrorist groups, Turkey is also opposed to Kurdish independence movements and worried about the likely attack on Idlib by the Syrian state given the number of rebels and displaced persons in the last remaining rebel stronghold in Syria, close to Turkey. Turkey has allied herself with Qatar, a state which has fallen out with Saudi Arabia, the USA’s main ally in the region.

In recent months there has been a sharp deterioration in US/Turkish relations. President Erdogan felt the US did not offer sufficient support and sympathy when there was an attempted coup in Turkey. The USA thought Turkey over reacted and imprisoned too much of the opposition to the regime. Turkey does not like the way NATO works with Kurdish forces in its interventions in Syria, and is now locked in a trade war with the USA over steel and aluminium tariffs. Recently the USA  has renewed its demands for the release of Pastor Brunson, and Turkey has imposed a range of high tariffs on items like cars and rice from the USA.

President Erdogan timed his re election well. The economy was growing at a rapid 7%. Public spending shot up just before the polls, and the government urged the Central Bank to keep interest rates down despite the obvious build up of inflationary pressures. Shortly after the election win markets turned against the Turkish lira and demanded action to raise rates, slow the economy, rein in debts and curb price rises. The President has no wish to do these things, and has appointed his son in law as Finance Minister to help him see off unruly markets.

So far markets have been getting the better of him. A massive slide in the lira is posing problems for the Turkish companies that took out substantial dollar borrowings in the good days. The Central Bank has raised rates to 17.75 % despite Presidential reluctance, but markets want more. Now Qatar has provided some much needed relief for the banking system by offering loans of $15bn to ease shortages of foreign exchange. The Central Bank has imposed controls on commercial bank dealings  in foreign exchange, and the government may turn to a wider range of controls on the movement of money to stem the run against the lira.

Russia sees all this as an opportunity. Turkey has already bought some anti aircraft missile defences from Russia despite being a NATO member. The USA is now blocking the sale of F35s to Turkey and is concerned about what technology and intelligence it shares with a member state that is developing closer relations with Russia. Tomorrow I will look at the options facing the main participants and discuss what might happen next.

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How modern borders work

The people who churn out the latest absurd version of Project Fear are stuck in a time warp. They think that if we leave and go to the WTO model our borders will immediately  be congested with lorry drivers in queues waiting for a staff member at the border to carry out an inspection and calculate the tax there.

In the modern world most of the work is done away from the border by computer exchanges. Our border with the rest of the EU is already in their terms a complex border. Goods passing need to be charged to VAT, Excise needs to be levied on various items, the currency changes, and various UK domestic rules on health, safety and migrants have to imposed . In the case of the majority of imports coming in from outside the EU there are also tariffs to levy.

Most coming across our border comes  on big trucks organised by approved traders. The tax is sorted out from the electronic manifest away from the frontier. Any checks on products are carried out at the originating factory, and subject to inspection and  spot checks there. Any additional requirements as we switch from EU to WTO can be done in the same way.

So what exactly is the problem? All imports will be under our control to deal with at our borders. We have no need to put in queues and special border checks. Those who say the EU will impose some  version of the Napoleonic blockade on us when we leave also live in an imaginary  world. It is strange the people who most love the EU  expect it to try to  start an economic war. They do not understand that even in the unlikely event they wanted to under international law and WTO rules that would not be possible. How would the EU seek to prevent a French cheese maker or a German car maker sending product to the UK? And how would that be legal?

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The reasons the PM gives to surrender our powers of self government again over the supply of goods

In her letter the PM says “the rules of goods are long established – the last substantial change was in 1987”. This is untrue. The EU is regularly updating and extending its rules over business. Once we have left we lose the little influence we did have whilst still a member with a vote to prevent or delay the most damaging proposals.

“Many of the rules are based on international standards set by bodies that we will have a seat on”. Fine, then there is no need to  bind us into the EU version anyway

“British businesses which export to the EU have been clear they will continue to follow the rules in order to continue selling into the European market”. Of  course if a customer wants a given specification the supplier will meet it. That does not mean we have to adopt those same standards for everything we do at home, or be bound by them if selling to third countries with their own different requirements. Exports to the EU are only 12% of our economic output. The ability to improve and change our own rules is important in a democracy, and important to be able where we wish to do trade deals.

“any changes to our rules will be subject to a Parliamentary lock” – but each time Parliament objects to EU rules or changes to EU rules we will be told we are not allowed to alter them as it would disrupt our relationship and trade with the EU.

She argues we could still do trade deals with non EU countries, though the EU control over our goods market would make this much more difficult.

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Ed Balls and the politics of jealousy

It has been amusing to watch Ed Balls trying to understand the support for Donald Trump in the USA. Quite a lot of the time Mr Balls seems thrilled to be part of the car loving outdoors lifestyle of the typical Trump supporters. He seems very at home with  the not so rich that he rubs shoulders with, and wants to enjoy his time with the wealthy and glamorous. He leaves it to his individual private talks to the camera after his social events and interviews to confide in us that he still disapproves, with some large moral objection or other to this democratic phenomenon of a popular movement.

The main issue Mr Balls keeps coming back to is how can the low income Trump supporters back a billionaire? How can they vote for a man who gives the rich tax cuts? He seeks to stir up jealousy. So far he has had no success. The replies come back that they like the fact that Mr Trump is a businessman – he might help them make some money just as he has made some money for himself. They are very relaxed about the higher income people getting tax cuts, because they are getting tax cuts too. Some of the Trump supporters on lower income reckon they might be much richer one day anyway. As one said this Sunday, I am $100 a week better off with the Trump tax cuts which helps me so I don’t mind the rich getting tax cuts as well.

I am surprised Mr Balls finds this absence of jealousy surprising. The whole idea of the American dream is someone can go from Bell boy to hotel owner, from a kid in a deprived neighbourhood to a top paid lawyer or banker . It is at best a get up and do society, where many want their government to get out of their way, and to let them keep more of the money they earn.

In the UK where Mr Balls learned his politics maybe he hopes the politics of jealousy will be more successful. Here too there are many more people who are not jealous. They vote for parties and candidates that can improve their lifestyle, incomes and life chances, not for parties and people who will do down those who have succeeded. Labour wanted to get rid of grammar schools by giving the vote to decide their future mainly to the parents of children who did not get in. The first ballot failed to deliver the closure many in Labour craved, because the parents of children not at the grammar were not jealous of those who went to the grammar. They gave up and grammars survived.

Mr Balls as often on the left also argues from contradictory positions. He both thinks poorer Americans should shun Mr Trump because he is rich and privileged, then argues they should shun him because he has had business failures and was not the in past rich enough! So is he too successful to represent people, or too much of a failure to do so in Balls land? And does it matter, as enough US voters backed him whichever.

I will enjoy the remainder of this mini series. I like it when Mr Balls looks thrilled to be there and is visibly enjoying lifestyles he would normally condemn. I then like it even more when we get  the private musings to camera to shore him up with the left wing UK audience that will see the programme as he struggles to find things to complain about. He is going to have do better than the crusade for jealousy, which is an unbecoming political emotion.

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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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