Author: johnredwood

Yesterday we were told of yet more delay in taking  back control of our fish. The government should tell the EU we will resume control in March 2019, as we need to put in a new policy to save what is left of our home  industry and get it growing again.

There are two things the government has promised that I agree with

Nothing is agreed until everything is agreed.

No Deal is better than a bad deal.

It is difficult to know what the government will get in return for the very generous draft offers it has made over money, fish, law taking and freedom of movement for the so called Implementation period.

There is no need for an Implementation period unless there is something really good to implement which takes time.

My advice to the government is to make sure everything works on March 29 2019 when we want to leave. What could be sorted out or agreed after March 2019 that cannot be sorted out in the next year?

Let’s cut back the period of uncertainty.

This unseasonal cold weather has placed more strains on the UK electricity supply. Yesterday we were importing substantial volumes from France and the Netherlands, needing coal to generate 18.7% of our demand, and finding it difficult to get enough from renewables. Gas fired stations still provided the single biggest volumes at 37.3% of the total.

The EU is quite dependent on Russian gas. Fortunately the UK is not so dependent. 43% of our gas comes from our own fields, and it should be possible to increase that volume with the right policies. The largest source of UK  imported gas is Norway, with significant quantities also coming in by tanker from places outside the EU like Qatar. It is the imported gas from the continent that does contain some Russian gas, where the continental system needs decent volumes of Russian gas to keep the whole system with sufficient pressure and volume to meet demand.

The threats to energy security that we sometimes hear in world arguments reinforces the  case for the UK to look to greater energy independence. It will also help our large  balance of payments deficit if we seek to supply more of our own gas and electricity. The UK has increasingly linked itself into the EU system of energy markets. In doing so the UK has reduced its margins of capacity, cutting the amount of reserve electricity capacity it has, and removing an important part of its gas storage system. This has increased our import dependence and cut the resilience of our system

Closure of the remaining coal stations would seem unwise before we have put in place more reserve capacity that can function on cold days when there is little wind and sun to power the main renewables. Putting in place more gas storage would  be wise, as would developing more local supplies. Relying on EU imports when they in turn rely more heavily on Russian gas does not look like a great policy.

The one senior job I have held which I grew to dislike was the job of being the UK’s Single Market Minister. I was faced with an avalanche of new draft laws which the EU wished to put through in the name of the single market. It was difficult to see how most of these laws would help people buy and sell more with each other. It was a simple power grab for the EU to take control of more and more policy areas and laws. It was clear they would often keep out competition, limit innovation, favour the large incumbents and put up costs. They were united with the Customs Union approach, seeking to keep out non EU imports. I defined the job as damage limitation. Which draft laws could the UK persuade others to help block, to hold them up altogether? Which laws could be amended to limit the damage they did? Could smaller and more innovative businesses be exempted from them? We had our wins in all these categories.

The task was, however, made more complex by the fact that large parts of the UK civil service always wanted us to reach a deal. Quite often they would ensure my hands were tied by taking the issues to a Cabinet Committee which itself was primed to prefer deal to no deal and set minimum objectives for the UK to reach an agreement. It was usually easy to secure these objectives, because they asked for too little, or because it appeared someone would tip off the other key negotiators what my required bottom line was. They then usually offered it to me quite early on as they knew I would dig in until they offered the full requirement. Some realised I probably preferred no deal in most cases.

Some of the draft legislation was bizarre. They usually wanted to set out how certain goods or services were designed and offered, in ways which sometimes did not allow the UK method as their draft was based on some continental model. The UK then had to work hard to get amendments to allow us to carry on with successful business models we were using.

As we exit the EU we need to make sure Ministers provide good leadership to their officials, explaining in future we wish to turn our backs on this way of legislating. It is high time we had the self confidence to pass our own laws that can be good for both customers and businesses. They should not set out how everything is to be done, as that gets in the way of competition and innovation. Laws are needed to ensure honest dealing and safety, but are not needed to tell businesses how to make things or to define services.

I am keen to see what more we can do to protect elephants from death by poachers. Like many of my fellow countrymen and women I feel angry about the way these great animals are being killed to lay hands on their tusks.

