Richard Holden: The Japan trade deal, future CPTPP membership – deliverers of wages, prosperity and work to my Durham constituents.

26 Oct

Richard Holden is MP for North West Durham.

Maddisons Cafe, Front Street, Consett

In the year I was born, 1985, Consett had unemployment of 35 per cent – multiples of the average across the country.

The decline and, finally, the end of heavy industry and mining in the hands of a few, nationalised employers, poor management and poorly led, often over-politicised unions brought down the industrial North – and the demise of these industries decimated communities that had been reliant for generations on an increasingly small number of large employers.

By the time of the last election, employment in North West Durham had recovered to around the national average. A significant part of that is down to Nissan and its supply chain in the region.

This is why the agreement that Liz Truss has signed with Japan last week provides a very much-needed good news at a very difficult time, particularly for North East England but, more widely, for the whole country.

Trade deal signings come with plenty of fanfare and diplomatic niceties. But, beneath the pageantry, these agreements are a fundamental catalyst for delivering growth and investment of the type that we will need to ensure that our economy recovers from Coronavirus. This is especially the case for places in the Blue Wall, including my constituency in North West Durham.

The Prime Minister was right when he said trade can help us build back better, and make Britain a leader in modern areas like the green economy, high-tech manufacturing and technology.

The Japan deal is proof that we can strike good trade deals for Britain, despite the derision of arch-Remainers. Britain is out there and we’re winning.

It proves we can go further and faster than the EU in such areas as digital and technology, including enabling the free flow of data, a commitment to uphold the principles of net neutrality and a ban on data localisation that will prevent British businesses from having the extra cost of setting up servers in Japan.

The agreement also goes much further than the EU deal in terms of food and drink. We have secured a deal which benefits our farmers and fishermen as British meats, cheese, and fish will face lower tariffs in Japan.

It also contains over 70 geographical indications – compared to seven under the EU deal – that will mean iconic British products from all over the UK such as Melton Mowbray Pork Pies, Cornish Pasties, Welsh Lamb, Scottish Salmon, and Wensleydale Cheese receive legal protection from cheap imitations in Japan.

It helps provide critical continuity for businesses and secures many thousands of British jobs, not least those at the Nissan plant down the road, where many of my constituents’ work and which I recently visited with the International Trade Secretary.

And the Japan deal is just the start.

It is a signal not only of our capability as an independent trading nation, but also of our intent to strike great deals around the world and move well beyond the EU – particularly with Commonwealth countries and parts of the wider Pacific.

British industry, innovation and intellectual leadership shaped the world of international commerce that we recognise today. The work of Smith, Ferguson, Cobden and political giants like Robert Peel established Britain as the world’s pre-eminent trading nation, and set the stage for the creation of the international rules-based system a century later.

This Government’s ambition is to reconnect with that heritage, and re-establish Britain as a pre-eminent global trading nation that looks well beyond its own shores.

Leaving the EU gives us the chance to do that, and to lead the world in areas like the green economy (with hydrogen set to play a major role down the road in Teesside) services and technology.

The Japan deal is an important staging post in that journey. As well as driving economic growth across the country, it paves the way for us to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), one of the world’s largest free trade areas, covering 13 per cent of the global economy (and growing), comprising 11 major Pacific nations.

Membership of CPTPP is vital to our future interests and vision for Global Britain and, more broadly, we must decrease our reliance on large dictatorships whose ‘actions short of war’ – like intellectual property theft and cyber warfare – leave us under permanent attack.

By joining a high standards agreement with countries who play by the rules, we will strengthen the global consensus for free and fair trade at a time of heightened global uncertainty and rising protectionism – keeping markets open and trade flowing. Increased trade and connections with such countries is vital not only in economic terms, but also in geo-political and strategic terms.

Diversifying our trade and supply chains will also help our economy become more resilient to future shocks, and put us in a stronger position to reshape global trading rules alongside like-minded allies, including old friends such as New Zealand, Canada and Australia.

Strategically, this diversification is an exciting part of the Government’s plan to put Britain at the centre of a network of modern free trade deals, making us a hub for services, technology and cutting-edge manufacturing and green technology.

Ultimately, CPTPP membership delivers gains that would be impossible as part of the EU. And do so in a way that doesn’t impinge on our sovereignty. There is no ECJ, no harmonisation of domestic regulation and no ceding of sovereign powers.

All of this matters. Trade – and the notion of Global Britain – can seem divorced from the everyday worries and priorities of people here at home. But at its heart, trade is a powerful way to deliver the things people really care about.

It means more opportunities for local people, higher-skilled jobs, better standards of living, and happier, wealthier, more vibrant local communities in places like North West Durham, building on relationships abroad, as with Japan, to deliver local jobs so that we never again return to the bad old days of decay and decline that ultimately cost jobs and communities.

Liz Truss, who I recently spent time with on the production line at Sunderland, and the Government are working hard to secure CPTPP accession, and am pleased to see that a lot of the groundwork has been laid already – including exploring membership with all eleven countries in line with the official process.

Britain is at its best when it is an optimistic, outward-looking nation that engages with the world. CPTPP membership is the next logical step in the fulfilment of that vision.

It will show the world we are back as an independent trading nation and that we are not only a major force in global trade, but a major force for good across the globe.

