Friday, 22 September 2017

The devil is in the detail

That was the impression I was left with after Mrs May's Brexit speech in Florence, and we didn't get much detail beyond what was leaked beforehand, although the questions from journalists did tease out one or two points.

Despite the prime minister's insistence that Britain was able to carve out a new relationship with the EU that did not have to draw on existing models, I got the impression that she was trying to steer a middle course between the Europhiles and Europhobes in her own party. She rejected both the EEA and Canadian free trade treaty models as unsuitable for both the UK and EU. In particular, she noted that the Canadian model made insufficient provision for mutual market access, so her 'bespoke' model may be close to the 'Norwegian' end of the spectrum, even if she rejects the idea of such a spectrum.

The beginning and end of the speech was largely rhetorical, so the key part was in the middle. A comprehensive security treaty with the EU including justice and home affairs issues does offer the EU an incentive for agreement.

It was also made clear that the UK would make payments during what she envisages as a two year implementation or transition period, shorter than the three years that business and Europhiles want, but longer than the six months the likes of Boris Johnson think would be sufficient. A figure was not mentioned, although £18m (around €20m depending of the exchange rate) has been leaked. This provides a basis for negotiation, although it does not take into account the €9bn/€10bn of pension commitments.

I was a bit surprised to hear that there had been 'concrete progress' in the negotiations: in so far as there has been, it is in relation to relatively minor matters. The 14 position papers issued by the UK Government have been largely judged to be unsatisfactory by the EU.

The rights of EU citizens already in the UK would be protected by the UK courts who would be able to take into account ECJ judgments.

She correctly said that regulatory issues are going to be crucial. But what does this mean in practice: for example, will we still follow EU guidance on allowable active ingredients in pesticides? She also envisaged that a disputes settlement mechanism would be necessary, but what form this (presumably quasi-judicial) body would take was not specified.

She said that the UK's 'fundamentals' were good, but I would not say that of our productivity problems or of real wages (which in part are held back by poor productivity).

Journalists' questions

These provided a little more illumination, although what was not answered was often significant.

Laura Kuenssberg of the BBC drew an admission that 'no deal is better than a bad deal' still remained a premise of UK policy. This could end up with what in effect amounted to a partial economic blockade of the UK simply by using the pinch point of the Channel ports.

The prime minister did not answer a question about whether we would remain in the EEA in the implementation/transition period.

Asked if we had got a single concession from the EU in the negotiations, she said we had got several, but did not specify one.

Asked by the FT if we would abide by new EU rules and regulations passed in the transition phase, she said that would be a matter for negotiation.

Now we have to wait for the reaction of the EU and member states. It is a step forward if Britain can work out what it wants from the negotiations, at least in general terms, but it takes two to tango.

Wednesday, 20 September 2017

The customs cliff edge

Introducing customs declarations after Brexit could cost traders £4 billion according to this report from the Institute for Government: Implementing Brexit: Customs

The authors say that while most people recognise the customs 'cliff edge' in the UK, not enough attention is paid to a similar cliff edge on the other side of the English Channel. Unless Calais, Dunkirk, Rotterdam and other European ports are also ready for Brexit, British exporters will face significant disruption to their supply chains. Preparation on both sides is particularly vital in the case of the Irish land border.

My preference would be to remain in the customs union or at least have a customs agreement with the EU, but the Government seems to be veering in the direction of a harder Brexit.

Saturday, 16 September 2017

Jo Swinson and the vacant centre

I am not a Liberal Democrat, but I have a lot of time for Jo Swinson for the work she did on under discussed issues like body image. She has given an interesting interview to The Guardian: Harder to offer simple solutions

Given that the Labour Party is consolidating its lurch to the left, and a weakened Conservative Party often seems to be held hostage by the likes of Jacob Rees-Mogg and Boris Johnson, one would think that there was a ready made space in the centre for Liberal Democrats to occupy. After all, the data would suggest that there are plenty of voters in the centre of the political spectrum.

I think that they are still suffering from being in coalition with the Conservatives. At the time I thought it was the right decision as they had to show that they could be a party of government as well as a party of opposition. Swinson herself admits that she learnt a lot from being a minister, in particular the fact that there are no simple solutions to many issues and many dangers from unintended consequences.

Swinson also tackles the issue of whether it was her gender that stopped her standing as leader. Again I think it was the right decision to give 'national treasure' Sir Vince a chance to display his silky skills away from the ballroom floor. But Swinson could well be leader before the next election.

The experience so far with the Democratic Unionists suggests that one can get a lot out of a confidence and supply agreement while still maintain autonomy. But then the Democratic Unionists have demands that relate to a very specific territory and require a cash pay off. What the Liberal Democrats wanted would have been somewhat more elevated.

