Mohit Lal: Come buy with me – Let’s onshore the benefits of duty-free shopping

10 May

Mohit Lal is Chairman & CEO of Pernod Ricard Global Travel Retail. This is a sponsored post by Pernod Ricard Global Travel Retail.

The careful reopening of international travel is a welcome step on the road back to normality. It’s also a valuable reminder that Global Britain is not just about the work of diplomats and top business executives – it is also built on Britons’ openness to the world and the conviviality that travel experiences bring to our lives.

In a normal year, a greater proportion of Britons travel abroad than almost any other nationality. European destinations are particularly keen to welcome Brits back, as friends and as lucrative customers. And while much of the debate has focused on holidaymakers, or reuniting us with loved ones abroad, international travel is also key to the livelihoods of many people at home.

The travel industry supports almost one million jobs and generates £8.5 billion for the economy. Beyond airlines and hotels, Britain’s airports and airport retailers are significant employers in their own right.

While many sectors face challenges to get back on their feet, the travel industry has been more severely impacted by Covid-19 than almost any other. With the number of flights at less than 10 per cent of normal levels, footfall and revenues have plunged to negligible levels.

Travel retail will play an integral role in the recovery of the travel ecosystem; it supports the financial viability of airports in every region and every nation of the UK, helping to protect our international connectivity. Shopping revenue represents up to 40 per cent of the income for our airports, helping to pay for infrastructure and keeping ticket prices lower, whether we’re flying from Cardiff.

Our duty-free halls are also an invaluable showcase for British produce – duty-free sales are the number one market for Scotch whisky worldwide, representing 22 per cent of the market for high value Scotch.

When travellers get back to UK airports, they will notice they can benefit from duty-free shopping when flying to EU destinations. This is a welcome reform that will benefit 72 million passengers annually.

The UK Government has also increased in-bound duty-free allowances on wine, beer and spirits, meaning passengers travelling to the UK can buy up to four litres of spirits duty-free. This is one of the most generous allowances in the world, and a testament to the Government’s efforts to liberalise trade.

While this is a boon for travellers, it is not – as it stands – as much of a boost as it could be for the UK economy and British jobs. The reforms mean someone flying from Paris, Dublin, Berlin or New York can buy four litres of spirits duty-free on departure and bring it back duty free to the UK, but they cannot currently buy any alcohol duty free on arrival in the UK. This places UK airports at a significant commercial disadvantage.

Thankfully, there is an easy way for the Government to onshore the benefits of this policy. By amending the rules to allow UK arrivals stores, travellers could purchase four litres of Scotch whisky on landing in the UK, instead of giving their money to airports and retailers elsewhere. A total of 60 countries already have arrivals stores in place, from Norway to Russia. Indeed, our Commonwealth friends such as Australia, New Zealand and Singapore have had arrivals stores for many years. This policy change would also not require a full Act of Parliament, so it won’t disrupt the Government’s busy legislative agenda, or its ongoing response to the pandemic.

Our experience suggests arrivals stores could boost UK airport passenger spending by between 20 and 30 per cent, creating jobs and supporting our airport infrastructure. York Aviation estimates that for every one million passenger journeys, arrival stores generate 155 jobs, £14 million in gross value added, and over £5 million in tax revenue (through corporation tax and national insurance, for instance). And on a practical level, it would make it easier for Britons and visitors to transport glass bottles at a time when airlines are continuing to crack down on on-board luggage allowances, and allow for lighter aircraft loadings and lower fuel requirements and carbon emissions.

The Government has already shown a willingness to innovate on duty-free shopping. By going a little further, we can secure more business for Britain’s airports, more sales for British producers, and ultimately more British jobs. This would be a win for consumers and would help the UK economy and our regional airports to really take off after Covid-19.

Sorry, Matthew, but there’s a Centre Party already – Johnson’s Conservatives

3 May

It’s easier to define what the centre ground of politics isn’t than what it is.  So here goes.

It’s not the same territory in one generation as in the next: political landscapes change – sometimes because of a volcanic eruption, like the financial crash; sometimes more slowly, because of eroding attitudes (on eugenics, say, or over women).

Nor is it found by picking some point halfway between that held by the two main parties.  Most voters aren’t engaged with them in the first place, or with politics at all.

Polling will help you to find it, but the map it provides is confusing – at least to political afficiandos.  For example, most voters are broadly pro-NHS but anti-immigration.  Does that make them Left or Right?

Those two examples help to find the answer – as close to one as we can get, anyway.  Voters lean Left on economics and Right on culture. To their being anti-migration (though less than they were) and pro-health service, we add the following.

English voters are also: patriotic, pro-lockdown, anti-racist, pro-armed forces and supportive of public spending over tax cuts (if forced to choose).

They are somewhat isolationist, pro-Joe Biden rather than Donald Trump, unsupportive of the aid budget when push comes to shove, punitive on crime, and paralysed over housing, where the interests of different generations net out.

Centrist voters, like a lot of others, are also closer to teachers than Ministers, at least if they have children of school age – a headache for reforming Ministers of all parties.

They are pro-environment, but in a certain way: our columnist James Frayne has suggested that there is a consensus for improving food safety, animal welfare, protecting areas of natural beauty and reducing the use of plastic.

(Welsh voters are broadly the same; Scottish ones are divided over patriotism and, as the inter-SNP dispute over trans has demonstrated, probably a bit more to the Right on culture, as well as rather more to the Left on economics.)

James himself, whose fortnightly column on this site we call “Far from Notting Hill”, isn’t himself a million miles away from where this centre currently is.

If you wanted to pick out some issues that give the flavour of it, you could do worse than the following: hospital parking charges, pet kidnappings, the proposed Football Superleague, and the decline of high streets (which doesn’t stop those who complain using Amazon).

This ground was getting bigger, like a widening land enclosure, before Brexit; and leaving the EU has allowed it to become even bigger.  You can see where all this is going.

Theresa May, under the guidance of Nick Timothy and Fiona Hill, had first dibs at occupying this territory – or, if you distrust the metaphor of ground, winning the support of these voters – remember “citizens of nowhere”, and all that.