Robert Halfon: We should be pro-private enterprise, anti-mega corporates. How have we allowed these to plunder the taxpayer again and again?

21 Oct

Robert Halfon is MP for Harlow, a former Conservative Party Deputy Chairman, Chair of the Education Select Committee and President of Conservative Workers and Trade Unionists.

Lessons from New Zealand

The re-election of Jacinda Ardern, winning an overall majority and so overcoming New Zealand’s complex proportional representation system, shows that, even in the age of centre-right populism, there is a route back for social democracy.

It could be that alongside her emotional intelligence, which she displays in abundance, in this new Covid era, what voters yearn for is competence and security. A feeling of safety first.  With both her handling of the terrorist atrocity in 2019, and her extraordinary success in dealing with the virus, is it any surprise that voters have given this remarkable politician the thumbs up?

No doubt our own Labour Party will be trying to pull off the same trick here, as will many other centre-left parties around the world. Conservatives should be doing everything possible to learn from her victory and thus forestalling the same thing happening over here.

If Joe Biden wins the US Election in two weeks time, it could just signal that the pendulum is swinging leftwards once more. If Trump gets an unexpected victory, then perhaps Ardern’s result will be seen as a swim against the tide.

The Corporatist State

I am as pro-genuine private enterprise as most Conservatives. But I don’t understand why our governments never get to grips with the mega-corporatist state.

How it is that we have allowed, time and time again, big corporations to plunder the taxpayer – whether it be through failed procurements, or permitting ginormous consultancies to charge £7,000 a day for their services in terms of track and trace.

Why is it that a noble £85 million laptop computer procurement programme for disadvantaged pupils, announced by the Department for Education in the height of lockdown, took months to deliver – by the time many children were already back to school? A school in my Harlow constituency told me they had only received the laptops recently, whilst others had arrived without the relevant logins et al. Would a better option not be to just give schools vouchers, after negotiating a good deal with Currys and Asda etc, and allow the teachers to purchase the computers themselves?

Of course, I appreciate this is a national emergency, which perhaps makes these vast sums going to consultancies more understandable. But, somehow, it seems pretty grim that the businesses profiting most from Covid-19 are these mega-corps consultancies.

Moreover, it is not as if these issues started in the pandemic.  It has gone on for some time, and books have been written about the monies these consultants make and the failed procurement schemes that lay in their wake,

The left, naturally, describe all this as ‘vulture capitalism’ – but this is as far removed from genuine capitalism as it is possible to be. Capitalism is about the free exchange of goods and services and fair competition.  The corporatist state is neither. Some of these companies are so big and intertwined with government departments that they become indistinguishable from the government departments themselves.

In the reform of Whitehall that Number 10 is currently planning, perhaps the wisest maxim might be “small is beautiful”.

Taking back control of VAT

Whether we leave with or without a deal by the end of the year, one of the key arguments for Brexit was that we took back control over our taxes.

Indeed in May 2016, during the EU Referendum campaign, both Boris Johnson and Michael Gove said that energy bills would be lower because EU rules meant that Britain could not take VAT off those bills. In The Sun, they wrote:

“The least wealthy are hit particularly hard. The poorest households spend three times more of their income on household energy bills than the richest households spend. As long as we are in the EU, we are not allowed to cut this tax.”

Both were absolutely right. Now we need to live up to that pledge by reducing the five per cent VAT rate for energy bills, and cutting the cost of living for millions. The Brexit dividend must mean cuts to the cost of living.

In a question to the Prime Minister in the House of Commons on this last October, I asked:

“In Harlow, we have already seen the NHS Brexit dividend, with a brand new hospital. The people of Harlow will feel that those who vote against this excellent deal really just want to stop Brexit completely. Will my right hon. Friend confirm that, once we do the deal and leave the EU, we will gain control of our tax rates and be able to reduce VAT and energy bills for our hard-working constituents?”

The Prime Minister replied:

“Yes. Not only will we be able to reduce VAT in the UK, but we will be able to do it in Northern Ireland as well.”

Matthew Elliott: Please apply to invest in Britain’s future and win £10,000

19 Oct

Matthew Elliott was Editor-at-Large of BrexitCentral

Coming from the world of think-tanks and campaign groups, I have a strong interest in the policy ecosystem that surrounds political parties.

Ahead of Tony Blair’s victory in 1997, think-tanks such as Demos and the Institute for Public Policy Research were established. And in the 2000s,a plethora of think-tanks (Centre for Social Justice/Policy Exchange), campaign groups (Business for Sterling/Countryside Alliance) and websites (ConservativeHome/Guido Fawkes) were launched and play an influential role in political discourse.

As well as playing a role in two successful referendum campaigns (NOtoAV and Vote Leave), I helped set up the TaxPayers’ Alliance (2004), Big Brother Watch (2009), Million Jobs (2012), Business for Britain (2013) and BrexitCentral (2016), so policy entrepreneurship is one of my passions. And even though my focus is now more in the private sector, I still enjoy helping and mentoring new policy entrepreneurs who are setting up the next generation of campaign groups and think-tanks.

At the beginning of my career, I was helped by the entrepreneur and philanthropist Stuart Wheeler, who sadly passed away at the end of July. I was 25 when we launched the TaxPayers’Alliance. I didn’t know any potential financial supporters, so I wrote to the signatories of a Business for Sterling advertisement with my ‘Strategy Plan’.

