Tuesday, 17 May 2022

The NIP: how it came to be.

 I am indebted to my friend and fellow Liberal, John Cole of Bradford, for this succinct analysis of how the UK government, apparently in good faith, signed the International Treaty containing the Northern Ireland Protocol.

1. In 2017 Mr Johnson, then a member of Theresa May's government, spoke vehemently against any customs sea border between Great Britain and Northern Ireland.

2. In an effort to avoid a sea border Mrs May negotiated a complex “Northern Ireland Backstop”. The Backstop became almost universally hated on the Conservative benches and in consequence:

3..When he became prime minister Johnson re-negotiated with the EU to get rid of the Backstop, but only by replacing it with a customs sea border between Great Britain and Ireland. (see 1 above)

4. The Northern Ireland Protocol (including sea border) was part of the agreement reached with the EU and signed off by both parties.

5. Johnson presented this “oven ready” agreement to the Commons where the Conservatives voted for it - and them went out to win the 2019 general election off the back of it - having “got Brexit done”.

6. Today Unionists in Northern Ireland plus our Conservative government rail against the Protocol and insist that the EU must now sit down and either amend it or scrap it.

7 . I [John Cole] acknowledge that the NIP is causing considerable damage to trade and making life difficult for exporters. But this was known in early 2016 when Sir John Major and Tony Blair jointly issued warnings.

8. These sage warnings were dismissed by Brexiters as part of “Project Fear”. Now their arrogance, wrong-headedness and unwillingness to engage with reality is reaping its comeuppance.

 So there we are: no ifs, no buts, no arguments about the EU being "inflexible" or "over-implementing."  They were told, they knew,  they signed it -  there is no point in their trying to blame someone else.

Wednesday, 11 May 2022

Security and the Queen's Speech

We British people, along with  those in  most  countries, face three serious threats to our security.  Two are immediate: the possible escalation of the Russia/Ukraine war into a Europe-wide and potentially nuclear conflagration, and a "cost of living" crisis.  The third,  global heating, is more long term but requires immediate action.

The Prime Minister likes to pretend that he is playing a leading role in averting war and is today visiting both Finland and Sweden, presumably to acquaint them of the joys of being members of NATO.  In fact his interventions, along with the bellicose utterances of our Foreign Secretary, are more likely to inflame matters further than lead towards compromises which will at least stop the killing.

 Fortunately, in this context,  Britain's international standing is now so diminished that I doubt if what either of them says or does is likely to make much difference.

There is, however,  a great deal the government can do to help the most vulnerable to avoid the worst effects of the cost of living crisis arising from the explosion in energy prices and the prediction that inflation could reach 10%.  The effects of these are serious and immediate.  Already three quarters of a million of our fellow citizens are experiencing destitution (insufficient means to secure adequate food, warmth and shelter) and a further quarter of a million are expected to join them as the year progresses if there is no meaningful intervention. Their social security is at risk, which is totally unnecessary and complexly avoidable in a country as rich and highly developed as the UK.

In the government's programme announced yesterday (and rather grandly called the Queen's Speech)  the government claims that there are no short term fixes and that the problem must be dealt with by long term growth.  This is half true.  

There is  considerable need (and has been for decades) for us to improve our productivity in order for us to be competitive with other economies.  But we need to define "growth " more carefully.  That which uses non-renewable resources or further pollutes the planet is not the answer (but likely to be on the cards).  Only sustainable growth, if it can be achieved other than by the exploitation of other people's resources, is the long term acceptable solution.

Sustainable or otherwise , the million destitute people need help now, not is in some distant fairyland future.

Here's how that  could be given :

1.  State subsides to all low-to-medium-income households so that they can afford their fuel bills and keep warm.

2.  Increase all social security benefits by at least the anticipated rate of inflation and preferably more.  Re-introducing the £20 per week Universal Credit boost would be a start and could be done immediately)

3.  Abandon the proposed and deflationary increase in national Insurance contributions.

4.  Join Europe''s  Customs Union and Single Market. This would not be a betrayal of the Brexit vote. The Leave Campaign  frequently implied that we should remain in both. Such an act would have the added bonus of solving the Northern Ireland Protocol problem "at a stroke."   If formally rejoining is too much to swallow, then we we could "re-align" to them (which seems to be Jacob Rees Mogg's practice anyway). What we need in the famous Keynesian  "long run" and before we're all dead (which for the destitute million may not be al that long) is an export-led boom, and hampering out exporters by splendid isolation is not the best way of achieving one.

The first three of these proposals will cost a considerable amount of money, and the government will argue that the "public finances" cannot afford it.

That is nonsense.

In spite of the incompetence and missed opportunities of the last half century we are still a very rich country.  If our national income were shared equally between every child, woman and man living in the country, that would produce an  income of over £30 000 per year each. Or £120 000 for every family for four.

Untold affluence.

I'm not suggesting it should be so divided, just using that as an illustration of how rich we are.

So there is plenty of scope for additional taxation (perhaps just to come up to the OECD average).

The aim should be cut the taxes on those things that will lead to deflation  (income of the lower paid, taxes on employment such as NICs, and  expenditure taxes ),  and tax the many things that make least impact on current incomes and expenditure (known in the jargon as the "circular flow")

There's plenty to choose from:

  • a windfall tax on excess profits (especially of the energy companies)
  • a wealth tax: say 1% of all wealth over half a million
  • a land tax
  • an effective inheritance tax
  • a financial transactions tax
  • effective capital gains taxes
  • carbon taxes
  • pollution taxes.
Don't panic: I'm not suggestion we tax all of them - just illustrating the variety available if we had a political party courageous enough to grasp the many golden nettles.