Nick King: Levelling up. The challenge is less defining it than delivering it, for which Johnson will need the private sector.

25 May

Nick King is a Research Fellow at the Centre for Policy Studies.

To level up or not to level up? That is certainly not the question. If theres one thing the Government has been admirably clear about, it is its determination to do it. But that begs rather a lot of other legitimate questions, such as: what does levelling up really mean? How will we level up? What level are we levelling up to? How will levelling up be measured? And if answers to these questions are not forthcoming, how can we ever really know whether weve levelled up or not?

Some of these points were recently put to ministers from the Business and Housing departments by the Business Select Committee. The answers forthcoming were clearly not to the (Labour) Chair of the Committees satisfaction. He suggested there was no clarity in terms of understanding what levelling up means or the policy which sits behind it.

But there’s actually a strong argument – although you wouldn’t expect the ministers themselves to make it – that the lack of specificity around levelling up, and the catch-all nature of the term, have added to its value as a concept.

The Conservative Partys last general election manifesto talked about levelling up every part of the UK, levelling up skills and levelling up through investment in infrastructure. Prior to that manifesto, I produced a report for the Centre for Policy Studies, which called for greater devolution, enhanced skills, increased infrastructure investment and new Opportunity Zones as the principal means of levelling up.

Since the election, various other think tanks have put their own spin on levelling up, with Onwards taskforce looking at levelling up the tax system and innovation, the Centre for Progressive Policy developing its own Levelling Up Outlook, the Institute for Public and Policy Research suggesting we level up health, and Bright Blue looking at levelling up in the context of deprivation.

This all-encompassing nature of the phrase, not yet defined by any mainstream dictionary, is surely more of a strength than a weakness. We saw this during the election. Then, across the former ‘Red Wall’ seats of the Midlands and the North, people voted in their millions for levelling up, without needing a detailed policy prospectus outlining which departments would take the lead and what metrics they would apply. Yes, they wanted to ‘get Brexit done’ – but getting Brexit done was just one half of the equation to making their lives better: levelling up was the improvement that would come afterwards.

For all of its lack of explicit definition, those of us who are who committed to the levelling up cause – and I include myself in that number – feel we know what it’s aiming at. We know that at its heart it is about addressing the long-standing inequalities which exist in the United Kingdom.

Levelling up is about the life chances of people, the prospects of places and about making sure our country is the United Kingdom it should be, not the divided realm it risks becoming. In that spirit, it can be seen as a continuation of One Nation Toryism, of efforts to extend social mobility and even of various Governments rebalancing efforts.

Perhaps that is why, when Boris Johnson returned to Downing Street, having won his crushing majority in the election, he stood on the steps of Number 10 and promised to unite and level up’ our country. There followed measures such as substantial increases in infrastructure investment, the creation of the Towns Fund and, more recently, the creation of the Levelling Up Fund and the Community Renewal Fund. These all suggested a centrally-driven, targeted approach, relying on the funding of specific projects to level up specific places.

But the ambition to level up goes much wider and deeper than that. Ever since the election, every Government department has been tasked with thinking about levelling up and how to deliver it. In education, that means better schools and improved skills outside London and the South-East. For the Transport and Culture departments, that means greater national transport and digital connectivity respectively. For the Department of International Trade, it means getting more investment into the regions and more companies around the country exporting.

Now, to bring coherence and strategic intent to the levelling up agenda, the Government has promised a Levelling Up White Paper. This White Paper is to be produced by ConHome columnist, Harborough MP and the Prime Minister’s Levelling Up adviser, Neil OBrien. He is, in many respects, the perfect man for the job, with a first class brain and a long history of considering these issues, raised in the North but representing a Midlands constituency, and someone who knows his way around Whitehall.

This last point is critical given the clear intention to make this a ‘whole of government’ exercise. Virtually every department has been instructed to play its part in levelling up; the Prime Minister and the Chancellor recently put it at the heart of their Plan for Growth, and OBriens White Paper is being run out of Cabinet Office, suggesting an ambition to reach into various Whitehall departments.

He will, no doubt, have received direct orders from the Prime Minister as to what he wants in the White Paper and perhaps the slight shift in language within the Queen’s Speech gives us a clue as to what to expect. That speech promised to level up opportunities’ and the accompanying Briefing Note – prepared by the Treasury – tied the levelling up agenda much more closely to public services, such as health, education and policing. 

This suggests the Government will be looking as much at the opportunities presented to people, and within places, as the outcomes which those opportunities might lead to.For my part, the most important factor I would urge the Government to remember, is that whether we want to improve opportunities, or outcomes, levelling up needs to be centred on the potential of the private sector. As I argued in my recent Centre for Policy Studies paper with Jake Berry on rejuvenating the North, only the private sector can offer the scale of investment, the jobs and the opportunities which can lead to long-term sustainable change.

Government, of course, has a pivotal role to play. It needs to think about where it invests, about the implications of the gravitational pull of London and the South East and how it can best break the trend of self-perpetuating economic failure in the least successful parts of our country. But, most importantly, it can help create the conditions in which private enterprise can thrive.

After all, to business-loving, capitalism-supporting types like me, levelling up can only really be delivered through the dynamism of the private sector. It is its agility, investment and innovation through which life-changing opportunities will be created. Absent of that, levelling up will mean very little at all.  

Alexander Downer: A trade deal with Australia is just the first step. It could open the door for Britain to the Asia-Pacific trading club

24 May

Alexander Downer is a former Australian High Commissioner to the UK and a former Australian Foreign Minister.

The UK’s departure from the European Union gives Ministers a huge opportunity to put freedom at the heart of this Government’s agenda. Freedom from Brussels’ bureaucratic meddling. Freedom to deviate from overbearing European laws. Freedom to strike trade deals around the world.

