Hard Brexit or Soft Brexit; What’s the Difference?

The media seem to be fixating on the question of a hard Brexit or soft Brexit. But how real is this apparent conflict?

The Conservative and Labour Parties accounted for around 83% of the popular vote at the last election and the polls suggest that public opinion remains at similar levels today. Both parties contain a majority of MPs that were on the side of “Remain” during the 2016 referendum; both parties accepted the result of the referendum; and both parties are now committed to leaving the EU in April 2019. So, one way or another, it seems likely to happen.

The essential difference between a hard and soft Brexit is whether we leave both the “Single Market” and the “Customs Union”. The hard Brexit outcome would mean leaving both; the soft Brexit outcome would mean remaining in both.

The single market requires the free movement from one EU member country to another of goods, people, services and capital (the four freedoms). It removes barriers to trade and harmonises or unifies national rules at EU level.

For the UK to remain in the single market, it would require either the EU to agree that the UK could dispense with the requirement for the free movement of people; or for the UK to agree to retain the free movement of people. Realistically, neither of these is going to happen. The free movement of people is one of the prime founding principles of the EU, which is bound by those principles. For the UK the free movement of people was one of the main reasons for the Brexit vote winning the referendum. So there is a complete impasse.

The customs union states that all trade in goods between EU countries must be free of customs duties and that member states must apply a common customs tariff for goods imported from outside the EU. For the UK to remain in the customs union would require either the EU to agree that the UK could negotiate it’s own trade agreements with countries outside the EU; or for the UK to accept that is couldn’t. Again, neither is going to happen. The EU has no incentive whatsoever to agree that the UK should be free to negotiate its own trade arrangements with countries outside the customs union. On the other hand, for the UK, the ability to negotiate its own trade agreements outside the customs union is essential, if it is to develop its international trade throughout the world. So, once again there is a complete impasse.

Whether we like it or not, the simple facts of life are that the choice we have is to remain in the EU, as we are now or leave the EU and this means leaving the single market and the customs union. Leaving the EU and remaining in the single market and customs union isn’t a realistic option. However, that doesn’t mean we can’t negotiate a non tariff trade agreement with the EU; and it doesn’t mean we’ll need to establish customs controls at borders because we already have them, as we’re not part of the Schengen Agreement. Although we will need to find a solution for the border between Ireland and Northern Ireland.

Realistically, the argument over a hard or soft Brexit is meaningless. The real argument is between those who support Brexit and those who oppose it. We live in a democracy and those who oppose Brexit have every right to do so and every right to campaign for their views to prevail. However, by campaigning for a so called soft Brexit, they are campaigning for something that can’t happen and undermining the government’s position in the process. They should be honest and campaign for NO Brexit. We must remember that we are still in the EU; so no Brexit means no change and that seems much more realistic than campaigning for a change that can never happen.

 

 

By Europe Divided

I’m a Baby Boomer, born in 1948 and, in my nearly seventy years of life, as a British subject, I can’t remember a time when our nation was so divided. The issue of Europe and our membership of the EU has pitted young against old, cosmopolitan against rural and region against region. It’s fractured families, friendships and communities; and has created monumental splits within both of our two largest political parties.

Many people are critical of the Cameron government’s decision to hold a referendum in the first place, accusing it of pandering to it’s right wing and hard core Brexiteers. But this is too simplistic because it ignores the considerable anti EU views that have existed within the wider British population, since we joined, what was then, the Common Market in 1973; but particularly since the Maastricht treaty of 1992, which projected the EU towards ever closer political union.

The emergence of UKIP has also been extremely influential. Whilst it has failed to gain a significant parliamentary presence, it has gathered a groundswell of support as a single issue political party.

The problem for the government of the day was that this groundswell has been growing rapidly and, as we now know, it hasn’t been coming from just traditional Tory voters, it has as much, if not more, support from within the ranks of traditional Labour voters. You could argue that Cameron was the unlucky Prime Minister, who happened to be in office when it all came to a head. But in truth, if Cameron hadn’t called the referendum, when he did, it would only have delayed it; and a future government, of whatever political persuasion, would have had its hand forced, within a comparatively short time.

