One of the main arguments between socialists and conservatives is over the main aim of economic  policy. Conservatives want to raise living standards, to help people be better off. Socialists usually want to lower or remove inequality.

These two varying aims require different policy responses and achieve different results. Of course all sensible socialists would also want higher living standards, and all democratic conservatives agree the  tax and benefit  system should remove some of the inequalities market economies generate. Nonetheless deciding based around a primary  aim of betterment for the many or a primary aim of cutting inequality produces different results.

Mr Osborne adopted more of the socialist preoccupation in his budgets, worrying about measures of inequality more than about sluggish rises in average real incomes. He worked out how to administer a bigger tax hit to the wealthy and how to get rich people out of the country or to stay out of the country. One of the easiest ways to cut inequality is to offshore the richest people by having a hostile tax regime towards them. This may then reduce investment and job creation for everyone else as these people live and invest in a more friendly climate elsewhere. Both France and Italy are now wooing the rich with a better tax deal for that reason.

A test of which motivation predominates in a policy maker is that of the Laffer curve. If a Chancellor insists on imposing a tax at a rate that reduces the tax take, we can assume he does so to create more equality at the cost of less income and lower living standards. The decision of Mr Hammond and Mr Osborne to levy Stamp duties that cut the revenue must be based on this, and their  persistence with a 45% higher rate of income tax which also lowers revenue.

I want a policy based on a more rapid reduction in low incomes and no incomes. That requires a policy  which allows entrepreneurs, footballers and great entertainers to keep more of their earnings  so they stay here and pay tax here. They then also buy more things here, invest more here and employ more people here. Jealousy is a nasty emotion, and not a good policy. It makes us all worse off, with less money to spend on public services. As you achieve more growth you can then also lower tax rates on the rest of us, where lowering the rate cuts the revenue for any given level of economic output.

Facts4EU.org have posted today a useful guide to the continuing huge trade surplus in goods the EU continues to run with the UK. Since the referendum vote they tell us the EU has earned itself a wonderful £250bn trade surplus, so no wonder they want to try to lock us in to their trading terms and laws  to keep it going.  It is a reminder of how good a negotiating position the UK failed to use during the talks on our exit, and is worth a look on their site.

Whilst shopping on Saturday I was struck again by the huge range of choice of products, the good displays and by some of the keen prices on offer on the High Street.

I saw a Potato masher made of good strong stainless steel with a pleasant wood handle for just £3.99. Assuming a 50% only mark up by the retailer that means it was bought for just £2.67 from the manufacturer, including all packaging and shipping costs. Maybe the mark up was higher and the item cost just £2 delivered half way round the world. It had come from China by ship and truck. What UK manufacturer could match that cost?

Or take a well made and strong pair of kitchen scissors for £5.99. They came with plastic handles over the steel, good cutting edges, and all encased in a rigid see through plastic pack for ease of getting home. They may well have cost the shop between £3 and £4.

There is plenty of manufacturing capacity in the world for everything from clothes to housewares, offering a great array of different styles, colours and specifications. The excess capacity in China and elsewhere means strong downward pressures on the prices of many goods. The family budgets are under pressure thanks to the cost of government – Income Tax, Council Tax, VAT, fuel tax, car park charges, vehicle and broadcast licences, rail fares and the rest – and the increases in prices of various services with a higher labour content.

Consumers are spending relatively more on services and less on goods. As real wages rise so people can afford a few more luxury or discretionary items, with basics taking less of the budget. The new Wokingham Town Centre has a higher ratio of restaurants, coffee bars, specialist food bars and cocktail parlours, reflecting the wish of shoppers to afford an experience as well as simply buying more goods. The digital pound is also surging, with more being spent on mobile phones and tablets, on film downloads, on internet papers and magazines and various specialist apps.

The public sector needs to get smarter at adapting modern technology so it too can be more flexible in the services it offers and keener in their costing or pricing. The USA is pushing back on China to stop it dominating in tec as well as consumer goods, and to protect their data and networks.

Will Mrs May really ask us to vote for a fourth time on this unpopular Treaty by bringing forward the Bill to ratify it? She says they will. Why then does she  not publish it so we can talk about it properly? Is it so bad it must be kept secret?

Mrs May’s refusal to change her mind on this draft Treaty means she must resign after so many defeats for it.

A couple of correspondents have asked me to provide a more detailed response to  the Barclay letter.

In the main areas his letter confirms what I said about the draft Treaty. He agrees that as long as we are in so called transition the UK is “subject to existing and new rules as if we were members” and pays full budget contributions. I have  always pointed out we lose vote and voice so we are no longer full members with rights, but we would be entirely subject to EU laws, rules and budget requirements. That does not sound like leaving. We then need to negotiate our way out, which according to the government will entail locking us into yet  another EU Treaty to be determined. Its a very expensive invitation to more talks about leaving.

