Author: johnredwood

The so called Recovery and Resilience fund agreed after much wrangling on Monday night will do practically nothing to help EU economies recover from the pandemic policies. There is no public analysis of the damage done to large sectors of the EU economy by lockdown, no plan for aviation or hotels. It is a very important step on the road to full political union, establishing the important principles that the EU can borrow on the balance sheet of all the member states, and can transfer money from richer to poorer countries following such borrowing.

The grant and loan money in the fund totalling Euro 560bn after haggling will be disbursed over a four year period starting next year. Nothing will be raised and spent in 2020, when the need is greatest, and maybe under 60bn Euro in 2021 according to an EU Commission cash flow forecast. In other words this scheme is not going to rescue the EU economy and is going to make no visible contribution to the recovery for at least the first 18 months after the crash. The other Euro 190 bn will be added to existing EU spending programmes in future years, taking the new borrowing to the promised Euro 750bn.

It is not actually about the virus. It is about the political ambitions of the new Commission, and the need of France and Germany to reaffirm faith in the project of ever closer union at a time of major divisions of opinion on that goal. The UK’s dogged resistance to the project is rightly no more. It is better we leave than continue to oppose the central thrust of the project. Instead the Netherlands led a group of five so called frugal countries who object strongly to a larger budget and to sharing their tax revenues with poorer nations. Two of them have also refused to join the Euro, seeing how that takes you a long way on the road to European integration. Denmark has a legal opt out from Euro membership, whilst Sweden simply declines to meet the Treaty obligation to join.

The Commission has used the Covid 19 damage as a means to lever a bigger budget out of the member states, to be applied to the priorities of the Commission as set out before the pandemic intervened. The overriding priority is to push the Green Revolution. The favoured example of a project suitable for funding is 1 million electric vehicle charger points around the EU. To bring that about individual member states will need to incorporate national roll out of such points in their National Plans and submit them to the EU for money.

Any country wanting a grant or loan will need to send in a Plan and detailed proposals and receive EU approval. Money will only be released where there is target monitoring and performance reporting in place. Payments will be phased with review of progress before further release of cash. This reflects the worries of the states opposing the original scheme.

The government has recently issued a White Paper setting out how the UK’s single market and customs union will work as we leave the EU’s single market and customs union.

The legal powers for our single market stem from the original laws and terms of the Union, and from the removal of the EU powers under the EU Withdrawal Act. The White Paper reminds us of the fundamental principles of the UK market, which rests on the principle that any company can supply goods and services throughout the UK. High standards will be maintained by UK laws and regulations.

The government proposes “enshrining the principle of mutual recognition into law” ensuring regulations are recognised across the UK. It also wishes to repeat in law the principle of non discrimination so companies can trade freely throughout the UK.

These issues will be contested by the SNP. Ever keen to bind us into common rules and laws with the EU in the name of their single market, they will doubtless oppose similar rules and regulations at UK level. Given their belief that they needed the common rules to carry on selling into the EU, they should be more worried about their ability to sell into the rest of the UK and grateful for legal reassurance offered by the Union government. Scotland sells more to the rest of the UK than to the rest of world together and more than to the whole EU of course.

The government needs to ask how much legislation it actually needs to continue these trading practises and principles, that pre dated our membership of the EU.

The government is offering more powers to devolved Administrations as we reclaim powers from the EU. As the White Paper says they will respect devolution, ensuring the devolved administrations “receive powers over many more policy areas than they currently hold as part of the EU, whilst ensuring that all intra UK trade remains frictionless”. There will be transfers of power in 160 policy areas, whilst ensuring common frameworks to keep the single market together.

How much further would you go with devolution? How should the government respond to an SNP that wishes to use these issues to drive a wedge into the Union?

I have received copies of a couple of lobby letters being sent round asking me to support proper Parliamentary scrutiny of trade deals. Let me put minds at rest. Parliament has debated trade more thoroughly and more often in the last four years than in the four decades of our membership of the EU.

Parliament is debating trade yet again today as we continue our scrutiny of the government’s legislative framework for our post EU trade policy. We were never offered primary legislation or extensive scrutiny of the many tariffs and rules imposed during our membership of the EU. There was of course little point in Parliament debating the tariffs and controls imposed on us during those years, as they resulted from directly acting regulations of the Commission, or from Directives decided by qualified majority vote which we might have lost or agreed to reluctantly.

Any future trade deal will be discussed, examined and debated extensively by Parliament. It may well need legislation which will have to go through both Houses with more extensive scrutiny and with votes for those who dislike any such Agreement. There is no need today to vote for an amendment which requires more scrutiny as there will be more scrutiny. It is not a good idea for Parliament to try to fix its own future agenda in law. The truth is if a majority of MPs want something to be debated or wish to stop something the government is proposing, they will do so. Governments can only enter trade treaties or make other decisions all the time they command a majority. To continue to command such a majority they need to persuade enough MPs on each measure that they deserve support.