This anti EU feeling isn’t unique to the UK. Many other European countries have a growing level of discontent with the EU. The UK is merely the first to bring that discontent to a head.

The EU has worked extremely well for some people in most member countries but it has not worked at all well for others and this is at the route of the problem. The EU bureaucracy and individual country Governments have ignored those people, for whom the EU hasn’t worked. Throughout Europe and North America, we have seen the rise of an intellectual liberal elite that has permeated the upper echelons of politics, public services, financial services and business and commerce. Overwhelming, these are decent people working incredibly hard in very difficult and challenging roles. They do a huge amount of good work, from which we all benefit enormously. However, they have become too detached from the wider populous and imbued with a certain arrogance that says, “we know better than you what is best for you; therefore, we don’t need to listen to you”. As a result huge swathes of people feel ignored, disenfranchised and powerless to do anything to put matters right.

The rise of Donald Trump in The US and the success of Jeremy Corbyn in the UK have happened because they are talking to the people that the establishment has ignored. It’s interesting that Trump is from the far right and Corbyn the far left. There have been all sorts of complex and convoluted reasons put forward for their success; but actually it’s very simple and they both know it. They offer hope to those, who feel disenfranchised and have no hope.

Based on past experience, it seems unlikely that either the far right or the far left are capable of delivering the kind of society that most of us want. Most of us in the western democracies gravitate from centre right to centre left. In the UK that could be described as One Nation Tories to Social Democrats. But the detachment of the Liberal Elite is creating fertile conditions for more extreme politics.

Getting back to the EU issue, we’re not in a good place at the moment. The divisions between us are creating an almost impossible position for any Government to resolve. This is probably the most serious threat to our nation since the second world war and, unless we start to come together and unite, the UK will enter a period of very serious decline. In principle, the UK could almost certainly look forward to a great future either inside or outside the EU. We are an industrious and innovative nation that has been a world leader for centuries because of our ability to adapt. But if we keep fighting between ourselves, there is only one outcome possible, namely serious national decline.

Given where we are, it seems inevitable that we will leave the EU. But there needs to be compromise. No one will get everything they want but we’ll all get some of the things we want.

It’s time for the silent majority from One Nation Tories to Social Democrats to make its collective voice heard and to unite so that we can achieve an outcome that enables our country to thrive.

The treat this nation faces, is the greatest since the second world war. In those far off days, my parent’s generation put aside their differences and united. Their fortitude and determination won through and secured a future for those of us alive today. We owe it to them and we owe it to our children and grandchildren to do the same now.

The current government may not be everyone’s choice. It may have lost the confidence of many of our people through its botched general election. But it is the government and it faces a massive challenge. We must put aside our differences and support it rather than continually undermining everything it tries to do. When Brexit is complete and our country is secure, we can return to our tribal politics just as my parents’ generation did in 1945. If we don’t do that, our future will be bleak, whoever holds the key to number 10.

 

 

Corbyn’s Car Crash

The current state of British politics is on a knife edge. The smaller parties have crashed and we’re back to the Conservatives and Labour with virtually 85% of the popular vote between them. Despite all the spin and jockeying for position, both parties gained a substantial number of votes at the recent election; and both gained a significant share of the vote, on a significantly higher turnout. But the idiosyncrasies of our electoral system have lead to a hung parliament. Theresa May’s gamble failed, despite her gaining many more votes. So where does all this lead us?

The Conservatives prime focus has been on deficit reduction and Brexit. But despite the need to eliminate the deficit and to address the problem of the spiraling national debt, people have become tired of public sector pay freezes, cuts to many of our public services and the failure to increase funding for health, social care and education in line with demand.

Whether we like it or not, the hard facts of life are that the only way we can address these financial challenges is to expand our economy at a faster rate than the rate at which we wish to expand public spending. Higher tax rates and more borrowing won’t work and will ultimately make the situation worse. Unfortunately, the Conservatives have turned out to be administrators, who are simply juggling the resources they’ve got. They lack any real vision for how this country can develop and grow; how our industry and commerce can become stronger and more successful in world markets and how we can punch above our weight in world affairs. Without a vision, they have no strategy. Furthermore, they have no passion, with which they can enthuse the British public. In this situation, it’s very difficult to see how a minority Conservative government can survive for a full five year term and it’s difficult to see how the result of the next election, whenever it comes, will be anything other than a majority Labour government. So what can we expect from Labour?

