John Redwood's Diary
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St George’s Day

A happy St George’s day to all.

Today England should be celebrating our freedom out of the EU. England voted by 53.4% in favour of Leave, with a large 1.921 million vote margin of Leave over Remain. English voters expected us to be out by now. Once again England has been let down by UK and EU politics.

The negotiations with the EU have reminded us of the way England’s wishes are so often ignored or sidelined. There has been no Ministerial or representative voice of England in the negotiations at a time when the Scottish government has been most vocal setting out their views on the topic. The EU itself has always tried to split England up into artificial regions, and has not wished to hear an independent England view.

I have judged trying to reach a rapid and successful conclusion to the UK’s exit from the EU is the most important constitutional task confronting us. Once we are out we do need to revisit the issue of England’s representation. The Coalition reforms gave us the right to avoid Union legislation placed upon us against our will. We need next to turn to acquiring the ability to initiate measures for England without needing a majority in the Union Parliament, where those issues are devolved to Scotland.

The leadership of the Conservative party

Many members of the Conservative party are feeling let down that we are still not out of the EU. They warmed to the Prime Minister’s approach that no deal is better than a bad deal, and accepted her assurance we would be out by 29 March 2019. Many Conservative MPs are unhappy about the plunge in the polls brought on by the news that we might be holding European elections after all, and by the fall in the general polls following announcement of delay in getting out.

There are moves to see if the question of the leadership can be revisited before the expiry of a year since the last confidence vote in Theresa May. Some MPs and some members of the voluntary party with their Associations are looking at what scope there is under the rules to test support again for the Prime Minister. It is reported that sufficient Associations have demanded the matter be examined by the party Board. Many MPs are sending letters to the Chairman of the 1992 Committee demanding action.

Mrs May herself has said she would resign as leader after the Withdrawal Agreement has gone through. She said nothing about what she would do if it did not. It is looking increasingly unlikely it will go through, as Labour have many difficulties with the Political declaration and the future partnership which is an integral part of the Agreement. As a result there is doubt about her intentions. Nor has she stated a definite leaving date were the Agreement to go through. Her wish to get it through with Labour votes is also unpopular with many Conservatives.

I do not favour the attempt to broker a deal for the PM to step aside in return for getting through a bad Agreement. I am urging the PM to lead us out on May 22nd, by cancelling the European elections. Under the Extension Agreement with the EU we would then automatically leave on May 22nd. We should offer further talks to secure more agreements on a range of things, led by tabling a free trade proposal, to start as soon as we leave.

If the Prime Minister did this the difficult problem of the European elections vanishes, and the Conservatives would go back up in the polls as Leave voters returned, grateful that we will be out on May 22nd. If she does not do this a very unhappy party will look for a legal means under its constitution to force a meaningful vote of confidence in the Prime Minister.

Striking a successful balance between landlords and tenants

It is right that the law requires landlords to treat their tenants well and to stick to the promises they make in their contracts with tenants. There have been too many cases of bad landlords who have failed to maintain properties to a decent standard, or who have sought to evict tenants for no good reason.
The government is currently reviewing the balance of the law to see if tenants can be offered more security. It is after all their homes we are talking about, and it is disruptive and upsetting if people have to move out of a place they need and like living in.
In the review the government also needs to take into account how landlords are likely to respond. Tenants have more freedom, more choice and more affordable rents if there are enough landlords wishing to make property available. Some overseas markets have been badly damaged by offering strict rent controls and other advantages for tenants, only to discover the supply of rented accommodation falls, creating scarcity and upward pressure on the general rent level.
Today both landlord and tenant can agree to a rental contract for a stated period. The landlord may have good reason why they want the property back at the end of the specified time. If this is no longer possible more potential landlords may be put off, concerned that they cannot get their property back.
We have already seen a contraction in the supply of more property to let by the tax attack on buy to let investments by individuals. The disallowance of mortgage interest relief and the higher stamp duties on such investments has put some people off contemplating put their savings into such a venture. More emphasis has been placed on institutional and company landlords, who will in turn be concerned if contracts are too restricted.
I want tenants to get a good deal, and want there to be sensible legal protections against poor or bad landlords. The government for its part needs to recognise that the best way for tenants to get good deals and have choices is to encourage a larger and healthier private rented market. You do not achieve this by overtaxing provision, nor by intervening too much in the contracts willing landlords want to exchange with willing tenants.
I am not myself a tenant, nor do I have a buy to let investment.

