Rainer Zitelmann: Wealth taxes would not be popular, or Conservative. Sunak must remember this tomorrow.

7 Jul

Dr. Rainer Zitelmann is a historian and sociologist. The data cited in this article is analysed in detail in his recently published book The Rich in Public Opinion

Over the past couple of weeks, UK Treasury officials have been contacting private bankers to sound them out on how the country’s richest citizens might help pay for the huge cost of Coronavirus relief packages. Ahead of Rishi Sunak’s big speech tomorrow, this should be worrying for many.

Austerity might be off the menu for the state, but it’s definitely the dish that is being prepared by civil servants to be served to everyone else.

Labour are getting in on the act too with Annalise Dodds, the Shadow Chancellor, stepping onto the Sunday shows to explain with zero detail that the burden of higher taxation ought to fall on those with the “broadest shoulders” and that taxes needed to reflect the “increase in income and wealth inequality over recent years.” She’d called for wealth taxes in the preceding week during a speech at the IFS, again with scant information on what this would actually look like.

Now, leaving aside the fact that a lot of income and wealth inequality is mostly a proxy for geographic inequality and restrictions on growth of jobs and homes outside of major centres of population, we should question what brings together the Shadow Chancellor and Civil Service. Especially when it looks a lot like trying to confiscate wealth and punish those that have worked hard to get on in life.

This isn’t Conservative. The Civil Service should be reminded of that fact, and the party should remember the benefit of providing some clear blue water between the reds in Labour and the Tories in power. Rishi Sunak on Wednesday should signal he’s going in quite the different direction to keep Conservatives and the country on side.

In fact the party of a low-tax dynamic free market that in December ruled out an increase in the rates of income tax, National Insurance or VAT – should also remember voters aren’t keen on the state coming for wealth either.

In a poll conducted in 2018 by Ipsos Mori across the UK, France and Germany, voters were asked their attitudes to the rich and to tax asks of them. They were presented with two statements:

The first was: The taxes on the rich should be high but not excessively high because they have generally worked hard to earn their wealth, and the state should not take too much away from them.

Over the UK as a whole, 29 per cent agreed. Of Labour voters, 20 per cent agreed. Of Conservative voters, 46 per cent agreed.

The second: The rich should not only pay high taxes, but they should pay very high taxes. In this way, the state can ensure that the gap between the rich and the poor does not become too great.

Of the UK population as a whole, 38 per cent agree. Of Labour voters, 53 per cent agreed. Of Conservative voters, 21 per cent agreed.

What the survey was designed to reveal is the proportion of the population in a given country that envies the rich (“social enviers”) and compared this with the proportion who do not (“non-enviers”).

While there is a section of the population in Great Britain that envies the rich, the number of enviers in Great Britain is much smaller than in the other countries. Much lower in fact.

The survey data was used to calculate a Social Envy Coefficient – the higher the coefficient, the higher the proportion of social envy.

The coefficient for France is 1.21, which means there are considerably more social enviers in France than non-enviers. Germany’s coefficient is 0.97, which means there is an even balance between social enviers and non-enviers. In the United States, the coefficient is significantly lower at 0.42. But the lowest coefficient is for the UK, at 0.37.

In other words, a clear majority of the British population are not envious of the rich.

There are significant differences between what Conservative voters and Labour voters think about the rich. Conservative voters say that society as a whole benefits from the existence of rich people (e.g. as entrepreneurs who create new products) but just a fifth of Labour voters think the same.

Despite a platform of envy and higher taxes on offer from the most far-left Labour leader in history, the British people decided to plump for the man opposed to them. Instead of thinking of the rich as a cash cow, when asked to describe the rich Conservative voters plucked for the following terms: industrious, imaginative, visionary, bold, intelligent, and ruthless.

Five out of six being positive traits ain’t bad. Labour voters under Corbyn plucked for the alternative, rich people to them were: materialistic, industrious too, ruthless, bold, self-centred, and greedy.

Starmer has done a good job of modernising his party, but he needs to win over Tory voters that thought of the rich as imaginative industrialists, not just pander to a coalition that thinks of them as ruthless greedy materialists that has failed twice to put the party into power.

Like throughout the pandemic, the UK is not the first to encounter the issues at play. When a few years ago the then socialist president François Hollande introduced a supertax on France’s highest earners, many wealthy people left France.

The tax was subsequently abolished. And France’s neighbour Germany found that the bureaucracy associated with levying a wealth tax is simply not worth it. As a result, Germany has waived its wealth tax since 1997.

Treasury officials and Tory strategists should realise: Britain is a low-envy country; a pro-growth country, and one that knows that imposing more envy taxes on wealthier people simply will not work.