But what use is freedom as a word unless the Government puts it into practice? We are now beginning to see the opportunities that freedom can present in real terms.

Liz Truss, flanked by her rough and tough negotiators at the Department for International Trade, has worked tirelessly to battle for a gold-standard deal with Australia. A Free Trade Agreement (FTA) that reflects the export potential of British SMEs and services. An FTA that tears down the archaic barriers and restrictive tariffs that limit trade between two of the world’s closest allies.

Brexit was fought and won so that Liz and Boris Johnson could prove to British businesses and consumers that they can export their quality goods and services and import vibrant new products without the cumbersome interference of Brussels. If Britain cannot do a trade deal with Australia, a country with whom it shares a common language, history, and standards – then who can it do a deal with?

Total trade in goods and services (exports plus imports) between the UK and Australia was £13.9 billion in 2020. Britain is the second-largest source of total foreign investment in Australia, and the eighth largest two-way trading partner. The Government estimates a good deal could further benefit the UK to the tune of £500 million.

Does it want to have delivered Brexit only to allow unsubstantiated protectionist tendencies to limit that mutual growth further?

In recent days, a lot has been made of the potential for a UK-Australia FTA to do irreparable damage to British farmers. These claims are misguided. For example, Australia’s beef exports to the UK peaked back in 1955, accounting for 65 per cent of total exports. This trade was decimated when the UK joined the EU in 1973 – and today, exports to the UK make up a minute 0.15 per cent of Australia’s total. Despite this, as a result of trade diversification, the market has restructured and today Australian red meat products can be found in over 100 different markets, from the US to Japan, Indonesia to the UAE.

2021 is a vitally important year – and not just because Australia will welcome England down under for the Ashes tour.  Johnson hosts the G7 summit in June and will welcome some of the world’s most influential political leaders to Carbis Bay, Cornwall. In November, the Prime Minister hosts the COP26 climate summit in Glasgow.

These two events mark critical moments for Britain to take its proud, independent place on the world stage again. The best way of proving those credentials? Britain must walk the walk and not just talk the talk when it comes to “Global Britain” and free trade.

A good deal with Australia stands to benefit Aussie farmers just as much as Scottish whisky distillers; trade goes two ways. If “Global Britain” is to become a reality and not just a slogan, the Department for International Trade must be given the freedom and power to negotiate and then sign trade deals with great allies like Australia.

Boris Johnson and Scott Morrison have the chance to toast a comprehensive, trade liberalising FTA over a delicious Aussie beef steak and glass of English sparkling wine at the G7 summit in June. That would give Britain a huge boost in its aspirations to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the vast Asia-Pacific trading club that opens the trading doors to new corners of the globe.

I agreed entirely in 2016 with George Eustice, then the Farming Minister, when he backed Leave and urged proud British farmers to do the same. Let us now get on and get the deal done. Australia and Britain are two great friends. Now is the time to sign a Free Trade Agreement that allows our partnership to flourish further.

David Gauke: Is Britain really set to become a low tax, less regulated, free trading, buccaneering country?

13 Mar

David Gauke is a former Justice Secretary, and was an independent candidate in South-West Hertfordshire at the recent general election.

Conversations about tax policy can take unexpected turns. It was during one such conversation in the late 2000s – I was the shadow tax minister at the time and developing our plans for corporation tax – that a senior tax lawyer at a city firm recommended a series of books on naval battles.

Peter Padfield’s Maritime Trilogy is, in truth, somewhat broader than that. Padfield alternates accounts of the most important maritime confrontations since the Spanish Armada with a broader account of the social, economic and constitutional development of the great powers.

His central argument is that there is a distinction to be drawn between maritime nations – with linked strengths of sea-fighting, trade, financial innovation and constitutional constraints – and land-based empires. The later relied on closed domestic markets, rigid hierarchies and centralisation, the former distinguished by liberty, flexibility and enterprise.

It is an analysis that many British Conservatives would share and, the argument goes, makes the UK well suited to the era of globalisation. We are historically and culturally accustomed to trade and with that comes a recognition that trading partners have other options. Our prosperity is dependent upon those partners wishing to continue to trade with us. Political stability; the rule of law; paying our debts; limited government; competitive and predictable taxes – all qualities that are necessary to succeed as a maritime nation and in the era of globalisation.

It was in this spirit that the Prime Minister’s first big speech following our departure from the EU was at the Old Naval College in Greenwich where – in extolling the virtues of free trade – he talked of recapturing “the spirit of those seafaring ancestors immortalised above us whose exploits brought not just riches but something even more important than that – and that was a global perspective”.

So how are we doing? Are we on course to be the open, outward-looking nation of which the Prime Minister spoke? Are we becoming a more flexible, enterprising, maritime nation?

My last column assumed that corporation tax rates would increase and argued that this would be a mistake. When I heard Government ministers defend the rise by saying that our corporation tax rates remained the lowest in the G7, I was reminded of my conversation with the tax lawyer.

The lawyer’s argument (which I found persuasive) was that we became economically successful from the 1690s onwards because our model was more like that of a small country dependent upon foreigners choosing to trade with and invest in us, taking inspiration from the Dutch rather than the French. Our modern tax system should seek to emulate this, he argued, encouraging international businesses to locate activities and investment in the UK. Our rates may be lower than other G7 economies but, if we see ourselves as nimble and competitive, our ambitions should be greater than that. A better corporate tax regime than France is not a proud boast.

How about freeports? The name could not be more evocative of our trading and maritime traditions. But the evidence suggests that they will achieve little other than displacing activity from one part of the country to another. And if we were really ambitious about a deregulated, low tax, low customs solution to our economic woes, why give these advantages to some places, why not everyone?