Labour has a vision; or at least Jeremy Corbyn has a vision. And there’s no doubt that he has enthused younger voters. He’s promising to end austerity and pump huge additional sums into the economy to increase funding for a whole range of public services. He’s also promising to nationalise the railways and public utilities, with the objective of achieving better services at lower costs to the public. All this will be funded through extra taxes on the rich and increased borrowing. It all sounds good and, in the absence of any competing vision from the Conservatives, it will win votes and probably get him into No 10. But what will happen then?

History tells us that these policies will not only not work but will make matters considerably worse. Nationalisation, in the post war period was a disaster. There is not a single example of a nationalised industry that was a success. They became moribund by bureaucracy. Governments interfered because they constantly sought political outcomes rather than outcomes that benefited customers. The entire management process become completely dysfunctional. Huge losses built up. Governments struggled to fund those losses and consequently cut capital investment. As a result the businesses concerned went into a long term decline. Some like ship building and steel virtually disappeared. Others like the railways were brought back to life through privatisation.

The tax and spend policies of the Attlee Governments from 1945 to 1951 and the Wilson Governments from 1964 to 1970 were equally disastrous. Even then, high rates of tax failed to provide the tax revenue that they were designed to achieve because people and organisations changed their behavior patterns. Borrowing went out of control; the pound was devalued, interest rates went up, inflation went up and economic growth stalled. This all culminated in James Callaghan’s Labour Government (1976 to 1979), having to take loans from the IMF and being forced to make the most drastic cuts in public spending that there have been this side of the second world war. It was a national humiliation and created huge hardship for many people.

I can well understand why younger generations might be attracted by Corbyn’s vision. They don’t remember the carnage and chaos that these policies caused between 1945 and 1976; and, in the absence of any vision from the Conservatives, they offer a welcome change from the austerity of the last nine years. However, before Jeremy Corbyn is given the chance to repeat the mistakes of the past, we urgently need a meaningful debate.

The Conservatives need to challenge Corbyn’s policies, pointing out the likely consequences, if they are implemented. This shouldn’t be in the form of personal attacks on Jeremy Corbyn; it should be a robust rebuttal of his policies, evidence based and delivered with passion. They should also be offering a realistic alternative that can bring real prosperity to everyone.

Labour, on the other hand, must explain why they believe that the policies they are proposing will work today, when similar policies between 1945 and 1976 were such a disaster. At the moment, their head of steam is largely as a result of the Conservatives offering no meaningful challenge and younger people being unaware of the risks that these policies present.

Personally, I think it’s probably too late. The Conservative party contains too many people, who believe in some sort of divine right to rule. They probably need a period in opposition to get rid of the dead wood and to reinvent themselves as a vibrant political force with a strong and exciting vision for the future. In the meantime, Corbyn is set to take us back to the austerity of the post war period. It’s a car crash waiting to happen.

 

 

 

Beware: £20,000 Fraud: This Could be You

My daughter is a single mum. She works full time time and has been saving up for a deposit for her first house. Recently she decided to take the plunge; put in an offer for a small house to provide a home for herself and my granddaughter. She had her mortgage application approved and everything was moving towards completion on Friday 16th June.

On Thursday 8th June, she received an email from her solicitor with instructions to transfer her £20,000 deposit to the solicitor’s client account. This email was the last of a full trail of emails that had been going back and forth over several weeks; so there was no reason to doubt its integrity. BUT…..

Fraudsters had hacked into the solicitor’s email account and taken over the correspondence. The bank account details they provided were not those of my daughter’s solicitor; but she didn’t know that and had no reason to suspect that this was the case. She transferred the money and has now lost every penny to someone or some gang that could be anywhere in the world. We’ll now have to see if, as a family, we can find the money to enable my daughter and granddaughter to still have their own home.

