Tag Archives: Europe

EU Referendum Poll


My experience from blogs, meetings and general discussion is that the mainstream polling does not reflect the public mood.  I reckon its 45:20 in favour of Brexit, (with 35% undecided) which is a long way from what is published in the press, or indeed the current odds offered by on-line bookmakers.  So given the power of WordPress I thought I would conduct my own research. – hence this poll.

 

The EU Referendum Should Be Held On Bonfire Night


It looks increasingly likely that we will have the referendum on Europe this year. Notwithstanding the media commentary I think it will be difficult to hold it in June so I propose 5th November, which has an appropriately historical significance. I’ll get to that in a bit.

The question will be a choice between staying in the EU on terms slightly modified by Cameron, or leaving it. The rational person will make this choice based upon which is most likely to be best for the UK. Of course, defining best is therefore fundamental. There are generally assumed to be three components to this measure, GDP, sovereignty and the UK’s part in the community of nations (whatever that is).

Taking the last point first, if the vote is to leave the UK will remain a permanent member of the UN Security Council, a signatory to the Europe and Convention on Human Rights, a founder member of NATO, the founder member of the Commonwealth, a nuclear power and the 5th largest economy in the world. We will no longer be represented overseas by the EU foreign commissioner (a plus to most rational people as we already have the FCO) and we will have no direct input into the future evolution of the EU, nor will we be bound by its directives. If fact most of the directives are enacted through UK law, so we will continue to be bound by them until they are repealed. The short version is that the only change is our lack of direct influence in shaping EU development. This is in part mitigated by the fact that as the EU’s largest export market we would have significant indirect influence. It is unlikely that the UK’s part in the community of nations is going to determine the outcome of the vote.

Sovereignty is more straightforward. Voting to leave means that all future laws and treaties entered into (or broken) will be determined solely by the Houses of Parliament. MPs will also be able to decide which parts of EU law to repeal. Of course, some of these laws will also be interpreted and enforced with regard to the European Convention on Human Rights, so Mrs Blair and Mrs Clooney’s livelihoods will not be at risk. Given the more direct relationship between Westminster MPs and their constituents compared to MEPs and theirs, this would arguably make the UK more democratic. Perhaps more importantly, government departments would be directly accountable to Parliament and thus to the people; they would no longer be able to cite EU decisions or regulations as a reason for a particular piece of bureaucracy. This argument is compelling to those who believe either that UK government is better than that of the EU (which should be a majority) and those of a libertarian disposition, to whom any reduction in the amount of government is a positive advance. Not a majority of the UK perhaps, but politicians underestimate their numbers at their peril.

Which brings us to economics. There are two fundamental problems with making the decision based upon the impact on GDP. The first is that all economics is based upon the theory of the “rational consumer” while all asset bubbles, panic sales, brands and the like demonstrate that most consumers are far from rational. The second is that, as noted by Niels Bohr, “all forecasts are hard – particularly if they involve the future.” The Bank of England is required to produce quarterly forecasts of inflation, which it publishes. These clever graphs have an error budget in them and clearly demonstrate the problems inherent if forecasting just one parameter. As GDP is in effect the collective purchasing decisions of the UK population and all the companies in the UK for a year there are far more than one parameter. Last year there were claims that many companies would leave the UK in the event of an out vote; so far no company has said that and at least two, Toyota and Hitachi, have said that they will stay. The reason is obvious; the EU exports more to the UK than the UK exports to the EU. If the EU refused to continue the UK’s tariff free access to the EU markets we would reciprocate which would hurt the EU more. It is also very expensive to move a car factory, particularly one as efficient as the Toyota one.

So the rational person will conclude that there is not much in it either way, which is about where the polls have it at the moment. But the rational person has to make a decision, so he (or she) will start to look at the emotional issues (which is, of course, where the less rational – spelt poorly educated – began). The obvious issue is migration.

Leaving the EU actually does not have much of a direct effect for the simple reason that most migrants arrive somewhere else in the EU and find it hard to cross the channel or North Sea. If we have a migrant problem it is because for much of the past two decades the Home Office has consistently failed to enforce our border controls. The one change that leaving the EU will bring is that it will remove the automatic right of an EU citizen to live and work in the UK. The key word is automatic. It will also remove the same right from UK citizens in other EU countries. The concern that an absence of readily available EU workers to fill jobs in the UK is really not defensible; they can come in under a similar (or improved) visa system to non-EU citizens. The fate of ex-pats is harder to predict. That said, few EU countries are going to wish to lose solvent contributors to their economy so I suspect current expats will be granted whatever visas become required.

