John Redwood's Diary
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Why the single market damaged the UK economy

As a young man one of my first votes was in the original referendum on whether to stay in the EEC, misleadingly called the Common Market during the campaign. I was against the language in the Rome Treaty that warned us this was much more than a Common Market in the making, and disliked the Labour government’s lies about the nature and long term aims of the body. I also was asked to produce a decade forecast of the outlook for the UK if we stayed in by my employer.

As I drafted it five problems became clear. The first was the burden of our financial contributions was too high, and these would produce a nasty dent in our balance of payments as we sent that money away and it was converted into foreign currencies. I did not know or forecast Margaret Thatcher would become PM and negotiate a better deal, which limited the damage a bit – or that I would help her.

The second was the UK’s industry which had management and Union issues, some old capital stock and poor nationalised industries like steel and shipbuilding that were not cost effective. This meant it was going to have to face the full frontal assault of German and French competition with the full removal of tariffs before it was ready to withstand those pressures. My forecasts rightly assumed we would lose a lot of capacity in areas like steel, cars, foundries, ship building and textiles. Our car output halved in the first decade of membership.

The third was in the areas of services where the UK had a good competitive advantage the considerable barriers to trade were going to remain in place. As a result I reported a major and long lasting deterioration in our balance of payments as imports of foreign goods surged, exports of services were still limited and as we had to make new large payments away.

The fourth was the dreadful deal on fish, bound to damage our industry substantially.

The fifth was the complete removal of tariffs from EEC food, the imposition of tariffs on Commonwealth food, and the hugely damaging impact the EEC would have on areas like fruit and market garden produce.

Later policies as the EU emerged and increased its wide ranging legislative grip also drove us into importing everything from defence equipment to electricity. It was a great scheme for continental exporters. In those days running a balance of payments deficit required stringent credit and money control which slowed growth.

We voted to leave the single market and customs union of the EU

EU representatives still seem to think the UK wants special access to the single market and is desperate to stay in their trading arrangements. They may be fuelled in this mistaken belief by sections of the UK establishment who seem to think the single market is a good construct that we would be wrong to leave.

One of the few things Leave and Remain agreed about in the referendum was leaving the EU meant leaving the single market and customs union. The winners thought this a good thing and the losers thought it was some kind of threat hanging over us. I became a strong critic of the single market when I was the UK’s Single market Minister. I was given the task of supervising the UK’s response to and involvement in the so called “completion of the single market” in the run up to 1992 when they declared it finished.

The endless Council meetings and negotiations were to complete 282 pieces of law making to regulate all sorts of things people trade. Many of these added little or nothing to trade, and many entrenched in law the preferred ways of making and doing things of large continental companies. They stated “1992 will be a pivotal year in the development of the European Community. It marks the final year of the enterprise to complete the single market” and the year when they went on to economic and monetary union.

I lost the main argument within the UK government before when I was the PM’s adviser. I pointed out you do not need a whole lot of common laws to have a free market. The EU already had established the key proposition, that any good of merchandisable quality in one country could be offered freely for sale in another. This was sufficient in itself. It meant companies could get the benefits of scale and trade their goods freely across the whole EU without tariffs and non tariff barriers. Consumers could decide for themselves if they liked the product and the supporting standards of the sponsor country when making a purchase.

The EU was determined to use the excuse of a single market to greatly expand its legislative control over member states. They demanded the end of the veto over all single market legislation to expedite putting through regulations that were against the interests or traditions of individual countries. I advised the government to only surrender the veto for the 282 specified pieces of legislation, and for it to revert thereafter. The government was not even prepared to protect us to that extent, and the UK swallowed the idea of majority voting for huge swathes of legislation. By the time I became Single market Minister I had to construct blocking minorities of countries every time the Commission came up with another damaging or needless proposal.

As I feared the EU had no intention of limiting itself to 282 laws for its single market, but went on year after year long after the so called completion of the single market pushing out many new laws to exert control over many new areas all in the name of the single market. The single market was much better at ensuring tariff and barrier free access to the UK for continental manufacturers and farmers than it was at securing access for UK service providers to the continent.

How the EU sought to make us dependent

As we exit the EU fully we need to be aware of just how far the EU had got in seeking our integration and submission to their system. They were always bitterly disappointed that the UK avoided joining the Euro, the main mechanism by which a fully integrated EU economy is being created. Greece and Italy have discovered the hard way that there are many policy choices they can no longer make as they are committed to the disciplines of the Euro.

