Author: johnredwood

Before and after the referendum I have heard Remain people say we would have to apply to rejoin the WTO, as it is the EU that is currently the member. I always said this was untrue. The UK is a founder member of the organisation. We are still members, but whilst also being members of the EU we have to allow the EU to have our voice and our vote. We suspend our own.

Last week there was a welcome confirmation from the Head of the WTO that Leave were correct. He said “The UK is a member of the WTO today, it will be a member tomorrow. There will be no discontinuity in its membership…” (when we leave the EU). “Trade will not stop. It will continue and members negotiate the legal basis under which that trade is going to happen”.

I also consulted a WTO legal expert. He confirmed that whilst the EU exercises the votes and voice for all EU states, the individual member states are not just members in their own right as well, but each member state pays its own membership subscription. This shows just how wrong it was to say we would have a long process to rejoin. We are full paying club members who will get our vote and voice back when we leave the EU.

As the WTO is an international organisation set up with the express purposes of facilitating trade and pulling down barriers to trade, they will of course welcome the UK as a leading exponent of freer trade worldwide. They will also want to help ensure a smooth transition for EU/UK trade, and will recognise it is the member states, not the EU, that pays the subscriptions.

The liberal Europeans and the EU have been quick to condemn or distance themselves from Mr Trump. They particularly say they dislike his Mexican wall policy designed to reduce the number of migrants.

I find this confusing. All across Europea border walls and fences are springing up. The EU itself is encouraging Ukraine and Turkey to build these barriers, and offering EU tax revenue to help pay for them.

There are now walls and fences between Hungary and Serbia; between Hungary and Croatia; between Greece and Macedonia; betwenn Greece and Turkey; between Slovenia and Croatia; between Spain and Morocco in Ceuta and Melilla;between Russia and Ukraine; between Austria and Germany and between Hungary and Slovakia.
Some of these barriers are high razor wire fences, some heavy concrete walls, some have watch towers and some have planned ditches and surveillance strips. In sone locations surveillaince technology is being deployed to stop tunnelling or other ways of evading the barrier. Others are fences.

Can someone explain why all this is fine, yet the Trump plan for Mexico is unacceptable? The EU seems to be aware of the dangers of large scale migration through the lands of Turkey, Ukraine and other neighbouring states with access to the Schengen area. That’s why the grant of freer movement to these countries through Association Agreements includes joint action to control their borders with third countries. How should the EU develop their free movement policies? Is the price of free movement a Trump like armed wall all round the EU? Did Mr Trump copy the idea from the EU’s constructions?

What do we think of walled and fenced Europe? How does this sit with the emphasis on human rights and the general policies on refugees and migrants?

When you get one leak, suddenly another turns up. Dr Roy Spendlove has apparently written back to Dame Lucy to tell her why he has moved departments.

Dear Lucy

I thought I should let you know privately my reasons for putting in for a transfer to the Brexit department. I can assure you I was not unhappy working for you and will be sad to go. I felt, however, that it was important the new Department should have some people like me well versed in the ways of the EU. They need to understand the immense complexities of the relationship, and appreciate the difficulty of severing these important links.
It was not as easy as I expected securing the transfer. There was a surprising amount of interest in the jobs. I guess it was the thought of working closely with Ministers in a new venture, based in Downing Street itself. Fortunately I can speak a bit of Brexit, which I needed to do to secure my place. I studied what these Ministers had been saying on the Leave campaign, as I do need to know where they are coming from if I am to give them hard hitting advice that is grown up and realistic.
I am pleased to report that it has been decided that we will need a substantial staff to deal with all the aspects of the relationship, though I think current numbers will prove inadequate and we will need to revert on that when it becomes clearer just how much is at stake here. I am also pleased to report on this occasion that we will be using external consultants, as they may assist us in mapping all of the difficulties. They also include a large number of Remain voters who understood in advance the magnitude of the task.
I will not be allowed to offer a running commentary on the negotiations. There are quite strict rules about all that. However, as the negotiations get underway there will be plenty of people in business, in the European Parliament and in the Commission who will want to put out their view of it all, which may in due course force some kind of reply from ourselves. In the meantime the danger for the government is a continuous and one sided briefing about where we are, coming from those on the continent who want to make it painful for the UK. We have warned them this could be the result of their policy.
We are proposing that the government shows flexibility on migration, on budget contributions and the supremacy of UK laws in order to secure continuing membership of the single market. I can’t believe they think we can simply turn our backs on the whole thing. There will be powerful voices for compromise, and many pieces of advice stressing the weakness of the UK position.
The Department has accepted the need to talk widely to people in business, the academic world and the arts about what they fear and what they need from the discussions. I am quietly confident that we will get across the need to have very wide ranging negotiations where all aspects of our relationship with the EU are on the table, and where therefore there has to be very thorough examination of all the downsides before committing ourselves to an irreversible course.I am sure the rest if tge EU is watching listeningvery carefully as business and UK commentators point out all the problems and troubles with our exposed position, which will push us to Brexit lite. As the Canadian trade deal showed, these apparently straightforward things can take seven years, and may still have an unexpected hiccup in the end. Rome was not built in a day, and the Treaty of Rome cannot be repealed in a day, whatever some in Parliament may wish.