He confirms that the Northern Ireland Protocol  creates different government for Northern Ireland over customs, trade and the single market. Of course he is right if the rest of the UK accepted EU requirements and changes as Northern Ireland would have to we could avoid separation of conditions between NI and the rest of the UK. Again that does not sound like leaving.

He confirms that we will face full budget bills up to the unclear  end of transition and will have further obligations up to 2028. He says the further adjustments made up to 2028 might be downwards, but clearly they could  be upwards from an EU that is cash hungry and inventive on claims.

He suggests £35bn to £ 39 bn is a small sum. I beg to differ. He also concedes this is just an estimate . Given the vagueness of the headings I think it could well be a lot bigger. He concedes the EU has a big role in calculating and sending the  bill and adjudicating disputes.

He doesn’t disagree we have been short changed on the EIB by losing our share of accumulated  reserves.

He agrees we have to meet pension liabilitues and payments to Turkey, but says this is fair.

On individual Articles he usually argues continuing ECJ powers and related matters up to 2028 that I listed relate to matters that occur up to the end of transition. I object to this long tail, providing an enduring opportunity for the  EU to demand more cash or  legal observance because they say something started or occurred before we left. It gives them a lever which could be damaging to us

He agrees the ECJ continues to rule all the time  we are in so called transition. This would  be a binding  Treaty which would greatly reduce our capacity to govern ourselves. There is less disagreement than the general remarks of his letter might suggest. He places  a favourable construction on how the EU would behave if we signed.I think they might push the  clauses against us rather more.

This week President Trump issued an Executive Order requiring tougher regulation and bans of telecoms equipment from unnamed “foreign adversaries” that threaten the US national security. At the same time briefing occurred that he has in mind China in general and the Huawei  company in particular.

It is clear the US thinks Chinese involvement in digital systems can pose a future threat to their security and might give the Chinese state access to secrets and the ability to disrupt should it wish to do so. Most comment has concentrated on whether Huawei would ever act for the Chinese state in this way, and whether they have a possible “backdoor” into the systems and data on systems in the west where they provide hardware. They deny both suggestions.  There is also the issue of the nature of the US/China relationship that underlies these concerns, with the USA effectively calling China an adversary and treating the Chinese state as a potential threat.

Should America’s allies adopt the same posture as Mr Trump wishes? This will be an issue when he next visits.

I know some of you thought it odd that the Attorney did not reply to my letter, but I eventually got a reply from the Secretary of State for exiting the EU. You will be pleased to know that yesterday I did also get a reply from the Attorney himself, so any criticism on that score is misfounded.

I am used to government departments sending letters to other government departments for reply. I am also used to the idea of collective responsibility, so I assume the government department that sent it to another agrees completely with the answer the responding department offers, and has had an opportunity to comment on the line taken when the matters covered were settled by government or when the letter is answered.

I thought I should share the Attorney’s letter with you as people will want to make up their own minds about the balance of argument on this important constitutional matter.

The Attorney wrote:

“I am writing further to your emails of 14 and 18 April concerning the Withdrawal Agreement.

The Secretary of State for Exiting the European Union has now responded to your queries on behalf of the Department for Exiting the European Union, which is the department responsible for overseeing negotiations to leave the EU and establishing the future relationship between the EU and the UK. I have seen the letter dated 14 May 2019, the substantive contents of which I agree with.”

This is an unusual letter, as normally the government only sends one reply to a query. It is interesting that it explains to me how the negotiations over the EU are conducted without mentioning the prominent roles of the Prime Minister, Mr Robbins and the Cabinet Office who I thought had been leading the talks. It is also interesting because it does not simply say the Attorney agrees with the government’s letter, but he agrees with “the substantive contents” which are not separately identified.

 

 

Just a reminder that I am giving my talk in Oxford tomorrow, when I will demonstrate the collapse in support for major traditional centre left and centre right parties, the impact of the Euro and the EU scheme on those parties, and the general disillusion with the establishment that we see on both sides of the Atlantic.

“We don’t believe you” Why populists reject the establishment (via Amazon)

Signed copies available tomorrow at the launch.

When I wrote my book about populism a few weeks ago I drew a contrast between the long trends on the continent to the demise of the Christian Democrats and Social Democrats in most places, and the recovery of support for Conservative and Labour in the 2017 election. In February this year as I sent it to the printers the Conservatives were on a  healthy 43% in the polls. The reason was simple. The Conservatives had embraced the Brexit verdict and we were on target to leave the EU on 29 March 2019. It seemed very likely the Withdrawal Agreement would not be passed, as it was extremely unpopular with much of the electorate, uniting Remain and Leave voters against. Implementing a timely and clean Brexit could  lead on to other changes that would be welcome – spending the money on our priorities including some tax cuts with more spending on schools and social care, boosting the economy, developing our own global trade policy, setting out our own borders policy and restoring our fishing grounds.

