Ben Roback: AUKUS shows that delivering ‘global Britain’ creates losers as well as winners

22 Sep

Ben Roback is Head of Trade and International Policy at Cicero Group.

It has been a busy month for geopolitical analysts. Rarely does the world slow down, but a sluggish summer has turned into a busy autumn.

Joe Biden abandoned his globalist heritage and pulled the United States out of Afghanistan, taking the western coalition with him by default. Kabul fell and a once nascent democracy is now run by a terrorist organisation that diversity groups have been surprised to learn is clamping down on women’s rights.

The announcement of AUKUS – Australia, UK, USA – pulled the rug from the Five Eyes network and questioned the relevance of Canada and New Zealand, although Auckland frequently gives Beijing the benefit of the doubt to the frustration of the other four Eyes. France reacted with unprecedented fury, but in a bruising re-election campaign it was perhaps not surprising to see Emmanuel Macron lash out.

Energy politics has created a new frontier for international diplomacy, as ministers in Western Europe rush to warn their citizens that the lights won’t be going out any time soon. Raging wholesale gas prices have once again reminded continental Europe that hard politics often begins first with raw materials and natural power.

“Global Britain” creates winners and losers

At the United Nations, all of these factors are coming together. It is a good week to be Boris Johnson, Liz Truss, and Anne-Marie Trevelyan. From Downing Street’s perspective, it is a fresh chance to plant the Union Jack on the world stage and prove that “Global Britain” is more than just a strapline.

Johnson and Biden met yesterday in the White House, where the expected back-slapping bonhomie was missing owing to the Biden administration’s ongoing insistence on mask wearing.

There was plenty for the two men to discuss, chiefly the AUKUS trilateral, a fledgling US-UK FTA, Covid-19, and COP26. Although AUKUS featured only briefly in Downing Street’s published remarks, the newly minted partnership between Australia, the United Kingdom, and the United States loomed large over the meeting.

It followed last week’s announcement in the East Room of the White House, where the President and Prime Ministers Johnson and Morrison announced the creation of a new trilateral grouping, “AUKUS”. It lacked the zip or panache of a “G7” or “Five Eyes”. Presumably “Bojo, ScoMo & Joe” was vetoed. The announcement proved the joint opportunity and challenge ahead for “Global Britain” – picking winners (in this case Australia and the United States) which results in losers (France).

“AUKUS: a partnership where our technology, our scientists, our industry, our defense forces are all working together to deliver a safer and more secure region that ultimately benefits all”, Morrison described. In the first instance, a signed agreement that would deliver a nuclear-powered submarine fleet for Australia.

The Australians “intend” to build these submarines in Adelaide, but from a British perspective there is a clear appeal given our own expertise in the field. After all, the Royal Navy launched our first nuclear submarine in the UK over 60 years ago, and the domestic manufacturing and skills base have never looked back since. Johnson’s remarks therefore turned quickly turned to the hundreds of highly skilled jobs that could be created across the UK.

From an international perspective, the three leaders were guarded about the rationale behind AUKUS. The “Indo-Pacific” was mentioned a dozen times in the shared remarks. China? Not once. But when world leaders talk about “threats in the Indo-Pacific region”, they mean Beijing’s expansionist tendencies.

China’s growing defence capability has caused grave concern in democratic capitals for decades. The 2020 Department of Defense’s China Military Report describes PRC as having the largest navy in the world. It has more ships than the United States, is the top ship-producing nation in the world by tonnage, and is increasing its shipbuilding capacity and capability for all naval classes.

AUKUS proved that geography matters in international politics. The UK has the domestic expertise to help provide the naval capacity the Australians need given their nautical proximity to China and Beijing’s ‘freedom of navigation’ missions. The US retains a clear interest in supporting measures to push Beijing back. Europe was simply a geographic and therefore political afterthought.

Whilst it was a bad week for Macron, who recalled France’s ambassador the United States for the first time in 243 years, AUKUS is a telling reflection of where international priorities lie for the Biden administration. International trade is viewed through the prism of reshoring jobs back to the United States, whilst the major international priorities are climate change and combatting the rise of China.

If the President was taking his international obligations more seriously, he would speed up the excruciatingly sluggish pace at which the White House is nominating ambassadors to supposedly key posts. The US still has no confirmed ambassador in Paris or London, at NATO or at the EU. It is unlikely that an approved ambassador would have changed the course of AUKUS events, but with more informed ears on the ground, Washington might have been better prepared for the fallout.

The AUKUS announcement has shifted the geopolitical sands further, whilst the dust has still far from settled in Afghanistan. Biden was supposed to bring a sense of calm and normality back to international policy, but he has become wildly unpredictable. In this instance, Macron’s loss was Johnson and Morrison’s gain.

In London, the Prime Minister has shown that “Global Britain” and “Levelling Up” can be delivered hand in hand. But just as the motivation for AUKUS was geographic proximity and Australia’s concern about a noisy neighbour, there are dozens of issues at home which rely on cooperation between the UK and France. The small boats carrying illegal immigrants from French shores to Britain’s is the Home Office’s top priority and said to be an increasing imperative for Johnson. Any solution will require increased collaboration between the UK and France just at the time when Paris is apoplectic with London.