She made a botch of the job, and Boris Johnson had a second go.  Do you want to go Left on economics?  If so, you’ll welcome his government’s proposed Corporation Tax rises, the record borrowing, the superdeduction for manufacturing, the net zero commitments.

Do you want to go Right on culture?  There’s less for you here, given the quiet shift to a more permissive migration policy.  Even so, you can rely on Johnson not to “take a knee”, unlike Keir Starmer; and to commission the Sewell Report; and to protect statues.

We are over five hundred words into this article, and haven’t yet deployed those two reverberating words: “Red Wall”.  But now we have, that the Conservatives hold, say, Burnley, Redcar and West Bromwich East says something about this new centre and who lives in it.

Whatever this week’s local, Mayoral, Scottish and Wesh elections may bring, these voters are Johnson’s to lose – if Starmer can’t grab enough of them: he has done nothing to date to suggest that he can.

If you want to know why this is so, consider the three most coherent alternatives to today’s Johnsonian centre party.  First, one that begins by being to the right of it on economics.

It would be for a smaller state, free markets, lower taxes and personal freedom.  This outlook is likely to drag it to left on culture: for example, it would not be uncomfortable with the present immigration policy, and not always exercised by “woke”.

It members might include: Liz Truss, Kwasi Kwarteng, Matt Ridley, Steve Baker, Lee Rowley, Sam Bowman, Crispin Blunt and our columnists Ryan Bourne, Emily Carver and Dan Hannan.

We see no reason why it shouldn’t include economically liberal former Remainers other than Truss – such as, talking of this site columnists, David Gauke.  Or, if you really want to put the cat among the pigeons, George Osborne.

Next up, a party that starts by being to the left on culture.  This already exists.  It’s called the Labour Party.  It’s Dawn Butler going on about “racial gatekeepers” and Nadia Whittome refusing to condemn the Bristol rioters.

It’s Angela Rayner claiming that the former husband of the Conservative candidate in Hartlepool was once a banker in the Cayman Islands.  (He was a barrister and the head of banking supervision at the islands’ Monetary Authority.)

It’s Zarah Sultana calling on prisoners to be prioritised for Covid vaccinations, and Labour voting against the Crime and Policing Bill.  It’s Starmer himself taking a knee in his office rather than in public – so seeking both to placate his party’s left while also hoping no-one else notices.

Finally, we turn to a party that begins by being to the right on culture: a successor to the Brexit Party.  The Conservatives may be leaving a gap for it here with their new immigration policy.

Which means that it would be likely to pick up more voters outside London and the Greater South-East, which in turn would drag it leftwards on economics.

This is the ground that Nigel Farage occupied, that his Reform UK party is now trying to recover under Richard Tice, and that a mass of others are sniffing around: Reclaim (that bloke from Question Time), the Heritage Party, the SDP (no relation; not really).

In electoral terms, this new Labour Party would be best off junking its efforts in provincial working-class seats altogether, and competing with the Greens and Liberal Democrats for the urban, university-educated and ethnic minority vote. Think Bristol West.

Our new economically liberal party could begin by diving into the blue heartlands from which city workers commute into the capital.  Think St Albans.

And the various revamp parties would try to paint the Red Wall purple, where voters may have backed one of the two main ones, but have no love for either of them. Think, say…well, anywhere within it.

We apologise for coming so late to the cause of this article: Matthew Parris’ column in last Saturday’s Times, where he yearned for a “sober, moderate, intelligent and morally reputable centre party”, and asked “where is it”?

He’s right that the Conservatives’ grip on the centre will weaken sooner or later: because another volcanic eruption blows it apart, or it sinks below the sea…or Johnson blows himself up or sinks instead.

But he’s mistaken about what the centre is.  Or, more precisely, he identifies it with himself.  But many sober, moderate, intelligent and reputable voters backed the Tories in 2019, if only for want of anything else – and still do, it seems.

The real centre isn’t where Matthew or ConservativeHome or anyone else wants it to be.  It’s where it is, as cited above.  Johnson’s bottom squats on it, and he’s no intention of moving.

John Redwood: Why now that we have left the EU are we still yoked to Maastrict austerity?

26 Apr

Sir John Redwood is MP for Wokingham, and is a former Secretary of State for Wales.

The UK economy is currently being run on the Maastricht rules as if we had not left the EU. The Office for Budget Responsibility made clear in its March report that whilst it awaits the Government’s conclusions on a new fiscal framework, the economy will be guided by the two familiar requirements that we get the running deficit down below three per cent of GDP, and that state debt as a percentage of GDP is declining all the time it is above the 60 per cent level.

It is clear that the whole five year budget in question is dominated by the perceived need to get state debt falling as a percentage of the economy by the end of the forecast period. This has led to a range of measures to increase the tax take, with a large increase in the Corporation Tax rate, and a big increase in the numbers of people paying higher rate income tax through freezing allowances.

My critics will argue that because we were outside the Euro we never had to follow the Maastricht rules. The truth is we did. We still do because we have never changed the rules, even though now we are free to do so.

We faithfully reported each year on progress with hitting the debt rules, and made clear that policy was primarily steered by the need to control debt. That was the central driver of George Osborne’s so-called austerity economics. The latest Government figures after Brexit continue to report our progress against these EU rules. This quote from the OBR’s March Report shows nothing has yet changed:

“The Chancellor has not set new fiscal targets in this Budget (despite two of the existing ones expiring this month) and is instead proceeding with the review of the fiscal framework proposed in last year’s Budget. But the absence of formal fiscal targets does not mean that the Chancellor has not been guided by particular metrics when selecting his medium-term Budget policies. The tax rises and spending cuts he has announced are sufficient to eliminate all but a £0.9 billion current budget deficit in 2025-26, while they are just enough to see underlying public sector net debt as a share of GDP fall by a similarly small margin of £0.7 billion in 2024-25 and £4.1 billion in 2025-26.”

I rest my case.

Requiring states to keep their overall state borrowing low makes a lot of sense in a single currency area where different governments have the right to borrow in a common currency. They need to avoid the free rider problem, whereby some states run up excessive debts, taking advantage of a low interest rate facilitated by the prudence of others.

The UK has no such problem. The UK as a single state with its own currency and central bank cannot take advantage of others. It does of course have to decide how much to borrow with affordability in mind. Borrow too much, and the interest bill could become unaffordable. Borrow excessively, and lenders could start demanding penal terms.

