Sanjoy Sen: The Government and Stellantis. ‘Picking winners’ is rarely a popular concept among Tories but it’s often a reality.

8 Mar

Sanjoy Sen is a chemical engineer in North Sea oil. He contested Alyn & Deeside in the 2019 general election.

The Government has been in “productive” discussions with Vauxhall’s new owner, Stellantis, over the future of the Ellesmere Port Astra plant and its 1,000-strong workforce. 

Three options are on the table: plod on building petrol cars until the 2030 government ban, close the whole place down or re-invent it as a long-term electric vehicle hub. The last one is evidently the most attractive but Stellantis is clear that it comes subject to government support. But are the fate of the factory and the fate of the Vauxhall brand one and the same thing? 

What is Stellantis, anyway? 

Back in 2014, Italian auto-giant Fiat acquired America’s Chrysler. And in 2017, General Motors off-loaded its European division (Vauxhall-Opel) onto France’s PSA Group (Peugeot-Citroen). That whole lot, comprising some 14 mostly over-lapping, loss-making brands, came together as Stellantis in 2021. MBA students will be poring over the internal politics and corporate culture clashes for years to come.  

Worse still, Stellantis is wildly over-represented in Europe but is miles behind in Asia. And its mainstream brands are under pressure from all directions: prestige players (BMW, Mercedes-Benz) are rolling out compact competitors while low-cost manufacturers (Dacia, Skoda) are fast raising their game. Then there are the externalities facing all auto-makers, from anti-car city mayors to debt-laden Generation Z preferring Uber to ownership

Stellantis does have one ace up its sleeve, though. Governments worldwide fret over redundancies, both in terms of the economy and the ballot box fall-out. Little wonder CEO Carlos Tavares can do the rounds drumming up taxpayer support globally. 

Government to the rescue (as usual) 

Brexit critics have been quick to highlight the reassurances offered to Nissan and the support demanded by Stellantis. But state backing is hardly new in the car industry. Germany recently offered up a billion Euros to secure the new Tesla factory over its EU competitors (sorry, partners). France already holds a stake in Stellantis with Italy set to follow suit. Even the Americans aren’t averse to a bail-out, rescuing both Chrysler and GM after they filed for Chapter 11 bankruptcy in 2009. 

The UK, of course, has plenty of experience here. Successive governments backed everything from DeLorean to British Leyland before finally losing patience. Even Margaret Thatcher, not a noted market interventionist, incentivised Nissan to come to Sunderland, resulting in a huge success.  

Tavares describes the UK decision to bring forward the petrol car sale ban to 2030 as “brutal”. In reality, the shift to hybrids and “pure electric” is inevitable – but Stellantis brands have been slower to transition than their rivals. “Picking winners” is rarely a popular concept among Conservatives but it’s often a reality. Kwasi Kwarteng needs to be confident that the Stellantis electric plan for Ellesmere Port looks long-term credible before committing taxpayer money. 

What might become of the Vauxhall brand?  

While the future of the factory might be secured, the Vauxhall brand itself could be a different story. In these Thunbergian times, car manufacturers are frantically ditching a century of petrol-based brand awareness and creating all-new, futuristic identities.

The Stellantis portfolio needs urgent pruning with even Chrysler under threat. Although its market share has long been slipping, a ruthless axing of the Vauxhall name wouldn’t be go down well in the UK. But a well-planned transition into a modern electric identity isn’t just achievable – it’s downright essential for success.  

A decade ago, former owner GM had high hopes for their Volt hybrid; a typical suburbanite could re-charge on their driveway, enjoy an all-electric commute and forget any range anxiety thanks to the back-up petrol engine.

Instead, it became a textbook example of marketing failure. Badged as a dowdy Chevrolet, it proved too radical (and expensive) for traditional buyers – yet too old-fashioned (and conformist) for super-trendy early adapters. The Volt came over here as the Vauxhall Ampera and suffered a similar fate despite being crowned 2012 European Car of the Year. Forgive the pun but they just didn’t plug it properly. Sorry. 

Neil O’Brien: Lessons we can learn from fast-growing countries to help us to grow faster

8 Mar

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

Here’s a striking thing: several countries which suffered decades of communism are now richer than large parts of the UK. In 2018, the GDP per head of Yorkshire, Northern Ireland and the East Midlands (where I’m writing from) were all below Slovenia. Wales and the North East were lower: below Portugal, Estonia and Lithuania. All are now poorer than the old East Germany.

Radical change is needed to claw our way back into the top economic league. And unless we raise growth we won’t escape from demographic trends putting upward pressure on taxes. If you look at countries that have enjoyed rapid growth, they have in common a conscious drive to increase their knowledge, investment and technology.

Take the east Asian countries. Japan, Korea, Taiwan and now China, all followed the same playbook and saw dramatic growth.

Between 1945 and 1970 Japan went from a 20 per vent of the GDP per person of the US to two thirds, rising to 85 per cent by the late 80s. When I was born GDP per person in Korea was a quarter of the UK level. Now they are roughly the same. To have seen as much economic growth as a Korean pensioner has in their lifetime, a British pensioner would have to have been born in the reign of George III.

All four invested heavily in bringing new technologies to the country. Through a mix of government support for new industries and control over the financial system they supported firms to enter new higher tech industries, and soak up the inevitable losses as they learned on the job. For example, TSMC, now the world’s leading chipmaker, was a originally part owned by the Taiwanese government. Likewise Korea’s POSCO, now one of the world’s leading steelmakers.

But unlike many poor countries, they used internal competition between firms and global markets to discipline such subsidies. Companies that grew the national knowledge base and proved capable of export success got subsidies, tax breaks, free land and infrastructure; those that failed were ruthlessly culled (the opposite of what we did with British Leyland).

