Author: johnredwood

It is most important not to confuse a free trade policy with a Customs Union policy. The main point about a Customs Union is the wish to impose tariffs and barriers against the rest of the world that are legal under WTO rules, knowing that the WTO would prefer the members of the Customs Union to lower tariffs and barriers for all.

Much of the design of the EU Customs Union was to protect French and German industry from better value or smarter competition from elsewhere in the world, and to protect the exploitation of market niches that they had done well so far. One of the features I most dislike about the EU Customs Union is its aggressive stance towards emerging economies which rely heavily on agricultural production, as the EU Customs Union takes full advantage of the WTO permission to have strong restrictions on agriculture.

Germany, for example, has a profitable and large industry processing raw coffee. This is made possible by imposing tariffs on processed coffee from outside the EU whilst allowing import of raw coffee tariff free. It means the coffee producers find it more difficult to capture the extra added value and create the extra jobs that are needed to turn an agricultural product into coffee to drink in supermarket packaging.

Once out of the EU Customs Union the UK could unilaterally cut all tariffs on products we do not grow for ourselves, or could offer to do so in return for some free trade response from those who would benefit. Inside the EU Customs Union we cannot do this, as the others do not agree with such a strategy. Trade is often better than aid in promoting economic development and greater prosperity amongst emerging economies. The Uk will be able to have a better policy for this once we are free to negotiate our own trade system.

In what passes for a debate about Brexit I have got used to the barrage of commentary that thinks it is wholly or mainly about trading arrangements, when it is really about how we are governed, to whom our government is accountable, who raises and spends the tax money and who makes the laws. Many people voted leave to take back control, to bring back self government.

The commentary also usually wrongly assumes that membership of the single market and customs union has been wholly benign, and that if we just leave we will be worse off. The facts of our past membership do not prove this supposition. As I have often pointed out, our growth rate was faster in the years before we joined, than after we joined. There was no benefit or acceleration of growth when they “completed” the single market.

More importantly, lop sided reductions in tariffs and barriers meant we lost a lot of industry to continental competition, but were given no parallel benefits to compete in areas where we were stronger. Our fishing industry was badly damaged by the CFP and we plunged from net exporter to net importers. Our farming industry saw its domestic market share eroded badly, aided by EU policies on beef and milk which did not help.

The EU argues that single market membership added just over 1% to our economy over the whole time we were in it – yet it is difficult to see from the actual growth figures any positive contribution. You clearly need to knock off from the figures the 5% loss of GDP compared to trend caused by membership of the European Exchange Rate Mechanism, which the EU study leaves out. You also need to take into account the £12 bn net a year contribution or cost, which is a drag of around 0.6% of GDP every year. If we spent that all at home instead that would give us a welcome boost.

I have long disagreed with my old friend David Willetts and those who think the baby boomer generation have done too well at the expense of the generations that follow. I am not pessimistic like them about the upcoming generations, who may well go on to harness new ideas and new technologies to make themselves considerably more comfortable and richer than the baby boomers. Meanwhile, let me explore some of the errors of the present belief that the older generation are having it too good.

There is nothing new about most of the wealth of a country residing in the hands of people over 40 rather than under 40 years old. By definition babies come into the world with no wealth of their own, and no capacity to earn until they have grown up. We do not agree with child labour, so we support our children from our income instead.

In contrast many of the older generations have spent years struggling with a mortgage until they reach the day when they own a home outright. Given usually rising house prices they get gradually richer even with a mortgage. Most save for their retirements, so over their lifetimes their savings in financial assets build up to secure them that pension at 65 or beyond. 20-40 year olds have not normally managed to save much for their retirement, and are still struggling with home buying. So did the baby boomers in their younger days when house prices were a lot cheaper but mortgages were a lot dearer. Current affordability as judged by mortgage payments as a proportion of income are not overextended in the way the house price to income ratio is.