Global Britain can be a guiding light for the United Kingdom, bold and brave outside of the EU, but the challenge becomes how to manage the winners and losers it creates.

Andrew Gimson’s PMQs sketch: Rayner mocks Raab and steals Starmer’s thunder

22 Sep

Angela Rayner is good at looking and sounding unimpressed. With a derisive smile playing across her face, and in rasping Mancunian tones, she asked Dominic Raab:

“How many days a worker on the minimum wage would have to work this year in order to afford a night at a luxury hotel, say in Crete?”

Raab had the decency to smile at this caustic reference to his late, unhappy holiday, which was interrupted by the fall of Kabul. He said some stuff about easing the burden on the lowest paid, but couldn’t think of a retort that would remove Rayner’s grin.

She proceeded to accuse him of “complaining about having to share his 115-room taxpayer-funded mansion with the Foreign Secretary”.

He replied that “she should check her facts”, since Chevening, the mansion in question, is funded by a charity, with not a penny paid by the taxpayer.

Somehow one felt that Raab, in the heat of battle, had not picked the best ground on which to fight this outbreak of class war.

It is possible, of course, that he did not wish to outshine the Prime Minister, for whom he was deputising.

Rayner clearly did wish to outshine Sir Keir Starmer, for whom she was standing in. Her rudeness came as a delightful change from his cautious, lawyerly manner.

Raab, himself by training a lawyer, today played the role usually taken by Sir Keir. He had a complete grasp of the arguments and facts, but was deficient in imagination, and therefore unable to raise anyone’s spirits.

No one will have got to the end of this session wondering why Raab cannot replace Boris Johnson, who has apparently been shuttling by train between New York and Washington, raising people’s spirits everywhere from the United Nations to the White House.

Local elections in depth: Plymouth’s divided fortunes pose challenge for the City’s new Conservative leaders.

22 Sep

Source: Election Maps.

Case study: Plymouth

Control: No Overall Control.

Numbers: Conservatives 25, Labour 24, Independents 8.

Change since last local elections:  Conservatives +6, Labour -6.

All out or thirds: Thirds

Background:  Plymouth has a strong tradition of local administration. It was recorded as a borough from 1276, was incorporated in 1439, and became a City in 1928. But Plymouth City Council, in its current entity as a unitary authority, only came into being in 1998. Since then it has alternated between being Labour or Conservative run. Or being hung. Parliamentary representation has also produced mixed fortunes for the parties over the years. Johnny Mercer was returned for Plymouth Moor View as the Conservative candidate at the last General Election with a majority of nearly 13,000. But Labour won the Plymouth, Sutton and Devonport constituency. This seat had been won by Oliver Colvile for the Conservatives in 2015. Sir Gary Streeter, the Conservative MP for South West Devon, also has some Plymouth wards in his constituency.

Former MPs from Plymouth include Nancy Astor, the first woman to take her seat in the House of Commons, who won Plymouth Sutton for the Conservatives in 1919. Her successors included Alan Clark. David Owen, the former Labour Foreign Secretary and co-founder of the SDP, represented Plymouth Devonport.

Margaret Thatcher’s last speech to an election rally was in this city in 2001. She offered a rousing appeal to local pride:

“Where better to take a stand than here in Plymouth? Plymouth – England’s historic opening to the world. Plymouth – from where Francis Drake, Walter Raleigh, and Captain Cook set out to take the ways of these islands to the uttermost bounds of the earth? Plymouth – from where the Pilgrim Fathers left in that cockle-shell vessel on a voyage which would create the most powerful force for freedom that the world has known?”

Despite this Labour held both seats. But the reduced majorities meant the triumph was slightly deceptive. Looking back, it was the start of a slow decline for the Party. In the EU referendum, the people of Plymouh voted Leave by a margin of 60 per cent to 40 per cent.

Results: The Council is now Conservative led. They were elected on an impressively thorough Manifesto. It included some bold ambitions for economic revival and infrastructure projects. But also promised to sort out the “basics” such as bin collections and enforcement against graffiti and other anti social behaviour. They are getting on with delivering their promises with a Hundred Day Plan. They have even cut spending on allowances. Cllr Nick Kelly, the new council leader, is showing great energy and determination.

Before the elections, there had been a serious split with several councillors leaving the Conservative Group to sit as independents. This has not yet been resolved. But it seems they were not sufficiently alienated from their old colleagues to come to an arrangement with Labour.

There is a big divide between rich and poor areas of the City. The grime and unattractive social housing in the Keyham district was brought to national attention last month as a result of the appalling shooting incident resulting in six deaths. The Council is working with charities to seek to revive community spirit in the area. The challenge will not only be recovering from the shock of those events, but a wider one of despair and social decay being quietly felt by those who do not resort to violence.