The emphasis on freeports reveals an approach to the levelling up agenda that I worry is more about creating grateful localities in exchange for pots of spending rather than a clear sighted vision for improving productivity. The suspicion must be that the preference for ad hoc ministerial decisions over a more defined industrial strategy will lead to a less economically rigorous approach. The suspicion will linger that party political considerations will be to the fore.

There is one surprising, if qualified, bright spot. We are becoming more open to talent. It was already the case that the requirements to get a work visa were much less restrictive than previously, and the Chancellor’s announcement on the skills visas is worthwhile. The qualification, of course, is that it is still much more bureaucratic for EU citizens to work here than it was – which brings me to Brexit.

Our history as a maritime nation is one often identified by supporters of Brexit – like the Prime Minister in his Greenwich speech. Even the word ‘Brexiteer’ evokes the naval escapades of buccaneers (although the Oxford English Dictionary also defines ‘buccaneer’ as ‘a person who acts in a recklessly adventurous and often unscrupulous way’). Liz Truss tops the ConHome Ministerial popularity charts largely on the basis of her energetic advocacy of Global Britain and for free trade as a benefit of Brexit.

The reality is that Brexit involves the erection of trade barriers with our largest market, as January’s appalling trade numbers suggest (although, to be fair, a clearer picture will only emerge over time). Given the Prime Minister was willing to agree to the Northern Ireland Protocol, it even involves trade barriers within the UK.

While good progress has been made by the Department of International Trade in completing free trade agreements with third countries, these have primarily rolled over existing agreements that we had as members of the EU. There was a flurry of excitement last week when the US dropped punitive tariffs on UK products that were in place because of a longstanding dispute with the EU over Airbus and Boeing. Brexit supporters rushed to declare it a triumph due to our new status, the Trade Secretary wrote a self-congratulatory piece in The Daily Telegraph. A day later, the US announced that it was dropping the punitive tariffs against the EU, too. The search for a trade benefit from Brexit continues.

What about regulatory flexibility? It is nearly five years since we voted to leave the EU, but there are still no bold plans to regulate in a different way. Plans to review workers’ rights have been dropped on the basis that this would be politically unpopular.

If the hard Brexit delivered by the Government has made trade with the EU much harder, the combative manner of our dealing with the EU has not only reduced trust but even undermined a key attribute for a trading nation – the rule of law. Having threatened to breach international law for three months over the autumn, Lord Frost has now decided to extend the grace period before internal checks come into place – unilaterally changing the terms of our agreement with the EU. A second breach of an international treaty only recently agreed begins to look like a habit. It does nothing for our reputation for trustworthiness.

The attributes of an outward-looking, open, trading nation are ones to which we should aspire. But in terms of our openness to trade, competitiveness on tax and adherence to the rule of law we are going backwards. In terms of the State telling businesses what they should do and where they should do it, we are becoming more centralised and more arbitrary.

For years, many in the UK have characterised the EU as centralised, interventionist, uncompetitive and protectionist. It would be a sad irony if our departure from it makes us more like the type of inward-looking, land-based power that we once used to disparage.

Our next live event: Truss on ‘Global Britain – navigating the post-Brexit world’

18 Feb

We are very pleased to invite you to ConservativeHome’s next free online event: a timely discussion on “Global Britain – navigating the post-Brexit world“.

At 7pm on Monday 1st March, we’ll be joined (via Zoom) by:

  • Liz Truss MP, Secretary of State for International Trade
  • Professor Anand Menon, Director of UK in a Changing Europe and Professor of European Politics and Foreign Affairs at King’s College London
  • Katy Balls, Deputy Political Editor of The Spectator
  • Paul Goodman, Editor of ConservativeHome (Chairman)

Having left the EU, the UK is embarking on a new period in its political, diplomatic and trading history. Re-establishing an independent trade policy, negotiating new and ambitious trade agreements – including the recent application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – and navigating a competitive and turbulent world bring distinct opportunities and challenges.

In this live online event, our expert panel will be exploring what ‘Global Britain’ means in practice, how the UK is equipping itself to forge this new path, and what the future might hold for a country adapting to such changed circumstances. This event offers the opportunity not just to benefit from our panelists’ unique perspectives inside government, academia and the media, but also for the live audience to put your questions to them directly.

This event is hosted by ConservativeHome, in partnership with UK in a Changing Europe, a research initiative which promotes rigorous, high-quality and independent research into the complex and ever changing relationship between the UK and the EU.

To register for your free ticket, click here.

Ranil Jayawardena: A strong trading partnership with India will be a central feature of Global Britain

10 Feb

Ranil Jayawardena is Minister for International Trade, and is MP for North East Hampshire.

Benjamin Disraeli once said that the secrets to success in politics were to “be amusing, never [to] tell unkind stories and above all, never [to] tell long ones.” I will make sure to abide by the latter two rules here, though sadly I cannot promise you the former!

The great Conservative Prime Minister once also, perhaps rather more prophetically, opined that “there is no education like adversity.” And, as the world recovers from the unprecedented impact of Covid-19, this Government will use key lessons we have learned to build our economy back better, stronger, and more resilient in the months and years ahead.

Trade will be pivotal to this great endeavour, driving growth throughout the United Kingdom, generating jobs, fostering innovation, and creating prosperity in every corner of our country.

Using our newfound freedom, we will seek to forge even deeper and stronger trade ties with our friends around the world, including with the world’s largest democracy: India.