Houses became a bit more affordable last year

In the year to February 2019 house prices edged up by just 0.6% nationwide, whilst average earnings advanced by 3.4%. Housing just got a bit more affordable.
There was a north-south divide, with London prices down by 3.8% and South east house prices down by 1.8% whilst prices rose in all other regions bar one. Prices were particularly strong in Wales, Northern Ireland and the North West of England.
Some will say this is good news. We want more people to be able to afford to buy a home of their own. These recent changes make homes a bit more affordable, without pushing recent buyers into heavy losses shortly after buying.
If you live through a house price collapse, as we did in 2009 during the credit crunch, people struggle to take advantage of the fall owing to the general shortage of credit and the risk of losing their job. Others who have recently bought can end up in a bad position. If they lose their job and main income they may have to try to sell their house into a falling market and end up with a nasty capital loss.
The recent squeeze on house prices has come from the tighter rules over mortgage provision. Banks are under instructions to limit the multiple of earnings they can advance and to demand bigger deposits from the buyers. Higher stamp duties have hit dearer houses where the price falls have been largest.
The issue is how far do we want this to go? Whilst it means more affordable homes, it does not necessarily mean more people manage to buy these homes. If house prices fall because of shortage of mortgage credit, that remains an obstacle to more people fulfilling their dream of a home of their own.
Meanwhile the government that says it wants homes to be more affordable continues with penal Stamp duties on many buyers. The London market in particular, where the average price is so much higher, is being badly damaged by high transaction taxes. It gets in the way of people downsizing and upsizing, moving to minimise their travel to work, and impedes people buying to restore an renovate.
When will the government listen to the need to cut Stamp duties some more?

A response to the Parliamentary Early Day Motion on climate change

The UK has been one of biggest cutters of carbon dioxide emissions worldwide. Since 1990 UK carbon emissions are down by 43% compared to a target of 40%. The UK met its first carbon budget in 2008-12 and outperformed targets in the second budget 2013-17. All looks good for outperforming again in the current budget up to 2022. In contrast Germany was only trying to get 40% below 1990 by 2020 but is a long way off hitting that target, last seen only 27% below. German carbon output is more than twice the UK’s. China and the USA are the two largest worldwide contributors.
If we look at carbon dioxide per head the USA at 15.7 , Germany at 9.7, China at 7.7, Russia at 12.3 and the EU average at 7.0 are all well above the UK at 5.7. This is a global issue which needs global policies. The UK is active in pressing for international targets and agreements. It makes little sense for one country to cut back if others do not, and even less sense if a country like the UK cuts back on its own use of energy for production and transport, only to import items that are energy intensive from elsewhere. It is bad for UK jobs and the balance of payments if we uniquely have dear energy that prices industry out of the UK.
The UK government claims to be the greenest ever, and has put a lot of effort into technological alternatives to encourage fuel saving and substitution. The EDM does not recognise any of this. It does ask the government to make more money available for a “green deal”. I would need to know how much is being sought and how it is proposed it should be spent. I am always happy to support initiatives to promote fuel saving and would be willing to look at further good suggestions. We need to avoid initiatives that do not make overall net reductions, or destroy jobs and create fuel poverty.
As the EDM says, the good news is we all have access to technology which means we can make a difference ourselves. Ultimately it is about how we all live our own lives. I have taken action to curb draughts and heat loss at home. I try to buy locally sourced food as it makes little sense to bring in food from the continent by ferry or airfreight when we can grow it nearby. I have improved my heating controls and heat my home to lower average temperatures by flexing the temperature to my use of the rooms. I have proposed removing VAT on all green products once we are out of the EU and allowed to do so, as I want better draught excluders, insulation materials and control systems to be cheaper and more accessible.
The public is keen to see cleaner air by setting higher standards on particulates and smoke, and to pursue commonsense policies to promote better insulation, greater fuel efficiency and fewer food miles. It is also important for individuals to choose to limit family size if they care about the demands on planetary resources. The UK rightly does not favour any government controls on such matters in the way China did for many years. Governments can help create a climate where people self impose sensible limits on population growth in the interests of sustainability and limiting demands on resources, and can control migration levels.

The latest polls should warn the two main parties in the Commons to avoid a European election.

The latest poll for the possible European elections shows Labour on just 22% and the Conservatives on a new low of 15%. The two main parties in the current Commons commanded 82.4% of the vote between them in June 2017. Then both parties promised to implement the decision of UK voters to leave the EU. By making that important promise many UKIP voters returned to the two main parties. The Conservatives hoovered up Eurosceptic votes and Labour attracted left wing votes from people who had often not voted before. Labour kept a lot of its Leave voters in the Midlands and the North by promising to leave. The two parties have lost 55% of their vote according to the latest poll, and will struggle to get it back for the Euro election.