Wednesday, 13 September 2017

Who represents business?

Dethroned guru: some reports suggest that he has lost the beard.

Dave Cameron's government tended to have an over cosy relationship with big business. When Theresa May came into office, it was apparent that she wanted to distance herself from big business as part of her appeal to the just about managing, although many suspect it was eminence grise Nick Timothy who was really behind this stance.

In any event the May Government's relationship with business has subsequently blown hot and cold. Business (by and large) wasn't happy about Brexit in the first place, but has been even less unhappy since then about the uncertainty that has been created (secret deals for Japanese car manufacturers aside).

The CBI has had an up and down relationship with governments. It was at the peak of its persuasive power in the tripartite structures used by both Conservative and Labour governments in the 1970s. Mrs Thatcher regarded them as corporatism incarnate and preferred to talk to the more ideologically sound Institute of Directors. They were rehabilitated under John Major and were seen as on message by Tony Blair who wanted to make New Labour 'the natural party of business'.

Now it has kicked off again. It started when Downing Street tried to get companies to voice their support for the Government's exit strategy which they were understandably reluctant to do. The stance taken on immigration has upset some companies.

Further offence has been caused by the failure to invite leading business lobby groups to a meeting at Chevening, the country residence available to Brexiteer ministers. The CBI, the Institute of Directors and the Association of British Chambers of Commerce have all been excluded. Senior business people are expected to attend, but there is some suspicion in business circles that it is a public relations exercise to show that Government is 'listening' to business.

I think there is a possible alternative explanation. When I was involved in the Organization of Business Interests project in the 1980s, the German leadership (Wolfgang Streeck) were preoccupied with the German associative state model which they saw as the norm. I had an uphill struggle to persuade them that in the US and the UK, a company state model tended to prevail with direct interactions between big companies and government being the norm. I also pointed out that big companies were forming government relations divisions to make their operations more sophisticated.

One interpretation of what is going on is that the Government is simply adhering to the British company state model and dealing direct with companies.

BTW, the FT had a very interesting article on the role of Vereine in producing a particular political culture in Germany recently: Clubby Germans

Wednesday, 6 September 2017

The Brexit divorce bill

The 'divorce' bill for the UK leaving the EU is proving a difficult and controversial subject. Leavers are using it to revive the narrative of 'no deal better than a bad deal' which has not been heard at all since the election. Those who advocate leaving on WTO terms should realise that it would allow a partial economic blockade of the UK.

Those who think that EU countries are motivated by the desire to maintain their exports to the UK should remember that their first priority is the integrity of the internal market. German firms want to maintain access to cheap production in the Czech Republic and Hungary.

There is no depoliticised formula which can resolve this problem. It is a highly political matter. The EU is faced with a net eight per cent hole in its budget and wishes to fill as much of it as possible. The UK wants to minimise its commitment. Indeed, poll evidence suggests that voters would find even €30 billion too much whereas the EU is (unrealistically) demanding €100bn.

These figures seem very high, but voters often forget that total public spending in 2018 is forecast to be £814 billion. Even if the euro was at parity to the pound, a €30 billion bill would be just 3.8 per cent of total spending. That is still a large amount, but it would be spread over three years at least. Reports in the Sunday Times that Britain would be prepared to pay €7bn to €17bn over three years, i.e., a maximum of around €50bn, have been denied.

I am not an expert on the EU budget. Robert Ackrill of Nottingham Trent Universityis and he has written an excellent summary of the subject which I commissioned and will appear in a future edition of Political Quarterly (advance publication is likely online).

There are some bills that the UK will have to meet. If it failed to make pension payments for UK citizens who have worked for the EU, they could sue the UK Government in the British courts (bill $9.6bn). I do not think that the EU can demand reste a liquidier, payment for all future projects decided while the UK was still a member (€36.2bn). It has a better legal case in 2019 and 2020 payments, mostly to farmers (€27.6bn).

There has to be a negotiation and a compromise, but this has to start by the UK making an offer. As the Financial Times said in a recent editorial, the UK Government has so far handled the negotiations 'shambolically'. It added, 'The British government has shown itself to be too much at the mercy of internal strife between its ministers to produce a coherent and detailed plan for Brexit.'

Tuesday, 5 September 2017

The day before yesterday

Yesterday the BBC Parliament channel re-ran the coverage of the 1997 general election campaign. I am not enough of an anorak to watch all of it, which would have been a marathon. However, I watched a considerable amount and the cat got some extra lap time.