Industry ministries like MITI in Japan systematically researched and plotted the conquest of one industry after another. China’s NDRC and “Made in China 2025” are similar today. Taiwan created a huge science park and established consortiums of firms to share research, development and knowledge.

Various kinds of regulations and incentives encouraged sky-high rates of investment: even after easing off a lot Japan invests about 25 per cent GDP each year and Korea 30 per cent, compared to 17 per cent in the UK. All four went through periods of importing, copying or frankly ripping off western technologies.

Or if that seems too distant, take an example closer to home. Since 1990 average wages in Ireland went from being 5-12 per cent lower than the UK to being 7-15 per cent higher, depending how you measure it. Ireland attracted four times more inward investment than the UK relative to the size of its economy. Those foreign-owned firms have higher productivity: employing 22 per cent of people but accounting for 57 per cent of value added and 70 per cent R&D investment.

Some recent growth has been driven by highly specific and aggressive tax policies. But the seeds of Ireland’s growth were sown in earlier decades, when Ireland opened up to foreign direct investment and introduced a zero tax rate for manufacturing exporters. From the mid 80’s, Ireland specifically targetted investments from higher tech firms: Microsoft arrived in 1985, Intel arrived in 1989, Amazon, Bell Labs, MSD, Google, Twitter and Facebook in the 90’s and 00’s.

The Irish Development Agency operates a sort of concierge service for inward investors, and recent court cases like that brought by the European Commission regarding Apple show how far Ireland has been prepared to go to attract leading tech firms.

What would it mean to learn from these fast-growing countries today?

First, attracting firms with leading knowhow. We’ve done it before: Mrs Thatcher wooed Nissan to Sunderland with tax breaks. Although evidence suggests previous tax breaks increased foreign investment into poorer parts of Britain, we gradually phased them out, only partly due to EU rules. So the creation of the new Office for Investment is a good start.

Second, improving our innovation-industrial system. Total investment in R&D in the UK is just way too low. The UK invested 1.7 per cent GDP on R&D in 2018, China 2.1 per cent, the US 2.8 per cent, Germany 3.1 per cent, Sweden and Japan 3.3 per cent, South Korea 4.5 per cent and Israel 4.9 per cent. Across the world there’s a clear correlation between government investment and business investment.

However, government investment is more geared towards prompting business investment in some countries. We’re now growing government investment in R&D after decades of neglect, but we must also make it more business-focused. Government should implement the proposals set out in a recent NESTA report to support innovation in poorer parts of the UK.

Third, we need to bring the same focus to manufacturing and tech policy that we’ve had for decades on financial services. We have a city minister, and have quite rightly intervened and changed the tax system to promote financial services, because finance has high wages and productivity growth.

But so do manufacturing and IT. Between 1998 and 2018 output per hour grew £20.60 in manufacturing and £22.70 in IT, compared to £11.90 in leisure, £11.50 in retail, £9.50 in admin support services and £7.20 in accommodation.

Outside London, weekly pay in manufacturing is nearly a quarter higher than the economy as a whole. However, over recent decades poorer parts the UK have seen employment dramatically shifting out of manufacturing, and into these slower-growing local services. Though this holds down unemployment, it represents a sort of economic Dunkirk. The pace of this shift has dramatically slowed since 2010, but not been reversed.

Fourth, we need to address the UK’s longstanding low rates of physical investment. As the excellent Plan for Growth published last week noted: “The UK has a lower proportion of innovating firms overall than other advanced economies and weaker business investment”.

One cause of this is that Britain has had the most miserly tax allowances for investment in the G20. So the “super deduction” unveiled by Rishi Sunak last week is a huge step in the right direction. It should boost investment everywhere, but particularly in poorer places where there is more manufacturing.

Last but not least, a lesson from the high growth countries is about making sure that finance serves growth, rather than itself.

Again, the budget saw steps in the right direction. The Hill Review will enable dual class shares, which tech firms (like Google, Facebook, Lyft, Pintrest etc) increasingly use to offset market pressures for short termism. The new Infrastructure Bank in Leeds will catalyse private infrastructure investment, while further extensions of the British Business Bank will support lending and equity for growing companies (it is gradually filling the hole where 3i used to be).

The next challenge is to unlock more institutional investment into venture capital. Sunak has set in train a review of the EU-imposed Solvency II regulations for insurers. Shifting even a small sliver of such vast institutional cashpiles out of gilts and into growth enhancing venture capital could be transformative for growing businesses. There’s also arguments for reviewing similar rules around pensions too.

Making Britain into a tiger economy is a daunting challenge – particularly its less prosperous parts. But the challenges facing other countries at different times have been at least as daunting. If we don’t want a future of ever higher taxes and slow growth, we simply have to make it happen.

Iain Dale: The EU has no interest in Northern Ireland’s future prosperity. It just sees it as a mechanism to exert its power.

5 Mar

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

Most budgets are curate’s eggs. Good in parts. This one was no different.

Politically, it was a triumph for Brand Rishi. It was well delivered. His post-Budget press conference was slick and smooth. He comes across as a transparently nice and competent individual. That’s because he is.

But was it a budget with a narrative? Was it a “reset” budget? Was it a transformational budget? No, it was not.

It is possible to argue that it couldn’t be anything else than be a budget for the short term, given we have no idea where we will be this time next year, but even if you accept that argument, it disappointed on a number of levels.

The super-deduction measure was innovative and will have a massive event on investment over the next two years. And then it ends. It’s too short term, and should have surely been tapered.

Did corporation tax really need to be increased in one go by six per cent in two years’ time? Wouldn’t a gradual approach have been better, even if you accept it needed to rise. Which I do not.