This means the best type of control over debt build-up for the UK should be a control over the size and growth of the interest burden. The UK has a tradition of borrowing long, and can do so in current markets. This protects taxpayers against sudden rises in rates, and reduces any strain from refinancing the debt. The Government has used debt interest targets, and should draw up a new realistic one. Given the way debt interest has fallen despite the increase in debt, this should not prove difficult.

The idea that we should carry on controlling the economy by state debt as a percentage of GDP is particularly silly given the great monetary experiment the UK along with the USA, the ECB and the Bank of Japan is carrying out.

The state-owned Central Bank is buying up large quantities of the state debt. Claiming that the gross debt is still a real debt is therefore wrong. The Treasury pays interest on nearly £975 billion of the debt to the Bank which it owns. If I had bought in my own mortgage but still kept paying the interest, I would not regard it as a real debt in the way I did before I bought in the loan, since I would be paying myself. Despite this obvious anomaly, the Budget is constructed on the basis that we need to get gross debt down, not the debt net of that owned by the state itself.

So what should we use as guides for economic policy? To a control on state interest payments to others, we should add a growth target and we should keep the important two per cent inflation target as a restraint on excessive credit and money expansion. The growth target should encompass aims to increase employment and productivity. What we need is to promote a higher wage, higher productivity economy. Our economic targets should reflect those aims.

The current state debt target is acting a constraint on faster growth. Offering tax rises and threats of tax rises for the years ahead damages confidence and deters new job creation and new investment. The UK’s productive capacity has been damaged by years in the single market where we lost out in many areas from steel to consumer electronics and from temperate food production to electricity generation.

We now need a favourable tax regime on self employment, investment, enterprise and individual incomes to promote a substantial increase in our productive capacity. The state debt control implies more of the same old policies which we had to follow in the later single market years which did not do enough to boost high paid jobs through industrial investment and higher productivity.

Garvan Walshe: Russia’s building up troops on Ukraine’s border. Here’s what we can do to stymie Putin.

15 Apr

Garvan Walshe is a former national and international security policy adviser to the Conservative Party.

Tanks rolling towards the Ukrainian border. Paratroopers in Crimea. Mechanised troops to the Kaliningrad enclave on the Baltic sea between Poland and Lithuania. A “rotational” but in effect permanent presence on Ukraine’s frontier with Belarus.

These are just the most obviously military steps in Russia’s campaign to divide and confuse the West, and test the mettle of the Biden Administration.

They come as tensions increase in East Asia, with China increasing pressure on Taiwan, and the US trying to enlist Japan into backing up the island. The question on Russia’s mind is who are the Japans – the large, democratic American allies – of Europe?

Moscow could be forgiven for thinking there aren’t any. France was suckered into attempting a “reset” in relations in exchange for cooperation in the North Africa that never materialised. How seriously can Germany be taken until it cancels Nordstream 2? And the UK has just released a review of strategy promising a military tilt towards the Indo-Pacific.

Russia’s big disadvantage is that its economy is still relatively small (its GDP is the same as that of Spain and Portugal, or the Nordic countries), and its autocratic regime needs an expensive repressive apparatus to hold onto power.

Its advantage, however, is that such wealth as it has comes from natural resources, and these are easy for the ruling elite to capture. It’s much easier for the “Collective Putin”, as the ruling elite is sometimes known, to spend them on internal security, military hardware and foreign subversion than it is for a democracy constrained by law, voters unhappy about tax rises, and expensive welfase states.

Putin’s central belief is that the world is a transactional place where raw power is decisive. He finds it difficult to understand the Western talk of values, and dismisses it as cant, just has he knows that Russian lines about non-interference in the affairs of other nations or respect for international frontiers are empty propaganda – to be used, or discarded, as convenient.

But if he cannot quite fathom the levels of trust that Western countries still have for one another, he knows how to erode it by supporting nationalists from Marine Le Pen (whose party received loans from a Russian bank) to Alex Salmond (still a presenter on Russia Today), and of course, Donald Trump.

But 2021 has worsened the strategic environment. Biden has bluntly called him a “killer”. The autumn’s elections in Germany could deliver the Greens (who are not only anti-Putin, but anti-the oil and gas from which he makes his money).

His only solid European ally is Hungary, whose government has bought Russia’s vaccine, hired Rosatom to renovate its nuclear power plant, agreed to host and give diplomatic immunity from regulatory oversight,to the Russian state International Investment Bank, and provided a permissive environment for Russian spies. Viktor Orban’s collaboration with Putin, is however, enough to neutralise the EU’s Russia policy and limit the effectiveness of NATO.

The latest military build up is another attempt to increase pressure on the alliance now that Trump is no longer in a position to destroy it. Ukraine, which was formally offered a path to NATO membership in 2008, has repeated its request to join, splitting its friends from those who profess to be afraid to “poke the bear.”

But if immediate NATO membership for Ukraine is currently off the table, there is an opportunity here for the UK to be a “North European” Japan, and anchor North European security against Russia in support of the US-led alliance. This role should naturally fall to the UK, since France is heavily committed in North Africa, and Germany cannot be expected to be decisive, especially during a year where the election coincides with Russia’s annual Zapad military exercises.

Britain is in a position to convene a coalition of European countries worried about Russia, including Poland, Sweden, Finland, the Netherlands and the Baltic states, possibly with Ukraine in association. A semi-formal initiative and northern analogue of France’s European Intervention Initiative, but obviously more defensive in nature, could focus on reinforcing the territorial integrity of its members, as well as security of the Baltic sea, and develop programmes of mutual assistance in civil resilience for circumstances below those that would warrant the invocation of NATO’s Article Five.

Such an initiative would, I believe, be well received in Washington, where a reinforcement of Britain’s role in the Euro-Atlantic, and not just the distant Indo-Pacific, theatre would bring significant relief.

David Gauke: Cameron’s values in government may be out of favour, but they are not wrong

13 Apr

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

The Government’s announcement that it is undertaking an independent enquiry of the Greensill Capital affair is unlikely to bring much cheer to David Cameron. He has endured weeks of bad publicity, and there is little chance that the story is imminently going to ‘move on’.