The less obvious issue is the contempt with which much of the UK electorate loathes the current parliamentary establishment. I believe that this goes beyond the historic lines of tribal voting and is the result of the rise of the professional politician, and this is my 5th November point. Since the farce of the Iraq War and the missing WMD, the astonishing and sudden wealth of Blair, the horror show of Cameron and Osborne and the expenses scandal(s) politicians have managed to fall very low in the public esteem.

At the same time their ability to deliver anything useful, like say a balanced economy or even a balanced budget, is diminished by globalisation. There is nothing, absolutely zip, that Westminster can do about the oil price. Nor can it do much about the Chinese economy or any of the other myriad drivers of our wealth. The best any chancellor can legitimately claim is that their policies have not overly hurt the economy and public – and precious few can claim that. All prime ministers since Thatcher have had to go to war but only Blair and Cameron have joined recreational wars and then lost them (in warfare if you have to ask who has won it isn’t you). None have managed to reform the House of Lords, indeed one could argue that the removal of the hereditary peers has actually made it worse. I think that an increasingly wide selection of the British electorate subscribes to the “a plague on both your houses” school of thought – also spelt “we want our country back.”

In those circumstances when faced with a choice between “stay” recommended by Corbyn, Blair, Cameron, Alec Salmond and whoever replaced Nick Clegg the option of flicking them two fingers and voting “go” will be irresistible.

But it won’t end there. At the moment some are saying that the mechanics of leaving will require negotiation. Why? The day after the vote has been counted if it is “out” then all Mr Cameron has to do is stop writing cheques to Brussels, recall our commissioners and MEPs and get on with running the UK. He also has to state that, subject to reciprocation, imports to UK from EU will be tariff free and EU citizens currently resident in UK will have their current rights. That’s less than five minutes’ work.

The only possible thorny areas are the Common Agricultural Policy (CAP) and the Common Fisheries Policy (CFP). The former is solved by Westminster taking over responsibility for payments. That is pretty much a trivial change. CFP is a bit harder as upon leaving the EU we will wish to re-establish our territorial waters. Again, an announcement that with immediate effect fishing rights of non UK vessels within what are once again UK territorial waters are cancelled and that all such vessels are to leave UK waters at best speed will establish the policy. What’s left of the Royal Navy will be busy for a bit but that is what they are there for.

In any competent administration the wording would already be drafted and the contingency plans in existence. Civil servants are going to have to get busy, but I fear that they won’t. If there is an out vote followed by delay I suspect that there will be fireworks, real and metaphorical, on a similar scale to those Guido Fawkes attempted.

 

In or Out? A Rational Approach to the EU Referendum


Now that the dust has settled on the general election we face some 18 months of campaigning and debate about the long overdue Euro referendum. Depressingly it seems that the quality of debate has already sunk to infantile and I type this in the hope of raising it slightly.

Continue reading In or Out? A Rational Approach to the EU Referendum

Who’s Afraid of Jihadist Losers?


Under the banner headline “War on Freedom” today’s paper recounts yesterday’s murderous assault on the offices of Charlie Hebdo. Shock, outrage and fear fill the pages. An attack on a satirical magazine’s offices is equated with an attack on the freedom of speech, and thus an attack on democracy. Without supporting the terrorists, nor diminishing the sadness, I do think that we need to maintain a sense of proportion.

Continue reading Who’s Afraid of Jihadist Losers?

What is the Point of Russell Brand on Question Time?


Last night’s Question Time on BBC included Russell Brand (alleged comedian and “campaigner”) whose appearance was much hyped in anticipation of a battle between him and Nigel Farage. In the event the programme was interesting viewing, although Brand’s diatribes, long on abuse and gross simplification but short on fact, ideas or even well-articulated thoughts achieve nothing other than irritating the audience. One has to ask what on earth the BBC producers were thinking of. If there was a confrontation, Farage won it by miles by the simple, devastating tactic of providing factual answers to the audience’s questions. As one audience member pointed out, you may or may not agree with UKIP’s position on immigration but Farage has managed to get what was a politically taboo subject being debated sensibly in the mainstream.

Continue reading What is the Point of Russell Brand on Question Time?