I thought, if they like BfS, there’s a good chance they’ll like the TPA. Stuart was one of the people who very generously sent a contribution which, along with some other donations, gave us the resources to cover my salary for three months, giving me the confidence to leave my position as a researcher to the Conservative MEP (now Lord) Timothy Kirkhope, and go full-time with the TPA.

Seventeen years later, I now find myself in a different position. My most recent project – the news website BrexitCentral – sent out its 1,085th and final daily email bulletin to the tens of thousands of subscribers we had accrued on February 1, the day after the UK formally left the European Union.

Alongside those essential morning emails put together by the indefatigable Jonathan Isaby and his team, we had published more than 2000 articles by over 500 authors, including the current Prime Minister and many of his Cabinet, not to mention Erin O’Toole, the man who was elected leader of the Canadian Conservative Party over the summer.

We are now in the final stages of winding up the company – a task which has been somewhat delayed by babies and Covid-19 – so, along with Georgiana Bristol, who worked tirelessly behind the scenes to keep the show on the road, we are left with the issue of what to do with the last remaining funds.

When we were discussing the matter, I thought about the support that Stuart Wheeler and other donors had given me as we launched the TPA, and we decided that it would be very fitting to use those remaining funds to support the young policy and campaigning entrepreneurs of today – people with the ideas that will tackle the policy challenges of the coming years.

We have two cheques for £10,000, and we would like to hear from people under the age of 35 with an exciting idea or contribution to policy debate. It could be:

  • A campaign group or think-tank you have set up, or are hoping to set up;
  • A book proposal that you want to take a sabbatical from your current job to research and draft;
  • A think-tank report you want to take time off from your current position to write;
  • A website or podcast you want to establish, or a short film you wish to make.

That is not an exhaustive list – we are interested in all ideas, the more innovative and entrepreneurial the better. And because Brexit was supported by people from across the political spectrum, we are open to proposals from all policy positions.

To stress, we are not looking for proposals relating to Brexit or Britain’s future relationship with the European Union – we are looking for submissions on any issue, policy or subject that you feel passionate about.

Entries should be emailed to policyentrepreneurs@brexitcentral.com by midnight on Sunday 8th November 2020 and should cover (on no more than two sides of A4) an outline of your plan an dhow you hope to execute it. All submissions will then be sifted and judged by a panel comprising Jonathan and I, plus Kate Andrews, Peter Cruddas, Helena Morrissey, Jon Moynihan and Mark Wallace. And the two winners will be announced by the end of November.

Since I became active in politics, the barriers to entry for policy entrepreneurship have been massively reduced thanks to the Internet. When I interned at the European Foundation whilst at university, it had an office in Pall Mall, it had copies of its European Journal and European Digest professionally printed, which were then posted to subscribers and the opinion formers in Westminster, Whitehall and Fleet Street that it was trying to influence. It sent press releases out by fax, business was conducted on the telephone or by post, and all these costs were before the general overheads and payroll costs that also needed to be covered.

Fast forward twenty years, and the cost of campaigning has fallen significantly. From setting up a website to using social media, broadcasting ideas and opinions to the world is so much cheaper. But there are still financial barriers, so I hope that this small project will help two policy entrepreneurs of the future, just as Stuart Wheeler helped me with the creation of the TaxPayers’ Alliance all those years ago.

I look forward to reading your entries and announcing the recipients later this year.

This article was originally published on ConservativeHome on Monday October 19, and we are re-publishing it during each weekday this week in order to advertise this project.

Claire Coutinho: Amidst the Great Global Data Divide, Britain must lead the charge for digital free markets

16 Oct

Claire Coutinho is MP for East Surrey.

As the world’s first industrialised nation, Britain knows the value of getting ahead of the economic curve. Access to natural resources like coal and oil have driven historic and economic revolutions, but in the future the fuel of our economy will be data.

Data flows are already estimated to be worth up to £3 trillion a year to the world’s economy. But a global divide is opening up between those leaning towards digital protectionism, like China and the EU, and those pioneering data agreements.

Where once we had the iron curtain, we now have digital drapes. We must reject this impulse and secure access to the resource that will drive our future growth. Pursuing freer digital markets can propel a great British leap forward. To achieve this, we must put ambitious digital chapters at the heart of our trading agenda.

The global data divide has been developing over many years. It sees some countries restrict the transfer of whole swathes of data, with others taking a far more open approach.

For China, its restrictions form part of its protectionist Made in China 2025 industrial strategy, as well as reinforcing its Great Firewall.

Others, such as New Zealand and Australia, have pioneered digital agreements to make it easier for their businesses to connect with new customers.

Britain is a services superpower. We are second only to the USA in our volume of exports. The sector contributes over 80 per cent of our economic output and employs 30 million people. Our data centres are world leaders, we have a global financial centre and thriving data-rich sectors like AI and fintech.

In 2018, the digital sector contributed £150 billion to the British economy, and grew at a rate almost six times faster than across the whole economy. As Britain flies the flag for free trade, ensuring the international free flow of data will be crucial to our future prosperity.

Digital Trade Agreements form the foundation of future services growth. Digital exports do not recognise geographic distance, which makes large markets on the other side of the globe even more appealing.