Mrs May’s decision to delay our exit and to blame Parliament led to a big fall in Conservative poll ratings. Her even worse decision to hold the European Parliamentary elections, three years after our decision to leave, led to a further slump in Conservative poll ratings. People write in and tell me I have to solve this problem. I need to do something.

My remedy is simple. We need a government that will go to the EU and explain the Withdrawal Agreement is completely unacceptable to Parliament and people, and cannot pass. We will leave at the first opportunity – October 31 if the EU does not co-operate or earlier if they will co-operate. We will offer free trade talks and no new barriers to our trade on exit if they agree under Gatt Article 24. It would be better to leave with such a deal than with just the various smaller deals we have in place for a so called no deal exit.

That is all the easy bit. I will continue to argue and vote for that in Parliament. That is entirely in line with what I promised I would do in the General election, and with the Conservative party Manifesto of 2017. The difficult bit is how to get the government to do just that, as it shows no wish to save itself at the moment.

I have made clear my wish to see Mrs May either change her policy in the way described or to give way to a PM who can do the job. If the Conservatives do not deliver  a clean Brexit soon the polls will stay bad for the party and the country will continue to feel let down. I on my own do not have the power to get these changes, and nor so far does anyone else. That is what these days are about – trying to get the change we need.

The immediate future of Brexit rests on a Conservative Prime Minister and will continue to rest on a Conservative PM until the end of this Parliament at least. Any individual MP resigning the Conservative whip would not bring about the change many of you want, but would make achieving such change one vote less likely.

 

The book is

“We don’t believe you”

 

Paperback version:

 

ISBN-10: 1095254952

ISBN-13: 978-1095254950

 

Kindle version:

 

ASIN: B07QYBK9SZ

 

On Amazon:

 

https://www.amazon.co.uk/Dont-Believe-You-Establishment-Differently/dp/1095254952/ref=sr_1_1?keywords=we+don%27t+believe+you&qid=1556687292&s=gateway&sr=8-1

 

On Bite-Sized Books website:

 

https://www.bite-sizedbooks.com/shop/public-affairs-books/we-dont-believe-you/

 

 

 

 

 

I have received a reply from the Brexit Secretary following to my recent letter to the Attorney General. The letter is available to view here.

Here is my further response to the Secretary of State:

Dear Stephen

Thank you for your letter.

You say the Withdrawal Agreement takes us out of the EU, yet you also agree with me that we may well stay fully in without vote or voice under it until December 2022, and you cannot of course tell me what our eventual departure would be  like given how much would need to be negotiated over the so called future partnership. There would also need to be resolution of the alleged Irish border difficulties which so far have proved impossible to resolve despite lengthy talks.

I am glad we agree we could be fully under the control of the EU until December 2022 and would have to accept all new rules and laws. I do not accept that these will  be few in number and limited by our possible departure. The EU is a very active legislature, generating a large proportion of our laws over everything from the environment to trade and from migration to transport.

I am intrigued that you think £35-39 bn a small sum, and that the Treasury forecasts of our gross contributions now amount to an annual  £16.7bn. One of the main advantages of leaving as was clear in the referendum is the ability to spend our own money on our priorities, which we should  be able to do from now, 3 years after our decision to leave.

In a number of areas you point out that the continuing powers of the ECJ and the EU relate to events or commitments made during the transition period. I and many others object to this. Leaving means ending the authority of the EU, not allowing it to interpret past events and impose continuing obligations upon us.

You confirm we will not take control of our fishing grounds during the transition period of the Agreement, nor can you promise that the independence of our fishing industry thereafter might not be compromised in subsequent negotiations to get out of the EU in due course.

The splitting of the Withdrawal issues from the future partnership issues is against our Manifesto and full of negotiating danger. Why should we sign up to so many things they want, before we have agreed some of the things we might want? Why have we dropped the mantra of “Nothing is agreed until everything is agreed?”. What exactly do we get for our £39bn (and the higher sums likely to result from the loose and general commitments of the Treaty) in this so called deal?

 

The Agreement is a very expensive invitation to talks about our possible exit. It does not give us either a clear date for leaving or the terms on which we might eventually be allowed out. It locks us into a binding Treaty to behave as a continuing member of the EU without vote or voice over what we have to obey whilst we try to negotiate our way out of the Irish backstop and the other restraints on us.

Yours ever

John