It’s a tax rise which will inevitably make this country less likely to attract the levels of foreign inward investment in the long term. You can’t argue one day that lowering business taxes is a good thing and makes us more competitive, and then argue that by putting up corporation tax by a quarter still means that we are just as competitive.

Leaving the EU certainly gave some companies pause for thought about locating here, or increasing their presence here. We are lucky that most decided to go ahead anyway, but we do not need to give any company an excuse not to do so.

We may still have the fifth lowest rate of corporation tax among G20 countries, and yes, as Sunak argues, our rate will still be lower than in American, Canada, France, Germany and Italy.

But I’m afraid that argument cuts little ice in a world where the last thing the British government needs to do is do anything to put off businesses considering building a presence here.

Having said all that, two snap opinion polls show that the public approve the Budget with only 11 or 12 per cent disapproving. So from a political point of view, it was job done for the Chancellor. But I still wonder whether a bit more long term, “reset” thinking was needed and that both Sunak and the Government might come to regret that it was largely absent.

– – – – – – – – –

If the pandemic hadn’t happened, surely this Budget would have been all about the post Brexit economy. Brexit wasn’t mentioned directly once in the Chancellor’s speech, although towards the end we heard a few oblique references.

What we needed was a pathway to the future, not just over the next couple of years, but over the next couple of decades. We needed a vision.

Businesspeople needed to be reassured about the future of our trading patterns, not just with the rest of the world, but with the EU. Too many businesses seem to be finding that the so-called “free trade agreement” with the EU is nothing of the sort. The inevitable bureaucratic teething problems in trading with EU countries are still there, two months on.

OK, there are no queues at Dover, but the attitude of (particularly, but not exclusively) of French customs officials leaves something to be desired. I hear time and time again reports that countries deal perfectly happily and efficiently with the US, China or even Russia, yet find it that deliveries to European customers are being returned to them by couriers with no explanation and on multiple occasions. They feel powerless to do anything about it.

And don’t get me started on the Northern Ireland protocol, whose only effect so far as I can see has been to effectively annexe Northern Ireland to the EU. Just as Martin Selmayr threatened.

The EU has no interest in Northern Ireland’s future prosperity. It just sees it as a mechanism to exert its power. It is a constitutional outrage that British companies are not free to trade without restriction to all parts of the sovereign United Kingdom. The checks that are now being demanded by the EU are so disproportionate as to be totally unreasonable. The British government bent over backwards to make a compromise to meet EU concerns that the Single Market could be compromised, but its goodwill has been exploited at every turn.

At some point this has to stop, and the unilateral extension of the grace period is the inevitable consequence of EU inflexibility. It is not, as the Irish government unhelpfully says, a breach of international law. What it is, is a sign that Britain’s patience with the EU on this issue is about to expire.

– – – – – – – – –

I’ve been watching a new documentary on how Donald Trump won the 2016 presidential election called The Accidental President.

It’s made by the British film maker James Fletcher, who is now based in New York. Fletcher will be familiar to many for his work filming David Cameron for the WebCameron project back in the day.

It’s a fascinating account of Trump’s rise to the presidency. There was no narration, no voiceover, just 90 minutes of original campaign footage together with lots of testimony from political commentators, eye witnesses and vox pops.

The most powerful moment was when commentators were asked to name Trump’s campaign slogan. They all trotted out “Make America Great Again”. They were then asked for Hillary Clinton’s campaign slogan. None of them could recall it, bar one, who recalled it was “Stronger Together”. He then followed it up with “whatever that means”.

If proof were needed that political slogans can be all powerful, then we now have it.

The DfE has thrown everything but the kitchen sink at school reopenings. But the perennial problem is communication.

25 Feb

With little over a week to go before schools reopen, Gavin Williamson has been busy trying to persuade all parties concerned that it’s safe to go back.

Yesterday at a Downing Street press conference, he outlined plans for schools in England. One of the Government’s biggest moves is a “pandemic package” of extra funding to help pupils catch up with all the learning they have missed during the course of 2020/21.

The Government will fund £700 million in total for England, with a £302 million Recovery Premium dedicated towards state and primary schools. This is designed to help schools support disadvantaged students in whatever way they think is best – whether that’s additional clubs and activities, or something else.

The other huge development is that A-Level and GCSE results in England this year will be decided by predicted grades (teachers deciding pupils’ exam results, based on a combination of mock exams, coursework and essays). More on that later.

As for safety, face masks will not be compulsory in schools, but “highly recommended”, and Nick Gibb, the education minister, said he hoped the majority of students would volunteer to have Coronavirus testing twice a week. Secondary schools and colleges are also allowed to stagger reopenings on March 8 to get testing in order.

The DfE has gone to huge efforts to try and get schools running again. It is trying to pre-empt every criticism that has been levelled at the Government during the pandemic, from schools not having enough tests to concerns about how far behind pupils are, which will be addressed with mass testing and after-school classes, respectively.

One of the toughest challenges for the Government has been deciding how to mark grades. It cannot win, whichever route it takes. When it used an algorithm over the summer – designed by Ofqual – to decide GCSEs and A Levels, this led to huge outrage about exam results. But predicted grades aren’t perfect either. When the Government switched to them after the Ofqual furore, it led to grade inflation (last year a total of 76 per cent of GCSE results were a grade 4 or above compared to 67.1 per cent in 2019).

Williamson said 2021’s predicted grades will be “fair to every student”, and Gibb promised “the best system possible to ensure there is consistency and fairness in how teachers submit grades for their students.” But you sense that it’ll be another troublesome summer for the Government.

