Iain Dale: Your Brexit trade talks countdown. Fifteen days left until transition ends fully.

18 Dec

Iain Dale presents the evening show on LBC Radio and the For the Many podcast with Jacqui Smith.

As I write my final column of 2020, the Brexit free trade negotiation is still not done.  Recent indications were that it will be, although their fate stlll seems swing back and forth.

But surely it has to be settled very soon if any deal is to be ratified by January 1st. I wouldn’t put it past the European Parliament to put a last minute spanner in the works, and declare that MEPs haven’t had time to scrutinise it. Let’s hope it doesn’t get to that.

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This week, Liz Truss signed a trade agreement with Mexico, a country we do £7 billion worth of trade with each year.

I’m going to be honest, and say that I was rather surprised when she topped the ConHome list of cabinet ministers last month but, when you think about it, she’s quietly got on with her job, and done what she’s there to do – sign trade agreements.

We’ve now got rollover agreements with most of the G20 countries which the EU already had a trade agreement with. I remember the days when Remainers said this would be impossible to do.

Well, Truss has proved the opposite.No grandstanding, no fuss, just getting on with it. When she was appointed, I thought it was a strange one, but she’s risen to the challenge and proved herself.

Only six months ago, she was being tipped for the chop in a reshuffle. If she were ditched now, it would be incredibly unfair. When people prove themselves in a job, it’s often a good idea to leave them there – and the next twelve months are going to be absolutely vital in the promotion of Global Britain. It would be no time for a trade novice.

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The announcement on Wednesday of the four nation approach to Covid restrictions over Christmas was a disaster from a communications viewpoint. To try to pretend, as the Prime Minister did, that the policy and guidelines remained unchanged was ridiculous, and further undermined the government’s approach.

When circumstances change – and they have changed since the initial announcement of the Christmas rules on December 2 – it would be wholly reasonable to change approach, even if there might be a political backlash.

Infections are rising in large parts of the country, as are hospital admissions. Death numbers are rising again, too. In those circumstances, would surely be reasonable to tighten the guidelines. Other European countries, such as Germany and the Netherlands have done it. It’s called leadership.

Boris Johnson appears to think the British public wouldn’t swallow it. All the polling suggests that they would. There will always be people who ignore anything the Government says and deliberately do the exact opposite, but most people do take notice of what Ministers and scientists say.

We know from the spike that happened after Thanksgiving in the America what happens when families get together. The virus spreads. And that’s what is undoubtedly going to happen over Christmas.

Would we be having this five day long super-spreader event, were it not for this annual holiday? No, of course we wouldn’t. In fact, I suspect much more severe measures than Tier Three would be imposed.

So when we get to the middle of January and we’re getting 40-50,000 new infections a day, and at the end of that month the death rate climbs to more than a thousand a day, many people will look back and blame the Prime Minister directly for it.

You can explain all you like that it’s individual people’s lack of discipline or adherence to the safety measures but the commentators and scientists will blame one person: Johnson.

I hope he’s got a good explanation ready. Having said all that, it will be interesting to compare infection rates in January in Wales with those of the rest of the UK. Mark Drakeford has said only two families may meet over Christmas rather than three, and is criminalising anyone caught breaching the limit. Nicola Sturgeon hasn’t gone that far, but she’s advising people only to meet on one day, with no overnight stay.

Meanwhile, the Prime Minister is saying that just because you can doesn’t mean you should, and that we should all enjoy a smaller, shorter Christmas. In essence, he’s trusting the people to do the right thing. In normal circumstances, that ought to be the right message. In this case, that message has been undermined, yet again, by a lack of clarity. It’s something I suspect we’re all going to live to regret.

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As this is my final column of the year, let me conclude by wishing you all a very Happy Christmas – and let’s hope that 2021 is a much better year for all of us and the country.

Neil O’Brien: No, more economic prosperity doesn’t depend on more social liberalism

13 Jul

Neil O’Brien is MP for Harborough.

Danny Finkelstein took issue with Boris Johnson’s idea of “levelling up” in the Times the other day. He reviewed the work of Richard Florida, a thinker dubbed the “patron saint of avocado toast” for highlighting the role of bohemian urbanites in driving economic regeneration.

Danny concludes from his work that, “Social liberalism and economic prosperity go together.” He argues that: “in order to match the success and power of metropolitan areas, non-metropolitan places need to become more… metropolitan.  The problem with the metropolitan “elite” isn’t that there is too much of it. It’s that there aren’t enough members of it, drawn from a wide enough background and living in enough places.”

I hesitate to disagree with one of the smartest columnists on the planet. But economic growth and social liberalism don’t always go together.

What about the Victorians, combining breakneck growth with a religious revival and tightened public morals? What about Japan during their postwar decades of blistering growth and conservative “salaryman” culture? Over the last 70 years, Britain has become more socially liberal as our growth rate has slowed.

Even in Britain today, it’s highly questionable. London is the richest and fastest growing part of the UK.  But where is opposition to homosexuality and pre-marital sex strongest? London. Where is support for censoring offensive speech highest? London.  The capital mixes liberal metropolitan graduates with religious immigrants. Its success is shaped by both.