The votes have gone to parties clearly committed to an early Brexit on the one hand, and to parties wishing to abandon Brexit on the other. The pro Brexit parties are on 34% of the vote, and the anti Brexit parties on 29%

Brexit party 27% Greens 10%
UKIP 7% Lib Dems 9%
Change 6%
SNP/Plaid 4%
Total 34% Total 29%

It is difficult to see how a Euro election could be other than a verdict on how and when to get out of the EU. The indecision by Conservatives and Labour over this very issue has led to their collapse in the polls, as many voters have come to doubt their stated intention at the last election to get us out in good time.

My advice to the government remains the same. Announce you are cancelling the Euro elections and leave without signing the Withdrawal Agreement. We can leave on 22 May under the extension agreement. Offer talks on a free trade agreement for the day after we leave.
Looking at these polls were Mr Corbyn and Mrs May to do a deal to put the Withdrawal Agreement through they could avoid the Euro elections that way. The problem with that approach is as described yesterday. The Withdrawal Treaty entails binding us back into the EU, meaning both parties have a great deal of explaining to do as to why they have committed to it. Both parties would continue to suffer in the national polls from uniting to push through a much disliked Treaty that does not allow us to take back control of our laws, our money and our borders any time soon ,and does not agree terms for our eventual possible departure from the EU. They are also leaving it very late to get the complex and unpopular legislation through Parliament against a determined minority opposing it all the way.
It is strange to watch two leaders fixated by such an unpopular Treaty and willing to preside over such a huge collapse in their party’s vote owing to failure to do as promised in the summer of 2017.

Mr Corbyn’s dilemma

Over the next two weeks Mr Corbyn can determine the fate of Mrs May’s EU Agreement. If he placed a three line whip on Labour MPs to vote for the legislation necessary to bind the UK into this new Treaty, he would give Mrs May enough votes to secure the matter. There might well be more Conservative rebels against such legislation, but not enough to prevent a grand coalition of Mr Corbyn and his loyalists with Mrs May and her government appointees putting through the necessary law. So far Mr Corbyn has been unwilling to do this, even though Labour has not made much of a case against the terms of the so called Withdrawal Agreement. We saw the kind of votes we could expect in such circumstances on the vote about the latest delay to our exit. Delay won by 400 to 120, with only 133 Conservatives voting for the delay despite a three line whip to do so.

Instead Mr Corbyn has concentrated on criticising the attached Political declaration. Understandably he has argued that signing the Withdrawal terms does not place the UK in a good position to secure the kind of eventual exit from the EU that he and others would like. He has placed considerable emphasis on his wish to see the UK stay in a customs union with the EU, though he has also hinted that he would still like some independent trade policy. It is difficult to see how these two usually incompatible positions could be negotiated with the EU. He has also made it official Labour policy in certain circumstances to have a second referendum to endorse any Agreement, though he seems more flexible about this than the Blairite wing of his followers.

Mr Corbyn now has to recognise that Mrs May could end up conceding the customs union. If she has her way and puts indicative votes to the Commons again, the customs union proposal without a Conservative whip on to oppose might get through. It has been voted down several times before because it was Conservative policy in the last election to oppose it, and because 3 line whips were placed against it. It would only take a handful of Conservative rebels against the Manifesto to tip over the vote, assuming all opposition parties coalesced around the proposal. Mrs May would probably then change her own mind and recommend the customs union.

This could place Mr Corbyn in a more difficult position. Why would he wish to take responsibility for the Withdrawal Treaty and for rescuing Mrs May’s government? Why would he hand her a big win, finally vindicating her tenacious support for a Treaty which is opposed by a big majority of the public? More Labour than Conservatives might end up voting for the legislation it needed. He still has a couple more options. He can argue that he dislikes other features of the proposal as well as the absence of the customs union to avoid commitment. He could help her win the first vote but then find detail in the legislation he could not support, creating subsequent chaos amidst allegations of bad faith.

The way out appeared to be to rewrite the Political declaration, as the EU used to say there was some flexibility about that document. That seems to be closed off by the tough terms of the recent extension, where they categorically rule out any further discussions of the future partnership until the Withdrawal Treaty is adopted in UK law.

Mr Corbyn’s safest course is to find another reason why he cannot bring himself to back this Treaty, He has been talking about worries over who the next leader of the Conservatives might be, what kind of future partnership the Conservatives would want to negotiate, what trade deals they might do elsewhere and other related matters. He could even start to expose some of the undesirable features of the Agreement. Were he to give the government support not just for the first vote but to get through a very contentious and important piece of constitutional legislation to enforce the new Treaty he might unleash uncontrollable forces amongst his own voters and members.The curse of the Agreement might gravely damage his party. This is a draft Treaty which unites many Leave and Remain voters in opposition to it. Labour MPs in Leave voting seats would be particularly uncomfortable, whilst the left would make unusual supporters of Mrs May.