Whatever the rights and wrongs of the former Prime Minister’s actions – and he has acknowledged making mistakes – the furore is all the more painful because his reputation as Prime Minister was already at a low ebb. Critics of his economic policy accuse him of inflicting austerity which, they argue, were unnecessary, stunted growth and damaged public services; he is castigated by Remainers for calling and losing the Brexit referendum and by Leavers for being a Remainer; some on both sides accuse him of deserting his post by resigning the morning after the poll; his electoral successes have been surpassed by Boris Johnson’s thumping majority in 2019. Not unrelated to this, neither the man nor his political values appears to have much influence on the modern Conservative Party.

Defending Cameron’s record in office is deeply unfashionable. So I will do so.

Let us start with the economy. There are few defenders of ‘austerity’ in today’s public debate. Labour still want to argue that the electorate got it wrong in 2010 and 2015, just as they tried to do in 2017 and 2019 (which, incidentally, suggests that this might not be a guaranteed route to success). Johnson, meanwhile, is not temperamentally an austerian and enjoys the opportunity to demonstrate that he is new and different from recent Conservative history.

The economic debate has also moved on. Governments have been able to borrow vast sums of money in the last year without much of a risk of a sovereign debt crisis. Central banks have played a more active role, debt servicing costs have fallen and international organisations have advocated expansionary fiscal policies. This may all go wrong at some point – there is more reason to worry about inflation than for many years – but it hasn’t gone wrong yet.

None of this means, however, that the concerns of fiscal conservatives back in 2010 should be dismissed. The global financial crisis had resulted in substantially higher spending and permanent damage to tax revenues. The risks of a sovereign debt crisis – with consequences for inflation, debt interest costs and consumer and business confidence – were not imaginary. The IMF and the OECD advocated that countries needed to have credible plans to put the public finances on a sound footing, and many countries did just that. In short, the balance of risks and the expectations of the markets in the years after 2010 were very different to where we are now.

Did fiscal consolidation significantly hamper our economic recovery? It is true that economic growth in 2011 and 2012 was disappointing (although not as bad as it appeared at the time when the ONS early estimates suggested that we had had a double dip recession), but it is worth remembering that the independent Office for Budget Responsibility put this down to the lasting effects of the banking crisis, higher commodity prices and the Eurozone – not fiscal consolidation.

Looked at in the round, over the 2010-2016 period, the UK had the joint highest growth for a G7 economy, level with the US. It was also a period of rapid jobs growth, with the highest employment rate in our history and income inequality falling. Had the Brexit referendum gone the other way, there is every reason to believe that the post-2016 UK economy would have been characterised by high economic growth, rapidly rising living standards and strong public finances, as opposed to us falling to the bottom of the G7 league table.

Were public services were unduly damaged? Difficult decisions had to be made, but many of them were unavoidable given that the spending plans that we inherited were based on an over-optimistic, pre-crash assessment of what was affordable. It was possible to drive greater efficiencies and find ways of getting more for less. The British state has been placed under enormous strain in the last year by Covid but there have been some real successes. Just looking at two areas where I have some familiarity through Ministerial experience, HMRC was able to introduce the furloughing system in a matter of weeks, and the Department for Work and Pensions was able to cope with an extraordinary surge in benefit claimants. Neither would have been possible without reforms undertaken by the Cameron Government.

Having said all that, we relied too heavily on spending cuts over tax rises. It was politically easier at the time to cut spending rather than raise taxes and, as time went on, we got the balance wrong. Some areas of government spending – justice, for example, or social care – were squeezed too hard. But a period of spending restraint was necessary and inevitable and too many of Cameron’s critics fail to acknowledge that.

It was the decision to hold a referendum on the UK’s membership of the EU and then lose it that hangs most heavily over Cameron’s reputation. It will, unfortunately, always be for what he is remembered and, for many Remainers, this will never be forgiven. The referendum result created huge uncertainty and will, in my view, inflict lasting damage to the UK. But we should not kid ourselves that had he adopted a different approach our membership of the EU would currently be assured.

The Conservative Party was moving in the direction of being a Vote Leave Party – in part because of the fear of UKIP peeling off Tory votes – and the decision to offer a referendum was motivated both by a desire to win the 2015 general election by winning back UKIP voters but also by a recognition that a post-Cameron Conservative opposition would, in all likelihood, favour Brexit.

The best chance of staying in the EU, Cameron concluded, was to settle the issue early with a decisive Remain victory – the longer the issue was left, the greater the chance we would leave the EU. As it turned out, he was wrong to believe that he could deliver a Remain victory but he may have been right that this was the best chance of defeating Brexit.

As for the criticism that he should not have resigned following the poll, one lesson of the last five years is that the referendum did not tell us what exactly ‘Leave’ meant. I do not believe it is plausible to think that the European Research Group would have allowed the leader of the Remain campaign to define the answer.

More broadly, much of his political approach has stood the test of time. In wanting more women and ethnic minority MPs, caring about climate change and the environment and introducing equal marriage he took positions that were controversial at the time but have aged well.

Yes, Johnson’s majority in 2019 – and continued strength in the polls – exceeds anything achieved by Cameron, but it is not clear that a political strategy based on white voters without post-16 academic qualifications is the right long-term strategy for an electorate that is becoming more diverse and better educated.

Cameron represented fiscal conservativism, social liberalism and internationalism. These values may be out of favour but they are not wrong. It is too early to say to what extent his personal reputation will – in time – recover but the dismissal of the achievements of his Government is undeserved.

Neil O’Brien: I can laugh off China sanctioning me, but we can’t shrug off the threat it poses

5 Apr

Neil O’Brien is co-Chairman of the Conservative Party’s Policy Board, and is MP for Harborough.

Typical, isn’t it?  You’re trying to get the kids off to school and nursery, running late as you hunt around for your son’s snuggly giraffe. You have a busy day planned, meeting the local paper and a café owner threatened with eviction.

The next thing you know, a communist superpower declares war on you personally.

I’m one of nine people sanctioned by China. It’s tempting to laugh it off. After all, seizing my assets in China will leave the Communists no richer. And after they kidnapped two prominent Canadians, I wasn’t planning to go there anyway.