Liz Truss, our Trade Secretary, and I have had countless video calls with our counterparts since last year, and Truss is in India this week to take forward the opportunities built for closer collaboration between our nations. She will outline our commitment to strengthen the United Kingdom–India Enhanced Trade Partnership (ETP), a landmark moment on the road to a future Free Trade Agreement. The ETP will, itself, bring economic benefits, address key barriers, boost trade and investment, and create more jobs in both countries.

It is clear we must work side-by-side with other enterprising free trading nations to overcome the challenges posed by Covid-19 and embrace the enormous opportunities for global economic growth to come, so that future generations are not left shouldering the burden of the pandemic.

Trade will fuel the engine of British growth, as we plot a new path for ourselves as an independent trading nation – opening up fresh opportunities for budding exporters from Peterhead to Penzance, Bathgate to Ballymena, and Altringham to Aberystwyth, as we level up opportunity across the country. And it will bring us closer, culturally and economically, to likeminded nations, as we forge new bonds of prosperity worldwide.

In fact, it is the global pandemic that has highlighted the importance of keeping trade flowing and supply chains open – as the spectre of protectionism has reared its head once again.

Throughout the crisis, Britain and India have worked together to create ground-breaking solutions to the challenges presented by Covid-19, spearheading the drive to make sure that vaccines are distributed fairly, which is key to reopening the world’s economy. And our nations will continue to work side-by-side to develop the vaccines of the future, through the joint United Kingdom-India vaccines hub we launched last year, sharing best practice for regulation, clinical trials, and fostering innovation as we place ourselves at the vanguard of change in this field.

A truly Global Britain – a beacon of free and fair trade – will work with our friends and partners, like India, to overcome barriers to international commerce wherever we find them, using our seat in the G7, the G20, the WTO and other fora.

As two of the world’s most dynamic, innovative and truly global trading nations, Britain and India can help lead the world in harnessing the economic potential that only free trade can bestow. It’s this potential – harnessed by this Government – that will create opportunities for the next generation. For those in school, college or university – at this most difficult of times – Britain setting sail to trade with the world should provide hope. We stand tall in the world.

People want to do business with us. We are committed to playing our role beyond our shores. It is this global outlook that will provide our whole nation the exciting future we deserve, from generation to generation.

Free Trade Agreements with countries worldwide will be pivotal in building this truly Global Britain. I wrote on New Year’s Day that we have had agreed deals with 63 countries outside the EU. It is now 64, plus the EU, accounting for £889bn of our bilateral trade. No other country has ever negotiated so many trade deals simultaneously, nor with the same ambition.

The voice of British business – including the small and medium-sized firms that form the backbone of our economy – has been heard loud and clear throughout this process, and we want to expand this national conversation even further, as we build a trade policy that works for every part of Britain, and every generation.

That’s why, as much as it is right to celebrate our growing trade and investment relationship with India, worth almost £24 billion a year, supporting more than half a million jobs in each other’s economies, it is right to go further for the future.

We are already the largest European market for India’s goods exports, with hundreds of Indian companies doing business across our country, employing more than 80,000 people. But we can do even more. By taking our trade to new heights, our two great independent trading nations are helping support our shared values – of democracy, freedom, and protection of the environment – worldwide.

These fantastic agreements will provide the charge that powers the British economy forward, as we spearhead work to develop pioneering solutions to the great challenges the world faces, securing the opportunities that the country has called for.

Central to this is perfecting green technologies, from renewable energy to carbon capture storage, which will help build a cleaner, greener, more sustainable global economy, particularly as Britain progresses towards net zero carbon emissions by 2050. As we prepare to host COP26, we will work with India to develop the green technologies that will transform the way people live and work worldwide as we help build back better from the pandemic globally.

So, as we look ahead to a better, bolder, brighter era for international trade and investment, we want Britain to set her course to the heart of the action, driving change and fostering progress and innovation worldwide.

After all, as Disraeli recognised a century and a half ago, it is only by embracing the challenges of the present that we can help shape the world of the future.

Anthony Browne: Post-Brexit Britain. Now we’ve taken back control, here’s what we can do with our new powers.

31 Dec

Anthony Browne is MP for South Cambridgeshire and a former Europe Editor of the Times.

When I worked for Boris Johnson during his first term as Mayor of London, I led on devolving powers to City Hall, and went through it with Oliver Letwin, David Cameron’s policy honcho. One idea was to devolve VAT to London, copying regional sales taxes in North America. “We can’t. It is against EU rules. Not sure why,” said Letwin.

With our agreement with the EU, arguably the biggest change is not individual policy areas, but the sense of empowerment. Throughout government, naysayers and those suffering excessive status-quo bias have been able to stop any initiative saying: “you can’t. It is against EU rules.”

Sometimes – like the abolition of the tampon tax and banning live animal exports – it was a correct interpretation of EU law. But often it was just a general prohibition. It would end the matter, because no one really understood the EU rules, they were too difficult to challenge, and basically impossible to change. It bred throughout the UK government machinery an intellectual dependency on the EU that led to a pervasive “can’t do” attitude.

But from January 1, no longer will anyone be able to say: “you can’t – EU rules”. We have jumped from the passenger seat to the pilot seat. Can’t do becomes can do. So – what should we do?

Eighteen months ago, at the depth of our Brexit political paralysis, ConservativeHome asked me to write a series of 10 articles highlighting potential “Policy Gains from Brexit” – things we might want to do and would be able to do once we had left the EU. So how are we doing?

On most of the issues, we are making great headway. Across much of government, the new empowerment has led to a renaissance of democracy and policy making. The Department of Environment, Food and Rural Affairs used to be a body for transposing EU rules, with a bureaucracy that had gone native.

But under Michael Gove, Liz Truss and George Eustice, civil servants have transformed from passive recipients to enlightened creators, giving the department a buzz of excitement.