The worst outcone for Labour would be securing a second referendum. The party would then become a pro Remain party and lose most of its Leave voters. It would be scorned by at least half the electorate as anti democratic for going back on its word to accept the result of the original referendum. It would need to defend its new found enthusiasm for all things EU including its austerity economics.

What would a Manifesto for the European elections say in the UK?

As someone who wants us to leave now and not fight the EU elections, I think the parties will struggle to write their Manifestos for May 22nd.

Presumably the Brexit party and UKIP will write similar documents urging a WTO exit as soon as possible They should look forward to not having to take their seats or to giving up their seats after October 31st on the assumption we have then left the EU. Their problem will be differentiating their approaches from each other and avoiding splitting their pro Leave votes.

The Conservative party will presumably draft a Manifesto today based around Mrs May’s Withdrawal Agreement. The problem with that approach is if her Agreement were to pass with Labour support anytime soon then the elections will be cancelled, as the UK’s new status of in the EU without vote and voice would then kick in removing the entitlement or need for MEPs.

If the Agreement does not pass, this would leave Conservative candidates with a Manifesto made irrelevant by events.

If instead the Conservatives draft a Manifesto based on the proposition that the Agreement has not gone through, they follow a logical but politically dangerous path of hypotheticals. What then should it say? I would want it to say because there is no support for the Withdrawal Agreement we are leaving without signing it. That invites the response of “Get on with it, and spare us the election”. Alternatively the Conservatives have to set out in the document how they might get talks with the EU retriggered even though the EU has made clear its refusal to re open the Withdrawal Agreement. Likely tough responses from the EU make that a fraught approach.

Labour too has a difficult task in compiling a Manifesto. It faces all of the above problems facing the Conservatives over what to offer, with added grief from the factions wanting dilution or cancellation of Brexit within the party. If it includes a second referendum it is alienating all Leave voters who see no need to answer the same question again. If they leave out the second referendum they upset many of their pro Remain MPs and supporters especially in heavy Remain areas like London and Scotland. If they stick with their wish to enter a Customs Union they will be asked why they have failed to support Mrs May’s Agreement which is a necessary prelude to a customs union solution according to the EU. They will also generally be asked why they have been such an obstacle to leaving the EU and why they rule out leaving without an Agreement which most Leave voters and some Remain voters saw as necessary leverage in the talks.

The Lib Dems, Greens and nationalists who want us to stay in the EU have the easiest task. They will presumably set out why they think the people were wrong to vote to leave and how they wish to reverse the decision. They can then go on to explain how they want to spend 5 years in the European Parliament voting on EU laws, budgets and taxes. They will write off any chance of winning votes from more than half the public who want to leave or accept we need to leave in the light of the referendum result.

More jobs in the UK and wages rising

The February figures show the UK economy generated another additional 179,000 jobs. Wages rose by 3.5%, usefully ahead of prices. This all occurred against a backdrop of Italy in recession and the German economy stuttering badly.
All those commentators who wrongly ascribe any bad economic news to Brexit should be rushing to thank Brexit for this good news.

The Agreement to delay our exit is not one the UK should have signed

The EU have required the UK to accept there can be no re opening of the terms of the Withdrawal Agreement during the delay in our exit. They have also stated we cannot start discussing the future partnership despite it being sketched vaguely in the Political declaration, until the Withdrawal Agreement is signed.

This new agreement says if the UK does not fight the European elections we will automatically leave on 31 May. That would be the best outcome from here, and is to be recommended to a government that does not really want to hold the elections yet seems drifting to them for want of accepting the Withdrawal Agreement is not about to pass.

If the government wants to carry on with the delay despite the fact that it cannot be used to renegotiate anything with the EU, then the UK is subjected to major constraints on its rights as a continuing member of the EU. despite paying a big financial contribution and acting as importer of last resort for many continental producers, the UK is required to behave in a way the EU finds acceptable. The Agreement says ” The UK shall facilitate the achievement of the Union’s tasks and shall refrain from any measure which could jeopardise the attainment of the Union’s objectives, in particular when participating in the decision making processes of the EU. ”
Worse still they act as if the Withdrawal Agreement is in effect when the delay has been caused by the unhappiness of most voters and many MPs with it. “Any unilateral commitment, statement or other act by the UK should be compatible with the letter and spirit of the Withdrawal Agreement, and must not hamper its implementation.” This is an unusual idea that a country has to follow an international treaty which its Parliament refuses to ratify!