Author: johnredwood

The UK is constantly being mugged by the EU.In recent years the UK state has had to pay fines in excess of £500 million for infringing EU rules. We have recently been faced with an additional bill for regular contributions because our economy has grown faster than others and is bigger than they originally calculated. Now they want the UK to stand behind a bail out for Greece, when the UK has an agreement with the EU that it will not participate in any Euro bail out.
The main money for Greece has been provided under the auspices of the EFSF and the ESM. These funds are for Euro members only and are provided by Euro members only. So far so good. Then up pops the Commission and suggests that Greece’s next “bridging” loan of maybe 12 bn Euros should come from the EFSM, which is money provided by all 28 member states of the EU to an EU country in financial stress. The money is borrowed by the EU, and member states stand behind the market borrowings. The UK government is right to reject the  use of this mechanism for the special problems of a struggling Euro member. It looks as if the UK has now received legal assurances that we will not be liable for any of this money, and will expect full collateral against the amount put up by Euro area countries, along with watertight text.

Were the Commission to persist and to push it through without protection for the UK on a qualified majority vote which the UK lost, the UK should refuse to pay. If the EU tried this The UK Parliament should enact a one clause Bill amending the 1972 European Communities Act to make clear we do not pay any Euro bail out monies and would not accept the jurisdiction of the European Court on this matter.

The EU is free with its economic advice,telling the UK to cut its budget deficit and to get it below 3% of GDP. This advice is incompatible with its constant demands for more taxpayers money from the UK and its own spendthrift ways. Every penny we send to the EU is borrowed, to be repaid later by UK taxpayers. The sum needs to be cut.

It is difficult to understand why the EU and the Euro Group think they have more chance of succeeding with this latest Greek loan than with the previous ones, or how they think this is going to be repaid. They are lending more money to a country which is already in default with the IMF and the EFSF, as the EU’s own institution has made clear. They may want to use the EFSM rather than the ESM at this juncture because it seems to avoid the need for Parliamentary votes in the Euro area countries pledging the money, but as they intend to make longer term loans through the ESM they need Parliamentary votes on that. It’s a bizarre money go round linked to an economic policy for Greece which does not work.

Knowing of the great interest in this topic by many readers, I am today publishing the latest Ministerial update on this .

“The UK and French Governments have been working closely together to respond to the pressures caused by the growing number of migrants crossing the Mediterranean this year. The strike action by French port workers has recently exacerbated these pressures, temporarily closing the port of Calais and disrupting services by ferry operators and Eurotunnel. This had significant repercussions for the UK – in particular for lorry drivers, the travelling public and local residents in South East England. Although the strike action is now paused and the Port of Calais is open, the risk of further French strike action remains.

During the strike, Border Force, working with the French authorities, put in place well-tested contingency plans, reinforcing security and supporting traffic flow at the juxtaposed ports. All freight vehicles entering Calais, Coquelles and Dunkirk underwent intensified screening using some of the best techniques and technologies in the world – including sniffer dogs, carbon dioxide detectors, heartbeat monitors and scanners – as well as visual searches to find and intercept stowaways. Over 8,000 attempts by illegal migrants were successfully stopped at the juxtaposed ports during the strike period, thanks to these joint efforts.

The strike affected the travelling public and local residents of Kent who suffered disruption due to traffic. The Home Secretary will be meeting colleagues from Kent to discuss this issue directly. It also had a huge impact on hauliers from all over the country – who were subjected to long delays and repeated attempts by illegal migrants to board their vehicles.

Support for hauliers

We are working with the British haulage industry to support our drivers, and I recently met representatives of the industry to discuss their concerns. We provide clear guidance on lorry security and an accreditation scheme for hauliers. However, as the vast majority of vehicles arriving in the UK are foreign registered, the bigger part of our challenge is international, which is why we have offered to host an international event to promote best practice in lorry security.

Yesterday, the Home Secretary announced the creation of a new secure zone at the port of Calais for UK-bound lorries. This will provide a secure waiting area for 230 vehicles – the equivalent of removing a two-and-a-half mile queue from the approaching road. As peak-time queues rarely exceed this length, it will transform protection for lorries and their drivers – removing them from the open road where they can become targets for migrants.