Yours

Roy

Yesterday Mr Blair told us all we should have another referendum or Parliament should ignore the results of the vote on leaving the EU. He took my breath away, both by the hypocrisy of his position and by the vagueness of his proposals.

I recall Mr Blair won 3 elections in a row and formed a majority government each time. In each of those elections the south east of England voted by a substantial majority for a Conservative government. I and my fellow MPs representing that Conservative majority of the south east did not

1. Turn up at Parliament and say Mr Blair had no right to govern our voters
2.Take a case to court to say that as the south east of England is a larger part of the UK than Scotland and Northern Ireland combined in terms of voting population the UK government had no right to tell us what to do
3. Demand a re run of the election to try and get a better nationwide result
4 Say that because Labour lied, telling us there would be no more boom and bust and assuring us there would be very few EU migrants, the election was nul and void
5.Demand debates and votes on specific topics from the government in court actions when we were quite capable of tabling such debates and votes ourselves in opposition time

In a mature democracy like the UK we accept the verdict of the majority. A loyal Opposition in Parliament will oppose, challenge and try to influence a government, but accepts the government’s right to govern, and accepts that the main features of its Manifesto have every right to pass through Parliament.
Why does Mr Blair now think all these conventions and rules have been suspended, because he this time was on the losing side?

So now it’s official. The UK grew at 2.3% in the year to end September. Growth continued at a good pace in the three months after the EU vote, contrary to most official forecasts and many private sector estimates. I am enjoying watching all those big Investment Banks and official bodies having to admit they got their 2016 forecasts very wrong. They are now writing the immediate sharp shock and recession out of their scripts, and accepting that the UK is likely to be the fastest growing advanced country economy this year. I stuck with the Treasury March budget 2% forecast, which looks pretty good now. The growth rate can tail off a bit in Q4 and my forecast will still be hit, and the UK will still be the fastest growing G7 economy.

The economic good news keeps coming in. This week I noticed the consultation from Hammerson for a £4.5bn investment in Brent Cross and Cricklewood. This will include a £1.4bn expansion of the Brent Cross shopping Centre, adding 1.4 million square feet of retail space to what they already have. This comes after the development of the two large Westfield London shopping centres in recent years. The plans have not yet been passed, but they are a big statement of confidence in the economy. I also caught up with the news that there is a contested planning application to put major concrete and concrete bloc capacity into the Bow East Goodyards site, to keep up with burgeoning demand for building materials. Southampton Port is seeking permission for a major expansion of their facilities at Dibsen.

The latest earnings figures show good growth in earnings around the whole country, with people on the lowest incomes getting the biggest percentage boost in recent months. This will help the retail sales and service sector figures. Nissan yesterday confirmed it will put two new models into its brilliant and highly competitive Sunderland plant.

Some of the forecasters want to remain pessimistic about next year, now shifting the bad news from this year. It is difficult to see why there should suddenly be a sharp downturn next year, given the growth in jobs, income, credit and money this year. Unless the UK authorities behave in a particularly damaging way to arrest the upwards progress of the economy, it looks as if there will be more growth next year. It could even be the case that construction, which was weak in the latest figures, picks up on the back of the various housebuilding and commercial development schemes now being examined by the main property investors and developers.

I thought my source of leaks from deep in the official government machine had dried up. I was delighted and surprised to be sent an undercover copy of the latest instructions from Dame Lucy Doolittle to her team, and reproduce it here as I think it deserves a wider circulation. She has written:

“It is most important we provide a good service to the new government. They have been swept into office on the back of the disruption caused by the unexpected vote in the referendum. They had to set up a new unit to deal with the aftermath, and we should co-operate with the Brexit department within the Cabinet Office.

We must also understand as independent civil servants that it remains our duty to set out the many unfortunate and difficult consequences of the referendum outcome. We need to stress to Ministers that the UK has many and complex arrangements with the EU and all its member states. It will take us time to do a professional job mapping all the Directives, Regulations, ECJ Court judgements, EU bodies, budgets and grant programmes that have a bearing on the UK. We need to stop Ministers rushing headlong into an Article 50 letter and rapid negotiations, given the enormous complexity of our deep and wide ranging relationship with the EU. We have worked tirelessly for many years to ensure the UK does participate fully in the single market, in the large legislative programme, and the many pan EU initiatives from Open Skies through the Common Fishing Policy to the Competition regime. I would be grateful for you all to advise me of the many other areas of joint policy and EU jurisdiction.