The next morning, the Chinese embassy still sent me their regular propaganda email to MPs, which began: “Dear friends…”  It seems joined-up government is impossible – even under dictatorship.

But it’s no laughing matter. The goal isn’t really to intimidate me or the other MPs, but business people, academics, and others. To create uncertainty, fear and self-censorship – memorably described as the “Anaconda in the chandelier” strategy.

More and more businesses are having to grapple with it: Beijing’s currently threatening to destroy Nike and H&M in China for raising concerns about slave labour.

It’s now coming up on a year since we launched the China Research Group.  Over the last 12 months, things have changed in lots of ways.

First, there’s growing global awareness of China’s human rights abuses: particularly against the Uighur people, but also in Inner Mongolia, Tibet, and across China as a whole. Human Rights Watch says it’s the worst period for human rights since Tiananmen.

The brutal crackdown in Hong Kong and Beijing’s decision to tear up the Sino-British declaration and end “one country, two systems” showed how much Beijing will sacrifice to keep absolute control. All leading pro-democracy activists there are now in exile, in jail or on trial.

At least the world has started to notice and act.  Indeed, we were targeted by Beijing in response to coordinated sanctions on human rights abusers in Xinjiang, recently put in place by 30 democratic countries.

MPs around Europe and MEPs from all the European Parliament’s main political groups were sanctioned along with us, with various US politicians already sanctioned last year.

So we’re all in it together, and it was great to get strong support from the Prime Minister – and through him the US President – and also from friends around Europe.

The sanctions aren’t like-for-like of course. MPs like me are being sanctioned simply for writing articles like this. By contrast, the democracies are sanctioning Xinjiang officials for presiding over a regime forcing sterilisation of Uighur women on an industrial scale; using rape as a weapon to break dissenters in its vast network of detention camps; rolling out an AI-powered surveillance state that to identify and control minority groups; and physically erasing the Uighur culture and religion from the face of the earth.

Our sanctions are to protest against human rights abuses. Theirs to silence such protests.

What Beijing’s doing is at least as bad as Apartheid South Africa.  But by comparison, the international response has been more muted so far. Partly because China makes it hard for reporters to get access. But also because China is more powerful than South Africa was.

International pressure on South Africa grew over decades and became a huge cultural movement. It loomed large in the pop music of my 80s childhood: “Free Nelson Mandela”, “Something Inside So Strong”, “Silver and Gold”, “Gimme hope Jo’anna” were all hits.

These days Hollywood studios make sure that their films have the thumbs up from Beijing: they think it’s too big a market to risk losing.

I’ve written about China’s growing global censorship. Nonetheless, the truth is seeping out, and the global criticism getting louder.

That points to a second positive change over the year: new opportunities for democracies to coordinate in the Biden era.

Coodination is essential: China’s economic and political strategy relies on divide and rule.  Each free country fears losing out if it alone stands up to Beijing.

The communist regime singles out countries who challenge it like Australia, Sweden and Canada. Like all bullies, they are really trying to teach others to keep their heads down.

But while Trump had scratchy relations with other leaders, Biden’s election makes cooperation much easier.

It’s not just that we need to get the band back together again, and make the G7 work (though that’s important), but bringing together a wider group of democracies including India, South Korea, Australia and South Africa. The Prime Minister is right to push the “D11” concept.

The third big change is changing western attitudes on economic policy regarding China.

The single best thing about the recent Integrated Review was the clear-eyed understanding of the competition for technological advantage now underway between nations.

In the sunny utopianism of the 1990s, the world was going to be flat, borderless, and competition was between companies not countries. Technology was cool, but not a national issue: the UK could just specialise in professional services. Awesome new global supply chains meant you didn’t need to worry about where your supplies were coming from, whether it was vaccines; ventilators, PPE, silicon chips or telecoms equipment.

Beijing has a very different vision, and its rise means we must change our thinking  It promotes “Civil-military fusion”, and its imports have slowed dramatically as its import substitution policies develop.

Xi Jinping says he is “building a socialism that is superior to capitalism, and laying the foundation for a future where we will win the initiative and have the dominant position.” He explains that China must “enhance our superiority across the entire production chain… and we must tighten international production chains’ dependence on China.”

The US has woken up to this, and in Washington as well as Beijing there’s a shared understanding that the two superpowers are fighting to dominate the technologies of the future. Joe Biden talks about “winning the future”.

Japan, South Korea and Taiwan have long seen tech competition as a shared national endeavour, and have policies to match.  No wonder: meeting politicians from these countries through the China Research Group, I’ve come to understand the level of constant threat they have to live under.

We too must adapt to this more national world.

First, we need to build a powerful innovation system. During the 1960s and 1970s the US and UK invested similar amounts in R&D.  But Reagan grew federal support while we let it wither, and we have been operating on different levels since.  I’ve banged on before about how to make government funding do more for our economy.

Second, we need to protect ourselves from the Beijing’s hoovering up of technology.  More help for business to resist cyberattack from the National Cyber Force.  Somewhere to get advice on not losing your intellectual property if you do business in China.

And as well as the very welcome National Security and Investment Bill we need to make sure that the new Investment Security Unit has the same resourcing and input from the security services that CFIUS enjoys in the US – and we need to be prepared to use the new powers.

Likewise, Jo Johnson’s recent report highlights the risks to our universities from poorly-thought-through partnerships with China. Investigations by Civitas and the Daily Telegraph revealed that UK universities are actually helping Beijing with new weapons technologies. We must get a firm grip of all such partnerships and where universities’ money is coming from.

Over the last year we’ve learned a lot.  The UK and governments across the west have started to act.  But we’re still just starting to figure out how to respond to a more aggressive China.

Daniel Hannan: I hate everything about the lockdown. But most of all, how much we like being bossed around.

31 Mar

Lord Hannan of Kingsclere is a Conservative peer, writer and columnist. He was a Conservative MEP from 1999 to 2020, and is now President of the Initiative for Free Trade.

I hate everything about the lockdown. I hate the confiscation of liberty, and the ease with which it is surrendered. I hate the damage to children’s education. I hate the prying and the prissiness and the pettiness. I hate the way university students have missed out on what should be the best time of their lives. I hate the tone in which police officers address people going about their lawful business.