Bolstering security for all travellers

HM Government has been working closely with the French Government over a longer period to tackle with the broader situation in Calais. Earlier this month, the Home Secretary met the French Interior Minister, Bernard Cazeneuve, and agreed to strengthen that  cooperation further and build on the Joint Declaration they made last September. Since then we have:

• committed to investing £12 million (of which £6 million has already been spent) to reinforce security at our juxtaposed ports in Northern France. This includes new fencing to secure the approaches to the port of Calais and joint work to improve traffic flow through the port and Border Force controls, so that more tourist vehicles can queue within the secure environment of the port. This work is due to be completed at the end of this month;
• funded a £2 million upgrade of detection technology; and boosted our dog searching capability by another £1 million; and
• provided funding for additional fencing to help secure approaches to the Channel Tunnel at Coquelles, where repeated incursions have taken place over the last few weeks. This work, which we announced last week, has already begun and is also due to finish by the end of this month.

In addition, we have made considerable progress in targeting criminal gangs in Calais through better intelligence sharing and increased collaboration between UK and French law enforcement agencies, and we are running joint communications campaigns to tackle myths about life in the UK. We continue to keep the situation under review and will assess whether further measures may be required.

Tackling the problem at source

The problems in Calais are clearly symptomatic of a wider issue that needs to be tackled at source and in transit countries. This was reflected in the recent European Council discussions attended by the Prime Minister. The Government is clear that we must break the link between people making the treacherous journey across the Mediterranean and achieving settlement in Europe.  We must target and disrupt the organised criminal gangs who profit from this.

We are enhancing our work with European and African partners to tackle these callous criminal gangs and increase the support for genuine refugees in their regions of origin.

Recently, the Prime Minister announced the establishment of a dedicated law enforcement team to tackle organised immigration crime in the Mediterranean. Around 90 officers will be deployed in the UK, the Mediterranean and Africa to pursue and disrupt organised crime groups. They will make use of every opportunity at source, in transit countries, and in Europe to smash the gangs’ criminal operations and better protect the UK and the vulnerable people they exploit.

Continuing our work to crack down on illegal immigration

And finally, whilst the UK should remain generous to those who need help, we must also continue to be tough on those who flout our immigration rules or abuse our hospitality as a nation.

Since 2010, the Government has introduced new laws to make it harder for people to live in the UK illegally – restricting their access to rented housing, bank accounts, driving licences and our public services. We have revoked the driving licences of 11,000 illegal immigrants, closed down nearly 900 bogus colleges, and carried out over 2900 sham marriage operations in the past year.

The new Immigration Bill that we will introduce later this year will build on this work and enable us to take even stronger action. It will include measures to make it even more difficult for people to live in the UK illegally, make it easier for us to deport them, and make Britain a less attractive place for people to come and work illegally – by making illegal working a criminal offence in itself.

The Government’s approach is clear: we are working closely with the French authorities to mitigate the consequences of irresponsible French strikers; continuing our close collaboration to bolster the security of the ports in Northern France; providing assistance to our hard-working hauliers and the travelling public; and leading the international efforts to tackle this problem in the longer term – with generous support for those who deserve it, and tough sanctions for those who do not.

The Rt Hon James Brokenshire MP

Immigration Minister “

The Euro members of the EU will lend Euro 7bn to Greece via the EFSM (technically an EU not a Euro area fund)  so Greece can repay the ECB and the IMF what it owes them, prior to agreeing new loans from them! We are told the non Euro members of the EU will not carry any of the risk, so why use an EU rather than a Euro area fund?

Meanwhile the ECB which says it wants Euro 4.2 bn back on Monday from a previous loan will lend an extra Euro 900 million to Greek banks in the next few days and will doubtless be expected to lend considerably more thereafter.

Why this absurd money go round?  Why don’t the creditors delay repayments for a  period whilst they are negotiating the new longer term loans?  What’s the point of a bridging loan from them to repay themselves?

Reproduced from the BBC Newsnight live blog with permission.

James Clayton, Newsnight political producer.

John Redwood thinks all you need to illustrate the problems of the Euro are two banknotes – one €20 and one £20 note.

First of all look at the British £20 note

* The Queen represents the British Government

*There is a statement from the Bank of England:  “I promise to pay the bearer on demand the sum of twenty pounds”

* It is signed by the Chief Cashier of the Bank of England

* It has a picture of… the Bank of England

* It has a logo of… the Bank of England

In short – this is a pretty unequivocal IOU. It’s an explicit “promise to pay” from the Bank of England, assured by the British Government.

Now take a look at the €20

What does this note actually mean?