From facilitating e-contracts across borders, to preventing requirements for data to be stored domestically and allowing British companies to access foreign Government data, these agreements will be increasingly important for our services-driven trade. Regrettably, the global data divide is stymieing progress in international regulatory developments, leaving a void that will only become more pronounced.

Data localisation strikes at the heart of efficient business. Without locking in free dataflows, businesses in increasingly broad sectors would face the need for expensive data centres to operate abroad. In the long term, this would hit our national economy. In fact, the US Chamber of Commerce estimates that Chinese data protectionism will reduce its GDP by between 1.8 and 3.4 per cent by 2025.

As a leading digital economy with new control over its trade policy and an ambitious outlook, Britain is uniquely placed to help shape global rules in this emerging arena. A firm focus on digital trade will place Britain at the forefront in the sphere most crucial to the future success of our economy, and lock-in the digital freedoms that our businesses currently enjoy. The UK-Japan Free Trade Agreement stands us in good stead; going further than the EU-Japan deal and the Digital Economy Partership Agreement, it contains arguably the most wide-ranging and ambitious digital provisions of any agreement in the world.

Liz Truss is rightly focused on the Indo Pacific – the world’s fastest growing region. With plans to join the CPTPP, and trade negotiations underway with pioneers New Zealand, Australia and Singapore, Britain is right to side with digital free-traders. Digital Agreements in this region represent a significant opportunity for the UK, and one which we could not have pursued without leaving the EU.

The coming century will be dominated by data-dependent technology. Ensuring that our trade deals contain ambitious digital chapters will put us ahead of the economic curve, building firm foundations for future growth. Britain reaped great economic benefits from leading the first industrial revolution; we must ensure we are well placed for the next.

After my night out on Saturday, I’m even more convinced that the 10pm curfew won’t work

13 Oct

As readers of ConservativeHome may know, I am hardly the biggest fan of the Government’s 10pm curfew policy. I believe it will cause huge economic harm; has been based on a flawed model from Belgium, and is dispiriting for national morale. Last Saturday night, I added a new reason to my list of objections; it seems to me that the curfew is counterproductive – and could, inadvertently, harm public health.

That evening my friend and I had been in Soho at a smart, socially distanced bar before grabbing dinner nearby. At the restaurant, waiters frantically hurried about, conscious of the time. I don’t think I have ever seen someone sprint towards me with a glass of wine before, but there are firsts for everything in this crisis.

Coming up to 10pm, we were told that we had had to leave. We were in a lively part of town, and so this instruction suddenly meant tens of people getting up at the same time to go home. But that was nothing as I headed towards Oxford Street tube. The streets were heaving with people – similar to the photographs many of us have seen in newspapers of revellers convening in other parts of the country.

What troubled me wasn’t so much the crowds gathering outside (the virus spreads mostly indoors), but watching hundreds – maybe even thousands – of these souls then pour onto the tube, where they would inevitably be packed together in carriages.

Although I am quite relaxed about my own personal risk with Coronavirus, I decided to wait an hour before boarding the underground, taking photographs of the scene (one of which you’ll see above). It merely convinced me that the Government has indeed got this policy wrong.

The Coronavirus crisis is, of course, forcing MPs to make impossible decisions, for which – dare I say – I feel very sorry for them; it is a thankless task. Their scientific advisors have clearly told them about the dangers of bars; that one person can spark a big wave of infections, and that alcohol makes people more relaxed about social contact.

The curfews are in many ways a concession made to those who say it’s wrong to have pubs open at all, and maybe it’s the case that they work well in small towns, where one can walk back and forth to the local.

As a Londoner I can only speak for how it works here. It simply looked like the quickest way to accelerate the spread of the virus. It is an example when a theory sounds good – “close earlier and the virus can’t circulate” – but the practical reality is far messier.

I have seen other problems with the curfew, albeit simply walking around London. One is that people are starting their “evenings” much earlier. There are now groups of dressed up people in pubs and bars at midday. Revellers will find other ways around the curfew, too, standing outside pubs with plastic cups of wine long after closing time. The parties haven’t stopped, they’re simply moving elsewhere.

Some of this is no doubt because people’s tolerance for lockdown is starting to wane. For young people particularly, many of whom live in small homes, getting out for the evening is a strange type of stretching one’s legs. For people of all ages, bars and restaurants are a salvation at a time when life has become quite bleak. 

My own, somewhat controversial theory – and not simply because I like nightlife, which I do – is that extending closing times would, paradoxically, provide a much better outcome than curfews. It would increase the range of times at which people come and go from bars. It makes people feel less pressured to head in at the same time. Perhaps venues could even allow people to book slots.

Unfortunately this idea would never get any traction. Part of the reason is that so much of our policies are based on replicating Europe; we decided the curfew was a good idea because Belgium had taken it on, and now Germany has done the same so the case for it will grow. I wonder if this is the right approach for any country with densely populated cities, not just ours. What I saw on Saturday night was not good.

Ed McGuinness: A lesson for democracy in Europe from an abandoned airport in Cyprus

13 Oct

Ed McGuinness is a former Chairman of Islington Conservative Federation, founder of Conservatives in the City and contested Hornsey & Wood Green during last year’s general election.

In the middle of the Mediterranean atop the Mesaoria plain lies a major European international airport. There is a terminal, a runway, baggage machines and even a first class lounge as you would expect.

