John Redwood's Diary
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Votes next week

Another Groundhog week looms, when Remain MPs who cannot accept the verdict of the Peoples Vote have another go at derailing Brexit.

We know that the first vote will be a reprise of the Withdrawal Agreement. Unless there is a great breakthrough in negotiations with the EU this week-end with the removal of the backstop provision, the government is likely to find plenty of rebels against its three line whip and the proposal will be defeated once again.

The government has not yet offered  Conservative MPs guidance on how to vote should there be subsequent votes next week about keeping no deal on the table, and a possible delay to exit. Maybe   they hope that by creating uncertainty about their intentions they will maximise pressure to vote for the Agreement. I do not see this working.

The government should whip its MPs to vote against taking no deal off the table. As the Prime Minister has regularly explained, you can only take no deal away by agreeing a deal. As others have explained, the right to leave without signing an Agreement is the main pressure point we have on the EU to try to get a better agreement.

The government  should also whip its MPs to oppose any attempt to delay Brexit. The Prime Minister has told us all many times that we are leaving the EU on 29 March. She also told us at the election and for many months thereafter that no deal is better than a bad deal, showing she was prepared to leave without a deal if necessary.

Some think the government could lose both of these votes. Both are clearly winnable if the government puts the effort in. There are Labour MPs who would be very reluctant to vote for a delay given the strength of feeling in their constituencies pro Leave, and given the promises Labour made in their Manifesto to back Brexit. It would be perverse if Parliament voted for delay given the pledges made by most MPs in the election, and given the support of the government with their DUP allies.  It would place Parliament at loggerheads with the 17.4 m majority in the referendum and leave many MPs trying to explain why they had switched from their pro Leave position to get elected . If they now said that they wanted to delay it probably with a view to a second referendum or for a long delay in the hope that people would change their minds, they would need to agree delay with the EU and change our legislation.

Were Parliament to vote against no deal and against the Agreement it would have voted a contradiction. In that circumstance the government should proceed to exit in accordance with the legislation Parliament has already passed. The legislation takes precedence over a subsequent motion.

If a group of MPs try to legislate for delay they will find it difficult. It would need the government to back them to give it  a serious chance of success.The issue would be enforceabilty without government agreement. Parliament could legislate to say it must not rain tomorrow, but it would have no meaning and would be unenforceable. Delay requires the agreement of the EU as well as of the UK government. If the UK government is against delay they could claim they could not  negotiate one sensibly.  The only way to ensure delay would be to bring the government down and replace it with one that does want delay. The courts are unlikely  to uphold a case against Ministers over such a political issue which can only be resolved by Parliament.

Will the government set out all the good news of what we can do once we have left the EU?

The Remain MPs and commentators are brilliant at pushing out an endless set of recycled Project Fear stories, each one more lurid than the last. They want to pose Brexit as a disease to be treated or a “cataclysm” to be managed. They seem to have demanded or influenced a lot of government Ministers and departments to ignore the potential and suppress the good news of what we can do and achieve with a clean WTO Brexit on 29 March.

The Treasury refuses to discuss how we could spend the £12bn a year net saving if we leave without signing the Withdrawal Agreement with its promise to pay for nothing for years to come. The Treasury refuses to spell out what an April budget would look  like when we could spend the Brexit bonus on a mixture of public service improvements, investments and tax cuts. This would  provide a welcome boost to an economy slowed deliberately by a strong fiscal and monetary squeeze over the last year.

The Business department claims to be worried about the car industry after a WTO Brexit, yet fails to take any action to reverse the obvious damage being done to our car makers whilst we are still in the EU by the squeeze on car loans, the big hike in VED and the attack on diesels. Why wont they announce no tariffs on imported components from any part of the world when we trade under our own tariff schedule after March 29? Why do they not cut the VED, and lift the more extreme threats to diesels?

The Environment department fails to set out what a UK fishing policy will look like once we have  taken back control of our fishing grounds, and fails to make fewer food miles and more self sufficiency in food one of its priorities in the legislation for our future.

Euro area growth falls away

Today it was confirmed that Eurozone growth only managed 0.2% in the fourth quarter, and was just 0.1% in the third. Annualising that gives you a low  0.6% growth a year, compared to the UK’s annualised 1.6% over the same half year.

Yesterday the OECD cut its projections for growth in most countries of the world. It cut its forecast for Germany to just 0.7% for 2019, and Italy to -0.2%. It put the UK at 0.8%. The heading for its release was “Growth is weakening, particularly in Europe”.