Add to that it is already dealing with increasing calls to bump teachers up the vaccine queue. These will only grow after Germany announced it was doing this (even in spite of its terrible difficulties rolling out the vaccine, which make it no model to follow). 

Although the UK government’s scientific advisers have repeatedly spelled out the rationale for the vaccine order, it has been hard to compete with the likes of Tony Blair (who has also called for teacher prioritisation) and everyone else who has suddenly decided they’re an epidemiologist.

Overall, the Government’s biggest problem has always been communication. Up against a vocal opposition – that’s the teaching unions, not Labour – Williamson has struggled to make the case for keeping schools open (and it is a strong one).

As I wrote in November for ConservativeHome, one way the Government could have moved its plans forward is by using an independent taskforce in the way it did for vaccines (with Kate Bingham in charge). I also wrote that “it would be wrong to assume that the issue of closures has now been settled for good” – at a time when public attitudes to school reopenings actually improved.

Likewise, despite the speedy roll out of the vaccines and a palpable excitement about the Government’s roadmap to easing lockdown, one senses that the problems with school reopenings are far from over.

Macron and others played politics with AstraZeneca. The consequences for many EU citizens are fatal.

24 Feb

In January this year, many will remember Emmanuel Macron telling reporters, in no uncertain terms, what he thought about the vaccine developed by AstraZeneca and Oxford University.

Today we think that it is quasi-ineffective for people over 65”, he said, hours before the European Medicines Agency recommended it for adults of all ages. “[T]he early results we have are not encouraging for 60 to 65-year-old people concerning AstraZeneca”, the French president warned, as well as criticising Britain’s strategy of delaying the second dose of the vaccine to get the first one out quickly – in another act of incredible diplomacy.

Days earlier a German newspaper incorrectly claimed the AstraZeneca jab is only eight per cent effective in the over-65s. While the figure was quickly dismissed, several countries haven’t exactly inspired confidence in AstraZeneca’s efficacy. Germany advised that it should not be given to people aged 65 or above, citing “insufficient data”, and France, Switzerland, Denmark, Sweden and Norway have also recommended it only for younger people.

Ursula von der Leyen, the European Commission Chief, even went so far as to accuse the UK of compromising on “safety and efficacy” safeguards in delivering its vaccines. And Clément Beaune, France’s Europe Minister, warned “the British are in an extremely difficult health situation. They are taking many risks in this vaccination campaign.” You don’t have to be a Brexiteer to get the idea: British vaccines = bad. Even John Bell, a medical professor at Oxford University, accused Macron trying to reduce demand for vaccines to cover up the EU’s huge issues with procurement, culminating in its dangerous attempt to control vaccine exports across the Irish border.

So one wonders what the mood is in Brussels now that research has revealed just what a success the much-attacked AstraZeneca vaccine has been. A study in Scotland, where 1.14 million people were vaccinated between December 8 and February 15, showed that both the AstraZeneca and Pfizer vaccines led to a “very substantial” drop in serious illness across all adult age groups.

Critically, researchers found that by the fourth week after receiving an initial dose of each vaccine, the risk of hospitalisation from Covid-19 reduced by up to 85 per cent (Pfizer) and 94 per cent (AstraZeneca), in a result that will please people who’ve had it – but raise serious questions about the language and policies of EU leaders.

Their actions have fuelled vaccine hesitancy. In Germany, for instance, people have failed to turn up to appointments for the AstraZeneca vaccine. As of Friday, only 150,000 out of 1.5 million doses of the vaccine had been used – leaving the country with less than six per cent of its population immunised (compared to 26 per cent for Britain).

There are also reports of hospital workers in France and Belgium demanding that they be given the Pfizer jab instead of AstraZeneca (one nurse in a Flemish hospital even told a publication she would go on strike if offered the latter). Politicians have failed to convey the bigger picture; that everyone is lucky to be offered one vaccine with high efficacy rates (50 per cent protection would have been a good outcome), let alone that several have been developed.

As Ryan Bourne and Jethro Elsden have already written for ConservativeHome, the EU’s difficulties in procuring vaccines is dangerous enough in itself – Bourne estimates the UK has saved around nine thousand lives by choosing its own vaccination programme, and Elsden says the country has gained approximately £100 billion from doing this.

The fact that some EU leaders have added to this chaos by planting doubts about AstraZeneca’s vaccine makes the situation even more alarming. The vulnerable are less protected, and – on a global scale – if we do not get transmission of the virus down, it can mutate and mean that the current vaccines do not work.

Some leaders realise the seriousness of the problem. Michael Müller, the mayor of Berlin, has warned that people could be sent to the back of the queue for vaccines if they refuse an AstraZeneca job. “I won’t allow tens of thousands of doses to lie around on our shelves while millions of people across the country are waiting to be immunised”, were his words, and Angela Merkel’s spokesman has pleaded with Germans to take the “safe and highly effective” jab.

It’s a start, but terrible that so much damage has already been done. Some might remember that in November 2020, MPs here debated whether social media companies should be doing more to remove anti-vaccine disinformation. Never could they have imagined it would be Macron spreading some of the most troublesome ideas.

Guy Mansfield: Now we must work with the EU to make Britain more safe and secure

19 Feb

Lord Sandhurst is a member of the Conservative European Forum (CEF) Justice and Home Affairs policy group. He is a past Chairman of the Bar of England and Wales (as Guy Mansfield QC), and current Chair of Research of the Society of Conservative Lawyers.

As Conservatives, it is our duty to ensure that the UK is neither less safe nor less secure outside of the EU. Both parties must think again and strengthen cooperation.