In practice the baby boomer generation is sharing their wealth and income with the younger generations in conventional ways. The Bank of Mum and Dad is flourishing where parents have a surplus. It is paying educational fees and providing deposits for homes. The Bank of Grandma and Granddad is also often working overtime for similar purposes. Many of the younger generation will stand to inherit decent sums, though we hope they will have to wait a good long time for that.

The more active retired who have some wealth are keen to spend on exotic holidays, meals out, leisure breaks, sporting and cultural events and much else which creates income for those setting up businesses to service these markets, and creates jobs for many younger people. The frail and disabled better off spend much of their money on care homes, which again generate work and income for many people. The better off tend to be generous with charities.

The present imbalance in wealth between older and younger people is nothing new. It is inevitable given the way we work, earn and save. The money is recirculated, as it would be unhelpful if the elderly just sat on their wealth and did nothing with it. Many of them make conscious decisions to move it on by buying things and by giving it away to those who have more need of it. To those who do not, they leave it in a bank or savings scheme, so their money gets reused anyway by younger people who borrow it for their own purposes. I do not think there is a great intergenerational war. Most people see the elderly have money which they need to spend, and the younger people have energy to work, to earn that money. In their turn they will expect the same in their old age.

The PM’s critics say she does not know what she wants from the EU. Those who say this should read what she has written and spoken.

The following things are crystal clear in her statements:

The UK is leaving the EU on 29 March 2019
The UK is leaving the single market and the customs union – and this has been confirmed by two important votes in the Commons. She put Conservatives on a three line whip to vote down proposals to stay in the single market and customs union. It was also the clear statement of both campaigns in the referendum, and the position of the EU that you cannot stay in them without accepting all the other obligations of EU membership
The UK would like a comprehensive free trade agreement and trade partnership and is proposing no new barriers to our trade after we have left

She has also made clear – as she needs to do if we are to have a bargaining position – that no deal is better than a bad deal, and the UK will be ready to leave without a deal if necessary, though she strongly wants a deal.

I do not see how we can decide on a so called Transition period without knowing if there is something to transit to that both sides want. The March Council needs to be told we only accept transition if there is an Agreement and if it needs extra time to implement. The government should say to the EU we are offering no new barriers to trade – what barriers do they wish to impose on their trade with us? Were they to agree to no new barriers we could speedily translate that into a Free Trade Agreement and register it at the WTO.

I think the EU also needs to be told that the provisional generous agreement on money and other matters only comes into play if there is a comprehensive free trade deal which the Uk likes. As someone who does not want to pay the EU anything extra, I would need persuading that any Agreement was value for money for what is an ex gratia payment.

It is fashionable to be gloomy amongst leading commentators and economists. One of the things many of them are now worrying about is what new jobs will emerge to provide alternative employment, as the robot and artificial intelligence revolution gets into full swing?  My message is they should relax and study a little history. Past tidal waves of innovation have destroyed many jobs, only to create many others. Most  people tending horses and running horse drawn services lost their jobs, but it didn’t end the need for transport workers. Many of the jobs in factories moving parts to the line, assembling parts and testing the products have been replaced by robots already, but replacement activities have mushroomed as the society gets richer from automation.

Sometimes a new method does not extinguish all the old  competition. The advent of the Channel tunnel did not end the ferry companies who fought back well. Whilst robots can make cars, the rich often want a different product that is much more hand made. Robots could cook and serve a meal in a fast food outlet, but that will not end the demand for silver service restaurants.

Today some worry that we are near the time when professional drivers are replaced by automatic vehicles. This is a strange worry for now, as the opposite is happening. There is more demand for commercial drivers, as internet retailing surges in importance. This requires many more delivery vans and drivers to take goods to people’s homes that they would have taken  there for themselves on the old model. If we do get to automatic vehicles in the ascendency then there will be all sorts of jobs controlling, maintaining and instructing those vehicles, and doubtless plenty of jobs in regulating and policing them.