There was such great hope and so many comparisons to 1945. Although the positive achievements of New Labour are often under estimated, and always overshadowed by the Iraq war, most analysts would argue that the 1945 Labour Government made more of a difference. Having said that, Chipping Norton historians like Dominic Sandbrook argue that we underestimate the extent to which the foundations of the welfare state were laid in the inter-war period.

I think that a very perceptive comment was made by David Dimbleby on the lines of it's one thing to win an election, another to govern. The civil service would have to be bludgeoned into submission and Tony Blair always complained of his difficulties with them, although in part that was an alibi. However, as Dimbleby noted, there is a world of difference between deciding what to say and deciding what to do.

It took a long time for results to come through, but local election votes had to be counted as well. Conservative spokesmen (they were all men) were stonewalling, no doubt under instructions from Central Office on a line to take, saying that exit polls had a bad record and only the real votes counted. Nevertheless, Paxo asked Michael Portillo 'Are you ready to drink hemlock yet?'

In many ways, it was the quirky events that caught my attention. I do remember how acerbic the declaration at Putney was. There were a number of fringe candidates, one of whom got seven votes, while the 'Sportsman Alliance. Anyone But Mellor' got into double figures.

Unsubstantiated allegations had been made that Mellor had performed the rites of Venus with a young lady while wearing a Chelsea shirt. However, both the successful Labour candidate and Sir 'Jams' Goldsmith were on their third marriages. Moreover, all the three leading candidates were millionaires.

'Jams', who didn't do any better than Referendum candidates elsewhere, interrupted Mellor's speech with hand clapping and shouts of 'Out! Out! Out!' Mellor responded in his television interview by urging Jams to return to Mexico at the earliest opportunity and said 'Up your hacienda, Jimmy.'

The event of the night was the defeat of Michael Denzil Xavier Portillo which arguably changed the future of the Conservative Party and British politics. Portillo was grinning broadly in his post defeat interview, no doubt contemplating the British railway journeys which would transform him from a right-wing Mr Nasty into a national treasure. However, he soon got into a spat with Paxman.

It was interesting to hear Kensington & Chelsea described as 'the safest Conservative seat in the country' but with a majority of only 9,000.

Barbara Follett was then a key Labour figure with a great future supposedly in front of her. Perhaps it was a sign that her and her husband could not open the champagne, de rigeur for champagne socialists, on election night. She held minor government posts and then got caught up in the election expenses scandal.

Ben Bradshaw, standing in Exeter, was rather oddly described (by the standards of twenty years later) as the first 'openly homosexual candidate'. He defeated his Conservative opponent who stood on a strident anti-gay and family values platform.

The backcloth to the declaration at Torbay was declared to be like a scene from South Pacific by Dimbleby, but before the Liberal Democrat win by 12 votes could be announced we switched to Harrogate. A grim faced Norman Lamont had been defeated after parachuting into the constituency by the Liberal Democrat leader of the local council. I met someone once who was a nurse in the hospital in Lerwick where his father was consultant and she said that he was a 'nasty little boy'.

Then Martin Bell won in his white suit in Hatton, a reluctant victor. His daughter Melissa, a Warwick politics student, was in the background. The subsequent career of Neil Hamilton shows there can be life after political death. He is now a member of the Welsh National Assembly for UKIP. Many of the victors that night have disappeared into obscurity.

Finally, a word about the varying style of the returning officers. One result was read out by the High Sheriff who would not give the party labels. Some insisted on repeating the numbers in the style of 'Miss Moneypenny, Transvestite Party, ninety four, 94.' The really threatening one was a fierce looking but relatively young bearded returning office in Galloway. There was some noise in the hall, mild by the standards of Putney, and he asked an aide 'to attend to' the offender.

Saturday, 2 September 2017

A political history footnote in a sleepy Cotswolds town

Yesterday I went to Shipston-on-Stour in Warwickshire. It's a very pleasant but rather sleepy small town on the edge of the Cotswolds with a traditional tea room.

One of my sons-in-law comes from the nearby village of Whichford. This is the sort of village where people live for generations and still engage in traditional country pursuits. When I was with my in-laws for a barbecue not so long ago the death of the squire was a big topic of conversation.

However, it is also home to the Whichford Pottery which is located in a beautiful remote valley: Whichford Pottery . Its terracotta products are very popular in Japan and coach loads of Japanese tourists turn up there to see the production process and buy the wares.

My son-in-law's sister (who works at the pottery) gave me a voucher for a tour of Sheldon's wine cellars in Shipston. It was an interesting tour with a good wine tasting and they were selling some excellent wines at an excellent discount.

However, in an early part of the tour the guide told us that in the late 1980s the cellars had hosted one of the first negotiating meetings between the UK Government, the British military and the IRA whose representatives were flown into nearby Brize Norton.