Now would be a good time for the UK to cut tax rates and increase spending on schools and social care, as we could do with a boost and have the scope to do so as we leave the EU.

If you do not like the Withdrawal Agreement you won’t like the Political declaration either

Two  Treaties instead of one. That is Mrs May’s idea of leaving the EU! I have set out before the dangers of the Withdrawal Agreement, which would stop us taking back control of our laws, our money and our borders for at least another 21 months and quite possibly longer. The accompanying Political Declaration is the herald of an even worse Treaty to lock us into many features of the EU for all time, with  no exit clause.

Some parts of the Political Declaration are vague or contradictory. Does it mean a free trade deal with us free to follow our own trade policy, or does it mean effective membership of their customs union with limited scope to do better deals elsewhere? Does it mean respecting our own UK law codes, or does it in practice mean accepting EU laws and rules over many parts of our lives in order to meet their strong words that we must not compete unfairly and must observe a level playing field with them? Doesn’t a level playing field to them mean keeping taxes up, having the same regulations, and submitting ourselves to their laws?

Some of the text is detailed and finished. We must assume this would pass straight into any draft Treaty. Above all the EU has insisted on the same architecture for enforcing the Partnership Treaty as for the Withdrawal Agreement. They require a joint committee, where any matter raising EU law will be determined by the European Court of Justice!

That’s no Brexit. That is continued subservience to the EU and its powerful court. I did not vote leave to end up in 2 EU Treaties that recreate many of the features of our membership. The EU sees the Partnership treaty as a kind of EU Association Treaty. These are the devices they sign with countries like Turkey to gradually to  bring them in line with the EU as a prelude to possible membership. That is not what Leave means.

Knife crime

I went to the Urgent Question on knife crime on Monday. MPs all round the Commons are concerned at the escalation in these crimes of violence in various communities in the UK and keen to see more done to reduce and control it. I asked the Home Secretary what action he is taking to spread best practice from those towns and cities that are making progress with prevention to those with the worst problems, and what can be done to ensure extra money and personnel going into policing and responding are being targeted in the right way to tackle this trouble.

During the exchanges there was a general feeling that the Glasgow approach has had some success. Some favour wider use of stop and search powers to remove knives from young people, including random searches without grounds for suspicion. Some think more police in general is what is needed, whilst the Prime  Minister has suggested that there is no correlation between police numbers and knife crime.

Clearly having an active police presence in areas of our towns prone to knife crime attacks at times of the day and night when they are most likely must be an important part of the response. We also need to see that this is not a problem which the police on their own can solve. All the young teenagers caught up in this violence have parents or guardians , teachers, adult wider family members, youth and sports club organisers and others who know them and take an interest in them. Any one of these adults could say or do the right thing to reduce the chances of that young person carrying a knife or being drawn into gangland activity.

Some young people are drawn into gangs out of  a  sense of adventure. Some are groomed by older gang members. Some end up in a gang out of fear. Whilst young people do not want to be subject to home detention, adults in the family do need to take an interest in how much time their children spend out on the streets and what risks that might bring to them.  Young people that have been looked after by the authorities or are the products of a broken home are particularly vulnerable to gang grooming according to the Children’s Commissioner. The gang culture can lead to drugs and other criminal activity. Once lines have been crossed the young person can be forced into continuing with a way of life  they would not have chosen had they known how it ended, of if they had enough support at the beginning to say No.

De selection and staying true to your party and Manifesto

Both parties are prey to de-selection motions against sitting MPs. This has been brought about by changes of mind or stated  belief by Conservative MPs over EU exit, and by a combination of factors over the style, policy and direction of the party in Labour.  The imminence of a no confidence or de-selection motion is one of the drivers of recruitment to the so called Independent group of MPs. The 8 Labour and 3 Conservatives so far recruited by this new organisation shelter together from such moves by  their old parties. The Conservatives and Labour   in turn can get on and choose replacements for them for the next election in their seats now they have gone.

On the Conservative side I read that Sarah Wollaston and Heidi Allen were likely to face action by their former Executives or wider Associations.  Anna Soubry had defeated  one no confidence move, but faced a petition of others protesting about her perceived change of approach to Brexit. It is put out in the press  that at least five MPs  all face significant opposition within their Conservative Associations. I do not know  whether these stories are true.  It is true that  some local Conservative parties  are angry with MPs who have deviated from the Manifesto position on leaving the EU. That said we would leave on 29 March 2019, with or without a deal, and stated that No deal is better than a bad deal. All Conservatives fought the last election opposing the second referendum on the EU which the Lib Dems championed. It is always difficult if an MP changes his or her stance on crucial matters like these after an election but does not carry his or her local party members and electors with them for that change.