One of the features of a higher income economy that is growing is the shift in consumption towards more items requiring higher levels of service. When people have enough goods for their home and a decent wardrobe of clothes, they have money to spend on events, leisure, eating out. They might want to buy an expensive coffee in a shop instead of making an instant at home. They may want a Sunday lunch for the family in a restaurant rather than round the kitchen table. They want better haircuts or beauty treatments. All these things have a higher employment content than buying more goods made in robot controlled factories.

I see technology as generally positive. The internet is extending our options, keeping prices down and changing the way business works. It need not herald an unemployment problem. The way you get unemployment is from governments and Central Banks that destroy credit, push up rates too high  and impose damaging taxes, as we saw in 2008-10 in the west. Or you can get it like Venezuela from a government that does too much and taxes too much, killing off enterprise and private sector investment and innovation.

John Redwood (Wokingham) (Con): There is good news in this debate, which is that there seems to be universal agreement, from Members in all parts of the House, that where urgent work needs doing to guarantee the future safety of those who work in this place and those who visit, we should press on with it. Indeed, there is a strong feeling that there is a need for greater urgency in such work. From most things that I have read and heard, it seems that rewiring is a very urgent priority, as that is where the worst fire risk seems to come from. Substantial pipe work may also need doing, where pipes need replacing or re-routing as part of a safety plan. These things can all be done through compartmentalising—taking things in stages and linking up as appropriate.

We know we can work alongside builders and maintenance companies, because we are doing that all the time. I pay tribute to those who are working on the Elizabeth Tower at the moment. They are getting on with their work in a way that is not disruptive of our work at all. They must be working in confined and difficult circumstances, but they have so far done it in a way that is entirely compatible with the work of Parliament. So I hope that the Leader of the House would take away the sense that urgent work for the safety of people here in future and for the safety of the very fabric of the building might be accelerated, with options looked at so that we can press on with it in a timely and sensible way.

I find myself having more difficulties about the much bigger scheme being launched any time soon. As we have heard, quite big elements of it have not been properly thought through or costed, which makes taking a decision in principle a bit more difficult. I find myself in that interesting position where many parliamentarians find themselves; having been entirely of the leave faith on the referendum issue, now, showing flexibility and how I am always influenced by the facts, I find myself firmly in the remain camp on this parliamentary discussion.

Let us first address the issue of decanting to an alternative Chamber, which we would have to build. We hear there are problems with the site for one of the potential alternatives. I just do not think our constituents would understand our spending a very large sum on producing a temporary replica of this Chamber for a limited number of years—we are told it will be a short period, but some of us think it will be for rather longer—when there are so many other priorities. My constituents want us to spend more on health and social care, the military and so forth, and I agree with them.

Andrea Leadsom (The Leader of the House of Commons): For clarity, let me say that what is being talked about is a permanent business contingency in Richmond House that provides a real legacy gain to the parliamentary estate and is a secure gain for all parliamentarians for future generations.

John Redwood: I am grateful for that correction, and I did understand that, but the public are saying that this is really only going to be used for a few years because we will come back to use the main Chamber, and this is a very expensive investment in contingency, particularly as one hopes the contingency never occurs. We know from history that there are other ways of dealing with a disaster contingency, as unfortunately people had to do this during the second world war. We would cross that bridge in the awful event that we needed to do so, but investing a lot of money in such a protection would be a strange thing to do—I rest my case. I do not think my constituents would regard that as something they would want their taxpayers’ money spent on at the moment. I agree with them that we need to spend a bit more on health and social care. Those would clearly be the priorities if we had this extra money to spend.

Finally, let me say that I agree with those who think there is something very special about this place and something important about it for our democracy. This is the mother of Parliaments and this building does have great resonance around the world, being associated with the long history of freedom, and the development of the power of voice and vote for all adults in our country. It would be strange indeed to be turning our back on that for a period, particularly when we are going through a big constitutional and political change in order to implement the wishes of the British people as expressed in the referendum. Particularly during this period, it is important that our visitors can come to be reminded of our national story and why we are where we are. All those of us who seek to represent people should be daily reminded of that national story when we come here—

Mark Pawsey (Rugby) (Con): Will my right hon. Friend give way?