*  The gothic windows are not real, they don’t exist. They’re a symbol of “an artistic period” of European architecture

* The flag on the note is the EU flag – despite nine countries within the EU having nothing to do with the Euro

* There is a signature, but it’s not explained who it is or what their role is

* There is no explanation as to what his note actually means for the owner

* There is only one reference to the European Central Bank on both sides of the note

Redwood argues that this tells you all you need to know about how the Eurozone works. The Euro notes are unclear, ungrounded and do not adequately represent the governments that back the ECB.

The air of crisis over Greece relates to that country’s inability to repay money owing to the IMF and the European Central Bank. Greece is already in default with the IMF anyway. As it will be the Euro area, ECB and IMF who lend new money to Greece, why is there still this air of crisis over the old money the IMF and ECB are owed? Greece cannot repay it unless they are lent it back again by the self same creditors! Greece remains a pawn in the hands of the IMF and the Euro area. Their economy continues to be damaged by the attitude of their creditors, who are helping undermine Greece’s ability to pay in the future.

Germany is hard set against a transfer union, yet that is exactly what circumstances are forcing on the Euro area. Any debt relief to Greece makes it a transfer union by the backdoor. Money is first lent to Greece because Greece needs financial assistance to compete alongside Germany in the same currency. The debt builds up. Greece cannot repay it. So some of it is cancelled, retired, rephased. To anyone other than the German government that is a transfer union.

Germany cavils on fine definitions. If, they say, we simply prolong the loan, the debt can still be honoured. If we allow Greece to pay little or no interest on the loan for a bit, the debt is still intact. As far as markets are concerned, a debt not paying interest is worth a lot less than a debt with interest on time, and a debt repayable tomorrow is a lot more valuable than one repayable in 50 years time. You can’t get away from the fact that any diminution in interest payments and any extension of the loan has a free gift element to Greece, which is a kind of transfer union.

The IMF’s intervention into the Greek debate is at once electrifying and very unhelpful from the German point of view. I have been a longstanding critic of the IMF lending anything to a Eurozone member state. I pointed out that the IMF should only lend to countries with full powers over money, interest rates and budgets. IMF austerity measures in the public sector have to go alongside easier money and private sector led expansion to enable economic recovery to take place. This cannot happen in Euro area countries with no currency, no independent interest rates and no independent commercial banking system. The result is mass unemployment, lower incomes and often long and deep recessions. The IMF’s statement that Greece needs a debt write off is an admission of IMF failure, acknowledging that the IMF has lent to a country that cannot repay it all, and accepting that the IMF has to take a hit.

Which leads me to ask, why would the IMF want the Europeans and the IMF itself to lend more on a similar basis to last time, when last time’s loans failed to promote recovery and have ended in disaster? Is the IMF proud of its work in Greece so far, or will it now accept some responsibility and realise its clumsy interventions delayed sorting out the underlying problems?

The IMF is at last more realistic in saying that the current plans leave Greece unlikely to recover and succeed. They are saying that there needs to be transfers of cash from the rest of the zone to Greece to help. That pits them directly against Germany, delays a settlement, and means yet more misery and recession for Greece.

It is a true tragedy. Not only do the creditors and the debtor still violently disagree, but now two of the leading creditors have fallen out. Who said there was now a solution to the Greek crisis? Why did people think there was an agreement that will work?
There are only two long term answers. Either Greece leaves the Euro and establishes her own banking and currency system, or she is fully absorbed into a Euro political union and receives large transfers of cash from the richer parts of the zone in return for being told what to do.

The Greek Parliament is now just a rubber stamp. A German led Euro area has dictated to the Greek government. A comprehensive remodelling of Greek administration and justice is demanded, alongside major policy changes, a new wave of large cuts in public spending and tax rises. The lengthy list of requirements from the EFSF, the nominal creditor of Greece, is to be implemented in a hurry, with some of the programme a prerequisite for sitting down to try to reach agreement on new loans. Behind the EFSF lies some angry creditor states.

Some have rushed to presume that this is all now a done deal, that Greece will receive Euro 86 billion of new money, and peace can return to the Euro area and German-Greek relations. It is difficult to form such a conclusion if you read the full text of the “agreement”. The amount of money to be lent remains in question. There appears to be no reliable estimate of how much extra the Greek state will need to borrow, as it is likely tax revenues have fallen as a result of the latest crisis. There is no informed assessment of how much new capital and how many write offs the Greek commercial banks will need. The ECB is to study the Greek banks over the summer and assess the damage. There is marked reluctance by the Greek administration to find assets worth Euro 50 billion that can be sold for that much money.