I am also keen to see proper action taken against those who make big money from drug pushing, illegal arms dealing and other crimes and then seek to introduce the money into western markets. They seek to disguise it so they can enjoy the proceeds of making money out of others’ misery.

This is all topical again with campaigns to ban the trade in old ivory works of art, and to freeze the accounts of certain rich Russians coming to London and investing.
Today I would like to hear your views on how we can tackle the underlying problem of serious crime, and how we should respond to calls to ban more trade and more people in the UK.

The trade in works of art from old ivory is conducted in London as well as in other advanced centres. The traders are meant to study and catalogue the items carefully, to avoid offering owners of recent ivory a way to release money from their holdings. There is plenty of legitimate ivory around. Every elephant years ago dying of natural causes may have surrendered tusks on death that were in some cases turned into works of art. What we wish to stop is the barbarism of killing elephants today for their ivory.

Would banning all sales of all ivory in the UK make a difference? Sales of old ivory items will continue in other world centres legally, and illicit sales of ivory items will doubtless continue against the law here at home without the benefit of so many experts trying to ensure the items are from ancient ivory. Shouldn’t more be done to assist the countries where elephant poaching continues? Isn’t the main issue an enforcement one in the places where elephants still live? It seems to me an ivory ban needs to be global to make a real impact. With a global ban then all ivory trading would be a crime and make it that much more difficult for the poachers to convert their winnings to cash.

When it comes to the issue of rich Russians, the UK needs to make clear it is not against people because they come from Russia, and is not arguing that rich Russians are a unique category that contains more criminals than other groups of rich people from other countries. The Foreign Secretary is right to stress that Russians are welcome here as visitors and investors. The overwhelming majority of Russians like any other nationality obtained their money by hard work and enterprise and have a right to its safekeeping where they choose to live and invest. Many of the Russians here in the UK are opponents of Mr Putin, not trusted allies of the Russian government.

Of course the UK is also right to make clear we do not welcome murderers, money launderers and other criminals. We need to check the origins of large fortunes when they first arrive in the UK, as the comprehensive Money Laundering laws require banks and other financial institutions to do when they first accept a deposit or an investment sum from any new client. The government has powers to demand a person to explain where they got their wealth from. If proper money laundering checks are made on first entry of money into the system the UK authorities should know the answer and should expose the crimes before the money is ever accepted as a legal deposit.

None of this should be directed to most UK people who save out of net income or out of selling capital assets they own, sending cleared funds from one regulated account to another. All such transactions are visible to the UK tax authorities.

John Redwood (Wokingham) (Con)

Before the referendum, I made a speech in the House saying that we had become a puppet Parliament. All too often, regulations came from the EU that we could do nothing about, because they acted directly. In many other cases, even if we had been outvoted or were not happy about a proposition, a directive instructed the House to put through massive and complex legislation whether it wished to or not. We had a situation in which the Front Benchers of the main parties, alternating in government as they tended to do, went along with this. The convention was that the Opposition did not really oppose, because they knew that Parliament was powerless and that the decision had been made elsewhere, whether the British people liked it or not. That even extended to tax matters, such as a number of VAT issues, including areas where we cannot change VAT as we would like, and to corporation tax issues, which included occasions when we thought that we had levied money on companies fairly, but the EU decided otherwise and made us give it back.

Many British people shared my concern, and that was why we all went out together and voted in large numbers to take back control. The British people wanted to trust their British Parliament again. Of course they will find times when they dislike the Government, individual MPs and whole parties, but they can live with that, because they can get rid of us. They know that come the ​election, if we cease to please, they can throw one group out and put in place a group who will carry out their wishes. They said very clearly to our Parliament in that referendum, “Take back control; do your job.”

A recent example is that of Her Majesty’s Government presenting a very long and complex piece of legislation to completely transform our data protection legislation. Because it was based entirely on new EU proposals, it went through without any formal opposition. The Opposition obeyed the convention and did not vote against it or try very hard to criticise it. I am sure that if the proposal had been invented in Whitehall and promoted actively by UK Ministers, the Opposition would have done their job, found things to disagree with and made proposals for improvement. We will have this “puppet Parliament” effect all the time that we are under control from Brussels.