The Agriculture Bill – the first time we have had an agricultural policy for over 40 years – scraps the dysfunctional Common Agricultural Policy, and replaces it with environmental subsidies (it was a pleasure to do my maiden speech on it).

The Environment Bill (which I sat on the Bill Committee of) doesn’t just replace EU environmental law, but enhances it and tailors it for the UK, much to the delight of green groups.

The Fisheries Bill gives us our own, more sustainable, fisheries policy (subject to quotas agreed with the EU).

The Government is consulting on banning the export of live animals for slaughter, which the impotent Labour government was unable to do when it wanted to.

We now have a Department for International Trade, with our own trade negotiators, giving us a trade policy for the first time in forty years, and pumping out our own trade agreements. Agriculture and environment groups have been enthusiastically debating how we protect standards in our trade policy, something nobody discussed before because we had no power to deliver it.

The Treasury is reviewing the whole framework of financial services regulation, with the aim of setting out an ambitious financial services strategy. Previous strategies for financial services (which I played my part in, as chief executive of the British Bankers’ Association) were rather optimistic exercises – the UK government didn’t have the power to do very much. Almost all our financial services regulation we have inherited from the EU, but we need to ensure it is proportionate, and supports innovation and competition, as well as international competitiveness and high standards.

The Treasury has scrapped the hated tax on tampons, which EU rules had prevented George Osborne from doing. The popular duty free from EU countries is coming back after a 20 year absence – with the ferries from Holyhead to Dublin offering it from Friday. The Government is launching freeports to boost trade and regeneration of more deprived parts of the UK. The Home Office has scrapped the much-hated freedom of movement, and replaced it with a global immigration policy making sure we can get the talent that our economy needs.

But now that we have this empowerment, what else could we do now we have left the EU? Here are some other possibilities:

  • Reform public procurement (under the OJEU rules), to make it fit for purpose and give small businesses more opportunities.
  • Promote competition among retail banks by reforming EU inherited capital rules.
  • Remove VAT on housing insulation and other environmental products, and reform the biofuels regime.
  • Transform our waste and recycling regime, so it is not an exercise in hitting EU targets.
  • Reform the EU’s second company directive to reduce pointless red tape for public companies.
  • Reform the General Data Protection Regulation to protect privacy while reducing burdens on small charities and businesses.
  • Reform Solvency II so our insurance companies can compete globally.
  • Promote collaboration programmes with the Commonwealth, rather than just the EU.

It has been obscured by the dramas around Brexit and Covid, but the policy arena is the most exciting it has been for a generation. Say goodbye to can’t do. Say hello to the new “can do” Britain.

Profile: Liz Truss, Perky promoter of free trade with Japan – and, like Johnson, a disruptor

29 Oct

Liz Truss, the International Trade Secretary, proclaims the brilliance of the free trade agreement she has just signed with Japan. According to a video posted by her on Twitter, the deal, the first of its kind since Brexit, is “a win-win” and “just a glimpse of global Britain’s potential”, for it paves the way to other deals.

Experts observe that the economic benefits of the first deal are likely to be “very small”, and mockery erupted when the Department for International Trade tweeted, during an episode of The Great British Bake Off, the questionable assertion that soy sauce from Japan will become cheaper.

Nonetheless, it’s worth remembering that opponents of Brexit lauded the EU’s trade deal with Japan, while taking side-swipes at the UK’s “untested, yet still somehow flailing, negotiating team”.  Truss has delivered a trade agreement which some Remain supporters said wouldn’t happen before a trade deal was complete with the EU.

It is extraordinarily difficult to sing the praises of a trade deal. Rosy assertions about future prosperity have yet to be confirmed by events, and are countered by grim forecasts from depressed Remainers, while the voluminous details of what has been agreed are deeply technical and strike the public as intolerably dull.

In the present Cabinet, only Boris Johnson, Michael Gove and perhaps Rishi Sunak could give a speech about trade which would raise people’s spirits.

Like most of the rest of her ministerial colleagues, Truss is a dull speaker who never seems to get much better.

But she has the virtue of never appearing to get downhearted. She possesses a seemingly invincible perkiness.

Last summer, while contemplating a bid for the Tory leadership, she told The Mail on Sunday that as a woman in politics, “you have to be prepared to put yourself forward because nobody else is going to”.

In her case, this could well be true. A senior Tory this week told ConservativeHome: “Her longevity in Government is a mystery to virtually the whole parliamentary party.”

The senior Tory had perhaps failed to observe that in the most recent ConHome Cabinet League Table, Truss, with a net satisfaction rating of +69.7, was second only to Sunak, on +81.5, with Dominic Raab in third place with +59.7 and Gove fourth on +56.4, while the Prime Minister got -10.3.

At the age of 45, Truss is a veteran, the second-longest serving member of the Cabinet, which she joined as Environment Secretary in July 2014, a record beaten only by Gove, appointed Education Secretary in May 2010.

Perhaps that explains why the editor of ConHome possesses a seemingly inexhaustible appetite for profiles of Truss. The first appeared in March 2014, when she was a rising star of the 2010 intake, a tough-minded Thatcherite northerner who had been educated at a comprehensive school and was tipped by some as a future leader.

The next profile appeared in March 2017, by which time she was Lord Chancellor and Justice Secretary, and the judges were furious with her for failing, as they saw it, to defend judicial independence against attack by The Daily Mail.

Three months later, she was demoted to the post of Chief Secretary to the Treasury. Here she continued to fight her corner, and on occasion to express her disrespect for Cabinet colleagues (including Gove, by now Environment Secretary), as in this lecture, delivered at the London School of Economics in June 2018:

“I’ve never liked being told what to do. And I don’t like to see other people being told what to do. Britain is a country that is raucous and rowdy…

“I see it as my role as Chief Secretary to the Treasury to be on the side of the insurgents – I see myself as the disruptor in chief! Because British people love change…

“And government’s role should not be to tell us what our tastes should be.