Understandably, political and media attention has been focused on the trade elements of the deal agreed between the UK and the EU on Christmas Eve. Now that we have left the European Union, it is time to review carefully all aspects of the Trade and Cooperation Agreement (TCA) to ensure it satisfies all of UK’s needs, beyond simply trade, tariffs and quotas.

My paper published by Conservative European Forum’s Justice and Home Affairs policy group – The Trade and Cooperation Agreement: The Justice and Security challenges ahead – examines, in detail, part three of the TCA, which covers UK-EU security cooperation.

Regardless of one’s view on Brexit, we can all agree, especially as Conservatives, that we do not wish to see the UK less safe or less secure as result of our changed relationship with the EU.

The paper raises a number of concerns. The statement released by the Home Office immediately following the agreement was optimistic. In fact, since 31st December 2020, the UK has been at a disadvantage. We have lost tools ‘to tackle serious crime going forwards’ and to ‘bring criminals to justice.’ The new extradition system will be less efficient.

First, the UK no longer has direct, real time access to two important centralised databases – SIS II, which holds records of stolen identity documents and wanted people, and VIS, which stores fingerprints and digital photographs of those applying for a Schengen visa. In 2019, UK police checked SIS II no fewer than 603 million times. These databases have been vital for UK police forces, notably enabling them to check if anyone is wanted or missing across the EU.

Secondly, we have lost our membership of Europol. As a consequence, the UK’s police forces have lost real time access to its databases. In fighting crime, speed is crucial. Crime and criminals are constantly evolving to evade detection. The UK will no longer be a member of Europol’s management board; it will not be able to exert the same influence over its future focus or prioritise areas of threat. As a non-Member State, the UK has lost the right to initiate operations such as Joint Investigation Teams.

Thirdly, the UK has left the European Arrest Warrant (EAW). This will result in slower and more complex extradition processes. Henceforth UK and EU member states can, if they choose, refuse to execute an arrest warrant for a number of reasons:

  • In non-terrorist cases, on political grounds (the ‘political’ exception);
  • On grounds that the requested person is a national of that executing state (the ‘own national’ exception).
  • On the ground that the crime for which the UK seeks extradition is not a crime in the state from which extradition is sought (‘double criminality’). For such countries to agree to extradite, the crime must be an offence in that jurisdiction.

The political exception may well be an improvement. Not every member state is scrupulous in ensuring that decisions to prosecute are free from political interference.

But the reintroduction of the own national exception is bad news. Germany, Austria and Slovenia have already indicated that they will not extradite their own nationals. There are potentially a further 13 Member States which may likewise refuse to surrender their nationals. The UK will, in such instances, have to provide its evidence to such Member State, which (alone) will then decide whether to prosecute. Any trial will be conducted, if at all, in the Member State.

The double criminality requirement will slow down and even stop extraditions to the UK where the issue is raised. That too is bad.

It is not all bad news. The UK will continue to receive Passenger Name Record (PNR) data in advance of all arrivals by air. We shall continue to enjoy access to the Prüm system (which makes accessible to EU Member States and the UK all national databases which store DNA profiles, fingerprints and vehicle registration data) and the European Criminal Records Information System (ECRIS), which permits access to criminal records of individuals on national databases across the EU. These are not gains; they simply maintain the status quo.

It is important to emphasise that the losses in security cooperation disadvantage the EU too. This is not a one-way street. The UK’s diminished role in Europol will create reciprocal dis-benefits to the EU. The UK’s loss of access to the EU systems means the EU loses access to the UK’s systems.

Our conclusions are intended to be constructive. However, it is plain that we have lost important tools for tackling crime. Looking to the future, the UK and EU member states must address further the security needs of our populations to go about daily lives free from avoidable harm. I urge both sides to continue to work together to strengthen security cooperation. The price of failure is too high, not just for the UK, but for the EU as well. This is not a debate about sovereignty, trade or tariffs. It’s about security. As Conservatives, the security of the UK and its citizens must always come first.

Paul Howell and Heather Wheeler: Full HS2 is critical to our election commitment to rebalance the economy

16 Feb

Paul Howell is the MP for Sedgefield and Heather Wheeler is the MP for South Derbyshire.

After our landslide election victory last year, the Prime Minister made a promise to unite the country and level-up our nations and regions. The jobs-first approach and once in a generation levels of public investment in infrastructure announced by the Chancellor in his spending review set our party on course to deliver on these promises, despite the challenges presented by the pandemic.

The Chancellor has invested in supporting businesses and individuals throughout the pandemic – at massive cost to the Exchequer. But now that the vaccine is being rapidly rolled out across the country, we need to start thinking seriously about the economic recovery. We feel strongly that we need to invest in infrastructure and that in particular, investing in new rail lines, upgrades and new train fleets is one of the best ways to do so.

As Members of Parliament representing constituencies in the Midlands and the North East, we are pleased to see reform of the Treasury’s Green Book rules to unlock future public investment for our regions. Too often in the past, a rigid interpretation of the rules has led to spending in London and the South East, with areas such as ours being overlooked. The reforms under consideration have the potential to turn the situation on its head – essential if we are going to achieve our goals of levelling up.

The publication of the National Infrastructure Strategy is also welcome, as is the unequivocal support it provides for High Speed 2 – our flagship national transport project.

When the Government gave HS2 the go-ahead it recognised that it will deliver vital connectivity, cut journey times and boost capacity. We are aware of the current calls to cancel the project outright given the impact of Coronavirus. However, as Andrew Stephenson recently said, to do so would “send a terrible signal out globally about the UK intending to build back better from Covid-19.”

With over half of the Phase 1 budget for the line from London to Birmingham already spent or contracted to, such calls are frankly nonsensical, and would lead to the loss of 13,000 jobs directly employed by HS2 and tens of thousands more in the supply chain.