What I Want From the Next Government


With a little over 5 months before the next election we can all look forward to being bombarded with manifestos, promises and statements from those vying to rule us. This seems to be to be back to front, so I thought I would tell Dave, Nick, Nigel and (God help us) Ed what I expect from them. They can then contemplate the ways in which they will disappoint me.

I will deal with the topics more or less in order of my priorities and, where possible, share the arguments that lead me to the conclusions. However this is not a manifesto, so in the interests of brevity and clarity I will not necessarily develop them fully. Of course, I am happy to expand and expound upon request.

THE ECONOMY

The simple fact is that the country owes £1,500 Billion, and this is still increasing in spite of the incredible efforts of those working in the UK private sector, who are delivering growth. The implication of this is that the tax take is at about the maximum that it can be, and therefore government spending has to fall, urgently. Five years of austerity and cuts via salami slicing has not delivered sufficient savings and it is unlikely to. We therefore need a plan B, which is a total restructuring of government spending.

The first step is for the government to publish where the money goes and what liabilities exist. This can only be achieved if the government adopts the same accounting policies that all other enterprises are compelled to, i.e. UK GAAP (or its replacement FRS102). The Civil Service will whine that this is not possible or appropriate; my answer is that if they don’t know how to do it they are not fit for purpose. The ONS is a start, but it needs to go much, much further. The accounts (which I think would be best generated by department or agency) should be published annually, possibly bi-annually. Once we have established where all the money is going we will be in a position to spend less of it.

The second step is for it to become unlawful to set a budget that involves a deficit. The blithe assurances of ministers and officials over the past years have dumped a huge burden on the economy and the people who have to service the debt (and at some stage repay it). Most of these people weren’t born at the time the spending was incurred so their consent was not explicitly given. Taxation without representation started the US War of Independence. So far taxation before conception has not triggered social upheaval, but as the consequences become clearer I’m not confident that the peace will hold.

The government’s accounts should be examined by those capable of doing so and free from political affiliations. Rotating it through auditors, including accounting firms other than the big 4, should avoid that potential problem. Each firm gets to do it once, at commercial rates. Smaller firms could form consortia were there a manpower shortage. The audit would have the same objective as any commercial audit, i.e. to produce a true and fair view of the country’s financial position.

In terms of running the economy the government actually has little to do. It must provide a legal framework and provide that infrastructure which cannot be provided by other means. As the government is bankrupt its capacity for major spending programmes is limited. It has no business trying to run companies competing in open markets.

It should instead look in particular at enabling a wider adoption of crowdfunding solutions to allow more investment of wealth into the SMEs that produce growth, rather than chasing the small number of fully listed companies. Investment in real estate should not be encouraged.

In terms of taxation it should take the minimum possible commensurate with delivering the services required, plus a bit to reduce the debt. Where possible taxes should be hypothecated so that, for instance, the income from road tax, fuel taxes etc. should be applied to transport and environment. If there is a surplus then the tax should be cut. Indirect taxation (e.g. income tax) should be used for defence, welfare and the like.

Before looking at the spending departments in detail, we need to address the elephant in the room. Our economy functions differently to the ones in Europe, but too much of our law comes from there, and is therefore beyond correction and development by the UK government in the interests of the UK. Saving the UK is unlikely to be achieved by staying in Europe.

EUROPE

As it stands the EU is not working. Its accounts are a mess and its policy is (understandably) focussed on saving the Euro. Whether this is wise or possible is not relevant.

I expect the next UK government to produce detailed rational arguments for staying, renegotiating (if possible) or leaving as they see fit. After a period of serious public scrutiny I want a referendum (no later than May 2017 and earlier if possible), the results of which to be enacted in the shortest possible time, or one year – whichever is faster.

WELFARE

According to ONS data, the single largest slice of government spending is on Social Protection and Personal Social Services which will consume £253 billion in 2014. That is £9,800 per household. This simply can’t be right and a huge amount of this spend must be tied up in the administration of a complicated system. The only data I can find is for 2011-12, but that gives a total benefit spend (i.e. the money handed over to recipients) as £160 billion. Allowing for a bit of inflation, the inescapable conclusion is that the benefits system is costing over £80 billion to administer. That’s just ridiculous – it’s almost the size of the entire education budget.