Plymouth is to become a freeport which should see the creation of wealth and jobs. That is welcome. But transforming some of the rundown districts will be a big local mission. Replacing the depressing concrete “housing units” with beautiful homes would help. Just replacing a shabby ugly soulless block with a shiny new ugly soulless block (that will be shabby in a few years time) would be no use. Also needed are one of two really good new free schools – giving the sort of motivation that Michaela offers the children of Brent. At present, the City is below the national average for educational attainment for both primary and secondary schools. The Council could have an important role in making sites available.

Such progress is not impossible to achieve. But until it is, the main political trend may be growing reluctance to vote for anyone.

 

Andy Bagnall: Ministers must recognise rail’s crucial role in hitting Britain’s Net Zero target

22 Sep

Andy Bagnall is the Director General at the Rail Delivery Group (RDG).

Today, Britain’s train companies and Network Rail are coming together to give the classic double-arrows rail logo a green makeover and to declare that ‘We Mean Green’.

The aim is to remind people that while world leaders will soon gather in Glasgow to, we hope, make vital commitments to cut carbon emissions, there are choices we can make as individuals too, right now, that will help towards saving the planet.

Transport – how we get from A to B – is the single biggest source of pollution in Britain. Meeting the target of reaching net zero will, quite simply, be impossible without radical changes to how we move people and goods around.

Attention tends to focus on the new technology that will help tackle the challenge of decarbonisation. The assumption seems to be that with the right innovation we can all continue driving and flying much as we do today. In fact, behaviour change is going to be needed and there is no time to lose. A fantastically green form of transport already exists but it relies on people and businesses doing things differently.

As new commuting habits start to form with the return to work this autumn, there has never been a more important time to encourage people out of cars and on to trains. Recent research for the Rail Delivery Group found that just a 20 per cent shift from rail to road would create an extra million tonnes of carbon emissions annually.

This is because when people choose the train, they cut their carbon emissions by two thirds compared to going by car. The goods carried on a single freight train take 76 lorries off the road. The humble train’s green credentials are beyond doubt – while they accounted for ten per cent of journeys, pre-pandemic, trains were responsible for just one per cent of transport-related emissions.

Of course, the train will not be an option for every journey and for shorter distances, people should look to walk or cycle if they can. Yet in the many instances where taking the train is a viable alternative to more polluting modes, train companies and government have a responsibility to make rail an easier, more attractive choice.

If we are honest, that’s not always been the case. While we have spent billions of pounds upgrading trains and tracks, installed tens of thousands of bike spaces in stations, and gone to great lengths to reassure passengers, in the face of the pandemic, that train travel is safe, there is much more to do.

Research has shown that around a third of people for whom trains are an option are put off by the complexity of rail fares. That’s why train companies have been working with the government, encouraging them to radically reform the fares system so that it is easier for people to get a good deal, to know they have paid the best price and to be sure they have the right ticket.

Then there is the thorny issue of cost. While reforming the fares system will go a long way to addressing negative perceptions about the value for money of train travel, the Government has choices to make about the balance between passengers and taxpayers when it comes to who pays for the railways. This choice is made every year when government decides the increase to regulated fares, such as season tickets.

While many people never use the train, everyone benefits from it, whether it’s reduced road congestion, cleaner air, or goods getting to supermarket shelves promptly by freight train. Over the last decade and a half, however, governments of all colours have sought to shift more of the price of rail travel away from taxpayers generally and onto passengers. While car drivers have benefitted from a decade long freeze in fuel duty, and the Government is considering cutting air passenger duty for domestic flights, taxes now make up 40 per cent of the cost of electricity to power trains.

These are not policies that encourage green travel choices. Government should take a holistic approach and adopt a ‘polluter pays’ principle towards transport levies across modes to encourage more people to take the train and more companies to choose rail to move their goods.

As train companies, we believe passionately in the potential for our sector to help tackle the climate crisis. We’re not resting on our existing green credentials though. We are replacing older, more polluting trains for newer, greener models, and we’ve published a high-level strategy to bring greener power – whether electric, battery or hydrogen – to the tracks.

That’s why, today, as we look ahead the UN climate summit, Britain’s rail industry is confident in declaring that We Mean Green.

Newslinks for Wednesday 22nd September 2021

22 Sep

Ministers plan legal action to stop Insulate Britain disrupting motorways

“Priti Patel and Grant Shapps are seeking a court injunction to stop environmental protesters from targeting major motorways after five days of tailbacks and damaging headlines for the government. The home secretary and the transport secretary have asked National Highways and the Government Legal Service to submit an application later this week. Protesters from the group Insulate Britain have targeted the M25 five times in just over a week. They are calling for government action on home insulation. Thirty-eight people were arrested after the climate activists held another protest on Tuesday, police have confirmed. They stopped traffic on both carriageways of the motorway between junctions 9 and 10, near Cobham in Surrey.” – The Guardian

  • Home Secretary  vows to lock up the eco mob – Daily Mail
  • Police tackling M25 protesters set to be given more powers – The Times