Despite this they sought to ensnare us with various common policies. The Common Fishing policy took more and more of our fish to foreign ports, leaving us with one of the richest seas in the world to become net importers. The common energy policy got us to depend more on imports through interconnectors, making a country with plenty of its own energy partly dependent on a continental EU short of energy and committed to Russian gas. The common state procurement policy meant we bought more and more goods that the UK is quite capable of making from EU suppliers with continental factories. The Common Agricultural Policy led to a sharp decline in the proportion of our food we grow and rear for ourselves. The trade policy made us impose high tariffs on food products from outside the EU we could not grow ourselves. The animal welfare policy fell short of what we wanted, but we had to accept live movement of cattle and the standards the EU would accept for everything from chicken cages to sow tethers.

In future blogs I will be examining the scope there now is to improve so many things. The annoyance is the way the last Parliament and much of the UK establishment blocked preparatory work to grasp these many opportunities to do better more quickly.

How should the UK government handle Devolved government?

I opposed the creation of a devolved Scottish Parliament and Welsh Assembly when Labour offered its second referendum on these matters in 1997, as did the Conservative party as a whole. I accepted the result fully, even though the Welsh one was very narrow. Since that day I have never asked for another referendum to test opinion again, and have always supported co-operating properly with the devolved bodies.

I have not felt the need to change some of the arguments I put at the time. For example, I argued that setting up these bodies would not create a happily united UK in the way Labour envisaged. It was more likely that nationalists in Scotland would use the excellent platform the Scottish Parliament offered them to campaign continuously to move from devolution to separation. This has predictably come to pass. Not even a full and fair referendum to ask the question did Scotland wish to be independent was sufficient to restore peace on this issue, as the SNP unlike Conservatives never accept the result of a referendum when it goes against them. Today in Parliament every debate on whatever matters is another debate on Scottish independence as far as the SNP is concerned.

Today we see the results of managing the CV 19 response when the devolved authorities of Scotland, Wales and some City Mayors wish to be involved and wish to differentiate what they do. We get mixed messages, public disputes, selective leaks of privileged conversations and variable responses around the UK. I think a good case can be made for more local decision taking on this issue. After all the virus spreads at very different rates and at different times around the country. Hospital admission needs and death rates are very variable. Local circumstances over testing, hospital capacity and Care home management are different.

This argues for a two tier approach. The national government should provide a menu of powers and national advice on the best medical, scientific and economic response to the crisis. The national government and Parliament can decline powers that are thought to be too damaging and unhelpful. Devolved authorities should be free to select from the menu of special powers and responses what they wish to impose in their areas. The U.K. Parliament needs to press harder for a plan which does less economic damage than the current one.

Trying to do it by collaboration is more difficult, as this blurs responsibility and allows devolved authorities to play politics with a national crisis. The SNP government is said to have selectively leaked confidential information about possible future options before a common position was agreed or announced. They also spent the first part of the pandemic setting slightly tougher rules in Scotland, claiming this would allow Scotland to be virus free whilst England would suffer from being too lax. It did not turn out like that, with the Scottish government now needing to explain why their different approach did not produce better results.

Today why not let devolved authorities decide what they should do about rising case rates. They do not seem to like the national government telling them how to organise their pubs and restaurants, and they want to be more responsible for track and trace in their areas. If a Council or devolved assembly wished it could ask the national government to take responsibility for it. Otherwise the government will need to be firmer with sending plans to local and devolved government that they just need to implement as agents of central government.

The best argument against local differentiation is the variety of rules that will apply. The best argument in favour is many areas of the country will not need the heavy handed lock down the government’s advisers think necessary for areas with a high incidence of the pandemic.

(In the 1979 referendum Welsh voters rejected devolution by a massive 4 to 1 margin. In 1997 they voted 50.3% Yes on a 51.3% turnout, with a majority of just 6721 votes for devolution)

The Great Reset

I have no problem with the idea of building better or investing in a better future, but I do have problems with some of the agendas drawn up in the name of the Great Reset.

The problems of the past were not brought on by taxing enterprise too lightly or by being too generous to the self employed. We did not have too many large companies offering better new goods and services, and we did not have too many people working hard and investing their time, energy and capital in serving us better. We needed more of both, a need that has just been intensified by the damage done to both by the lockdown measures. Taxing work, enterprise and success more is a bad idea.