“Too often we’re hearing about not drinking too much…eating too many doughnuts…or enjoying the warm glow of our wood-burning Goves…I mean stoves.

“I can see their point: there’s enough hot air and smoke at the Environment Department already…

“we have to recognise that it’s not macho just to demand more money. It’s much tougher to demand better value and challenge the blob of vested interests within your department.

“Some of my colleagues are not being clear about the tax implications of their proposed higher spending.

“That’s why, in next year’s Spending Review, I want to take a zero-based, zero-tolerance approach to wasteful spend.”

In May 2019, while dipping her toe in leadership waters which turned out to be too chilly for her, Truss spoke of “a need to build a million homes on the London Green Belt”. On an earlier occasion, to an American audience, she had spoken with relish of a world in which “no one knows their place, no one fears failure, and no one is ashamed of success.”

This gung-ho side of her, the relish she takes in assaulting the cosy world of received pseudo-liberal opinion, her longing to let the free market rip in order to produce the wealth which alone will rescue the poor from over-priced housing and allow them to feed their children, find a ready assent in Johnson.

He too is a disruptor, who wants to unleash the animal spirits which have been crushed by socialist planning laws, and who favours tax cuts for everyone, including that most despised group, the better off.

Truss became the first Cabinet minister to declare for Johnson, and as Stephen Bush some time afterwards related in The New Statesman:

“During his bid for the leadership, Liz Truss advised Johnson on economic policy, and was the architect of plans to cut taxes for people earning over £50,000. Civil servants dreaded a Johnson government because they found Truss’s tenure as Chief Secretary to the Treasury under Theresa May exhausting, for reasons ranging from her demanding work schedule to her habit of asking officials multiplication questions at random intervals. Few dispute that she would have been able to do the job effectively. But Johnson discarded her as his chancellor-designate in part because of the row the tax plans caused, and in part because Sajid Javid was more willing to spend freely.”

Truss was more suited to the go-getting task of pursuing free-trade deals, as part of a global Britain strategy in which – despite having voted Remain in 2016 – she has the merit of actually believing.

She holds another post, Minister for Women and Equalities, and here too she is of value to Johnson, by holding the line against fashionable opinions which if adopted by him, would destroy his credibility with the former Labour voters in the Midlands and the North who handed victory to the Conservatives last December.

Truss is conducting a review of the whole field of equalities and diversity policy, and at Downing Street’s behest, has already refused to allow self-definition by transgender people under the Gender Recognition Act.

Crispin Blunt, Conservative MP for Reigate, was furious with her:

“Does she appreciate that trans people cannot discern any strong or coherent reason for this screeching change of direction?

“Does she understand the anger at the prospect of them receiving their fundamental rights being snatched away?”

But the Labour Party leadership has declined to pick a serious fight over this issue, for it knows that many old-style feminists are aghast at the idea of trans men being allowed to declare themselves women and enter women-only spaces.

So Truss, with her odd mixture of indiscretion and obedience, her contempt for liberal groupthink, love of freedom and faith in free trade, is in many ways a useful ally for Johnson.

Her detractors will continue to say she has only got where she is today because the Prime Minister needs a reasonably high proportion of women in senior posts. But it would be fairer to say that she has got there because she had the gumption to declare her loyalty to him in June 2019, and is in many respects a kindred spirit.

Minette Batters: Today, MPs should insist on better scrutiny arrangements for future trade deals

12 Oct

Minette Batters is the President of the National Farmers Union.

Today, MPs will once again be debating the Agriculture Bill in the Commons, and once again the critical issue of how we can strike out as an independent trading nation while safeguarding our food and farming standards will be addressed. But time is running out for Parliamentarians and government to come up with a definitive answer.

This has become one of the defining issues that has emerged from Brexit. Now we have left the EU, we have the freedom to negotiate our own trade deals and to define our own standards.

I want to be part of that – selling more of our great British food abroad, and using our import policy to drive the competitiveness of our farmers. But we are also facing the reality of a world with different values and priorities to our own, and with different approaches to food and farming.

It is difficult to disentangle this debate from the wider question of what it means to take back control and to take a new role on the world stage as Global Britain. Our voice will have regained its individuality, but we are no longer backed by the economic status of being part of the largest economy on the globe. This forces us to make some tough choices – and so it is vital that those choices are made by our elected representatives in Parliament. Proper Parliamentary accountability: that is what this current debate on trade and standards boils down to.

I was struck by the recent furore over the Internal Market Bill and the Withdrawal Agreement. It seems that many of those who vocally supported the Withdrawal Agreement earlier this year were disappointed with some of the fine print. Whatever the rights and wrongs of that particular issue, it was a stark reminder of what can happen when critical, international agreements are not properly scrutinised.

The Withdrawal Agreement runs to some 540 pages. A typical trade deal can be three times bigger. The EU/Canada agreement, for example, runs to nearly 1600 pages. Without proper scrutiny, it’s obvious that our future trade deals could hide all sorts of commitments we should at least be aware of.

A former Tory Prime Minister, the Earl of Derby, compared the development of the UK constitution with an old country house, added to over the years with a window here and a gable there. Well, that is the nature of the system we are relying on to scrutinise trade deals – cobbled together from different materials accumulated over centuries.

But with Brexit, we have cleared the furniture and can now take care of the leaky plumbing and fraying electrics. We should take the chance to create a bespoke system of trade scrutiny while we can.

We are told that our current arrangements for scrutinising trade deals are fine. But this is not the opinion of a number of recent Parliamentary select committee inquires and independent assessments.