I hate the way the goalposts keep moving: flatten the curve; no – wait for a vaccine; no – keep the pressure off the NHS; no – stop new variants. I hate the cataclysmic impact on small businesses, and the indifference of large parts of the public. I hate the debt we are racking up. I hate the protectionism and the authoritarianism. I hate hearing words like “hoarder” and “profiteer” – words we used to associate with extremist ideologies. I hate the loneliness that I see weighing on my elderly neighbours. I hate the profusion of pettifogging laws.

But d’you know what I hate the most? I hate what it has revealed about us. It turns out that we quite like being bossed around – at least, a lot of us do. Given the excuse of a collective threat, we revel in crackdowns and prohibitions.

I am not talking about the contingent acceptance of some restrictions. Almost everyone can see that an infectious disease requires proportionate limitations on normal activity. Infecting other people is what economists call an “externality”, a cost borne by someone else.

No, I am talking about the equanimity, even the enthusiasm, with which some have taken to house arrest. “I loved lockdown”, declared a secret card returned to an enterprising London printer who is inviting people to send her their most intimate lockdown confidences on anonymous postcards. I reckon most of us have heard that sentiment, whispered furtively. Many of the printer’s postcards tell the same story: “a lot of people not wanting to unlock,” as she puts it.

King’s College London and Ipsos Mori found last week that 54 per cent of us will miss some aspects of the lockdown. Think about that for a moment. We’re not talking about things that we are free to do at any time. Obviously lots of us find staying at home more pleasant than commuting. Lots of us have enjoyed walks more than usual. Lots of us like seeing more of our children. But the essence of the lockdown is not that it allows us to rebalance our lives; it is that it mobilises the full force of the law to compel us.

We could always choose to forego a foreign holiday in return for working shorter hours. The idea that we need to be coerced into doing so – and have all our neighbours similarly coerced – is a terrifyingly illiberal one. So is the idea that we should be paid to stay at home – with money that someone or other is presumably supposed to find down the line.

I always knew that libertarianism was a minority creed. For most people, safety trumps freedom every time. Even so, it is distressing to see the near-universal demand for the smack of firm government. Take, to pluck an almost random example, the prohibition on leaving the country. Governments have every right to impose whatever conditions they want on people seeking to enter their territory, including quarantine. But leaving? Isn’t that for the receiving country to decide?

Yet that ban, like all the others, was cheered through with barely any debate. Politicians can see which way the wind is blowing: 93 per cent of people backed the first lockdown, 85 per cent the current one, and every easing of restrictions has been unpopular in the polls. There are honourable exceptions, but few MPs or commentators want to take what they know would be an utterly pointless stand. Even the PM, whose dislike of nannying has until now been his ruling principle, seems to have decided that there is no purpose in placing himself in the path of an authoritarian electorate.

This is not a column about the efficacy of lockdown measures. I happen to think that they are disproportionate. It has for some reason become fashionable to mock Sweden, but that country has suffered fewer excess deaths than most of Europe. Then again, there are good and sincere people who take a different view. The question of how much suffering we should inflict in exchange for a given number of lives is never going to have a simple answer.

No, this is a column about what ConservativeHome has called “the freedom gap” – the way in which a country that used to define itself as individualist, eccentric and undeferential now leads the world in its unhesitating acceptance of controls. An alien visitor, judging only from the texture of daily life, would assume that Britain in early 2021 was a far more repressive state than Russia or China.

The editor of this site recently speculated that the elevation of security over liberty might reflect the feminisation of politics. Jonathan Haidt would put it down to the vogue for “safetyism” – the idea that people should be at all costs be protected from unpleasant experiences rather than learning from (and being hardened through) them.

Let me proffer a gloomier explanation. Safetyism is a natural instinct. Throughout almost all human civilisation, people have accepted various forms of hierarchy and tyranny in the name of security. The liberal interlude through which we have lived is exceptional. We may be witnessing its end.

David Gauke: I’m a convinced Remainer – but believe nonetheless that the EU has mishandled its vaccine policy

27 Mar

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

At Thursday’s virtual European Council meeting, the EU stepped back from imposing a vaccine export ban. This is just as well.

At a time when all nations face the same enemy and seek to apply the same solution, the case for international co-operation is overwhelming. We all know that maximising the production and take-up of the vaccines is the way out of the Covid crisis, and we all know that using global supply chains should be the swiftest way of producing the vaccines we need. Talk of export bans makes this task harder.

For some on the Remain side of the Brexit debate, there is an instinctive desire to defend the EU and cast the UK as vaccine nationalists or selfish panic-buyers and AstraZeneca as contract-breakers, arbitrarily favouring one customer over another.

It is, however, an unconvincing case. In contrast, had the EU proceeded to block vaccine exports to the UK, its behaviour would have been indefensible.

If one believes in open markets, removing trade barriers, building up trust between trading partners and honouring contractual obligations, one should be prepared to be critical of EU behaviour contrary to those values, regardless of where one stood on the subject of Brexit. I am sure many Leave voters who share these values must, from time to time, hold similar views about some of the actions taken by the UK Government.

Some have defended the proposed export ban stating that others are doing it. It is not much of a defence, but it is true to say that the US – under both Presidents Trump and Biden – has used legislation to prevent vaccines manufactured in the US from being exported. The Indian Government has also stepped in to prevent the export of doses. On the charge of vaccine nationalism, the US and India are guilty and the EU, as yet, is innocent.

The charge that the UK has a de facto export ban is, however, nonsense. There is a clear distinction between an entity not being provided with vaccines because the export has been blocked by government action, and an entity not being provided with vaccines because it has no right to it because they have already been acquired by someone else.

Underlying the EU case is a confusion between the entity producing the vaccines and the country in which the vaccines are produced. Some EU leaders have argued that it is not right that a large proportion of ‘EU vaccines’ have been ‘exported by the EU’. As the Taoiseach, Micheál Martin, pointed out earlier this week ‘these are not European Union vaccines… these are vaccines paid for by other countries that are manufactured in Europe.’

Is it right for the EU to characterise AZ as the villains of the piece for failing to fulfil its contractual obligations? When this row first blew up in January, the Commission argued that once the procurement contract was published, it would be clear that AZ was in breach.