Many of the great advances in living standards and quality of life have come from the innovation and enterprise of the private sector. It was not government effort that launched billions of smart phones and electronic pads on the world. It was not government which provided the cars to liberate many more people with flexible personal transport, or supplied the great entertainments of stage, screen and events. It is important that as we build back from lock downs these gains are banked and enhanced, with broadening of reach to ever more people.

When the agenda proposes taxing and regulating the very products of the digital revolution and the transport revolution that have offered to the many the freedoms and advantages that used to be the preserve of the few I worry that build back better just becomes a cover for more state control over our lives.

My speech during the debate on the Fisheries Bill [Lords]: New Clause 8 – Agency arrangements between sea fish licensing authorities, 13 Oct 2020

Sir John Redwood (Wokingham) (Con): I am almost seduced by Opposition amendment 1. It is an admirable idea that we should land more of our own fish in our own ports, but I am probably not going to make it to their Lobby, because they lack ambition—why only 65%? We heard from my hon. Friend the Member for Moray (Mr Douglas Ross) that the Norwegians and the Icelandics, who have had control of their own fisheries for much longer or never surrendered them, have much higher percentages than that. These are small, prosperous countries that took their destiny in their own hands, and they have a much finer fishing industry than ours—crippled as it has been for too many years by the common fisheries policy.

So full marks to the Opposition for wanting, for once, to go in the right direction, but let us have a bit more passion and ambition, because it is a disgrace that, after all these years in the common fisheries policy, the overwhelming majority of our fish is taken by others, and it is a disgrace that this great fishing nation imports fish to feed ourselves. I want to see a much higher percentage than amendment 1 suggests, because I think we need the food for ourselves or we would be very good at processing it and adding value to it. I do not just want fresh fish for our tables; I also want to see us putting in those extra factories and processing plants in our coastal communities so that they can produce excellent fish preparations or derivatives of fish for our own purposes and for wider export around the rest of the world. This is crucial.

I am afraid that I am not seduced by amendment 2 either. While I and the Government, and I think everyone in this House, think that sustainability of our fishery will be most important, I do not think it is the only aim, or even the prime aim. It is a very important aim that we want to use our fishery to feed ourselves and others, and to produce much better jobs, more paid employment and factory processing. It is very important, as others have said, that we look after the wider marine environment —not just the fish stocks, but the environment in which the fish and others are swimming.

I think we need to have multiple aims, and I think that is what the Government are setting out. The Government are very much in favour of sustainability, so when we wait—desperately worried—on these negotiations, I say, “Please, Government, do not give our fish away again!” That mistake has been made too often—in the original negotiations to go into the European Economic Community and in annual negotiations thereafter. Let us hope that our fish is not given away in those negotiations. If we cannot fish enough of it in the short term, because we still do not have the boats and the capacity, let us leave it in the sea and rebuild our stocks more quickly, while we get that extra capacity. I would like to hear and see more from the Minister and the wider Government on how we are going to support the acquisition of much more capacity.

Should we not be helping fishermen and fisherwomen commission new boats from British yards, and have that combined shipbuilding capability and the fishing capability, leading on to the production capability? Many of our industries were badly damaged or demolished by our presence in the European Union. This is a prime example of an industry that was crippled. The scope for much greater prosperity for our coastal communities could be added to by the right schemes to get more boats, and by the right schemes such as enterprise zones that allow us to go right up the value chain and produce the best fish dishes in the world.

My speech during the debate on the Public Health: Coronavirus Regulations, 13 October 2020

Sir John Redwood (Wokingham) (Con): The Government are desperately trying to find that balance point between protecting livelihoods and protecting lives, and I am grateful to them for all they are doing to try to bring that off, but the only way forward is to get maximum buy-in from the public. There is no perfect set of rules or laws that can be enforced. We do not have enough police and that would require a mighty explanation task, so the more they can do by means of persuasion, the better.

Sharing with the public the dangers and showing them how hand washing, distancing and not mingling in enclosed spaces are going to work are the way forward. I am apprehensive about how much of this is enforceable.