My reason for writing this article is not to ask for sympathy. It’s our problem and we’ll solve it. However, people need to be aware of just how clever and professional these criminals are. My daughter is nobody’s fool. She has a maths degree and is a business analyst, working on the development of smart meters for the various utilities. She is acutely aware of on-line security issues; so if she can be fooled, then how vulnerable are all those people, who are less IT savvy.

Sadly, the response from both the police and the banks has been deplorable. The police don’t seem interested and said they may or may not follow it up. The banks are equally half witted. My daughter banks with Lloyds; and the fraudsters’ account was with Barclays. But they don’t talk to each other; it’s been left to my daughter to liaise between them and, as far as they are concerned it’s her fault. So neither the banks nor the police want to know.

Crime in the UK, with the exception of this type of online fraud, is declining rapidly and it’s not surprising. Cyber crime is much easier, more lucrative and less high risk than robbing a bank or other traditional forms of crime. And what are we doing about it? We’re calling for 20,000 more bobbies on the beat, whose contribution to this fast growing cyber crime will be precisely zero. What we actually need is a major investment in the recruitment and training of cyber crime specialists, who do follow up thefts of peoples’ entire life savings and who work with similar agencies all over the world. Banks also have a major role to play. They cannot continue to take no responsibility; if they allow criminals to open and use bank accounts for fraudulent purposes, they must be held accountable.

Crime has moved into an entirely new era and threatens to overwhelm us. We must now act intelligently, purposefully and with great determination to prevent that happening.

Labour’s Manifesto of Madness

When the Labour Party’s draft manifesto was leaked last week, I hoped I was having a bad dream; but today’s publication of the real thing has has left me incredulous.

My concern is not about the policies. Depending on your point of view, they may or may not be very desirable. My despair is due to the Labour Party’s apparent lack of any real understanding of economics and finance.

Labour’s plan involves raising and extra £48 billions each year to fund £48 billions of extra spending.

Even with the help of the treasury, government spending forecasts invariably under state actual costs. Forecasts from opposition parties are even less realistic. So, Labour’s programme will almost certainly exceed it’s projected £48 billions, by a considerable margin.

On the income side, it will be impossible to raise the additional £48 billions of extra tax revenue. It doesn’t matter who Labour tax, what they tax or how they tax, nothing will raise that additional amount. There is a limit to how much tax can be taken out of any economy; and there is a threshold, beyond which higher taxation rates deliver less tax. The UK economy is on or around that threshold now.

Should Messrs Corbyn and McDonnell find themselves in numbers 10 and 11 Downing Street on the 9th June, the spending programme will no doubt begin. However, it will take a while before it becomes apparent that the additional tax revenue isn’t being generated and that the costs are escalating. By this time, our economy will be in very serious trouble and the austerity strategies of the last few years will pale into insignificance, compared with what will be needed, when  the Corbyn bubble bursts.

None of this includes the uncosted plans for Labour’s nationalisation programme, which they plan to fund through extra borrowing. This would add significantly to the national debt, which is currently heading towards £2 trillions and incurring annual interest charges that already exceed the entire defence budget. This manifesto is economic madness.

Many people will, of course, see through it. But many others, and particularly more vulnerable people, won’t. They’ll believe it and believe that their lives will improve because of it. But when the bubble bursts, it’s these same people, who will pay the biggest price.

 

Are We Heading for a One Party State?

Parts of the media are paranoid about the UK becoming a one party state. They see the probability of a Conservative landslide as a pivotal moment, leading to the end of democracy as we know it. But is this just scaremongering?

Let’s take a look at what happened after other landslides since the end of the second world war.

In 1945 Attlee’s Labour Party secured a majority of 150 seats. By 1951, he was out of office and the Conservatives were in government.

In 1959, Macmillan’s Conservative’s won a 100 seat majority but were out of office by the end of 1964, when Wilson’s Labour party won the election with a very small majority.

In 1966, Wilson went to the country and won a 97 seat majority but was out of power by 1970, when Heath took the Conservatives to victory.