Priti Patel and Grant Shapps: We will use jail to end this motorway chaos

“Transport is so crucial to that recovery. With every day that passes, our roads and railways are helping more businesses to grow, and more people to find jobs. Punishing motorists to make a point about home insulation makes absolutely no sense at all. As one van driver caught up in the chaos told a protester: ‘You are making people hate you.’ The police have our full support to take decisive action and we’re working with National Highways to take legal action against the protesters to ensure they cannot keep disrupting and endangering people’s lives in this way. We are giving them powers to better manage such guerrilla tactics in future. In the medium-term, the Police, Crime, Sentencing and Courts Bill will put public nuisance on a statutory footing, ensuring there are appropriate sentences for the harm caused.” – Daily Mail

Johnson vows ‘Christmas is on’ as he dubs gas crisis and supermarket shortages a ‘short-term problem’

“Boris Johnson last night insisted supermarket shortages and sky-high fuel costs are a “short-term problem” amid fears of a cost of living crisis. The PM promised families they will not have to go without this December as he vowed: “Christmas is on.” But gloomy experts warned inflation will run at three per cent next year — the highest rate of the major advanced economies. Figures last week revealed inflation has hit 3.2 per cent — its highest level in nearly a decade. Speaking in New York yesterday, Mr Johnson said: “We will do whatever we can to address the supply issues, but this is a short-term problem.” He said it was caused by the “world economy waking up after a long time in this suspended animation caused by Covid”.” – The Sun

  • Green energy firm on brink as Kwarteng says price cap stays – The Times
  • UK forced to borrow more than expected as soaring inflation bites – The Guardian

More:

  • Ministers reach deal on CO2 production to ease food supply fears – The Guardian
  • Britain to pay millions of taxpayers’ cash to US firm – The Sun

>Today: ToryDiary: Abroad, Johnson calls for fewer emissions. Here, Kwarteng aims to keep some going.

>Yesterday:

UN: Grow up and take responsibility for our planet, Johnson tells world

“It is time for humanity to “grow up” and address climate change, Boris Johnson will tell world leaders tonight. In an address to the United Nations general assembly in New York, the prime minister will cast himself as a teller of hard truths about the climate. With under six weeks to go until the Cop26 climate conference is held in Glasgow, the prime minister will tell the world to leave behind its “infantile” approach to the climate. “Of our allotted lifespan of a million, humanity has been around for about 200,000. In other words, we are still collectively a youngster,” Johnson is expected to say. “In terms of the life of our species, we are about 16. We have come to that fateful age when we know roughly how to drive and we know how to unlock the drinks cabinet and to engage in all sorts of activity that is not only potentially embarrassing but also terminal.” – The Times

  • UK’s debut ‘green gilt’ sale draws blockbuster demand – FT

UK pins hope on joining US, Mexico and Canada trade pact

“The UK hopes to join a trade pact between the US, Mexico and Canada as expectations fade for an imminent bilateral agreement with Washington.  The USMCA trade pact was signed by Donald Trump, then US president, with Canada and Mexico last year after a long renegotiation of the existing 1994 Nafta deal between the three countries.  The agreement, which was widely backed by Democrats on Capitol Hill, included tightened environmental and labour standards, a new digital chapter and strict rules of origin requirements for the automotive industry. British officials said on Tuesday shortly before Boris Johnson, UK prime minister, was to meet President Joe Biden that the UK was considering applying to join USMCA.” – FT

  • Booby-prize pact that would put British firms on a par with Mexican ones – Daily Mail

More:

  • President sinks hopes of quick trade deal with US… – The Times
  • …as the Prime Minister defends his bungled Afghan withdrawal – The Sun

EU:

Judge rules that Hancock must have his private WhatsApp and emails searched

“Former health secretary Matt Hancock will have his personal WhatsApp and emails searched as part of a High Court battle over millions of pounds’ worth of antibody test contracts. The Good Law Project has brought legal action against the Department of Health and Social Care (DHSC), claiming that more than £80million in contracts for antibody tests were awarded unlawfully. The bid covers three contracts awarded to Abingdon Health which the group claims were given in April, June and August 2020 but were not published until October 2020. ‘The contracts were awarded directly, and secretly, without any advertisement or competition,’ the Good Law Project’s barrister Joseph Barrett said in written arguments.” – Daily Mail

Cost of UK’s HS2 railway line has ‘no clear end in sight’, MPs warn

“The cost of the UK’s new HS2 high-speed railway line from London to the north of England, which has already risen from £55.7bn in 2015 to about £100bn, has “no clear end in sight”, a cross-party committee of MPs has warned. Cost pressures from Covid-19, little progress over plans for the new terminal at London’s Euston station, and a lack of clarity on other parts of the programme had left MPs “increasingly alarmed”, the House of Commons public accounts committee said. It added that this “raised uncertainty over the promised benefits” of the planned 250mph railway. Concerns are growing within the Treasury over the cost pressures on the UK’s most expensive infrastructure project ahead of the multi-year spending review next month.” – FT

  • Rising costs ‘could push bill over £98bn’ – The Times

>Today: Ryan Bourne’s column: Housing. Gove is poised to dump radical supply side reform. And subsidise younger peoples’ mortgages instead.