The creditors are aware of this forced vagueness and match it with language demanding that Greece does conform to tight controls on its budget. They say “The Euro summit takes note of the possible programme financing needs of between Euro 82 billion and Euro 86 billion, as assessed by the Institutions. It invites the Institutions to explore possibilities to reduce the financing envelope, through an alternative fiscal path or higher privatisation proceeds.” If you took this to its logical conclusion there would have to be more spending cuts, more tax rises and more privatisation sales, at a time when most sensible commentators call in question the abilities of Greece to meet the targets needed to limit the new money to Euro 86 billion.

The Summit did ask the Greek government and the negotiators of the loans to “take into account the strongly deteriorated (sic) economic and fiscal position of the country during the last year”. Again this is a requirement on Greece to cut more and raise more tax at exactly the time that the economy’s output is probably falling badly thanks to the banking crisis. The EU likes ripping out the fiscal stabilisers during a recession, the opposite of policy followed in countries like the USA and UK with their own currencies where public borrowing is allowed to increase in a downturn.

The wide ranging reforms are to be assisted by EU technocrats and supervised by EU Monitors. The Greek Parliament has to legislate for Sunday trading, sales periods, pharmacy ownership, milk and bakery reform and to open “macro critical closed professions”. They are to undertake a “major overhaul of procedures and arrangements for the civil justice system”. This is on top of the much discussed higher VAT, pensions cuts and creating a properly independent Statistics authority.

Most crucial of all is the pledge of the Greeks to accept “introducing quasi automatic spending cuts in case of deviations from ambitious primary surplus targets…subject to prior approval of the Institutions”.
It is extraordinary that they had to accept this when the most likely reason for failing to hit budget targets will be a further collapse of revenues from poor economic performance.

It is a tragedy. I do not see that either side have been sensible or done well. A provocative Greek government with no feasible plan for growth has collided with a vengeful EU with no credible plan for growth. Between them they have badly damaged the banking system that is needed to finance the recovery. I wrote without seeing the books they would need Euro 100 billion to get by, when the official figure was Euro 53 billion. The official figure is now up to Euro 86 billion, though reluctantly. I still fear that when they tot up the damage to output, tax receipts , banking capital and loan losses by commercial banks it will be Euro 100 billion and still no permanent fix. Meanwhile the challenge is now on the Euro area protectors of Greece to show how their policy can work if they do go ahead with this damaging programme and these large loans.

One of the biggest barriers to improved performance by all of us is the inability to get around the UK by road or rail. Thursday was a great example. Trying to get from central London to the busy Thames Valley, you had to run the gauntlet of the tube strike, the intrusive roadworks to replace general road with cycle lanes in central London, the strike on Great Western railway and a blocked M 25. If you wanted to go to Kent there was Operation Stack to contend with, closing one of the main motorways.

If I ever get a clear run from home to my London office it takes just under one hour. I allow twice that for the typical daytime or evening journey. If I go door to door by walking and train it takes more than two and a quarter hours if all works well. The usual impediments to traffic means a car journey typically takes more than 100 minutes.

My inconvenience is not important, but it illustrates the frustration and difficulty all workers face as they seek to do their jobs. I deliberately take on far fewer meetings, events and speeches than I would like to do if they entail travel, as experience has taught me that advertised times for the journey rarely work out. A typical speech and questions outside London lasting 45 minutes to one hour takes 5 hours for the home counties and more than 7 hours for further away when you add in the two way travel time.

Electricians, plumbers, delivery drivers, professional service advisers making home visits and many others who rely on vans, cars and lorries to get to work have to book in fewer income earning calls to allow for their wasted time in traffic jams. To many self employed time is money – you have to spend more time in the jam and less time in productive remunerated activity. To employers employee time is money – if your employees have to spend time in traffic jams when out and about trying to their jobs, you have to employ more people and spend more to achieve the same end results.

The UK suffered a 13 year hiatus in new road construction from 1997. The Coalition government tried to stimulate new by passes and extra capacity on main routes, but it is all taking time to work up viable schemes, consult on them, get planning permission and let the contracts. Roads account for 85% of the travel but have not enjoyed their fair share of the transport budget. It is time to welcome the Chancellor’s idea that VED revenue ought to spent on roads.