Jonathan Edwards

Given the scenario that the right hon. Gentleman is putting forward, is it not the truth that the Welsh and Scottish Parliaments will also be puppet Parliaments post Brexit?

John Redwood

No, that is not true. In their devolved areas, they have genuine power, which they exercise in accordance with their electors’ wishes, but of course this is the sovereign United Kingdom Parliament, and the devolved powers come from the sovereign Parliament, as the hon. Gentleman well understands, which is presumably why he likes being here.

Sir William Cash

Will my right hon. Friend also bear in mind the manner in which laws are made in Europe? They are made behind closed doors in the Council of Ministers with no proper record of who votes, how and why—we are outvoted more than any other country—and then those laws come here and are imposed upon us in this Parliament.

John Redwood

I quite agree.

We wish to take back control. We will be a very different and much better country when this Parliament can settle how much tax we levy, how we levy it, how we spend money, how we conduct ourselves and what kind of laws we have.

My main remarks for the Minister and his colleagues on the Treasury Bench, however, concern the conduct of the negotiations. Like the Minister, I wish the Government every success. I hope that they get a really good deal—I look forward to seeing where they get to—but the EU is trying to make the process as difficult as possible by insisting on conducting the negotiations in reverse order. It says first that we have to agree to pay it a whole load of money that we do not owe. It then says that we have to agree a long transition period that coincides with its further budget periods, so that it can carry on levying all that money, and that is before we get on to what really matters: the future relationship and the questions of whether there be a comprehensive free trade agreement, what it will cover, and if it will be better than just leaving under WTO terms.

In order to have a successful negotiating position, the Government have rightly sketched out a couple of important propositions. The first is that nothing is agreed until everything is agreed. That is fundamental, and I urge Ministers to understand that they must not ​sign any withdrawal agreement unless and until there is a comprehensive agreement that is credible and that can be legally upstanding, because there is no point paying money for nothing. There would only be any point in giving the EU all that money if there was a comprehensive agreement that the Government and the country at large could be proud of, and which enough leave voters could agree with as well as remain voters.

The second thing that the Government have rightly said is that no deal is better than a bad deal. That, again, is fundamental to the negotiations. I have never made any bones about this, because I said before the referendum that no deal was quite a likely outcome, and a fine outcome. For me, no deal is a lot better than staying in the EU: it would give us complete control over our money, meaning we could start spending it on our priorities; it would give us complete control over our laws, meaning we could pass the laws and levy the taxes that we wanted; it would give us complete control over our borders, meaning we could have the migration policy of our choosing; and it would give us the complete right and freedom to negotiate a trade policy with the EU and anybody else. That would depend, of course, on the good will of the other side as well, but I would far rather be in that position than part of a customs union in which I had little influence and that was extremely restrictive against others. There is therefore an awful lot going for no deal.

The Minister and his colleagues must stick to the proposition that they will recommend a deal to the House only if it is manifestly better than no deal. They need to keep reminding the EU negotiators that no deal offers Britain most of what it wanted when it voted to take back control.

Anna Soubry

Will my right hon. Friend confirm whether he has seen the Government analysis—apparently it involves excellent modelling and is far better than anything they did in the run-up to the EU referendum—showing that if we were to crash out without a deal and rely on WTO tariffs, our projected increase in productivity and economic growth would be reduced by 7.7%? Is that what his remain-voting constituents—the majority—voted for?

John Redwood

No, of course it is not, but that is not true. I have written at great length about that elsewhere. Unfortunately, I do not have time to go into a detailed rebuttal of those proposals, but we know that the Treasury modelling got entirely the wrong answer for the first 18 months after the referendum. Its short-term forecast, which should be easier to make, was massively wrong and predicted a recession. I and a few others put our forecasting reputation on the line during the referendum by saying that there would be growth after an out vote, rather than what the Treasury forecast. We were right.