Danny’s other argument has more important implications. Is it really the case other places must emulate London to succeed? Like other capital cities across Europe, London has grown faster than the rest of the country since the 1980s. The shift to an economy based on “office jobs” over has favoured the centres of larger cities.

But we shouldn’t get too carried away by the idea that hipster-powered megacities are sweeping all before them. For starters, there are successes elsewhere. Cheshire has high tech in a rural setting, with productivity and wages above the national average.  Milton Keynes likewise, because it’s easy to build there. Productivity in Preston has grown faster than average because it’s a transport hub with advanced manufacturing.

On the surface, large cities outside London have done well.  Since 1997, our 16 largest cities grew their GDP faster than their surrounding areas: Leeds grew faster than West Yorkshire, Manchester faster than Greater Manchester, and so on.

But on average, those cities saw also slower growth in income per head than their surrounding areas. In other words, people became more likely to work in city centres, but that growth was fuelled by people commuting in from smaller places around them. Their growth has been powered more by smalltown commuters than flat-cap wearing uber-boheminans.

It’s right that there are cities outside London that have things in common with it, and might benefit from similar investments. Lawyers in London will soon get Crossrail. So why have lawyers in Leeds waited 20 years for a tram?

But too often Richard Florida’s work leads politicians to focus on shiny cultural facilities. A cool art gallery in West Brom.  A national museum of pop music in Sheffield. It’s not just that these projects flop and close. It’s that they distract from two bigger issues.

First, most people aren’t graduates – so we need a plan to raise their productivity and wages too.

Second, places outside urban centres are perfectly capable of attracting high-skill, high income people – with the right policies.

Britain’s economy is unusually unbalanced compared to other countries.  Pre-tax incomes in Greater London are nearly 60 per cent higher than the national average, but more than 20 per cent below average in Yorkshire, the North East, Wales and Northern Ireland.  These imbalances mean our economy is overheating in some places and freezing cold in others, slowing growth overall. There are no major economies that are richer per head than Britain which have a more unbalanced economy.

But these imbalances don’t represent pure free market outcomes. It’s true that low-skill, low wages places can get stuck in a vicious circle. True that some places on the periphery have very deep problems. Nonetheless, the British state doesn’t do much to stop that – in fact it does a lot to unbalance growth.

Consider how we spend money. Capital spending on transport infrastructure in London is nearly three times the national average. Research funding per head is nearly twice the national average. Nearly half the core R&D budget is spent in Oxford, Cambridge and London. Spending on housing and culture per head in London is five times the national average. We’re “levelling up” the richest places.

We’ve rehearsed these problems for years, but not fixed them. Instead of chasing flat white drinkers, we need to find a cool £4 billion a year to level up R&D spending in other places to the levels London enjoys. Fancy coffee can come later.

Consider our tax system. Overall, the tax rate on business in the UK is about average.  But we combine the lowest headline rate in the G20 with the lowest capital allowances. The combined effect of this is a huge bias against capital intensive sectors, particularly manufacturing.

That in turn has a regional impact, hurting places more dependent on making things: manufacturing accounted for only five per cent of London’s productivity growth since 1997, but nearly 50 per cent in the north west. A hostile tax system is one reason Britain has deindustrialised more than any other G20 country since 1990, and why manufacturing’s share of the economy is half that in Germany or Japan.

Manufacturing should be a key part of levelling up outside cities: it needs space, not city centre locations. In English regions outside London, wages in manufacturing are about nine per cent higher than in services, and manufacturing productivity grows faster than the economy as a whole.  But Britain’s excessive focus on professional services makes it harder to grow high-wage employment in non city-centre locations.

Consider where we put our key institutions. In Germany the political capital was Bonn, and is now Berlin. The financial capital is Frankfurt. The Supreme Court is in Karlsruhe. The richest place is Wolfsburg, home of Volkswagen. There are major corporate HQs spread across the country. TV production is dispersed because central government is banned from running it.

In Britain, all these things happen in just one city. We’ve talked about this for years, but made little progress.  In recent years, we managed to move one chunk of Channel 4 to Leeds, and a bit of the BBC to Manchester. But that’s about it. Whitehall only wants to move low-end jobs.

The debate on levelling up is frustrating, because we know some things work, but we don’t do them. “Regional Selective Assistance” boosted investment in poor places with tax breaks and subsidies.  Thanks to evidence from natural experiments, we know it boosted growth. Yet it was allowed to wither.

I don’t want us to be just another government promising the world, then not delivering. Politically, it’s vital we deliver. Lots of people who haven’t voted Conservative before put their trust in us last year. It’s telling that the centre point of the seats we won is just outside Sheffield.

We won on a manifesto combining centrist economics, (50,000 more nurses) mild social conservatism, (ending auto early release) and national self-confidence (Getting Brexit Done).  Levelling up is central to all this. We promised voters steak and chips.  We could serve up avocado toast instead, but we shouldn’t be surprised if the voters don’t thank us.