Leave this idea to the Labour left and start pushing for growth by removing, rather than adding to, the burden of the state on businesses and families.

Roderick Crawford: We have interests in the rest of Europe, but must be free to run our own foreign policy

6 Jul

Roderick Crawford works on conflict resolution in countries such as Yemen, South Sudan and Iraq, and on Brexit-related matters. He is a former editor of Parliamentary Brief.

One could be forgiven a sense of déjà vu as we enter the second round of accelerated talks, this time in London. The high hopes of breakthrough at the start of last week’s talks were dashed as they broke up on Thursday last. The same sticking points remain: the legal structure of the agreement, level playing field commitments, including state aid, and of course fisheries. Specific details have not been released, so it is hard to comment on why the progress on getting agreement on underlying principles has failed to materialise.

Though working through the underlying principles of the agreement should help identify where the barriers to agreement lie, a look at the overarching principles of the negotiating positions of the two parties may throw better light on the lack of progress.

Last month, Der Spiegel ran an interview with the Anglophile former German Ambassador in London, Peter Wittig; he provided a revealing glimpse into the EU’s perspective on the negotiations. Asked whether, in effect, the EU should accept a hard Brexit and let the UK go, he says, no:

‘We should continue to endeavour to tie Britain as closely as possible to the European Union. Europe can only survive in the competition between the USA and China if it is strong and united. I always thought it was good that the Federal Government was the voice of pragmatic reason in all these difficult negotiation phases. I advise everyone not to think about the short-term effect, but to keep a strategic eye on where Europe should be in five, ten or 15 years.’

The quote is interesting because it is part of an intra-German conversation from a friend of the UK expressing pragmatic views on the big picture in which Brexit sits. While the UK has been caught up in its own arguments and political storms – and of course running ourselves down – we have lost sight of the impact of Brexit on the EU: it has been considerable.

The EU has lost its only global city, its only global finance centre, its most dynamic services economy, 12 per cent of its consumers – more when weighted for income – and its only universities ranked in the world’s top ten. It has lost a major pillar of good governance (the UK was a consistent upholder of the EU’s rules-based system) and a source of sound counsel.

As the EU looks to develop its common foreign policy and defence co-operation, it does so now from a far weaker base. The UK was one of two EU permanent members of the UN Security Council, one of two nuclear powers.

It had the only blue-water navy capable of working with the US; China has just achieved a two aircraft carrier capability – the UK will soon be there, too. It has a battle-tested professional army and air force. The UK alone had the capability of power projection across the world – albeit with limitations – and the will to do so. The Foreign Office, despite its shortcomings, is still world class and the UK’s influence is, arguably, stronger across the world than any single EU member state.

The EU is diminished, while the fault lines on which it sits become more unstable. To its east, Russia is reviving in confidence as its actions in Ukraine, Syria, and its challenges to the West demonstrate. Turkey has become a regional player, outside of the NATO fold, and looks to a future untied to the EU. The Middle East and North Africa are unstable, and a source of potential and probable mass migration to the EU driven by demographics, economic and political failures and climate change.

The UK looks out across the North Sea to Norway, Denmark and the Netherlands, and across the Channel to Belgium and France; to our west lie the USA and Canada. It is an envious position to be in, though not one deserving of complacency: we still want a secure and stable EU. We are committed to the peace and security of Europe through NATO; in these respects, our interests and obligation in NATO, we are tied in.

One of the problems in the current negotiations is that the EU has re-written history to build up its own role in keeping the peace of the last half century. One of its foundational myths is that it has been the EU that has kept the peace in Europe. It even claims responsibility for the Belfast Agreement.

But its claims to success are absent of evidence. It is the transatlantic partnership that has kept the peace in Europe; it was the Northern Irish, London and Dublin – with US support – who brought about the Belfast Agreement. The EU forgets its role in the break up of Yugoslavia, and the subsequent wars and civil wars ended only with US engagement. Its diplomatic bungle over Kosovo, when it resurrected the July 1914 ultimatum to Serbia, ended likewise – and at great cost in civilian lives. The EU has not kept the peace in Europe.

The EU’s ambitious partnership proposal is overly ambitious, based as it is on inflated ideas of its own story and present capability; the ideas of uniquely shared values and interests ignore that they are shared with the English-speaking world and beyond. When the myth is removed, and the reality of the EU’s position is seen — its risk levels, its lack of investment in NATO and its own level of defence preparedness, and its poor relations with its neighbours — it is hardly an attractive partner; more of a liability.

The EU, quite understandably, wants the UK as closely tied in as possible to its defence and foreign policy (and economy). The UK, quite understandably, does not. Present commitments through NATO provide sufficient security to the EU’s members and help balance much, though not all, of their security concerns. The UK will do more, through co-operation bilaterally with members and freely alongside the EU too.