The system needs complete reform. I think Iain Duncan-Smith is doing well on this; but with £80bn to save he needs further encouragement. It should not be difficult to establish the income required for an individual to exist at various ages and locations. If his/her income is short of that then the government should top it up. This involves means testing, but that is reasonable and necessary to ensure that money goes to where it is needed, and only where it is needed. As HMRC has all the data that it needs it should be possible to automate much of this process from existing software and data. If Tesco can tell where I shop, what I buy and what I am likely to buy tomorrow (which it can through its Clubcard) it’s not unreasonable to expect the government to know what I earn and what I need. If HMRC management says it can’t be done sack and replace them (which is what would happen in the private sector).

PENSIONS

I want an explicit admission from the government that the state pension scheme is in fact a Ponzi scheme and, unsurprisingly, is in huge trouble. Moreover, those who will be paying for the pensions were not consulted. The pension system should be subsumed into the welfare system (i.e. means tested).

Private pensions should be liberated further from state control. It’s the pension owner’s money and he can do what he likes with it. It is unlikely that the public pension will be so generous as to encourage the feckless.

Public sector employees should be required to fund their own pensions rather than impose a burden on future taxpayers. They won’t like this, and will probably strike. But my children were not created to pay the unfunded pension of someone in the public sector.

The retirement age should continue to increase, although of course those with sufficient wealth in their pension pots can retire whenever they like. Those senior citizens unable to work will be covered by other welfare payments.

HEALTHCARE

The NHS should be broken up into manageable parts, which should transferred to a range of ownerships, predominantly in the private sector. Any funds generated from the sale should be applied to reducing the national debt.

The government should pay insurance premiums for those on welfare and consider making private health premiums tax deductible. Given that health care cost £4,000 per household it should be possible to provide a pretty good insurance solution, with individuals able to buy more extravagant cover if they like.

Diabetes is a problem caused primarily by sugar. So tax sugar and apply the revenue to the health service budget.

Coordination of the availability of suitable heath facilities (if necessary) should be led by county councils. The role of the Department of Health should be trimmed to one of supervision and inspection.

EDUCATION

The state education model should mimic the private education one; each school should be owned in trust and run by a board of governors who appoint the headmaster, secure funding and set salaries etc. The governors are mostly elected. They are unpaid, but insured.

The role of the government is simply to collect and distribute fees, following the pupil. Pupils should be free to attend whichever school they like. The level of fee will be set by the governing body on the basis of the operating and maintenance costs. Their accounts will be subject to inspection and challenge by the charities commission and/or the Department of Education and/or Local Education Authorities (if the latter remain necessary).

Teaching hours shall be extended to match the working day. Access to and participation in sport shall be increased.

Technical colleges shall be re-introduced to produce an alternative to academic education, the transition being made at 16 (i.e. post GCSE). The number of places at university shall be reduced as a proportion of the school leaving population to reflect the number that actually graduate, as opposed to the number that enrol.

DEFENCE

I want a government that is able to acknowledge that something has gone terribly wrong in the MOD, as evidenced by our near-disastrous performance in the Iraq and Afghan wars. That is going to require a Defence Secretary (or his nominee) who commands sufficient respect to demand answers and impose solutions, a latter day Cardwell. Either Senior Officers advised Cabinet to proceed as they did, or the advice they gave was ignored. In the former case the Senior Officers were incompetent, in the latter case spineless. In either case they were massively over-promoted. The system that enabled this needs addressing, urgently.

We need far greater integration with reserves and a structure that reintegrates the armed forces with the communities that they serve. The super-garrison may or may not be the best structure.

The Armed Forces are almost certainly too small. A plan needs to be put in place for their expansion. This is likely to be particularly challenging for the Navy given their addiction to aircraft carriers and the exorbitant cost of new destroyers and submarines. But more ships are necessary, particularly if we are to leave Europe. A review of the need for the carriers, including cost benefit analysis, should be conducted and made available to the public.

The funding of the nuclear deterrent to be made part of a separate service (albeit one with manpower on secondment from the Navy).

TRANSPORT

Given that there is no money, HS2 & 3 are to be scrapped unless the private sector is prepared to take it on.

Runways to be authorised at both Heathrow and Gatwick, and regional airports and internal flights to be further facilitated. If this requires an Act of Parliament, so be it. But the runways are to be built with private money.

FOREIGN POLICY

Irrespective of the decision on Europe, the aim of foreign policy will be to turn the Commonwealth into a free trade area in as short a time as possible.

ENERGY

Build nuclear power stations. Stop subsidising absurd offshore wind.

POLITICAL REFORM

The right of recall should be enacted, and the sanctions available against miscreant MPs should be increased.

The Boundary Commission should become independent and its decisions binding.