The truth is, if you wanted a system that ran a high chance of side-lining MPs from having a really good say on trade policy, then the current arrangements under the Constitutional Reform and Governance Act 2010 (CRAG) would do the job.

Yes, MPs can vote against a trade deal, but they have 21 days to read these enormous tomes, and – as a negative resolution process – they then need to get themselves organised to pray against it. And repeatedly, every 21 days. There is no requirement for government to provide time to debate or vote on the deal.

It’s also important to recognise that changes to our domestic standards that result from trade deals will require domestic legislation to implement, including changes to our food standards.

This is an extra layer of Parliamentary involvement – but, again, it is very weak. Nearly all would be via secondary legislation, mostly through negative resolutions. I wonder how often any of our current MPs have voted against a Statutory Instrument under the negative resolution procedure – the last time such an instrument was defeated in the Commons was 1979. Robust Parliamentary scrutiny it isn’t.

Perhaps most concerningly of all, there are in fact no safeguards in domestic law for standards in areas such as animal welfare or environmental protection which can be used to control imports. I believe our food safety standards are strong. But in trade policy these cannot be extended to concerns over the way food is produced – for instance on animal welfare or environmental measures.

This is a reflection of international trade law, not on the Government, but it throws into sharp relief the reality behind the assurances we are given that our standards have been safeguarded in law after Brexit. Quite simply, they haven’t.

To be fair, Liz Truss and the Department for International Trade have recently indicated that they are looking at ways of facilitating greater Parliamentary scrutiny – providing select committees with advance sight of deals, making Parliamentary time available for debates, and providing impact assessments to inform MPs. But all of this is somewhat cobbled together and informal and could easily be reversed in future. There is no safeguard that such a system will remain in place, or even used for each and every deal. We need more.

So what would that look like?

First, we need a clear and simple process that ensures Parliament is given time to consider the details of any trade deals – 21 days is too short. Next, here needs to be formal, independent and expert evidence on those trade deals for Parliament to consider too, again something that needs more than 21 days. Finally, Parliament needs to be formally provided with sufficient time to debate these deals and to vote on whether they should be ratified or not. Relying on an outdated system that only allows them to continuously delay ratification every 21 days, without debate, is quite plainly not fit for purpose.

Lord Curry’s amendment to the Bill – New Clause 18 – would have helped considerably. It would give MPs expert advice on the impact of trade deals before any such deals are signed. Unfortunately, it appears that the Speaker may not move the amendment for debate. Nevertheless, the principles behind it stand, and the issues will still be debated under New Clause 16, which calls for imports under future trade deals to meet equivalent standards to those in the UK.

The moment has come. The implications of the result of the EU referendum must now be addressed. If Brexit was about anything, it was taking back control. Many farmers, who have close and strong links with their MPs, had become exasperated by decisions they saw as being made by faceless bureaucrats in Brussels. They will not be impressed if in future decisions that could be existential for their businesses are taken by faceless negotiators in Whitehall and the negotiating rooms of Washington, Canberra and Wellington. Tonight, during the debate on the Agriculture Bill, I hope MPs will make these points loud and clear to government.

What the new Anglo-Japanese trade deal tells us about ‘Global Britain’

12 Sep

Amidst all the challenging stories dogging the Government at the moment, yesterday’s newspapers offered a rare bright spot: the conclusion of an ‘historic’ trade agreement between the United Kingdom and Japan.

With talks with the European Union having almost completely broken down, and negotiations with the United States also having stalled, it offers a much-needed sense of momentum to the idea of a free-trading ‘global Britain’ so cherished by Brexiteers.

It also undercuts the impression that Boris Johnson’s brinkmanship over the UK Internal Market Bill has left it internationally isolated, although the timing reportedly owes more to the imminent departure of Abe Shinzō, the Japanese premier.

Yet the detail also highlights the challenges of the new approach. The headline figure of a £15.2 billion boost to Anglo-Japanese trade sounds impressive, but is a relative drop in the ocean in GDP terms. Likewise on agriculture, a sensitive topic which is one of the key stumbling blocks to a deal with the US, Britain has only managed to secure access to any unused capacity in a tariff deal negotiated by the EU.

On the other hand, it does illustrate that it is possible for the Government to effectively ‘roll over’ trading relationships built whilst the UK was inside the EU – and indeed, deepen them in areas of particular interest to Britain, such as digital and financial services. Liz Truss, the Trade Secretary, has also indicated that she hopes the deal will be a stepping stone towards British membership of the Trans-Pacific Partnership – which the Financial Times describes as “a sprawling multinational trade pact” – and thus further out of the EU’s orbit.

What seems unlikely is that deals like this will have much cut-through with the electorate, who have never been greatly interested in the minutiae of trade or regulatory policy. As the Vote Leave team recognised during the referendum, ‘global Britain’ is not a narrative which greatly excites the voters, especially not those voters who have been won over to the Conservatives since 2016.

If the Government wants to convert trade policy into an electoral dividend, then, it will need to package them up as part of a broader, more appealing, and more digestible narrative with more concrete benefits, as advocates of CANZUK are doing.

The deal with Tokyo is undoubtedly good news. But the detail of the agreement, and the way it has been completely swallowed by the news cycle, spotlights both the challenges involved in operating an independent trade policy and the limited political rewards of doing so.

Image credit: LSE Digital Library.

Stephen Booth: Why Stilton matters to the Japanese trade deal – and how talks can bring the UK closer to the CPTPP.

20 Aug

Stephen Booth is Head of the Britain in the World Project at Policy Exchange.