The EU and UK can co-operate to secure shared interests, but ultimately, though the UK wants a stable and secure EU and stability and security for its member states, there are differences in interests. The UK must be free to run its own foreign policy, champion alliances that may take precedence over that with the EU and policies that the EU will oppose — even the freedom to support member state interests against those of the EU institutions. It cannot be tied-in to a punitive governance structure to prevent it exercising such choices.

The overarching principles of the EU and the UK as regards governance of the future relationship are in conflict — we can’t be tied-in and free simultaneously; papering over the differences would breed confusion and likely lead to fresh upsets in the future. The UK cannot afford to accept a single overarching governance structure or claims upon it in the field of the EU’s common foreign policy and defence.

Tony Smith: Turning the tide on migrant boats

3 Jul

Tony Smith is a former Head of the UK Border Force and Director of Ports and Borders in both the UK and Canada. He is now Managing Director of Fortinus Global Ltd, and Chairman of the International Border Management and Technologies Association.

Rarely a day goes by without news of more migrants crossing the English Channel from France to claim asylum. What began as a trickle two years ago has now become a stream. Over 1800 came across in 2019. Over 160 arrived in a single day on 3rd June. At current rates, the 2020 figure will double last year’s total; it could even go higher still. Yet only around six per cent are returned to France.

Those who said that these waters were too difficult to navigate in unseaworthy vessels have been proved wrong. We have seen arrivals in all forms of makeshift craft, even inflatables and canoes. So how do we turn the tide, and stem these illegal flows?

This is a complex problem. There are significant challenges raised by international law including 1951 Refugee Convention, the UN Convention on the Law of the Sea (UNCLOS), the Convention for Safety of Life at Sea (COLAS), and the Convention on Maritime Search and Rescue (SAR).

Following media reports that French vessels were “escorting” migrant boats into British waters in May, Priti Patel announced that she would change international law to close the Channel loophole; but any change in international law needs international agreement.

Article 98 of UNCLOS encourages neighbouring states to establish regional arrangements for search and rescue at sea. Examples include joint patrol vessels, or the placement of officials from one jurisdiction on board the vessel of another.

So there is no reason in international law why the British and French governments could not introduce joint SAR patrols. They would have to meet the requirements on international law; but – crucially – refugees and asylum seekers can be taken to any place where there is no risk of their life or freedom being threatened in accordance with Article 33(1) of the Refugee Convention, on the principle of “non refoulement”.

So subject to mutual agreement, we could establish an integrated UK/French border patrol to rescue migrants at sea and bring them to a place of safety; and as both countries are signatories to the 1951 Convention, that could be to a port on either side, and not necessarily to the country whose vessel happens to rescue them.

Of course, this needs a political agreement with France. Some may say this is not achievable. Maybe not. But in 2002, the total UK asylum intake figure rose to over 100,000, with the vast majority arriving from France. To stem the flows, the UK and France agreed a bilateral Treaty (Le Touquet) in to establish “juxtaposed controls” whereby officers would conduct passport inspections prior to boarding ferries.

As these inspections were “extra territorial”, asylum claims were excluded. This led to a far harsher reduction of asylum claims from France than the numbers we see on the migrant boats today. In my experience, successive French governments have been prepared to work with UK border enforcement agencies to disrupt and deter irregular migration on the cross-channel routes. They don’t like human smugglers any more than we do. This suggests that there is scope for further bilateral agreement to counteract the maritime threat.

Although France is a “safe third country”, the current Dublin Convention trumps safe third country rules. To return as asylum seeker to another member state, the receiving state has to prove that an asylum claim had already been made in the other state.

Given that nearly all migrants are undocumented on arrival, this evidence is rarely available – and accounts to a great extent for the very low returns rate. As the UK departs the EU, it will no longer be party to the Dublin Convention. A new “safe third” agreement is needed.

There will always be migrants in France who want to come to the UK. Some may have legitimate reasons for doing so – for example, those with family connections here. To meet this demand, the UK could offer a legitimate migratory route to the UK for specific categories of persons via our offices in France; thereby reducing the incentive for illegitimate routes and simultaneously disrupting the smuggling supply chains.

I hope that the Government’s current strategy to encourage better enforcement in France pays off. It is certainly having an impact. But if we believe that this could escalate into a crisis like the one we saw back in 2002, we will need a more fundamental and radical approach to tackling the problem.

That means reaching a new international agreement France on joint patrols, search and rescue, and safe returns whilst simultaneously exploring alternative legitimate offshore processing routes for those with a genuine case to enter. Then – and only then – will we finally be able to turn the tide on migrant boats and defeat the maritime threat to our borders.