Labour targets those facing bill rises and £20 cut to universal credit…

“Sir Keir Starmer is targeting Conservative MPs in red wall seats with attack advertisements as Labour seeks to exploit the cost of living crisis to regain support in its former heartlands. Labour has released Facebook adverts in northern and Midlands constituencies to highlight the government’s impending £20 cut to universal credit. Among the seats targeted are Burnley, Blyth Valley, North West Durham and Gedling, all of which switched from Labour to the Conservatives in 2019. The adverts identify the area’s local MP with a warning about the number of families in the constituency who will see their income drop when the temporary uplift to the benefit comes to an end on October 6. Four in ten households on universal credit face a 13 per cent rise in their energy bills in the same month as their income goes down by £20 a week, analysis by the Resolution Foundation think tank has found.” – The Times

  • Ministers explore ways to cut soaring energy bills for poorest households – The Guardian

…as Starmer takes on left over leadership contest rules

“Sir Keir Starmer is seeking to prevent a repeat of the UK Labour party’s Corbyn era with a proposal to scrap its one-member-one-vote approach to leadership elections and give MPs a bigger role in the process. The move by the leader of Britain’s biggest opposition party would seek to lock out the “hard left” because most Labour MPs are more centrist and is likely to enrage many grassroots members. Ed Miliband, the former leader, scrapped the party’s old “election college” system in favour of an entirely democratic approach in 2014. That led to the surprise election of Jeremy Corbyn, a radical leftwinger who had spent decades protesting from the backbenches, to the horror of many MPs.” – FT

  • Attempt to ensure candidates in future contests will need more support from unions and MPs – Daily Telegraph
  • Move to put proposals to vote at party conference comes under fire – The Guardian

More:

  • Unite leader won’t attend Labour party conference – The Times

Macron may offer up UN seat in push for EU army

“France’s seat on the United Nations Security Council could be put “at the disposal of the European Union” if its governments back Emmanuel Macron’s plans for an EU army, a close ally of the French president has said. Paris is spearheading a diplomatic push for closer EU military integration after Australia pulled out of a £45 billion contract for diesel-powered French submarines and signed the Aukus security pact with the US and UK instead. A traditional standing EU army remains a distant prospect, but Mr Macron – on the cusp of becoming the EU’s most influential leader as Angela Merkel prepares to bow out of politics after Sunday’s German elections – is determined to lay its foundations.” – Daily Telegraph

News in Brief:

  • Forget gas prices, the UK’s real cost-of-living crisis is elsewhere – Henry Hill, CapX
  • The new Ireland dislikes Unionists as much as the old one – Owen Polley, The Critic
  • How feminism ate itself – Kat Rosenfeld, UnHerd
  • Another stupid, redundant, dismal Canadian election – Conrad Black, The Spectator

Abroad, Johnson calls for fewer emissions. Here, Kwarteng aims to keep some going.

22 Sep

The extremist wing of the green movement wants a deindustrialised Britain and zero carbon.  Will we get a glimpse this winter of their promised land?

No, says Kwasi Kwarteng.  There is “no question of the lights going out or people being unable to heat their homes,” he told the Commons earlier this week.  Which was unambiguous.  He also said that “we do not expect supply emergencies to occur this winter”, which was just a bit less unambiguous.

Not so sure, say others – pointing not only to the months ahead but to what’s happening now.  Ministers have reportedly been warned that consumers could face food shortages within days (the meat industy and food packaging are dependent on carbon dioxide supplies) and that six gas-cooled nuclear reactors may have to close.

What’s going on? In a relatively minor key, Russia is holding back on gas supply to put pressure on Germany over Nord Stream 2.  In a more major one, the rise in gas prices is part of a wider story of supply bottlenecks as the world begins to open up post-Covid.  The good news is that we’re not dependent on Russian gas.  The bad news is inherent in our wider energy policy.

Essentially, this has three main aims, pursued by governments of all the main parties.  First, security of supply.  Next, low prices for consumers.  Third, reducing emissions – and, now, delivering Net Zero by 2050.  These are applied in a country that has a long attachment to property rights, a complex planning system, green awareness, litigation-conscious local campaigners, and pressure on space.

It also has a strong Treasury that is institutionally suspicious of grand projets.  Put all that together, and no wonder there’s no third runway at Heathrow.  Or that although Britain established the world’s first civil nuclear programme, the industry’s contribution to the nation’s electricity has been in decline since 1997.  Or that nervy Conservative backbenchers have frightened the Government off fracking.

So we’ve gone for the pain-freer option of importing gas from abroad.  It supplies roughly 40 per cent of our electricity grid’s supply – the largest contributor by some way.  Won’t renewables drawn from our sea-surrounded, wind-visited country help us to achieve security of supply?

One green friend of ConHome says that “I do think there is now very strong evidence that electric cars (on a lifetime basis), wind and solar energy, and insulation will save consumers and businesses money, but there are less mature clean technologies (heat pumps, clean hydrogen, carbon capture, bioenergy, etc.) which are currently more expensive.”

So wind power, for example, will help – but it is in the nature of wind that it doesn’t blow all the time at the same strength, and a combination of a cold winter and calm weather would be problematic at least.  And as our friend conceded, some of the new technologies will pay their way and others may not.