What is missing are passengers and the passage of time. The Nicosia International Airport is abandoned in the Cypriot Neutral Buffer Zone between the Greek-Cypriot part of the Island in the South and the Turkish occupied territory in the North.

This no man’s land (though it actually contains several populated villages) was said to have been drawn on a military map in 1963, with a wax pencil, by a British general commanding the peacekeeping force on the island in the wake of the Turkish invasion. In recent times, it has become one of many explanatory points in the EU’s ever increasing complex foreign policy proposals.

Almost two and a half thousand miles away on an brisk autumn day in Brussels, Ursula von der Leyen was delivering her first State of the Union address, amidst the backdrop of a huge coronavirus stimulus package, on-going migration crises and foreign policy dilemmas over Belarus and China.

As it stands at the moment, essentially in order to enact lasting change, the EU requires every member state to agree on such significant issues as economic sanctions. When effective, the result is the world’s second largest economic bloc exerting a hefty punch.

But more often than not, this bureaucratic behemoth ends up in months off stalemate, compromise and early morning solutions – not very conducive to effective law-making. Von der Leyen, frustrated with this, suggested that, for human rights and sanctions implementation, the bloc should move to a “qualified majority voting” whereby 55 per cent of member states (15) comprising 65 per cent of the population can vote for such measures.

The reason why this issue has come to the fore is the failure of the bloc to come up with unanimous sanctions against Belarus and its despotic leader, Alexander Lukashenko, following his blatant rigging of national elections and violent suppression of pro-democracy protests as a result.

The EU is seemingly united on the issue: indeed, all member states agreed to impose sanctions on their immediate eastern neighbour – all, that is, except Cyprus.

Cyprus, that small country in the middle of the Mediterranean amongst other forgotten Southern European countries, is still in a “cold” war against the Turkish invaders to the North. Their air forces engage in mock dogfights, and even their navies have quite literally run into each other.

Cyprus however, has less than two per cent of the population of Germany and just 0.25 per cent of the EU population.  So it has, whilst in an on-going state of conflict with Turkey, to stand by and watch Germany lead on negotiations with its rival over a migration crisis that is, in relative terms, more important to Angela Merkel than it is to the Cypriot people.

As a result, Nicosia has exercised its only real influence over Brussels to allow its people to be heard over what is its most important foreign policy dilemma – a mechanism that would much less effective under the changes proposed by vvon don der Leyen.

Ironically, von der Leyen is indeed correct. The only way to prevent endless vetoes, continuously circling the issue and ending up with watered down solutions is to adopt a voting system based on a simpler majority, but in doing so she fundamentally breaches the “universal value of democracy and the rights of the individual” within the Union – a phrase she uttered in the same breath as her comments on voting reform.

The confusion at the heart of the matter is this: the operative aspect of the EU is in persistent conflict with its aspiration – in short, it is suffering from an identity crisis with limited escape routes. It is trying, and failing, to be both an economic union and at the same time, seemingly whenever it choses, a political union, with both aims simultaneously mutually exclusive and co-dependant.

An example of which may be advocating for voting reform and lowering representation in one sentence, and espousing the democratic rights of its citizenry in another. Stating it stands up for the rights of its smaller nations, whilst its bigger nations club together to secure powers and influence over their own interests.

The EU is now attempting a slow death of democracy which will concentrate power and wealth in the north-western countries to the detriment and federalisation of the southern nations. It is no wonder that pro-sovereignty movements have taken hold there.

The EU faces a stark choice, which will upset a significant bloc either way.

The first course is to follow their stated aim of continual political integration, which is clearly the option favoured by the President and larger countries who will benefit given their scale.

The second is to recognise the value of devolution, and endeavour to support those countries on the periphery of the Union.

A final option is to simply do nothing…and allow these problems to continue to build in a state of perpetual crisis. As with much in the EU, some mixture of choices two and three is most likely followed by an undemocratic push into option one, sometime many years from now.

The result may well be a smoother machine, but will be a further drain on the power, influence and already low democratic representation in the smaller capitals of the Union who are trapped by economic shackles to the centre.

The UK, and Canada, at the time of writing, have enacted sanctions on Belarus, Lukashenko and his senior lieutenants, and have worked swiftly with the US on multiple occasions this year to act on aggression from Chinese and Russian abuses of the rules based international order.

The “take back control narrative” which prevailed in the UK in 2016 has begun to deliver on those promises. The EU, on the other hand, remains confused about its own democratic values and whether it actually works for all its member states, or only does so when it wants to, or when it benefits its larger members.

Ultimately, the smaller countries in the EU will be the losers in the reforms proposed by von der Leyen, echoed in a recent tweet on by Guy Verholfstadt suggesting “unanimity was killing the EU”.

Well, Guy, it will continue to hold back the EU – or else the EU will end up killing its smaller members. The President of the European Commission ought to visit the abandoned airport in Nicosia. There she would see the land that time forgot which would perhaps spur her, and her colleagues, to remember how easily democracy can die.

Ian Howells: Hybrids are the key to delivering the Government’s climate transport goals in the UK

13 Oct

Ian Howells is Honda Europe’s Senior Vice President. This is a sponsored post by Honda.