Construction is well underway across the route, and British businesses are benefiting, such as County Durham based Cleveland Bridge, a world-leading steel engineering company. It produced twenty-four massive steel girders that form part of the first of HS2’s new modular bridges, recently installed over the A446 in Solihull in just 45 minutes.

Instead, we must continue with this once in a generation investment into UK plc. HS2 will serve as a much-needed catalyst for economic change across many of the cities and towns that are now Conservative constituencies. Many of these areas have seen positive change over recent years but such is the scale of the economic challenge that our levelling-up agenda must double down on investments such as these to drive economic growth and opportunity. This is made all the more important in light of the ongoing battle to contain Covid-19 across the UK, but particularly in our Blue Wall areas.

And to counter those who say the impact of home working and changes to commuting, or the future widespread introduction of autonomous vehicles means that we should no longer invest in rail, we say that is wrong. Demand for rail travel rose year on year since privatisation in 1995 – and pre-pandemic was predicted to go on rising – and we see no reason for this to change in the longer term. HS2 is intended to have an operating life of 120 years; it is right that we are thinking long term and investing in high-speed rail, just as virtually every advanced economy in the world is doing.

Try telling people in Japan, Germany, South Korea, China, Turkey and elsewhere that such investment is a waste of money and you will get an incredulous response. With many more countries now developing national and international high-speed rail networks, we have the opportunity in the UK to establish a world leading capability and export new trains, equipment and expertise to the likes of India, Australia, Scandinavia and many more. This opportunity is too often overlooked, but it has huge potential.

Making sure the British public gets the best bang for their buck from our flagship national transport project and that it truly delivers for the whole country will be vital. Anything less would be a missed opportunity. That is why HS2’s Phase 2b, Midlands Engine Rail, Northern Powerhouse Rail, and our plans to reverse Beeching’s cuts must also get the green light from the Integrated Rail Plan, which we are eagerly awaiting. Furthermore, investing in rail, and shifting people away from car and domestic air travel, is critical to achieving the Government’s net zero targets.

The opportunity from this unprecedented public investment is not just about new tracks, wires, bridges and tunnels – important though they are. We represent areas with rich and unrivalled heritage of train building, with two major rolling stock factories (Bombardier Transportation in Derby and Hitachi Rail in Newton Aycliffe) directly employing thousands of our constituents and supporting many thousands more jobs in their British supply chains.

After too many years of decline, when we saw British train building virtually extinguished, train building is back.

We now have two established UK factories employing highly skilled workers who are producing new trains that improve the journeys of British passengers. Were they to secure the order for the new fleet of very high-speed trains it would secure jobs and investment in regions outside HS2’s Phase 1 route, thereby spreading the programme’s benefits more evenly across the country to regions like the East Midlands and the North East. More broadly, it would enhance and protect vital existing investment in rail manufacturing at a time when the pandemic has created uncertainty across the rail sector.

We cannot waste the opportunity that our Government’s high-speed rail investment plans presents. Using it to level-up the economic fortunes of the areas we represent will make good on the Prime Minister’s promise to first time Tory voters at the last election – to unite our country and re-balance our economy. It is time to build back better.

Anthony Browne: Why the UK’s fall in GDP is not the worst of the G7, but in the middle

13 Feb

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

There is no doubt that the UK has suffered a severe economic hit as a result of the pandemic, but just how bad? In particular, is it true, as opposition politicians claim, that we not only have the worst death toll in the world, but also the worst economic slump? The short answer is: no.

Yesterday’s headline figure from the Office of National Statistics shows a fall in real GDP of 9.9 per cent in 2020, the largest in history, and certainly the largest among the major economies. There may be particular underlying economic reasons we are worse hit, such as that our service-based economy is particularly dependent on people being able to meet, compared to countries that are more dependent on manufacturing and mining. But the more significant issue is that we calculate our GDP in a different way from other countries, actually following what is usually agreed to be international best practice but is rarely followed.

We have been taking evidence about it at the Treasury Select Committee, and I asked the deputy national statistician to provide internationally comparable measures of GDP. The evidence provided by the ONS to the TSC shows that if you do that, it turns out we are no longer the worst hit in the G7, but right in the middle, with a decline smaller than that of Canada, Italy and Germany, but larger than Japan, France and the US.

The fundamental issue is that the UK measures the public sector from its outputs (eg how many hospital visits, how many school lessons) not from the inputs (money spent), which is what other countries normally do. So when we carry on paying for the public sector but close a lot of it down, then we show a decline in output but other country’s don’t. This does not affect the measurement of nominal GDP (ie in current money terms), but only when it is adjusted to create “real GDP” which supposedly has the impact of inflation stripped out. That real GDP is normally used for international comparisons, but because of the extraordinary circumstances of the pandemic, it is presently highly misleading. The ONS letter to the TSC said: “Current Price or nominal estimates of GDP are not affected and therefore more internationally comparable”.

So what happens when we look at the internationally comparable figures? For most countries, there is little difference between real and nominal GDP. But because of the UK’s methodology, there is presently a huge difference: the decline in real GDP is more than twice the decline in nominal GDP. In particular, from the Q4 2019 to Q3 2020, the UK suffered an official 8.5 per cent decline in real GDP, but only a 3.5 per cent decline in nominal GDP. That is less than Canada and Italy, with declines of over four per cent, and Germany with a decline of just under four per cent. As the ONS puts it: “while the UK’s performance on the volume measure is the weakest, the current price measure puts the UK in a more comparable position.”