Ministers need to be told that they must not press ahead all the time there are court actions over the legality of sending any Article 50 letter. Even if the court finds in the government’s favour, we need to be ready for an appeal which will delay matters further.

We have been asked to work on a Great Repeal Bill to remove the powers of the EU enshrined in the 1972 Act. We need to remind Ministers that the UK has Treaty obligations regardless of the Act, and that they must follow the process set out in Article 50 anyway. We need to warn Ministers that a Repeal Bill cannot be short and based on principles. It will have to be more detailed, listing all the relevant Regulations and court judgements, and going into detail about replacement regimes in agriculture, fishing, competition law, aviation and many other areas which will need certainty. None of this can be done quickly. I can see this lasting up to the next election if we are to do it thoroughly.

There are those who argue the Repeal Act can be short and simple because the 1972 Act to take us into the EEC was itself principles based and short. This is a misunderstanding of the position. The UK was then joining a much less wide ranging body. Standards were then lower for legislation. We now need to provide much more detail which will require considerable study.

Business and some Ministers are concerned about the UK remaining part of the Single Market. We need to stress that this would be the best course, and that will require wide ranging negotiations with compromises over issues like migration and budget contributions. I expect you all to be talking to your opposite numbers on the continent about all the things the UK will need from any Leaving Agreement, which will provide the context for Ministers needing to start offering concessions and compromises. It is important our partners in the EU are aware of just how much the UK will need in its Agreement, and ensure they understand the full range of complications they need to consider.

The mood in the Commission is not favourable to the UK. Commissioners do think the UK has to be taught a lesson if it continues with the idea that it can simply leave the EU after all these years of joint working without adverse consequences. We do need to get this important point across to Ministers. I will be writing to you again soon about the role of the Treasury. They are understandably sticking to their judgement that a Leave vote will do damage to confidence, trade, output, house prices, property and much else. We need to remind Ministers of this, given the wish of some of them to believe the surprisingly positive figures about the economy which we are seeing. We need to help the Treasury get across the message that things will go wrong at some point in the future.

Ministers do have a concern about the continued large flows of migrants into the UK . The Treasury might be able to help here by getting out their message that the UK will no longer be able to create new jobs and provide such a favourable economic background for them. Perhaps the Treasury would set up a special unit to communicate their realistic worries about the UK out of the EU to the countries losing migrant people. This might help Ministers in their difficult task of replying to those who want more control over UK borders.

I was pleased that the PM did stress we remain full members of the EU and intend to participate fully all the time we remain members. I trust officials will put forward sensible proposals to show just how positive the UK can be in its handling of EU matters, as a counterpoint to much of the negative comment about the EU we have witnessed in recent months.”

It is becoming more popular to criticise the Bank of England. Michael Gove has recently added his lashing to that from Jacob Rees-Mogg. There is now a strand of criticism which regards the end July announcement of more Quantitative Easing and the further cut in interest rates as an unwise move.

Most commentators and politicians are still hung up on the idea that the Bank is independent. They clearly do not read the formal letters that go between the Chancellor and the Bank which put beyond doubt the fact that the Chancellor signs off all QE, and the government sets the targets the Bank has to hit when it chooses interest rates. Nor are we or they privy to the endless discussions that go on between Treasury officials and Bank officials day by day, or from time to time the private conversations of Governor and Chancellor.The strong agreement over a set of wrong short term forecasts for the economy this year between the Bank and Treasury implies some joint working, not just coincidence of error.

The joint decision to create up to £170,000,000,000 of extra new money was strange. Money and credit had started to accelerate before this decision was taken. Over a month had passed since the people decided to leave the EU, with no falls in consumer spending, general economic output or house prices, despite the Bank’s negative predictions of an immediate collapse of confidence.

The Bank advised and the government decided to print up to £170 billion and spend it on a mixture of second hand government bonds, second hand company bonds and cheap loans to banks. It was part of a concerted effort to get the interest rate down further, which it did, and presumably also to get the pound down more, which it also did. It is difficult see how the Bank could have thought this policy would be good for the pound, given the large numbers of extra pounds they decided to create.

At a time when the USA is contemplating further rate rises, deliberately putting our rates below those of the USA was an invitation to people to switch their money into dollars. Creating more of anything is usually a way of lowering its price. Monetary policy since June 23rd has helped fuel further gains in share and bond prices and some parts of the property market. It will also lead to higher shop prices for certain imports which the Bank as custodian of the need to keep inflation down should worry about. The pound now looks very cheap and could do with a helping hand from the Bank. Ruling out further rate cuts and QE would help, as surely even the Bank cannot think any more is justified.