Honda has committed to achieving carbon neutrality globally by 2050, and we fully support the UK Government’s decarbonisation targets. In fact, throughout Europe, we have an ambitious target for 100 per cent of car sales to feature electrified powertrains (EV, plug-in hybrid, advanced hybrid) by 2022.

But, with our global experience and engineering expertise we know that delivering an affordable, decarbonised future cannot rely on just one technology.

A multi-pathway approach is required, in which a broad range of technologies are used to deliver CO2 reductions quickly and effectively, while ensuring that personal mobility remains affordable and accessible to all. This is vital to the Government’s levelling up agenda and underpinning the fundamental principle of personal choice.

Honda’s approach would see battery electric, advanced hybrid and – in time – hydrogen and decarbonised liquid fuels deployed to provide customers with the right vehicle, for the right use, at the right price.

For Honda, battery electric vehicles (BEVs) will play a key role in our proposed approach. BEVs provide a significant number of benefits to consumers, enabling zero emissions driving over short distances and within urban environments.

But BEVs are not a silver bullet. Challenges around affordability, infrastructure and technology limitations mean that the Government cannot rely solely on electric vehicles to completely replace internal combustion engines by 2035, if it does not also intend to restrict consumer choice.

An approach that relies only on expensive electric cars risks turning driving into a privilege only afforded to the wealthy, while pricing those who most need it out of personal mobility.

While prices are coming down, BEVs remain expensive in comparison to advanced hybrid and conventional cars. The UK’s own Advanced Propulsion Centre projects that cost parity between electric and petrol cars will not be reached by 2035 – and will take much longer for larger family cars or popular SUVs. The simple truth is that not everyone will be able to afford an electric car and outlawing advanced hybrid alternatives will price people out of essential mobility for work, school, caring and socialising.

Pursuing a battery electric only strategy will create a new inequality between those who have easy access to charging – and those in the Midlands and the North who do not.

Despite welcome additional investments from Government, the UK’s charging infrastructure is far from ready for a full transition to electric vehicles within 15 years. Public charging is unevenly spread across the country, with London, the South East and Scotland seeing the highest levels of public charging infrastructure, with the Midlands and the North much worse served. Wealthier drivers in the suburbs may be able to install off-street charging at home, but people with no access to off-street parking, such as those in tower blocks or dense urban areas, will struggle to find accessible and convenient ways to charge their car.

Current battery technology is nearing the limits of performance – and resource scarcity means there are not enough raw materials for a full shift to battery electric cars.

The current lithium-ion batteries used in electric cars today are reaching the limits of power and performance. These limits mean that EVs cannot be used to replace ICE vehicles in all cases. Whether towing caravans on the family holiday, pulling tradesperson’s equipment, or powering a sports car – battery electric cannot yet deliver the needed performance on its own.

Performance and power cannot simply be increased by installing bigger batteries, as these vehicles would incur weight and cost penalties. Furthermore, there are limits on global cobalt supply, with the European Commission estimating that by 2030, even with recycling, demand will far outstrip supply.

Honda’s advanced hybrid technology is at the heart of a multi-pathway approach that delivers significant emissions reductions, keeps mobility affordable and accessible – and still has scope for significant improvements. Signalling an end to this technology would be counter-productive.

Hybrid technology is far more affordable to a wide variety of consumers. Our new Jazz Hybrid starts from £19,000, which is much cheaper than a similarly sized BEV from other manufacturers – even when government support is taken into account. The price difference is much starker when looking at larger family-sized vehicles or the ever popular SUV category.

By combining compact, efficient, specially designed petrol engines with battery power, Honda’s advanced hybrid technology provides the power and performance that customers need to meet a wide range of needs, ensuring that customers feel confident in moving into low emissions mobility.

Our advanced hybrid products on the market now, are already making a contribution to CO2 reductions. Our new Jazz Hybrid emits 30 per cent less CO2 than its non-hybrid predecessor. In addition, there remains scope for significant ongoing emission reductions as advanced hybrid technology continues to evolve and move towards zero emission.

Decarbonised liquid fuels are an exciting way to further reduce transport emissions, alongside electrification.

The development of decarbonised liquid fuels – produced from renewable energy sources – have the potential to further reduce the CO2 performance of hybrid vehicles, and are a viable route to decarbonising the existing petrol and diesel fleet, again significantly bringing forward the reduction in carbon emissions.

As the Prime Minister said in his 2020 party conference speech – at some point the State must stand aside, and let the private sector take the lead. The role of Government is to set consistent and realistic targets and provide support, but it must let businesses innovate and invest, while enabling consumers to choose the technology that fits their needs.

The challenge of becoming carbon neutral by 2050 is huge. Honda has also embarked on that journey and will dedicate all its global resources to meeting this vital goal. The UK will be at the forefront as we deploy our technologies, and we support the Government’s ambitions of zero emissions mobility. But our global experience and engineering know-how make it clear that we can’t rely on one technology alone – a multi-pathway approach is required.

As ministers finalise their plans for mobility in a net-zero future, they must ensure that mobility remains accessible and affordable for all. They can achieve this by recognising the important role played by advanced hybrids and ensure these can remain part of the technology mix over the long term, as part of a multi pathway approach to our shared goal of clean, accessible and affordable personal mobility.

To find out more about Honda’s advanced hybrid technology, visit our UK website here.