None of this makes any difference to businesses, many of which are genuinely suffering a real crisis or have already gone under. I absolutely don’t want to play down their difficulties. But it does mean that opposition politicians are wrong when they say the UK has the worst record in the G7 in its economic response to the pandemic. Despite being harder hit by the pandemic, large doses of government support have meant that our economic hit is in the middle of the G7.

One last thought: if you want to stick with the real GDP figures that makes our slump look exaggeratedly bad by international comparison, then when the system goes into reverse, real GDP figures will make our bounce back look particularly strong. I look forward to opposition politicians congratulating the Government on that.

David Gauke: Ten years for lying on a form. Misguided, disproportionate – and characteristic of our cavalier approach to sentencing.

13 Feb

No one is going to be sentenced to ten years imprisonment for lying about where they have travelled from. Such behaviour might be reprehensible and, in the current circumstances, it may be justifiable to make it a criminal offence which, on occasion, may need to be punishable by imprisonment. But ten years – on a par with threats to kill, non-fatal poisoning or indecent assault – is evidently disproportionate. Even Michael Ellis, the Solicitor-General, who is not exactly a signed-up member of the awkward squad, has let it be known that he questions the “credibility” of the sanction.

I make this point not as a sceptic of measures to control the spread of the virus nor as a critic of Matt Hancock. Some of his Parliamentary colleagues appear to take out their frustration at the existence of Covid-19 and all that this entails on our way of life on the Health Secretary. Implicit in some of the criticisms he receives is the view that, if only someone else was in charge, we would all be going about our business unimpeded by lockdown restrictions. This is obviously nonsense.

On the big issue about the need to suppress the virus until a vaccine became available, Hancock got it right. Not everyone in Government can make that claim.

Nonetheless, the proposed maximum sentence is far too long. It also revealed an attribute that is not unique to one Minister or one government but which has been prevalent in our politics for nearly 30 years – a cavalier approach to sentencing policy.

Before making my case, let me set out some data. When I was Justice Secretary, I asked for information as to how large our prison population was compared to other European countries. For every 100,000 people in in the Netherlands, 61 were behind bars. In Denmark it was 63, in Germany it was 76, in Italy it was 99 and in France it was 104. In England and Wales it was 139.

This high prison population is a relatively recent phenomenon. In 1993, we had approximately 45,000 people behind bars. Fifteen years later, we had reached 83,000, which is roughly where we have been since (the current exceptional circumstances has resulted in a fall to 78,000, but is forecast to rise rapidly over the next few years).

The increase in numbers has not been driven by higher levels of criminality, but by tougher sentences. Speak to experienced judges, and they will tell you of how someone who would have been sentenced to five or ten years in the 1980s would now get ten or 20 years. Our prison population has risen not because there are more criminals or that more criminals are getting caught, but because our criminals are locked up for longer.

Quite right too, many will say. Longer sentences tend to be very popular. Even this week’s announcement polled well – 51 per cent thought it ‘about right’ and 13 per cent thought it ‘not harsh enough’, according to YouGov. That does not make it a good policy.

We have to ask ourselves, when it comes to increasing the time people are imprisoned for any offence, why we are doing it. The first argument is deterrence, but there is little or no evidence to suggest that, say, the threat of ten years in jail is more of a deterrent than five years.

The second argument is about incarceration protecting society from reoffending. But, again, the evidence tends to be weak to support this (and, by and large, the more serious the offence, the less likely the chances of reoffending).

The third argument is about society articulating its feelings of repugnance at particular behaviour by the severity of the punishment. I certainly do not dismiss the need for our criminal justice system to reflect our shared sense of outrage over particular crimes. This is a legitimate factor in determining sentencing policy. However, as a society, in recent decades we have become noticeably keener to articulate our feelings of repugnance.

This process often starts with a targeted announcement that applies to only a small number of criminals. To give an example, a minimum sentence of 30 years for murder involving firearms or explosives was imposed in the 2003 Criminal Justice Act. This applies, thankfully, to very few cases but it made the minimum sentence for knife murders look low, so that increased from 15 years to 25 years in 2009, after a high-profile case. And then when it comes to determining the appropriate sentence for other offences – such as attempted murder, or grievous bodily harm, or possession of a weapon – judges will take that minimum sentence for a more serious crime as a reference point.

Consequently, we have a ratchet effect. There is a high-profile crime; there is tabloid outrage over the leniency of a sentence, the Government increases the maximum or minimum sentence for that specific crime, sentences for lesser crimes increase accordingly – by which time many offenders face a longer stretch and the prison population rises yet further.

I am acutely aware that trying to step off this escalator is enormously difficult. In my own time as Justice Secretary, I tried to resist routinely inflating sentences for serious offences, rather than going as far as trying to reverse the trend for the previous 30 years.

Instead, I focused on trying to keep minor offenders out of prison. These are people who are frequent offenders where the focus has to be rehabilitation. Prison – with the inevitable disruption to family life, accommodation and employment – makes that much more difficult. The evidence points to non-custodial sentences being much more effective in reducing reoffending. Politically, there is widespread support for such an agenda and – although my policy of scrapping most short prison sentences has been dropped – there is very good work being done by my successor, Robert Buckland, and prisons minister, Lucy Frazer on this front.

Nonetheless, the Government’s Sentencing White Paper, published in September, as well as containing many excellent policies on matters like Community Sentence Treatment Orders, also contains a long list of measures that will mean sentences become even longer.

No doubt these poll well – even better than locking people up for ten years for giving inaccurate information as to their recent holiday travels – and those who will face lengthy imprisonment are deeply unsympathetic individuals.