In 1983, Thatcher won a 144 seat majority.  She’d already been in power for four years; but received a huge boost from her handling of the Falklands crisis. Perhaps even more important, Labour, under Michael Foot, had vacated the centre ground and was moving the party towards the far left. The Conservatives went on to win in 1987 and 1992 but with increasingly smaller majorities. At the same time, Labour was gradually coming back to the centre ground under Neil Kinnock. But it was not until Tony Blair took over the leadership that, in the eyes of the British electorate, the Labour party became electable again. And in 1997, Blair achieved a victory of 178 seats; the biggest landslide since the second world war. He followed this up with a 166 majority in 2001.

Although Labour won again in 2005, their majority was down to 65 and their star was on the wain. In 2010, they were out of office. The Conservatives  have been in office since then, firstly in coalition with the Lib Dems, then on their own.

If the current opinion polls prove to be correct, it’s likely that Theresa May will win a substantial majority on the 8th June. But it’s difficult to see that this will be any different from the pattern we’ve seen over the last 70 years.

The Thatcher years were characterised by Labour vacating the centre ground and making the party unelectable. By the end of the Conservative years, John Major’s government was tired, out of touch and riddled by scandals. Tony Blair had brought Labour back to the centre ground and offered a refreshing alternative. Following their defeat, it was the Conservatives turn to vacate the centre ground, as they moved to the right. Blair kept Labour in the centre and in Government. But his party turned on him because of the Iraq war. Labour’s credibility started to wain and the Conservatives were moving back to the centre ground under David Cameron.

So where are we now?

Theresa May seems intent on holding the Conservatives in the centre ground, whilst Labour has moved to the left. Over the generations, the British public has been resolutely centrist. When the Conservatives move right, they don’t get elected and when Labour moves left, they don’t get elected.

However, the problem for some of the political zealots, of both left and right, is their perception of what is left and right. When the Conservatives were in opposition in the first few years of the century, their shift to the right was accompanied by an attempt to portray the Blair government as much further to the left than was actually the case. Similarly, today, Jeremy Corbyn’s supporters are trying to position the Conservatives as being much further to the right than is actually the case.

The real political battleground in this country is between centre left and centre right; between Social Democrats and One Nation Tories. The moment either the Conservatives or Labour moves outside that framework, they become unelectable and that’s what’s happening now. Labour has vacated the centre and the Conservatives remain within it. So the Conservatives are likely to win the election with a big majority.

However, one way or another the centre left will come back. It may be in the form of Labour itself or there may be a realignment of the centre left that excludes the more left wing elements of the current Labour party. In the short term, while this all unfolds, the Conservatives will have limited serious opposition but their star will gradually wain and the centre left will strengthen, resulting in a new centre left government, at some point in the future.

What’s happening now is  no different from the past. Far from seeing the beginnings of a one party state, we’re seeing the workings of a strong democratic process that has served this country well for many generations and will hopefully serve it well for many generations to come.

Letter to Santa Claus

A prominent member of the Labour Party has stated, off the record, that the contents of the party’s leaked manifesto is like a letter to Santa Claus. Whoever that Labour Party member is, I’d like to applaud his or her honesty.

I live in South Devon and, in our locality, we have a slurry tanker that collects slurry from farms, septic tanks etc.. On the side of the vehicle, in very bold writing, is the following message, “This Vehicle is Full of Political Promises”.

Irrespective of their political allegiances, many people in this country are absolutely and utterly fed up with political parties making promises that there is never any serious possibility of them keeping. All of the main parties do it; and all it does is to alienate them from the electorate, as our local slurry tanker very effectively demonstrates.

I’m picking on Labour here, not because I’m trying to make a party political point but because they have launched a manifesto, which is quite simply undeliverable. If it was a document outlining a range of aspirations and ideas it would be fine. Indeed, many of the aspirations are very desirable. But it isn’t. It is a list of promises that Labour is committing to deliver if it is elected. Many people will understand that most of these promises cannot be delivered and, for these people, Labour is undermining its own credibility and increasing the disconnect between the political bubble and the electorate. Many others, and particularly the more vulnerable in our society, may believe the promises. But if Labour is elected, these people will feel cheated and let down when the promises are not delivered.

So how can I be so certain that these promises are undeliverable?