Political parties should have their budgets capped, and the amount allowed to be spent on elections also capped. Under no circumstances will parties be funded from taxation, so the cap will set on the basis of the total raised by the poorest party (on a per candidate basis).

The House of Lords to be restructured by a body that includes no-one who has ever been an MP. Until a solution is found, and approved by referendum, there should be no further appointments to the House of Lords.

CONCLUSION

That’s it. I hope that adoption of this agenda, or similar ones, will prevent this country being bankrupted again by misguided politicians. It should also shake the executive branch into reforms that suit it to the 21st Century, without losing the long traditions of probity and service.

Reckless Defection


It was John Maynard Keynes who said “When the facts change, I change my mind. What do you do sir?” Ignoring his disastrous economic theories he has a point, and to that extent I am reluctant to vilify an MP who alters his opinion to one which I think more correct. But I am struggling to find much joy in Mr Reckless’ recent defection to UKIP.

All I know about Mr Reckless comes from Wikipedia; it seems that he is a lawyer with the inevitable PPE from Oxford and a bit of time in the City. His majority is just shy of 10,000 and he took the seat over from the champagne socialist Bob Marshall Andrews. He is a close friend of Eurosceptic (Conservative) MEP Daniel Hannan, and has spent much of his parliamentary career rebelling against the more pro-EC line of his party. To that extent, what’s not to like? As professional politicians go he has a wider commercial experience than many and has been consistent in his Euro scepticism.

I assume that his move to UKIP has come at a time when he realises that his chances of advancement under Cameron are slim, and without that advancement his influence on policy will remain limited. He has had the decency to resign to trigger a by election (amazingly, still not a legal requirement) and as he got 50% of the vote last time (with no UKIP opposition) he should be fairly likely to win unless the Tory dirty tricks department proves to be as effective as the New Labour one. He’ll then get to fight again in May 2015.

If you are an MP and are going to change sides then this is probably the way to do it – state your case and then let your constituency judge. Most MPs changing side don’t (most famously Winston Churchill switched to the Liberals in 1904 but didn’t face an election until the general election of 1906). But I think it is still reasonable to ask why change now? Nothing much has changed in the Conservative Party, nor indeed in UKIP other than the former’s electoral prospects look grim and UKIP’s are improving.  As a lawyer it is relatively easy for Reckless to earn a wage outside of politics, unlike Lembert Optik, who was reduced to marrying a Cheeky Girl when his political career died. But in the current environment it will be hard for any MP to avoid a charge of putting self-interest before beliefs. Mr Reckless should be better placed to argue this than most.

There is no doubt that as an ex-City economist (albeit back in the 1990s) he brings much needed expertise to the UKIP team. But that would have been true last month, or last year. Mr Reckless may have had a Damascene moment at a policy day, but it’s taken him a long time to act. The feting of a defecting MP is getting to look a little like a new signing in the Premier League, with lots of media. But it also distracts that media from the messages that they should have been conveying; from UKIP the reiteration of the point that the EC exports more to the UK than the UK does to the EC, so the prospect of punitive tariffs on UK goods in the event of a UK exit from the EU. For the Tories that at least they have a plant for reducing the deficit (even if it isn’t working yet). Instead we get talking heads and vox popping where we need rational analysis.

What’s the impact? I don’t know. In the last election UKIP didn’t contest the seat and I guess some Tory will stand. The Labour candidate got 28% of the vote compared to Reckless’ 49% and in 2005 Reckless would have won but for UKIP taking 1,488 votes (he lost by 213). The reality is that UKIP collects votes from Tory, Labour and non-voters so the arithmetic is hard, if not impossible (which is a good thing). Rather than causing a fundamental change in Conservative policy I think that this may change strategy – if UKIP can win parliamentary seats that’s good for the conservatives as UKIP is a free market capitalist party. If the Tory vote splits and UKIP does not make up the difference, thereby allowing in Labour of Liberal Democrats, then it’s a disaster and we get Milliband.

If I were Mr Reckless I’d make darn sure that I got the UKIP economic team to start being persuasive and publicised.

If I were Farage I’d keep on doing what he’s doing, if anything with more venom for the prat who can say together but not mention the deficit, and then has the chutzpah to pretend that he forgot. I’d try not to seduce more sitting MPs to UKIP as they’ve pretty much missed the boat.

If I were Cameron I would stop being rude about UKIP supporters, most of whom have personally done a heck of a lot more for the economy and the country than he has.