Some rightly argue we need high animal welfare standards. One of the advantages of coming out of the EU is we can set higher standards, as we were usually arguing for higher standards within the EU against considerable resistance from some countries. It took longer than we wanted to improve conditions for hens, and to ease veal crate conditions for example. It is strange that some people think it is both critical we have a Free Trade Agreement with the EU and equally critical we do not have one with the USA. The truth is FTAs with both could be helpful if they are good deals, but we can trade without one if necessary as we have had to with the USA for all our time in the EU.

City centres often  generate higher incomes, higher property values and more turnover per person than the rest of a country. The more people you concentrate in a city centre, the more business there is for the shops, hospitality trade, personal services and the rest that congregate near the crowds.

Great cities have extra income  from commuting workers, local residents, tourist, business visitors, foreign investors and the rest. Homes have been a lot dearer in Westminster than Wokingham or Walsall because so many well off people and businesses congregate where the crowds are. People stream into central London to see the sights, use the shops, transact business close to one of the world’s great airports, next to one of the world’s most  famous shopping centres, and in one of the world’s leading business districts.

We are about to find out if all this can be sustained against the backdrop of a huge fall off in business activity. London has lost most of its millions of tourists, many of its visiting business people, most of its commuting workers and some of its richer  resident population who have retired to homes in the countryside. Its economy has taken a huge knock. Rents go unpaid. The shops that do open have nothing like the volume of trade to justify the very high rents. Many offices stand empty, with tenant businesses asking  themselves when is the next break clause in the agreement and how much space will they want in future?

There are those who say this will  be temporary. Give us a vaccine or better covid treatments in the autumn, relax the social distancing rules, and turnover will reappear and offices will fill up. There are others who say something has snapped. Office workers want to work from home more often.  Bosses with the detached house 30  miles out and the ghastly rail commute might also come to see the advantages of not always having to get the 7.05 to London. When will the international tourists return? 

The  retail sector has definitely taken a big hit from mass defections to on line forced by lock down. Not all of that loss will be won back as and when we return to “normal”. It is difficult to judge just how much office space companies will want post covid. It may be that we have witnessed peak office, which means reducing central city capacity in hospitality, sport and leisure.

The levelling up of the UK may have just witnessed a major levelling down of London, which has for so long outstripped the rest in productivity, incomes per head and private company formation.

I am glad to see others and the media now picking up the obvious point that the UK death rate figures are likely to be overstatements of the true position.

I first raised this matter on 11 April in my proposal to the government that they “Review the data”. In that posting I set out the various ways officials had been changing the basis of compiling the death figures, with each change designed to add numbers to the totals. I warned that it was probably leading to double counting, that death figures on any given day included deaths on previous days often stretching some way back, that anyone with Covid 19 symptoms could be put down as a Covid 19 death though they may have died of something else, and some were said to have CV 19 when  there had been no test to prove that. A a death certificate could cite  CV 19 as part cause of death based on some CV 19 like symptoms with no test, whilst also citing another more likely cause of death as well. Without a test there is the possibility that people had misreported common colds, flu, catarrh or allergies  as well as something serious that killed them.

On 1 June I took this up again in my blog discussion of Death rates. I said “There are differences in how the figures are compiled. The UK has gone out of its way to maximise deaths attributed to CV 19 by including care home and community deaths when other countries concentrated on hospital deaths. The U.K. has also recorded many care home and community deaths as CV 19 when no test was taken to see if the patient had it, and when it may have been other serious medical conditions they suffered from that killed them.”

I urged the government to ask for more accurate and consistent data from the experts, as these figures were being used to determine policy on lock down and to help derive the transmission rate which officials thought so important. As we move into the era of local lock downs precise and locally specific information about infection and death rates from the virus become even more critical to policy making. I have been surprised at some of the public scientific advice based on wide spreads for the possible transmission rate, in turn related to death and infection figures based on different data collection and definitions over time.

The Prime Minister is clearly concerned that if we continue with homeworking for the many, with social distancing for hospitality, and bans on live events, the economies of our city centres will be gravely damaged for as long as this lasts. The longer it lasts, the less likely that it will bounce back to the levels of city wealth and income we saw in January.

Even though the national lockdown has been relaxed, the current rules advising people against public transport and telling employers to require homeworking wherever possible means greatly reduced business for bars and restaurants, shops and personal services in city centres. The longer it goes on the more likely the many small businesses that populated these areas will give up, and  the more likely the large chains will look to cancel more of their leases on expensive city centre properties.

The PM has come up with compromise with his scientific and medical advisers, who urge caution and want the effective city centre lock downs to continue through the proxy advice to avoid public transport and busy pavements. He says from August individual companies should decide if they can provide safe working back in the city centre  office, having consulted their staff. To do so might well mean a reduced staff in the office at any one time. It may well mean staggered hours to avoid peak hours on trains ,  buses and tube. It will mean social distancing at work, limits on using lifts, more cleaning and the rest.

It underlines the cruel dilemma government faces. The economic advice is straightforward. Liberalise everything, give incentives to get back to work, and seek to inject a V shaped recovery into an economy gripped by a deep recession . The medical advice is also clear. To be safe, to fend off a second wave, keep up as much social distancing and isolation as possible. Do not encourage large numbers on public transport, and do not allow anything like full complements in offices.

Where would you strike the balance? Would you go for jobs and growth, or for greater security?