In sum, the first leg of the policy stool, security of supply, has been less stressed recently than the second, reducing emissions – hence the move away from coal and gas towards renewables and developing technologies).  As for low prices for consumers, policy faces both ways: on the one hand, there is the price cap; on the other, green levies, and other taxpayer spending and subsidies.

The Government’s response to some smaller suppliers going bust is to refuse either to drop the cap or to bale them out.  The second is right, the first questionable.  The cap is basically an Ed Miliband policy taken up during the Theresa May era to help the “just about managings”.  (Remember them?)

It’s impossible to enthuse about a policy that will limit the resources available for investment among suppliers.  Still, we are where we are, and Ministers aren’t going to drop the cap at time when inflation is doing its stuff, Covid subsidies like the Universal Credit top-up are being withdrawn, there are some food shortages, and there’s a squeeze on living standards (despite the buoyancy of wages).

Instead, Boris Johnson is in America, urging that we all produce fewer emissions.  And Kwarteng has been meeting with companies that supply CO2 here in order to ensure that they produce at least the same amount.  Such is the paradox of government policy – though Ministers are right to say that we are less exposed than some of our neighbours.

On this site on Monday, John Redwood wrote that “the Business Secretary needs to review the complex mesh of subsidies, regulations, penalty taxes and import arrangements that passes for an energy policy” with an emphasis on security of supply.  That is surely right, and has implications for the main net zero target, about which we are sceptical.

We end by returning to prices.  It makes sense for help from government to be targetted on the poorest people – whether that’s a cut in their taxes, principally VAT, or payments to help counter poverty.  The price cap is a pretty blunt instrument.  Universal Credit would be a better targeted one.  Iain Duncan Smith wrote recently on this site about raising the taper rate.

Rishi Sunak is in the business of putting VAT back up to its pre-pandemic levels, not cutting it.  And there is a solid case for taxation falling more heavily on spending than on income.  But that only returns us to the wider debate about tax, or should do.  The Just About Managings will be hit by the national insurance rise and the new health and social care levy.

They are not well-off enough to be rich.  Nor are they among the very poorest in society.  Lots of them voted to “Get Brexit Done”, and are now being hit by a perfect storm of tax and price rises.  Boris Johnson is perilously reliant on there being no credible alternative for them.

Robert Halfon: Reshuffles. The soreness of being sacked. And how to bounce back.

22 Sep

The Guillotine

I remember well, when just a few days after the election in 2017, I was called to the Commons Office of the then Prime Minister, Theresa May. I was told by her and Gavin Barwell that I had reached the end of the road in my role as Skills Minister.

She said I should go back to campaigning on the backbenches, where I guess she felt my abilities best lay. By the time I had got back to my own Commons Office, the Department for Education Civil Servants had returned my belongings, taken back the DfE laptop and changed the nameplates on the office door to make way for the new incumbent.

When you are called to the Commons Office of the Prime Minister you know it is over. Just like the condemned man walking to the guillotine waiting for his head to be defenestrated. Instead of the crowds baying for blood watching Robespierre’s latest victim, you have the reporters in the Commons corridors and on social media salivating at the latest beheading.

During last week’s reshuffle, journalists were waiting around a set of lifts located near the Prime Minister’s Commons Office. As I was pressing the button for the elevator, one reporter asked me courteously if I would mind standing at the back of the Speaker’s Chair (also located by the Prime Minister’s Commons rooms) and text over the names of any Ministers who were walking through to see him. I, also politely, declined. I explained saying I had better things I could do with my life!

Initially, getting the heave-ho is a pretty bruising experience. You feel sore and ask yourself: why? You have to explain to all of your family, friends and constituents that you are not really useless, and that it is simply the nature of politics. In truth, I was initially incredibly dispirited. I loved the job and I had wanted to be Skills Minister for a long time before my appointment. I had worked especially hard to bring the FE and Technical Education Bill successfully through Parliament in the nine months in the run-up to the election.

But, after a few days, I just dusted myself down and I thought, well, I’ve had a good innings. I had previously attended Cabinet, been Party Deputy Chairman, been made a Privy Councillor and I had just been re-elected MP for the best town in England. Que sera, sera.

I made the decision to stand for election to chair the House of the Commons Education Select Committee, so I could continue to work on education and skills – my passion in politics. Being elected in 2017, against five other candidates and having to canvas votes across all parties, was a special moment in my political life.

As a Committee Chair, you can campaign for the things you believe in, speak to the media more freely and still get things done, albeit in a poacher rather than a gamekeeper kind of way. You are also freed from the tyranny of the phone call from the Number 10 switchboard, which says the Prime Minister would like to see you in his Commons Office…

The ex-Ministers Roll of Honour

I recount all this because I have huge sympathy for those who got the chop last week. Nick Gibb for example, who, whatever my disagreements with him about technical and vocational education (sometimes played out and debated on the pages of Conservative Home), is a man of authenticity and conviction.

He did much to improve standards across our schools, especially literacy. Gavin Williamson, who pushed FE, skills and apprenticeships higher up the political agenda, culminating in the Skills Bill, currently before Parliament.