John Redwood: No, as I am conscious of time.

We need to be reminded of that story as we go past the memorial to suffragettes, as we go past the statues and paintings of those who made such a contribution to past political battles and debates, those who were part of the story of wrestling control from the monarch and establishing the right of many more people to vote and have their voice heard through Members of Parliament. That proud history makes this more than an iconic building, more than a world heritage site; it is a living part of our democracy. Our interaction with it and our presence on this grand political stage is the very essence of our democracy. I do not want us to move away for a few years at this critical moment in our national story.

It’s been ground hog week in the Commons. Labour has tried to imply the government was suppressing bad news, when Ministers were merely refusing to publish forecasts that look widely inaccurate and are similar to the wildly inaccurate short term forecasts and probably wildly inaccurate long term forecasts the Treasury published for everyone to consider before the referendum vote.

These people who write these silly forecasts never apologise for being wrong in the past, and never explain how on earth the UK economy could be damaged by trading with the EU on WTO terms rather than through the customs union. They are probably the same people or use the same warped analysis as those who told us the Exchange Rate Mechanism would be good for us, and who told us we would suffer badly if we did not join the Euro. Look at the colossal balance of payments deficit we run with the EU on trade in goods, fish and farm products, and how that built up early in our membership of the EU. It is quite obvious we did not benefit on trade account from joining. On the contrary, lifting tariffs and other barriers on things they were good at, whilst keeping barriers on things we were good at, led to a large and persistent balance of payments deficit with them. We have done much better trading with the rest of the world where we have a surplus.

Too many take EU laws and requirements without questioning them or refusing them when they are wrong. There are clearly still many members of the UK establishment who want to pretend we did not vote to leave, and who wish to make us continue to follow the Brussels way because that is what they have been making us do for years. Before trying any more Project Fear forecasts they should try explaining why the UK growth rate fell after we joined the EU, why we have had a persistent deficit with them, and why even the EU study shows there was practically no benefit from joining the single market.

I have made five speeches in the last two days and had a very busy schedule, so I have not been able to keep up with all these postings. Some bloggers are posting ten times a day, and some are writing very long essays. If you want to be moderated promptly keep down the volume and length.

Mr Trump rose to the occasion and delivered a powerful address, seeking to bring more people into his vision of a faster growing USA with more jobs and more take home pay

He was full of the American dream, though not so full of the American dreamers that the Democrats champion. The President hopes he has done a deal on migration. He gets an end to wider family members having an automatic right to entry, and more wall across the Mexican border, in return for offering full legal citizenship to the Dreamers, the young people born of illegal migrants and brought up in the USA. Republicans are presenting the extra border wall as an extension of the Democrats 700 mile border fence. Democrats including Mrs Clinton legislated for that in 2006. The Democrats see it differently.

Mr Trump pointed out that companies are offering to pay higher wages or special bonuses to their employees following the corporate tax cuts. He reminded the nation that these pay increases  are worth more with lower taxes. He told them that a family of 4 with an income of $75,000 would be $2000 a year better off. A married couple on $24000 will pay no income tax. He took credit for the decision of a number of car makers to expend or establish new factories in the USA. He announced the end of “the war on American energy” as he takes measures to produce more oil and gas at home. It looks as if his tax cuts will provide a welcome boost to jobs, earnings and US investment.

He was full of praise for the USA and for Americans, as he sought to get more buy in to his idea of making “America great again for all Americans”. He concluded with some history from the founding of the Republic, saying the USA is:

“home to an incredible people with the revolutionary idea that they could rule themselves. That they could chart their own destiny. And that, together, they could light up the world.”