On the Labour side there is the added issue that the party leadership has now changed the party stance on the second referendum. Labour was in agreement with the Conservatives in 2017 at the election that there should be no second vote and we should get on and implement the decision of the People’s vote in the summer of 2016. Maybe as many as 70 Labour MPs are said to be unwilling to support the new referendum policy, as they represent heavily Leave voting areas and promised to support getting out  in their election literature. This includes a dozen or more Shadow office holders.  Labour too is riven with disputes over anti Semitism, over the tough  style of the leadership towards non believers in its project, over the general drift to the  left. Recent flare ups over whether Labour is anti semitic have not helped relations between members and MPs, nor between different local party organisations.

The party leaderships face a dilemma. If they encourage de-selections of people who clearly have drifted from the leadership line they could end up creating a bigger Independent Group, thereby nudging it towards forming a proper party and fighting elections. The more risk of de -selection the more likely an MP is to jump first. If they do not impose some discipline over the party line and leave people alone within the party who have little or nothing in common with the rest of the party they encourage poor discipline within the Parliamentary party and have a battle with the local associations. Whipping  breaks down and the leaderships are left looking weak and less important. There should be a big difference in treatment for  an MP who occasionally votes against a 3 line whip to keep in line with the party’s Manifesto and in line with the membership who supports him or her , and an MP who regularly votes against a 3 line whip in order to deviate from  the  Manifesto. If an MP has used a popular Manifesto set of proposals to get elected and then unilaterally  tears up those promises it causes understandable stress within the party.

Both leaderships are likely to muddle forward on a case by case basis, with events often under the control of local parties rather than under national direction. The Conservatives have far fewer MPs seeking to deviate far from the Manifesto line, but more at risk as they need to keep up their stated party numbers in order to qualify as a coalition government with a majority of votes in the Commons.  The Conservatives will  have a  problem if  the leadership seeks  to deviate from the Manifesto line itself on the issue of leaving the EU. The  overwhelming majority of party members and a significant number of MPs want to stick with it and keep pledges made to voters about no deal being better than a bad deal and taking back control by leaving the EU, its single market and its customs union on 29 March this year. Labour’s leadership too is moving away from the Manifesto, and that is splitting their party.

Letter to Geoffrey Cox about the draft Withdrawal Agreement

Dear Geoffrey,

I am glad you are seeking to replace the unacceptable Irish backstop which is written into the Withdrawal Agreement which was vetoed in the recent Commons vote.

There are other features of the Withdrawal Agreement which I and other MPs cannot accept which also need attention in the national interest.

Under the draft Withdrawal Agreement the EU will enjoy of period of at least 21 months, and up to 45 months, when it can legislate for the UK under the wide ranging competencies it  has from the Treaty. This would permit the EU to enact laws and regulations banning or requiring changes to the way we do business, control the environment, treat people, offer business support and organise trade which could be against our national interest.  It could  require the transfer of business into the Eurozone at our expense. We will no longer have the power to veto or to create blocking minorities to prevent  measures that are damaging.

What action are you taking to prevent abuse of these wide ranging powers and  to ensure we are indeed taking back control of our laws?

The EU is moving to impose and alter more taxes by qualified majority with a view to increasing the range and incidence of EU taxes. As we will have lost our veto over tax anyway, what powers are you seeking to avoid the imposition of new taxes and additional taxation on us via the Withdrawal Agreement?

It is most important no additional tax can be imposed without UK consent.

The Withdrawal Agreement sets out under a  general heading where it reserves to the EU the right to send us big bills in the future. The £39 bn cost of the Withdrawal Agreement is a low estimate of what it might mean compiled by the UK Treasury. It is not an EU accepted cash limit. What safeguards are you seeking to ensure the bills do not escalate and to ensure the UK can refuse to pay unreasonable bills submitted under the  general powers of the EU? Spending our own money on our own priorities was a big part of the reason to leave.

I will make these questions public as they are of considerable national interest, and look forward to your reply. I assume  you are pursuing these matters as part of seeking  a fair deal, and in order to reassure the many MPs who cannot currently support the Withdrawal Agreement.