Global trade is the result of billions of individual decisions taken by businesses and consumers, but trade negotiations and agreements are inherently political. They not only require politicians and policymakers to haggle, in painstaking detail, over tariffs, quotas, rules and regulations; trade deals are also tools of foreign policy and in an increasingly unsettled, competitive and multi-polar world they can signify alliances between nations or groups of nations. Outside the EU, the UK’s trade agreements must therefore simultaneously address narrow economic and wider geopolitical interests.

Last week, we learnt that the UK-Japan trade talks had hit a roadblock over UK demands for greater market access for exports of Stilton cheese. The talks still seem likely to conclude successfully but the episode illustrates how seemingly small issues can play a disproportionate role in trade negotiations.

This would be a significant agreement for the UK. Japan is the third largest economy in the world and an increasingly important strategic ally for the UK post-Brexit. A UK-Japan trade deal is also an important step towards the UK’s accession to the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Total UK exports to Japan are already worth around £14 billion, just over half of which are in services, so increasing the market for UK blue cheese exports, which is currently worth around £100,000 in Japan, might appear a strange issue to potentially derail the talks. However, the UK’s demands on Stilton have not simply come out of the blue.

Growth in cheese exports is a recent UK success story, with the Department for International Trade (DIT) noting that the UK made it into the top ten cheese exporters worldwide in 2018, selling £665 million worth, almost half of which was cheddar. Growth in Asian markets in particular has been strong, with demand in China rising from £67,000 in 2013 to £6.5 million in 2018, so it is not unreasonable for the UK to seek greater opportunities for these products in Japan.

More significantly, the UK-Japan deal will replace the EU-Japan deal, which will cease to apply to the UK when the Brexit transition period ends on January 1, 2021. The goal, largely on the insistence of Japan, has been to seek a new agreement, rather than simply copy and paste the existing EU-Japan deal. Inevitably, however, with time tight, these talks have not departed significantly from the EU-Japan precedent with regard to trade in goods (services and data are likely to be the more innovative aspects of a UK-Japan deal).

“Automotive for agriculture” was a major feature of the EU-Japan negotiations and, in this case, Japan has been targeting an immediate removal of UK car tariffs, whereas the EU-Japan agreement only provides for phased reductions over several years. The UK has understandably countered that it cannot make the concession for nothing in return.

Under the EU-Japan deal, Japanese tariffs on hard cheeses such as cheddar would be phased out by 2033. But for blue cheeses, such as Stilton, there will only be duty-free access on an agreed quota. Reportedly, the UK has also targeted a faster reduction to Japanese tariffs on pork. If the UK is successful in increasing the quota or removing tariffs faster, it will have achieved concessions the EU did not, which would have obvious symbolic significance for Brexiteers.

We don’t yet know the full details of the eventual UK-Japan deal but the likely compromise is that neither side will get as much as they would like on cars or agriculture. Ultimately, this kind of tussle is part of the theatre of end-game trade negotiations, where both sides need to be seen by domestic audiences to be fighting hard over every inch. Indeed, given the importance of getting the agricultural lobby onboard in various UK trade negotiations to come, going into bat for British agriculture now is not a bad PR move for the Government.

Some commentators have questioned whether spending political capital on trade agreements is worth the candle since the estimated macroeconomic gains from them are relatively small. DIT estimates the increase to UK GDP from a Japan deal will be 0.07 per cent over the long run, while a deal with the United States would provide up to a 0.16 per cent boost.

Putting aside a valid debate about how accurately existing models capture all the facets of comprehensive modern trade agreements, these types of numbers are not unique to UK FTAs. The EU-Japan deal (the biggest ever completed by the EU) was estimated to boost EU GDP by 0.14 per cent, a figure regarded by independent researchers as “plausible, though at the high end of the range of past estimates”.

Ultimately, for advanced and open economies, trade agreements are rarely macroeconomically significant. They are opportunities to address microeconomic issues and require trade-offs to be made between them. These decisions can be hugely important for individual sectors, which is why they can be politically controversial.

Beyond any quantifiable economic benefits, closer economic and political cooperation via trade agreements presents an opportunity to build coalitions to help shape the course of regional or global developments. Successful conclusion of the Japan agreement and accession to the CPTPP will boost the economic and political relevance of the UK in the Indo-Pacific region, which is likely to host most of the world’s economic growth in the years ahead.

Similarly, Japan’s enthusiasm to reach a deal with the UK is not only about commerce. Foreign Minister Toshimitsu Motegi’s recent trip to London also provided a chance to discuss bilateral co-operation on security and defence, including the UK’s stronger stance towards China on issues such as Huawei and Hong Kong. A trade deal is another way to strengthen strategic bonds.

It is worth keeping this mind as another round of UK-EU talks – in this case to loosen ties – get underway this week. The Remain campaign had wanted the Brexit debate to be about trade above all else, but it was always primarily about politics. All trade agreements are political, but the level of economic and legal integration in the EU means it is as much, if not more, about politics than trade. Remain lost because it was unable, or unwilling, to make the intrinsic case for political union, or at least that it should be tolerated.

Indeed, the most significant macroeconomic consequences of Brexit – leaving the customs union and the single market – flow from the political desire to “take back control” of trade and regulatory policy. Continued dependence on Brussels in these fields without a vote in the EU’s political institutions was always likely to be untenable for the UK in the long-term.

Equally, sovereignty is never absolute. The more integration the UK seeks from trade agreements with the likes of the US and the CPTPP in the future, the more the UK will face difficult political trade-offs over its approaches to various issues from agricultural liberalisation to the regulation of data. Existing trade flows and geographical proximity to the EU will inevitably play some role in how the UK takes these decisions over the long-term.

However, it shouldn’t be a surprise that Brexit means treating the EU much more like any other trade partner. It’s the politics, stupid!