Robert Jenrick, who understood that our country desperately needed more houses and tried to face off the Nimbys.

Robert Buckland, who did much to strengthen the justice system and toughen legislation for victims of sexual assault and domestic violence. Yes, politics is a blood sport, but these few examples show, whatever had gone wrong in these Departments, much good was done as well.

Mangoes in the Antarctic, Brussels Sprouts in the Desert.

As far as education goes, the appointment of Nadhim Zahawi as Education Secretary is good news. When asked, I once said to Andrew Gimson (of this Parish) that Zahawi is such a brilliant organiser, that he could find mangoes in the Antarctic and Brussels sprouts in the desert. His previous and extraordinary work as Vaccines Minister is a testament to that.

I am sure Nadhim will shake a few trees (much needed) in the DfE and bring both passion and policy to his new brief – especially when it comes to Apprenticeships and Vocational Education. He was previously not just Children’s Minister, but Apprenticeships Ambassador for the Government and did much to improve Apprenticeship take up from big business. All power to his elbow.

Ryan Bourne: Housing. Gove is poised to dump radical supply side reform. And subsidise younger peoples’ mortgages instead.

22 Sep

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

Michael Gove’s appointment to what was the Housing, Communities and Local Government Department last week received an uncertain reaction among Wesminster’s free-marketeers. The optimistic case is that the former Education Secretary’s record of ministerial effectiveness, if channelled into the much-needed cause of land-use planning reform, could snatch victory from the jaws of defeat. Sadly, I find the pessimistic case more convincing: that his appointment further reflects the Government’s backtracking on the issue.

Renaming the Ministry the “Department for Levelling Up, Housing and Communities” already seems to reveal a shift in emphasis away from housebuilding. Gove has reportedly gone out of his way to play down the role of a constrained housing supply in driving recent house price inflation. It has been claimed that he will abandon the government’s “do or die” approach to watered-down planning reforms too – instead meeting backbenchers concerned about “over-development.”

Westminster’s mood changed with the Chesham & Amersham by-election, which crystallised the political risks of a planning reform overhaul. In the wake of that shock, spooked Conservatives began scrambling for fashionable theories to explain away the economic dysfunction caused by our archaic planning laws and so the need for reform. Now even Gove, it seems, echoes the talking points of the Tony Blair Institute’s Ian Mulheirn. The prospects for meaningful liberalisation are increasingly grim.

We all know the anti-planning reform lines by now: that the housing supply has kept pace with household growth since the 1990s, implying a housebuilding drive today would produce socially wasteful “surplus” stock; that planning can’t be the problem because permissions granted regularly exceed net additions to the housing stock; that new supply would take time to dent prices significantly, so wouldn’t do much for home ownership in the near-term.

These are alluring for Conservatives worried about the politics of land use liberalisation, because the conclusion is that mortgage affordability, not planning reform, is key for the Tory goal of a nation of homeowners. If planning genuinely doesn’t constrain how much and where housing occurs, then it’s difficult to see what anyone really fears by liberalisation.

But when has consistency mattered in politics? The convenient conclusion instead is that planning reform can be shelved, replaced with the tried-and-tested method of demand-side subsidies to first-time buyers from the Treasury. What could go wrong?

These planning-sceptic arguments are mostly non-sequiturs, of course. A functioning market doesn’t allocate by “need,” but by matching what people want and are willing to pay for with what suppliers are able and willing to provide. In that sense, the number of households is not synonymous with demand. As Paul Cheshire, a housing expert, has explained, as we get richer we tend to want more housing and more living space, often including gardens. A planning system using household numbers as a determinant of how much land to allocate for housing therefore systematically supplies too little and in the wrong places.

A well-functioning market, in fact, would see supply responsive to demand, not just in terms of the number of dwellings, but their type and location too. If half-a-million people really want to live in apartments in a commuter-friendly South Eastern town, then it would be densified, just as Kensington and Knightsbridge reached six or eight storeys in the Victorian era. That there’s new bungalows in Carlisle is hardly relevant.

Indeed, one would hope “market friendly” Conservatives would understand price signals. Today they scream that people want more land for residential use in London, the South East, Cambridge, and Oxford. Yet our planning system is tone deaf. Not only does it generally restrict land availability or prevent potential densification, but it does so more stringently where people actually want to live. Cheshire, again, has shown house completions have been much lower in Oxford and Cambridge over the last 40 years than in Barnsley and Doncaster, despite much larger population growth in the richer university towns.

The landbanking bemoaned by many is a consequence of the uncertainty of our very discretionary regime. As Ant Breach of the Centre for Cities told me, developers are plagued with the risks associated with not knowing whether developments will actually be approved given the blocking potential at local level. With the supply of land slow and unreliable, it makes sense for them to keep a buffer – a point made way back in 1988 in the IEA’s No Room.

The date of that publication indicates that Britain’s land use and planning policies have had badly damaging consequences for decades, leading to structurally high rents and house prices, irrespective of what drives more recent trends. So yes, house prices are now highly responsive to falls in interest rates, with housing demanded as an asset in itself.