Neil Record: Lessons from the recent past for the Chancellor as he seeks to salvage the economy

13 Oct

Neil Record is Chairman of the Institute of Economic Affairs board.

Like many people, I have become increasingly concerned about the long-term consequences of the UK government’s Covid-19-related extraordinary expenditure. Faced with the position the Government’s finances are now in, what would I do if I were Chancellor of the Exchequer?

My first priority, and indeed the core function of any Chancellor, would be to formulate a plan which on reasonable or even conservative estimates of future economic activity would yield enough tax revenue to stop the mountain of public debt growing any larger.

It may be fashionable to argue that with “modern monetary theory” there is a new normal level of fiscal debt which governments can comfortably accommodate that is far higher than, say, the old 60 per cent debt-to-GDP that the EU used to require a country to be under to qualify for membership of the Euro area.

But the UK’s public debt now stands at more than 100 per cent of GDP, and any student of economic history will understand that the higher the national debt level, the more vulnerable a country is to external shocks exactly like the one administered by Covid-19, and indeed to future unknowable shocks.

The consequences of fiscal recklessness can be seen littered not just across the developing world, with serial defaults and bankruptcies, but also in the sophisticated developed world, where the world’s third largest economy, Japan, has been mired in stagnation for 30 years, burdened by enormous public debt which saps confidence and dampens entrepreneurial spirits.

So if the current Chancellor accepts the idea that fiscal prudence is at the heart of his role, then what should he do to combine that constraint with creating the conditions for a vibrant, growing economy providing jobs and opportunities across the board?

Were I Chancellor, my objective would be to initiate policies which have a proven track-record of success on two measures: growth in real Government revenue, and growth in labour productivity. The latter is the heart of the complex modern economic system that delivers real rises in living standards. The former is the measure which, if successful, would minimise the extent to which balancing the fiscal books requires real cuts to public spending. The question of how large a role the State should play in the economy is a bigger question for another day.

Let’s start with government revenue. If we examine the past 40 years of the UK economy, we can search out the best decade for rising government revenue which, as it turns out, is 1993-2003. This decade achieved real growth (i.e. adjusted for inflation) in government revenues of 4.3 per cent per annum – an astonishingly high rate which delivered 51 per cent more real annual government revenue at the end of the period than at the beginning! If the current Chancellor could sow the policy seeds to create another period like that again, he would be rightly acclaimed a hero.

Why was this period so successful for government revenue? The answer is that it was launched on the back of more than a decade of deregulation and reduced marginal tax rates, and that the period itself was one of broad policy stability. This is the more remarkable since it straddled a Conservative government (until 1997), and a Labour one thereafter. It was also a period of strong growth in labour productivity, of which more below.

What were the key tax facts in the successful 1993-2003 period? A top rate of income tax of 40 per cent; corporation tax falling from 33 per cent to 19 per cent; stamp duty top rate of four per cent (after one per cent earlier in the period); VAT at 17.5 per cent; and capital gains tax same rate as income tax, but with taper relief (from 1998-99) reducing the rate on shares by up to 75 per cent (i.e. giving a top rate of 10 per cent).

So here we have a blueprint for a set of tax policies that have been proven to deliver strong rises in Government revenue.

It is always tempting to imagine that as Chancellor you can conjure up any amount of tax revenue by just adjusting tax rates accordingly. The evidence points strongly in the opposite direction. Marginal tax rates send very strong signals to key players in every modern economy, such that economic activity will inevitably shift away from heavily taxed activities or sectors to more lightly taxed (or even, worryingly, to subsided areas).

If you, as a government, want strong economic activity in both the labour market (jobs, productivity) and in the market for capital (infrastructure, homes, machinery, technological change), then each has to be taxed in a balanced way so neither is favoured and neither is avoided.

Which brings me to labour productivity – the engine of living standards. This is a fascinating area – one that, in my opinion, is much under-studied. We had been growing richer and richer in the Post-War period until 2008, when our improvements in living standards came to a juddering halt. There are two “whys” here – why did we grow so consistently for 40 years, and why did we stop growing so suddenly?

On the first question, we had been the beneficiaries of an absolutely remarkable transformation in our technological knowledge, which allowed each worker to enlist more and more power and control over his efforts with the help of increasing amounts of capital equipment. We think recently mainly of the digital revolution, but this comes at the end of a series of revolutions: agricultural, energy, trade and specialisation – all of which have contributed to this quite remarkable success story.

Why did this stop? In 2008, a key specialisation of the UK economy, the financial services sector, had a catastrophic failure. This sector had been an important engine of growth and source of much government revenue. The shorter-term policy response to this crisis protected jobs and the banks.

But the longer-term response to this was to set this sector in a straitjacket of regulation, which has killed its growth, its animal spirits and its tax generation. This enthusiasm for regulation has spread across all sectors, not just financial services, and has had an equivalently dampening effect on growth in those sectors too. Higher tax rates on top incomes have exacerbated this effect.

Governments have choices. This Government may not choose to adopt some or any of the successful policies from the past – and there will be good reasons for those decisions. In the round, however, if the government in general, and the Treasury in particular, is serious about pulling the UK out of the very serious financial and economic position it currently faces, then the arguments presented here should weigh heavily on its thinking.

This article is based on the author’s recent briefing paper, The Chancellor’s Post-Pandemic Choices.