I assure my right hon. Friend that I have not voted for anything that will make us poorer. We will be growing well, as long as we follow the right domestic policies. It is complete nonsense to say that there will be that kind of hit. It implies that we lose over half our exports to the European Union, and it is not a proper reflection of what would happen to our trade adjustment were anything that big to happen. I want to concentrate on the customs union.

Vicky Ford

Will my right hon. Friend give way?

John Redwood

I am sure that my hon. Friend wants me to concentrate on the customs union, because she shares my wish that the Government will be well supported if the Opposition decide to have a third go at voting through a customs union or customs union membership.

I remind the House that we have twice had big votes in the Commons in which Members have voted by a very large majority against our staying in the or a customs union. One was on an amendment to the Queen’s Speech motion, and the other was on an amendment to the European Union (Withdrawal) Bill. I hear that some Labour Members may have changed their minds and want to vote again. I am a democrat, and the Opposition have their own ways of doing what they want to do, but I urge them not to vote to stay in the customs union.

Above all, are Labour Members not at all worried about poverty in emerging markets? Do they not think it is wrong that we place huge tariffs on poor countries’ tropical produce—produce that we cannot grow for ourselves? Would it not be great, when we are outside the EU customs union, to be able to take down those tariffs and give those countries more hope of promoting themselves by good trade, while at the same time benefiting our customers because they would be able to buy cheaper tropical products? Can we not do good trade deals with those emerging market countries across the piece? The tariff barriers are too high, and we could make mutually advantageous changes if we were free to do so. I urge the Labour party to remember its roots in campaigning against poverty and to join me in saying that the best way to get the world out of poverty is to get down the high tariffs on emerging market countries that the EU imposes, which I certainly do not agree with.

The Minister must remind Labour Members that no deal is better than a bad deal, and that no deal allows us to take back control of all the things that he and I promised to take back control of. He must also remember that we do not owe the EU any money. It would be fatally wrong to pay it loads of money if everything else does not work in the way we want.

Vicky Ford

Will my right hon. Friend confirm that he agrees with the Prime Minister that we should look for a deal that covers many sectors that are not covered by the WTO, such as aviation, data exchange and having a mutual recognition of financial services, so that trade in those areas can easily continue?

John Redwood

I am afraid that I am out of time, so I cannot go into detail on all these matters. I believe that we should negotiate strongly and positively. I wish my right hon. Friend the Prime Minister every success, but I wish to strengthen her hand by saying that out there in the country, the message is, “Get on with it.” If that means leaving with no deal, that is absolutely fine.

Mr Osborne’s policy of cutting the budget deficit always relied primarily on a big boost to tax revenues. That is also the policy of his successor, Mr Hammond. Total tax revenue of £604bn in 2014-15 is expected to rise to £699bn in 2017-18. By 2022-23 they want to be taking £815bn from us. In 2009-10, the last Labour year, they collected just £476.4bn. Tax revenue in 2017-18 will be a massive 47% higher.

They expect Capital Gains tax receipts, Stamp duty on shares and self assessment Income tax to fall in 2017-18.The main gains in 2017-18 are forecast to come from National Insurance and environmental levies assisted by PAYE Income Tax and VAT. There is a substantial reduction in forecast for all years for Capital Gains Tax, reaching a £2.3bn fall in 2022-23. Capital Gains will bring in not much more than in the last Labour year before the crash, when rates were lower. There is a reduction in the Stamp Duty land tax forecast revenue in every year as well, reaching a £0.6bn cut in 2022-23.

This is no surprise. The Treasury underestimates how sensitive to the rate of tax these sources of revenue are. Rich people who pay much of the CGT and all of the top end Stamp Duty do not have to undertake a transaction, and are clearly in many cases not doing so because they do not intend to pay the combined high CGT and Stamp Duty charge. The higher rates of Stamp Duty and the maintained higher rate of CGT on property have brought about a substantial reduction in higher priced property turnover, hitting the revenues.

If you want to follow a higher tax revenue strategy on this scale successfully it is important to fix rates that maximise the revenue from each tax source. The Treasury is still struggling with finding out that revenue maximising rates are lower than they think.