The contract was published and it established no such thing. Without delving too far into the complexities of contract law, if AZ were failing to allocate vaccine doses to the EU in accordance with its contractual obligations, it would be open to the EU to seek legal remedy. Given that the EU is not doing this suggests that the Commission has little confidence in its legal position that AZ is in breach of its contractual obligations.

Did AZ agree better terms for the UK than for the EU? This may well be the case, and would be consistent with the Commission’s lack of confidence in its legal position. Does this mean that the UK engaged in sharp practice in the deal it got? No. First, competently negotiating a contract is no sin. Second, the UK – and the UK taxpayer – played an important role in developing the vaccine, first with Oxford University and then with AZ. This engagement enabled AZ to ramp up its production following an agreement signed in May 2020, months before the AZ/EU deal. This early ramping up of production, by the way, has probably helped not hindered the EU.

There is a comparison to be drawn with Germany and BionTech. Germany supported BionTech, which developed the vaccine that is being manufactured by Pfizer. In contrast to the UK and AZ, Germany did not nail down priority supply either for itself or for the EU.

As a consequence, many Pfizer doses are manufactured in a country that refuses to export to the EU or is exported from the EU to those who have placed an order. It would have been perfectly reasonable for Germany (or the EU) to say “we’re funding the research and development and agree to purchase the first X million doses”. But neither Germany nor the EU chose to do so. Again, that is not the UK’s fault.

The botched procurement by the EU is the route of many of the problems. The Commission was focused on the wrong issues in the circumstances, worried about the price and liability in the event of vaccines causing harm. Speed mattered and gambling large sums of money at an early stage was the right thing to do, as the UK demonstrated. The Commission, perhaps because it does not have its own tax base on which to call, was more hesitant.

Many a commentator has speculated that, had the UK still been part of the EU, we would now be stuck in the EU slow lane. However, it is inconceivable that a UK Government seized of the need to make rapid progress on this front would have surrendered control over the vaccine programme.

In all likelihood, an alliance of the UK and Germany would have ensured member states retained control, resulting in greater urgency in vaccine procurement. As members of the EU, we were a consistent voice of scepticism towards greater integration and, in this particular matter, our absence has been to the EU’s detriment.

Where does that leave us? The EU is well behind the UK in the vaccine rollout, it does not appear to have a legal remedy against AZ (presumably because AZ is fulfilling its ‘best endeavours’ contractual obligations) but the relationship between the EU and AZ remains toxic. The immediate threat of an export ban has dissipated but EU politicians are under immense political pressure. Until this pressure eases, the risk of a foolish intervention by the EU remains.

This incident also emphasises that our relationship with the EU matters. On this occasion, the European Commission has behaved very badly in the same way that I think the UK has behaved very badly over the Northern Ireland Protocol. But we must do more than just apportion blame. We have to make this relationship work because, if we do not, both sides have the capacity to do the other side a lot of harm. More often than not, the smaller party – in this case, the UK – will come off worse.

On both moral and legal grounds, the UK is in a strong position in the vaccine dispute. But the wise approach would be to reduce tensions. The national interest would be served by making some contribution to helping them out, even if the Commission doesn’t really deserve it.

Another staycation summer? It certainly looks that way.

25 Mar

The UK has had huge success with its vaccine programme, and understandably the Government wants to avoid anything that jeopardises this progress. Thus it has been incredibly careful about the future of travel.

Currently most international travel is banned and new laws that come into place on March 29 will mean extend that rule to June 30. Brits could reportedly face a fine of £5,000 if they leave the UK without a reasonable excuse.

The question most people want to know in all this is what’s happening with summer holidays? The decision ultimately lies with the Government’s Global Travel Taskforce, which will set out a road map for travel in early April. Boris Johnson plans to announce its decisions on April 5, and the earliest date for travel will be May 17.

Already there have been debates about how relaxed travel should be. Graham Brady, one of the most “hawkish” MPs in wanting lockdown to be eased, wrote yesterday for ConservativeHome about why we need to press forward with fully loosening restrictions. “That the UK could consider throwing away a major advantage of the world-leading vaccine rollout through an excess of caution on air travel, particularly prompted by a theoretical risk from imported variants, is almost unthinkable”, were his words.

Businesses, too, understandably want clarity about reopenings. Ryanair has even announced plans to increase its flights to 80 per cent of pre-pandemic levels by July – in a clear indication of what it expects the Government to do.

But there have also been calls through the Coronavirus crisis for the Government to close the borders. With the threat of new Coronavirus variants, some which will come from countries that cannot detect changes to the virus (as a result of inadequate or no genomic sequencing regimes), the argument is that we should keep as shut off as possible, particularly given the struggles our European neighbours have had with their vaccine rollouts.

The Global Travel Taskforce will create a risk-based framework to assess how safe travel is. Although it is using only four factors to decide restrictions, they are broad and include:

  • “the global and domestic epidemiological picture
  • the prevalence and location of any ‘variants of concern’
  • the progress of vaccine rollouts here and abroad
  • what more the government has learned about the efficacy of vaccines on variants, and the impact on transmission, hospitalisation and deaths”

So the Taskforce (and Government) has given itself a lot of room here, lest something suddenly changes in the Covid situation. As the crisis has shown, it can be extremely difficult to predict what will happen next, and after the Christmas debacle, the Prime Minister is trying to keep his optimism in check.

Ultimately it looks like the Government will go for a “halfway house solution” in travel. It has never opted for anything as severe as closing the borders, and it’s unlikely it will do that given how far along we are in the crisis. But there’s talk of a returning traffic light system for countries – meaning that they can be given the green (or red) light depending on their Coronavirus status. It would act as a de facto border closure between areas deemed problematic in terms of their Coronavirus statistics and/ or vaccination regime.

Given the state of Europe’s vaccine regimes, it seems highly unlikely anyone will be jetting off to, say, Germany, on May 17, nor that Germany itself would allow this to go ahead (these are two-way decisions, incidentally). But again, the Travel Taskforce’s criteria is broad so that it can accommodate changes in data – for instance, if Germany suddenly accelerated its vaccine roll out. So we shouldn’t feel too pessimistic about travel.