Yours ever

John Redwood

Why a second referendum would be a disaster

Labour has adopted its new policy with all the enthusiasm of a group of naughty children  deciding how to tell their parents of their misconduct  because they have been rumbled. They successfully kept opposing the government on Brexit without having a clear position of their own. They implied this was somehow compatible with fighting the 2017  election on a pro Leave ticket. Under pressure they opted for the idea that it needed a General election to resolve matters, which served their own interests and kept them united for a bit. Once they lost a vote of no confidence the internal arguments forced a change of line.

I am spending time on their  views because their votes matter in the Commons in the next few weeks. They have said only the public can now decide because Parliament is unable to. This ignores the fact that Parliament despite their opposition has passed the EU Withdrawal Act which means we leave on 29 March without a deal unless Parliament changes its mind and repeals or amends the legislation. Labour’s proposed second referendum clearly cannot happen before we  leave, so it implies they now want to delay our exit  and wish to amend or repeal the legislation about our departure.

It also implies that they expect the EU to acquiesce in a delay to allow a referendum to take place. It would take most of the rest of this year to legislate for a referendum  if Parliament was willing and then to hold the vote. It would require the consent of all 27 member states to the delay. If they wanted to change the terms of our membership or relationship that would need further UK legislation. If the EU  were happy for us to continue our current membership then we would need to field candidates in the European elections, which no-one has proposed in any motion before the Commons.

If an opposition party wishes to show it is ready for government and wants to propose positive policies then it has to draft the relevant documents and propose the necessary motions. The absence of a Labour motion to fight the European elections brings their wish to delay into some doubt. The absence of draft legislation to handle the delay period with the EU also shows some sloppiness or hesitation. Even more surprising is their inability to tell us what question they would want the referendum to ask.

Mr Starmer seems to want a referendum for Remain voters. It would ask do you want to remain or to accept Mrs May’s Agreement. There would be  no option for the 17.4 m who want to Leave, as  most of us do not see the Withdrawal Agreement as being any kind of Leave.  Some  Leave voters willing to compromise might accept a vote on would you like to leave without a deal or accept Mrs May’s deal?  This is unlikely to assuage Remain campaigners for a second referendum. Some now say they want a three way, asking between No deal, the Withdrawal Agreement and Remain.

This three way has two fundamental objections. The first is it  is primarily a re run of the first referendum, so what is the point of it? People are likely to say the same again, with more probably voting to leave out of anger with the political classes for failing to do as promised the first time.  The second objection is the winning answer might only get 34% of the vote, with almost two thirds of the country unhappy with the outcome. That would be more divisive than the first referendum.

Some in Labour want to put their different approach to Brexit negotiations  on the ballot paper as an option. This is itself a bit vague but probably entails membership of the customs union with some kind of shadowing of the single market and acceptance of EU views on movement of people and citizens rights. There seem to be different versions of whether Labour accepts or wants to end freedom of movement, and whether  they want us  in effect under the ECJ for many of our laws to stay compliant with the single market.  There would need to a written down detailed version of this to be able to  ask people about it. More importantly it would need the EU to sign off in principle that they would agree to it, as otherwise we would be voting on a nonsense which was  not negotiable.

I think it unlikely there will be a Commons majority for a second referendum. It is a spectacularly bad idea, guaranteed to split the country more, frustrate good government for longer and undermine the UK’s stature and reputation abroad. Leave voters do not want a second referendum and see no need for one.  Were a second referendum to give a different answer why would that answer be better than the answer properly given to the first one?

Getting the economy growing faster

Too much navel gazing about Brexit is crowding out time and space to discuss how we should respond to the worldwide slowdown in growth, to the recession in parts of the European continent, and to the need for policy change here to stimulate more enterprise, jobs and higher living standards.

In the USA, UK, Euro area and China the Central Banks have been tightening. Money and credit growth slowed markedly in 2018 especially in the UK. The US had rate rises and  reduced Quantitative easing, but there was a big offset with the large tax cuts the President put through the Congress. Money growth fell off late last year. This year the Fed has reduced its QE cancellation rate and signalled a softer approach, leading to some rebound in money growth and a big rally in share markets from relief.

In the UK we had two rate rises, the cancellation of special loan facilities for the commercial banks, no more QE and tough guidance on consumer credit, on  top end mortgages and car loans. Money growth halved. UK tax policy has been hostile to property and to cars, with big hikes in Stamp Duties on numerous transactions, and in Vehicle Excise Duty deterring purchases of new vehicles. UK fiscal policy has also tightened considerably, and this year there was an additional substantial further tightening from an unplanned extra cut in the deficit.