Test and trace can work only if people who are traced are willing to co-operate. Quite a lot of people leave funny names, apparently, or they are not available when people are trying to contact them, or when they are told that they are a contact, they decide they are too busy to follow the procedures. They might genuinely be too busy and have real conflicts in their lives about looking after relatives, sorting out children, cooking meals at home or whatever it is, and it is very difficult suddenly to isolate if they do not have the property and the means to do all that, so we need to carry them with us. There needs to be a more energetic reliance on persuasion and less on formal rules.

My other worry about this strategy is that we need a plan B for the possibility that there is no early and successful vaccine. We all hope that the Secretary of State is right and we all hope that, by spring, there is a vaccine that works that can be produced at scale and that enough people want to take it so the problem goes away, but there might not be and this might fall down on one or more of those requirements. I urge the Government to think through what is plan B, because we do not want this continuous cycle where the virus pops up, we impose controls, the virus goes down a bit, we relax the controls and the virus pops up again.

That is deeply destructive to social life and community life. It is going to destroy many more businesses and many more livelihoods. Many more jobs are going to be lost. Businesses need some greater certainty that they will be able to trade, so I urge the Government to be more open with us about what is plan B for no vaccine and more open with everyone about how long these controls have to last and what their purposes are.

The 10 o’clock rule has become the iconic one that is opposed by some and supported by others. The problem with it is that people find easy ways round it. They comply with leaving the pub, but then congregate in each other’s homes and use off-licence booze. They might be breaking the rule of six, but feel that is a tolerable thing to do. The police cannot go to everybody’s home to find out whether they are breaking the rule of six, but they can enforce turning out the pubs. It might be worse for people to drink at home than to drink in the pub, so rules have their limitations. Let us get more buy-in by persuasion. That is our job as politicians.

My intervention during the debate on the Public Health: Coronavirus Regulations, 13 October 2020

Sir John Redwood (Wokingham) (Con): How long do the scientists think we will need these lockdowns for, and what is their exit plan?

The Secretary of State for Health and Social Care (Mr Matthew Hancock): We have seen the exit plan from local lockdowns. For instance, in Leicester, where we had a firm local lockdown, the case rate came right down. We lifted that and we have sadly seen it start to rise again.

The case rate is determined by the amount of social mixing, and it reduces during a lockdown. In some parts of the country where the case rate has continued to rise, there is an argument for further ensuring that we do not reach the level of contact that is at the root of the virus spreading. The challenge is how to calibrate the lockdown to get the virus under control while doing the minimum damage to the economy and to education.

Clean water – and plenty of it

I never understand why it is fashionable establishment thinking to want to limit our use of water. Water is the commonest of substances on our planet. Here in the UK we have plenty of fresh water on top of the huge volumes of salt water all round our coast, alleviating the need to filter the salt out of what we use.

There is a water cycle where the winds pick up water from the sea, form clouds and then deposit a lot of it on our islands. All we have to do is to store it in lakes or reservoirs and draw on it as required, with suitable cleaning and filtering to ensure safety if we drink it. Our using it does not destroy it. We pass it out in used and dirty form, only for it to go round the cycle again and re-emerge as clean water to use again.

The UK industry is heavily regulated. The price control regulation builds in a strict restraint on providing more water capacity, as the regulator effectively controls how much capital can be applied. We have a strange system where there is a single supply to each home, so you need to use drinking standard water on flushing loos and hosing your garden instead of using grey water for these purposes. Maybe the way to go is to encourage more homes to collect their own rainwater for lower grade uses, cutting the outflow through the dirty water system and reducing demand for high quality water.

It would be good if the regulators would allow a bit more capacity to be available. We are vulnerable to drought periods, so we do not want a repeat of the mid 1970s hot 1976 summer which would stretch the system too much. We keep adding homes and people to the south east with no new reservoir capacity. It cannot go on like that. We should be building new reservoirs now. They can be attractive landscape features, and would be welcome as an alternative to a new housing estate in a given area under pressure of development.

High standards are essential for drinking water. On the whole the UK achieves this.The issues relate to water rationing and future needs. As we move to growing more of our own food at home we will need more water for crops. Richer societies want more water for everything from showers to car cleaning and garden maintenance. Let’s get on with catering for those demands from what should be a good growth business.

The water industry under its regulators has to tell people in the middle of a warm summer they should throttle back on water use, when they should be revelling in high demand. You do not hear the hot cross bun makers telling people at easter their buns are rationed because people want too many of them.