Part of the reason the Government might feel emboldened to be tougher on travel restrictions is that the public mood appears favourable to border controls. People are tired and just want to sit at the pub, even if that means a Parisien adventure is prohibited for the next however-long. Now it is even fashionable to say “the UK should have closed the borders” earlier in the Covid crisis, but in March 2020 that wasn’t the case. In fact, I think it would have played into the left-wing accusations of closed off Little England/ Brexit Britain (remembers those days?).

Either way, it’s safer to bet on Airbnb UK for now…

Stephen Booth: The Integrated Review – a further step towards the wider world and away from the European Union

25 Mar

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

A “Global Britain” needs to ensure it is relevant in and to all three of the world’s major economic and geopolitical hubs – Europe, North America, and the Indo-Pacific. Brexit or no Brexit, it is clear that the economic and political weight of Europe is in relative decline and that global power is shifting, predominantly due to demographics and the rise of economies in Asia. 

Brexit has only emphasised the need for the UK to diversify its international relationships and that it must be prepared to do so across a wide spectrum of areas. It was significant, therefore, that last week’s Integrated Review (IR) emphasised such coherence across government, mirroring a world where the boundaries between prosperity and security, trade and development, and domestic and foreign policy are increasingly intertwined. 

The IR reflects several concepts and recommendations that have featured prominently in the think tank I work for, Policy Exchange’s, research. Arguably, the most significant is the “Indo-Pacific tilt”. Trade policy was not highlighted alongside security, defence, development and foreign policy in the official title of last week’s IR, but did feature in its conceptual development and it is a key strand of the document. It has emerged as a key component of the UK’s new strategic approach and is central to the “tilt”.

The UK intends to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and become a Dialogue Partner of ASEAN. The UK has already secured a deal with Japan. Bilateral trade negotiations with Australia and New Zealand would be expected to bear fruit this year, while talks with the United States could take longer. 

India is an increasingly important part of the UK’s Indo-Pacific economic strategy and the IR confirmed that a potential comprehensive trade deal is a long-term ambition. We may expect to hear more about the roadmap to a deeper UK-India economic relationship during the Prime Minister’s planned visit to the country next month.

Individual free trade agreements will provide important economic benefits, particularly for certain sectors of the economy, but their aggregate impact on UK GDP is likely to be limited in the short-term. Trade deals are best viewed as important elements of a long-term strategy of diversification away from – rather than immediate replacements for – the EU market and increasing the UK’s links to the economic and political developments of the world’s faster-growing markets. 

The key to taking advantage of these opportunities will be to marry the twin aims of outwardly projecting “Global Britain” and “Levelling Up” those regions of the UK that have most struggled to adapt to globalisation. The IR recognises that for Global Britain to be a success, more of the UK must become integrated and competitive in the global economy.

For example, the government is launching new UK Trade and Investment Hubs in Scotland, Wales, Northern Ireland, and the North of England. This is a complex and long-term challenge. British businesses, smaller ones in particular, will need to be supported and encouraged to make the most of new opportunities which will take time.

It is welcome, then, that the IR acknowledges that the UK’s new trade policy is not simply a commercial endeavour. It is, rightly, viewed as an important part of a geopolitical toolkit that should be deployed to reinforce the wider economic, political and security relationships, upon which a successful Global Britain will rely. 

It is noteworthy that the IR underlines the UK’s ambition to “move from defending the status quo within the post-Cold War international system to dynamically shaping the post-Covid order.” An important aspect of this means using “regulatory diplomacy” and working with like-minded partners to influence global rules.

This is particularly relevant in emerging technologies, as systemic competition intensifies, in particular with China. This is an often-underappreciated benefit of concluding trade agreements, particularly with platforms such as the CPTPP. It helps to embed and promote high-quality rules. 

The IR’s emphasis on the UK “as a global services, digital and data hub” highlights that the UK’s natural economic strengths often sat uneasily within the wider EU’s order of priorities, where the UK’s approach in these sectors has often differed from the other big players, France and Germany.

In my previous column, I noted that the UK is now able to put forward a distinct voice and approach that plays to its competitive advantage and confronts head-on the political reality that global power is shifting away from Europe, particularly in these innovative fields. France, Germany and the Netherlands have all adopted their own national strategies for the Indo-Pacific, prompting the EU to signal that it will set out a common vision in the “coming months”. The challenge for Brussels will be to produce something pragmatic that rises above the lowest common denominator.

Several commentators have remarked that the IR says relatively little about how the UK views its long-term relationship with the EU developing, both in terms of future cooperation and competition. This is perhaps unsurprising given the proximity of the publication of the IR to what has been a turbulent Brexit process.

In recent days, we have seen examples of both forces at work. The UK and the EU, along with the US and Canada, have co-ordinated new sanctions against China over its treatment of Uighur Muslims. However, the threat of an EU vaccine export ban, chiefly targeted at the UK, illustrates that any UK strategy for national resilience must now consider the prospect of an uncooperative EU.

The EU acting as a bloc can have the advantage of economic scale and collective weight but, due to internal tensions, it can lack coherence and focus, often particularly evident in its efforts to implement a collective foreign policy.

There follows a strong argument that the advantages of the EU were better suited to the relatively benign international order of the late twentieth century – an order underpinned by the US security guarantee – and its drawbacks less so to a world increasingly characterised by great power rivalry and systemic economic competition. Many within the EU have historically been reluctant to acknowledge that the transatlantic relationship, based as it is on NATO, is fundamentally asymmetric.

It is also worth recalling that during the Brexit negotiations, it was the EU that held out hope of a formal agreement with the UK on foreign and security policy. The UK ultimately decided it would not pursue such an agreement. The UK has made it clear in the IR that its commitment to European security is “unequivocal”, that it “will continue to be the leading European Ally within NATO”, and will “actively support” EU-NATO exercises.

However, in terms of direct engagement with Brussels, the IR highlights the opportunity for a “distinctive approach to foreign policy” outside the EU and the advantages of flexibility and coherence from acting independently. The UK has also committed to finding “new ways of working with” the EU on “shared challenges” and “where our interests coincide”.

There remains no sign that the UK is interested in any formal agreement with Brussels in this area. The implication is that the merits of cooperation will continue to be assessed on a case-by-case basis and therefore cannot be taken for granted, particularly if the economic relationship were to be further soured.