But history shows if interest rates fall and the housing supply is elastic, we get a building boom, like in the 1930s with ‘cheap money.’  If housing supply is restrictive, we get the price boom. We today reap what our planning system sows.

The case for fundamental reform of land use and planning in a liberalising direction therefore remains overwhelming. Peer-reviewed academic literature has repeatedly confirmed that tight supply restrictions on housing reduce affordability, constrain the growth of productive regions, create macroeconomic instability, and a host of other economic problems.

It’s not as if the Government’s controversial reforms took aim at all of this, either. They were mainly about replacing the discretionary approach with a more explicit rules-based system to remove uncertainty, with developments automatically green-lighted if they met locally-determined, democratically approved requirements under the designation of the land (a form of zoning).

Were those proposals perfect? Of course not. Plenty of U.S. cities have zoning, but still suffer from a horribly inadequate supply of housing, as the rules are too restrictive. This meant whether the reforms produced new housing in reality was largely dependent on the “market socialism” of affordability signals creating centrally-determined housing targets in the style of the old Yugoslovia. This algorithm driven-process naturally raised question marks over how the very real bargaining needed about the impacts of development on local communities would occur.

What we are hearing today though are not critiques of the mechanisms that might produce more housing, but outright denials that the planning system is even a bottleneck to it. Faced with political resistance, the Conservative party seems to be abandoning not just the policy but its understanding of the problem.

And this backsliding has a self-reinforcing dynamic. The more that reform gets watered down, Breach tells me, the more even reforming Conservatives will regard the lesser economic reward of what’s left to defend as unworthy of the inevitable political grief. And so the Government will reach for the comfort blanket, once again, of fiddling with mortgages.

Fabiano Farias: I’m a long-term UK resident. So why shouldn’t I have a vote?

22 Sep

Fabiano Farias is a Brazilian national, and has worked in cleaning, delivery, and private transport.

In April this year, a Brazilian friend living in Scotland told me they had just registered to vote for the upcoming elections. Excited, I rushed online to register for the London Mayoral elections only to discover I didn’t have the right.

During the 14 years I have lived in the UK, I have worked in a variety of jobs: cleaner, waiter, Uber driver, Amazon delivery, and Deliveroo, Uber Eats, and Stuart rider. I have always followed politics closely: hours driving gives you plenty of time to pay attention to the news. I also believe that as a resident, it’s my responsibility to know what the key issues are, new policies I should follow, and what I can do to support my community. This is key for me to be a full part of the place I choose to call home.

I have no intention of returning to Brazil. My life, my family members, my partner, and my closest friends are in the UK. At every opportunity, I like to travel within the UK, visiting museums, castles, and learning about the history.

There is, however, one thing I have not been able to do yet, and that is vote in elections. I do look forward to saving and applying to become a naturalised British citizen in the future. This, however, is a complex, long, and expensive process. There are more local elections happening next year, and I would like to have a say now.

As a courier, I have been affected by the implementation of the Low Traffic Neighbourhoods (LTNs). Delivery and taxi drivers working to tight deadlines were not consulted about these, and yet are the ones most affected. Similarly, the congestion charge increase to £15 is another blow to those like us who are out on the streets day in day out. If that wasn’t enough, the extended Ultra Low Emission Zone affects those who have no option but to gain their livelihoods in private transport. Before the day starts, many of us are already £27 in debt.

Housing is another issue Londoners face. Prices keep going up unmatched by housebuilding.

I was excited by Shaun Bailey’s manifesto before the London Mayoral elections, and equally upset that I do not have the vote. As someone who works hard, I believe in the Conservative Party and its goal to reward those who put the time and effort into what they do.

I believe, as a long term resident who cares about London and the community where I live, I should have the right to vote in local elections where the impact of policies can often be so directly and visibly felt. I was happy to see that residents were given the right to vote in the Senedd and Holyrood elections and thought the rest of the UK would soon follow, especially now that the UK is out of the European Union.

Many other countries across the world also offer residents, and not just citizens, the right to vote in local elections. New Zealand goes as far as giving all residents the right to vote in national elections. I believe residence-based voting rights, at least in local elections, is an inevitable development considering places like London and the whole of the UK are so globalised.

As a Brazilian migrant in the UK, I often felt it was unfair that EU citizens had so many privileges over other migrants, including having the right to vote in local elections. With the Government’s promises of a future Global Britain, all residents, no matter where they were born, should be given a chance to have their say in their communities and how the public services they pay for through council tax are run. This is not necessarily about giving migrants the vote. It’s about giving residents, neighbours, workers, and service users, equal rights, as well as responsibilities.

I know the administration of elections in the UK is being reviewed with the Elections Bill and there are calls for all residents to have the right to vote in local elections. I hope these are adopted by the Government so people like me have the right to vote in local elections. It would certainly increase my sense of belonging in the UK. Integration is rightly encouraged by politicians. The right to vote would help develop that sense of active participation.

Often, it is assumed that migrants will not vote Conservative. It’s unwise to assume. Migrants are a diverse community with different realities and experiences. It’s only fair we are given the chance to make our different voices heard.