In China a doubling of car purchase tax to 10% and a credit squeeze brought down their car market and added to the slowdown induced by tougher money policies. In the Eurozone they ended Quantitative easing , continued to battle under reserved banks and hit the car industry with new emissions regulations. The gilet jaune protests damaged French sales and growth. Italy moved into recession. Germany had a fall in GDP in Q3 with no growth in Q4.

In such conditions with slowdown in our major trading partners around the world the UK should be taking sensible measures to promote expansion. Inflation is below target and unlikely to become a problem any time soon. The government should cut Stamp Duties. The present rates are reducing the revenues and have caused quite a shortfall compared to Treasury and OBR forecasts. The government should take VED back to pre 2017 budget levels to reduce the tax on buying a new car. Business rates on the High Street should be cut to help retailers. VAT should  be removed from green products and domestic fuel, helping keep inflation down.  The Bank of England should announce new good value loan facilities for commercial banks wanting to on lend for new business and growth. It should remove its special strictures against car loans as there is no evidence of credit danger threatening the system. It should state, as the Fed has now done, that it will be patient before any rate rise, and will want to see evidence of faster economic growth and a decisive upturn in money growth before a rate rise. This should all happen whatever we do on Brexit.

Let us assume  we leave on 29 March without signing the Withdrawal Agreement which is what will happen unless Parliament legislates to delay or stop Brexit or legislates some Withdrawal Treaty. The government should then hold a budget in early April to spend the money we will be saving from end March on our net budget contributions. It could spend an additional £12 bn next year on better public services and tax cuts without increasing the deficit. Given the substantial tightening and the low level of the planned deficit I would go further and spend £20bn or half the budgeted £39bn cost of the Withdrawal Agreement in the first year. That would provide a welcome 1% boost to the economy. Our schools, social care and public security budgets all need more, whilst selective tax cuts could boost home buying, cars, green products  and the High Street if we cut VED, Stamp Duty, Business rates and VAT. Some of these tax cuts would yield more revenues as they are currently stifling business.

The endless pessimism of Remain MPs

I have never known so many MPs be so pessimistic and so lacking in enthusiasm for anything about our country, our people, our ambitions and our opportunities. It is as if they are in some kind of trance, trotting out EU propaganda and Project Fear scare stories as if no-one had heard them all before, and as if they were about to change Leave voters minds. We did not  believe them the first time we heard them, and we still do not  believe them.

It is also disappointing that Remain  MPs elected to improve the living standards and lives of UK voters have so little confidence in the abilities of the UK to govern ourselves and to raise living standards by our own efforts and by good policies. Opposition MPs seem to think all good standards require an EU law to set them out, as if we cannot pass laws we are proud of for ourselves. They are desperate to give away as much of our money as possible to the EU and refuse to examine the outrageous vague overinflated and long lasting financial pledges in the draft Withdrawal Agreement.

They  make endless repetitious speeches around a few tired soundbites.

They tell us  leaving without a deal would  be “catastrophic”. When you ask why and how, there is no solid response as it would not  be a catastrophe. The  best they can do is to say we will be starved of food and medicines, as if the UK was about to mount a blockade of our own imports to deny our shops and customers access to the products the rest of the world still wants to sell us. No main EU supplier has said they want to terminate their contract, and  no-one has explained what blocks we will create at our ports to stop the goods coming in.

They tell us we will be leaping off a cliff if we leave without a deal. If you ask how and why again there is no factual or sensible response. They sometimes say Just in time supply chains would be disrupted. If you ask how and why there is no sensible response because they will not be disrupted. They seem to think EU trade is friction free, which it is not, and that non EU trade is impossible. In practice there are mixed supply chains for manufacturing in the UK, with materials and components coming in from EU and non EU. If they are all under rest of the world terms after Brexit  it will work fine. They seem ignorant of Intrastat declarations, of food and animal inspections and the other features of current EU trade. They ignore the old fashioned and worrying paper and wet stamp system written into the Withdrawal Agreement which would slow things down badly and is worse than the WTO  system we use for non EU trade today.

They tell us there is a genuine Irish/Northern Irish border issue. They seem unaware of the fact that it is today a complex international border. It requires changes of VAT, Excise, and currency. It has collaborative systems both sides of the border to combat terrorism and smuggling. If there have to be customs paid they will paid electronically away from the border as VAT is today. If there need to  be other checks on goods they too can be done away from the border. Most will  be done as today at factories and farms before shipping product, with electronic manifests providing the necessary detail, and or at arrival at the warehouse or store taking delivery.