There is a constant pressure on Ministers to be seen to do something, to demonstrate their abhorrence at criminality and to take the side of the victim. But where does this end? If – when faced with an individual crime that cuts through to the public or a crisis that requires the creation of a new criminal offence – the reaction of Ministers is always to impose a yet more draconian prison sentence as a form of virtue signalling, or to win a political arms race, sentences will become disproportionate, our prison population even more of an outlier and the burdens on the taxpayer (assuming we want a secure and humane system, which we should) unsustainable.

Yes: ten years for lying on a form is a bad policy. But this is not the first time that a misguided and disproportionate sentencing policy has been set out in order to liven up an announcement and show that the Government is being tough. And it certainly will not be the last.

Julian Gallant: Politics can support the arts without disturbing the artist

12 Feb

Jullian Gallent is a conductor, composer, pianist, impresario and Treasurer at Conservative Friends of The Arts (Instagram; Facebook).

I’ve been actively involved in Conservative campaigning since 2013, fought the 2019 GE as candidate for Ealing Central and Acton and am currently a Londonwide candidate for the GLA. My profession, though, is music and I’ve never quite understood the stranglehold the left has had on the arts, ever since “left” and “right” have been political concepts.

Mozart’s opera The Marriage of Figaro was certainly considered subversive; the star of the opera is a servant, not a prince. Beethoven’s belief in The Rights of Man, which he grandly expressed by setting Schiller’s Ode to Joy in the Ninth Symphony, probably raised the aristocratic eyebrows of some of his patrons. But this is nothing compared to the outright socialism espoused in the 20th century by artists like Frida Kahlo, John Steinbeck and Ken Russell. It became the thing to be “left-wing” as if the right was too interested in money-making, moralising and nationalism to care about the true, humanist religion of art.

The arts are the product of a natural urge to create in the abstract and a hunger for more than we see lying around us. It is hard to imagine a world without art yet, as Oscar Wilde said in his preface to The Picture of Dorian Gray, “All art is quite useless”. People die if they don’t eat, therefore food production is bankable. Illness must be treated, so doctors must be paid. The same for teachers, soldiers and lawyers. And politicians?

Music starts with a heartbeat, a voice and then other voices; rhythm, melody and harmony. Some of the world’s greatest paintings are the ancient ones on the walls of caves. Fine, but professional music, theatre, writing and painting must be rewarded if they are to thrive and this is always uncertain. The first commercial opera theatre opened in Venice in 1630, yet opera and capitalism have never happily coexisted. Handel in the 1720s famously had to seek regal patronage because the fees of Italian opera stars exceeded the entire box office take. I’ve experienced the same when putting on a world famous classical singer in a major London hall.

And don’t think you can just increase the ticket prices; that skews the image of the venue and they won’t have it. People will pay up but they won’t pay over the odds, even at the Royal Opera House. Stall tickets are eye-wateringly expensive for the big shows, yet other seats are sold at much lower prices. On the cost side, there can be over a thousand souls working on one operatic production, all quite rightly expecting a reasonable wage.

So there must be an extraneous financial input, which means some combination of donation, commercial sponsorship and state subsidy. In the USA state subsidies are negligible; donating is at once the main source of funding for big arts organisations and a measure of your social standing. In Germany and France state subsidy is the mainstay. In Britain, it’s a more even distribution of all three; the fundraising departments, known euphemistically as development offices, work overtime.

The gap between ticket income and cost creates opportunities for interference, especially in our big-state era. It’s pointless to cite a smooth transition from rich sponsors like Tchaikovsky’s Nadezhda von Meck (whom he famously never met) to state largesse. The rich patron wants to outlay on creating something beautiful, hence Paul Sacher’s commissioning of Bartok’s Music for Strings, Percussion and Celeste in 1936. The state wants something back, in the form of allegiance or national glorification or worse.

In the brave new world of the young USSR, artistic freedom and modernism was encouraged. By 1930 the picture was very different; professional writers, painters, actors and musicians had to join All-Soviet Unions. One of my heroes is the composer Nikolai Roslavets, who was published widely in the 1920s. By 1932 he had been forced into obscurity because an unpleasant and ideologically “sound” organisation called RAPM (Russian Association of Proletarian Musicians) thought his music was decadently complicated. He was accused of spying! Dmitri Shostakovich withdrew his Fourth Symphony from performance, aware of Stalin’s prudish criticism of his erotically charged opera Lady Macbeth of Mtsensk. The composer feared for his life.

All of that still happens, without the threat of the gulag of course. Artists are interfered with, because they do or don’t sign up to this or that ideology. And one of the worst of these ideologies is that public taste is vulgar and the enemy of true creativity. That wasn’t true for Beethoven or Debussy or Prokofiev, who were all big stars and marvellously original in their thinking. The state should carefully determine what needs support and then get out of the way, much easier said than done.

Politics has a constructive role to play, supporting artistic creativity without interfering with content, and there are some good things a-happening. Witness cross-party interest in establishing a 90-day touring visa for UK performing artists in Europe and vice-versa, which were debated in Parliament on February 8, 2021. That should transcend any post-Brexit blame game.

The APPG for Music, chaired by David Warburton, a former composer, has the largest membership of any such group. There’s another APPG for Music Education: one call I was on was attended by over 250 stakeholders nationwide. A £1.5 billion grant by this government, supporting arts organisations during the covid pandemic, puts the lie once and for all to the idea that true Tories are somehow closet Philistines.

I’m part of the recently-founded Conservative Friends of The Arts. We meet once a month to talk about the arts and to share short performances. One such was a recitation of Shakespeare’s sonnet No.18 (“Shall I compare thee to a summer’s day?”) by Giles Watling, which sounded bizarrely wonderful over Zoom. I got the impression that day that Shakespeare had no idea at all where the line lay between high art and superb entertainment!