Neil Record: Lessons from the recent past for the Chancellor as he seeks to salvage the economy

13 Oct

Neil Record is Chairman of the Institute of Economic Affairs board.

Like many people, I have become increasingly concerned about the long-term consequences of the UK government’s Covid-19-related extraordinary expenditure. Faced with the position the Government’s finances are now in, what would I do if I were Chancellor of the Exchequer?

My first priority, and indeed the core function of any Chancellor, would be to formulate a plan which on reasonable or even conservative estimates of future economic activity would yield enough tax revenue to stop the mountain of public debt growing any larger.

It may be fashionable to argue that with “modern monetary theory” there is a new normal level of fiscal debt which governments can comfortably accommodate that is far higher than, say, the old 60 per cent debt-to-GDP that the EU used to require a country to be under to qualify for membership of the Euro area.

But the UK’s public debt now stands at more than 100 per cent of GDP, and any student of economic history will understand that the higher the national debt level, the more vulnerable a country is to external shocks exactly like the one administered by Covid-19, and indeed to future unknowable shocks.

The consequences of fiscal recklessness can be seen littered not just across the developing world, with serial defaults and bankruptcies, but also in the sophisticated developed world, where the world’s third largest economy, Japan, has been mired in stagnation for 30 years, burdened by enormous public debt which saps confidence and dampens entrepreneurial spirits.

So if the current Chancellor accepts the idea that fiscal prudence is at the heart of his role, then what should he do to combine that constraint with creating the conditions for a vibrant, growing economy providing jobs and opportunities across the board?

Were I Chancellor, my objective would be to initiate policies which have a proven track-record of success on two measures: growth in real Government revenue, and growth in labour productivity. The latter is the heart of the complex modern economic system that delivers real rises in living standards. The former is the measure which, if successful, would minimise the extent to which balancing the fiscal books requires real cuts to public spending. The question of how large a role the State should play in the economy is a bigger question for another day.

Let’s start with government revenue. If we examine the past 40 years of the UK economy, we can search out the best decade for rising government revenue which, as it turns out, is 1993-2003. This decade achieved real growth (i.e. adjusted for inflation) in government revenues of 4.3 per cent per annum – an astonishingly high rate which delivered 51 per cent more real annual government revenue at the end of the period than at the beginning! If the current Chancellor could sow the policy seeds to create another period like that again, he would be rightly acclaimed a hero.

Why was this period so successful for government revenue? The answer is that it was launched on the back of more than a decade of deregulation and reduced marginal tax rates, and that the period itself was one of broad policy stability. This is the more remarkable since it straddled a Conservative government (until 1997), and a Labour one thereafter. It was also a period of strong growth in labour productivity, of which more below.

What were the key tax facts in the successful 1993-2003 period? A top rate of income tax of 40 per cent; corporation tax falling from 33 per cent to 19 per cent; stamp duty top rate of four per cent (after one per cent earlier in the period); VAT at 17.5 per cent; and capital gains tax same rate as income tax, but with taper relief (from 1998-99) reducing the rate on shares by up to 75 per cent (i.e. giving a top rate of 10 per cent).

So here we have a blueprint for a set of tax policies that have been proven to deliver strong rises in Government revenue.

It is always tempting to imagine that as Chancellor you can conjure up any amount of tax revenue by just adjusting tax rates accordingly. The evidence points strongly in the opposite direction. Marginal tax rates send very strong signals to key players in every modern economy, such that economic activity will inevitably shift away from heavily taxed activities or sectors to more lightly taxed (or even, worryingly, to subsided areas).

If you, as a government, want strong economic activity in both the labour market (jobs, productivity) and in the market for capital (infrastructure, homes, machinery, technological change), then each has to be taxed in a balanced way so neither is favoured and neither is avoided.

Which brings me to labour productivity – the engine of living standards. This is a fascinating area – one that, in my opinion, is much under-studied. We had been growing richer and richer in the Post-War period until 2008, when our improvements in living standards came to a juddering halt. There are two “whys” here – why did we grow so consistently for 40 years, and why did we stop growing so suddenly?

On the first question, we had been the beneficiaries of an absolutely remarkable transformation in our technological knowledge, which allowed each worker to enlist more and more power and control over his efforts with the help of increasing amounts of capital equipment. We think recently mainly of the digital revolution, but this comes at the end of a series of revolutions: agricultural, energy, trade and specialisation – all of which have contributed to this quite remarkable success story.

Why did this stop? In 2008, a key specialisation of the UK economy, the financial services sector, had a catastrophic failure. This sector had been an important engine of growth and source of much government revenue. The shorter-term policy response to this crisis protected jobs and the banks.

But the longer-term response to this was to set this sector in a straitjacket of regulation, which has killed its growth, its animal spirits and its tax generation. This enthusiasm for regulation has spread across all sectors, not just financial services, and has had an equivalently dampening effect on growth in those sectors too. Higher tax rates on top incomes have exacerbated this effect.

Governments have choices. This Government may not choose to adopt some or any of the successful policies from the past – and there will be good reasons for those decisions. In the round, however, if the government in general, and the Treasury in particular, is serious about pulling the UK out of the very serious financial and economic position it currently faces, then the arguments presented here should weigh heavily on its thinking.

This article is based on the author’s recent briefing paper, The Chancellor’s Post-Pandemic Choices.

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.