The answer is not rocket science. If Labour was to initiate a programme to deliver these promises, a very substantial increase in government spending would be needed. This would require a very substantial increase in the amount of money the government raised through taxation. “Great”, some people will then say, “let’s raise taxes”. But it’s not that simple.

The first problem is that when taxes are increased, the behavior patterns, of those people and organisation that are affected, change; often in ways that are not anticipated. As a result, the amount of additional tax revenue collected is invariably substantially less than that shown in the official projections.

The second problem is that there is an optimum level of tax that an economy can withstand and still continue to grow. Forget who pays what tax. Forget what products and services are or are not taxed. And forget what rates of tax apply. But consider the total amount of tax extracted from the whole economy. There is a tipping point and, if a government goes beyond that tipping point and tries to extract more tax than the economy can withstand, it undermines the growth of that economy and puts it into recession. As the economy shrinks, the total amount of tax generated then falls.

The UK economy is at that tipping point now. Based on the current size of our economy, it is virtually impossible to extract significantly more tax; and if we try to do so, the economy will almost certainly shrink and the amount of tax collected by the exchequer will fall, putting at risk existing funding for the NHS, education, welfare, defence etc..

Managing the economy of a modern Western democracy is incredibly difficult. The challenge faced by the government of the day is to raise the optimum amount of tax that will enable it to get as close as possible to meeting the aspirations of the electorate. But part of this must also be about managing the expectations of the electorate. If the electorate has unrealistic demands it will be demoralised, divided and treat its politicians with contempt. If its demands are more realistic it will be energised, united and treat is politicians with respect.

Sadly, managing the electorate’s expectations is something at which today’s cohort of politicians is not good; and this manifesto from Labour just makes matters worse. It is self-indulgent and will benefit no one. I just hope that there are more politicians in all of the main political parties with the honesty and integrity of the unnamed Labour candidate, who described the Labour manifesto as being like a letter to Santa Claus.

 

Should the Railways be Renationalised?

Frankly, I don’t care who owns the railways. My concern is whether they are run efficiently and provide a good, reliable service, at a fair price. Furthermore, I suspect most people, other than the ideologues, will agree. The apparent popularity of renationalising the railways is almost certainly because many people feel that they’re not getting a good reliable service at a fair price. But will renationalisation solve their problem? Personally,  I doubt it very much.

I’m old enough to remember “British Rail”. To say, “it was absolutely dreadful” would be a huge understatement. It suffered from very serious under investment in track, rolling stock and technology. All to often, trains were old, uncomfortable, cramped, dirty and unreliable. The Beaching cuts in the 1960’s, which occurred under both Conservative and Labour governments, decimated the network, leaving many communities isolated.

I’m the last person to suggest that today’s railway service is a beacon of success. Substantial improvements are undoubtedly needed. However, since privatisation, investment in the railways has increased massively. The network is carrying more than double the numbers of people it was carrying when it was privatised in the mid 1990s; and reported satisfaction levels have also been increasing over the same period. A significant amount of recent disruption has been caused by strike action, orchestrated by the rail unions. And it’s fair to question whether this is part of a strategy, by the ideologues, to create dissatisfaction, thus furthering the cause of renationalisation.

During the post war years, in addition to the nationalisation of the railways, a number of other core industries, such as steel, coal and shipbuilding were also nationalised by both the Attlee government in the late 1940s and the Wilson government in the 1960s. There is not one example of a successful outcome. At the very best, none of those industries was saved by nationalisation and at the worst, nationalisation could be deemed to have accelerated their demise.

The fundamental problem is that governments are absolutely hopeless at running large, complex commercial enterprises; and this applies to both Labour and Conservative administrations. They don’t have the skills and they are constantly prioritising political outcomes rather than meeting customer needs. Furthermore, investment decisions have to take their place in the queue alongside health, education, welfare etc.. Invariably they tend to draw the short straw.

The role of government should be to provide a robust and effective regulatory framework, within which privatised rail operators focus on providing the levels of service that the rail user requires.

Renationalisation of the railways is a road to nowhere and a distraction from the strategies that are needed to ensure the rail companies deliver the service we all need.