Malcolm Blair Robinson

We have a Government, a Tory one. There has been a re-negotiation of our membership deal with the EU and the Prime Minister has announced a previously promised referendum in which  government official policy is to back the deal and campaign for Britain to remain in the EU. Five Cabinet ministers have decided to oppose their government and campaign to leave. Through a peculiar indulgence they have been allowed to remain in the Cabinet, whilst opposing its policy. They are very lucky. They have been told that they will be allowed to continue to receive all government papers relating to the running of their departments, including business involving the EU. Lucky them.

Now they want to see all the papers relating to the government’s referendum campaign which they oppose and they have been told they cannot. So they are having tantrums. Enough of this. There is a simple solution. Sack them all, then they will not be allowed to see anything. They are nothing like as clever or indispensable as they think they are.

The West and especially the UK never looses an opportunity to blame, pour scorn on or needle the Russians. Moreover there is never anything nuanced or thoughtful coming out of the political elements of either the foreign office or the defence ministry, who pedal the notion that they are not only right but righteous. Yet here we are after four years of the most appalling civil war with millions uprooted, hundreds of thousands killed and the fabric and infrastructure of the country destroyed beyond use, at last edging towards some kind of peace. There is a long way to go and much can go wrong, but now we know there can be an end and it might be in sight. What has changed? After four years of western involvement which achieved nothing? Russia intervened. Five months ago almost exactly.

The nation will be surprised to learn, many will be aghast, that Osborne is planning more cuts. This Blog did warn after the Chancellor’s Autumn Statement that it was based upon forecasts likely to be wrong. As indeed they are. The admission that the ‘economy is smaller than we thought’ is a show stopper, because if that is the case, everything else will be wrong too.

This is the problem. If your economic strategy is to balance the budget, as it should be, then it cannot be done by cuts alone. Of course cuts are needed in many areas after time has allowed good housekeeping to become slapdash, but those cuts are to structure and organisation, not the front line. The front line has to be held for the very reason that it has to spearhead the advance of the recovery. Too much of the front line has been thinned for it to have enough punch, so here we are again with tax revenues that disappoint and do not add up to sufficient to pay the bills. There is no real plan to push growth up. There are catch phrases like ‘march of the makers’ and ‘Northern Powerhouse’ but they do not appear to describe real events. This Chancellor has been at this for six years now. If the plan worked it would now be working.

Instead there is still more austerity coming next month (wrapped in the forecast of jam tomorrow).  Cuts shrink the economy and whatever is growing has to compensate for that, making net growth too weak. Add in adverse economic trends globally and the uncertainty of Brexit and while we are not quite in a perfect storm, many will get wet.

The news that Michael (Lord) Howard, the  fourth Tory leader post Thatcher and the one who groomed Cameron and Osborne to lead the Tory party after him, has decided to join the out campaign comes as no surprise. He has always been eurosceptic and was one of the cabinet ‘bastards’ in the notorious live mike mishap which befell John Major during his turbulent premiership which ended in the long Tory night.

There will be more and they will make news.  It is no surprise for members of the governing party to support their prime minister and the fact of doing so is not news. But when one of them crosses over it is a media event. However the campaign lasts four months, the markets are growing jittery and sooner or later Leave has to come up with more than a roll call of supporters. At some point it will have to explain how it is going to manage the consequences of its recommendations, what its economic policy is, how it is going to negotiate trade deals and with whom and a multitude of other details which seem unimportant now, but which will tumble out of the crisis sack if they win.

Today’s proposal that if they win they will simply get a better deal and have another referendum is little short of barmy.

One is becoming increasingly tired of these endless inquiries led by elderly but distinguished judges, which find that bad stuff happened but the bosses, those with responsibility, senior management, did not know about it and therefore cannot be blamed. This is rubbish. The bosses, by definition, are responsible whether they knew about the problem, heard about the rumours or whatever. Because that is what senior management is. They should both be blamed and take the blame. To dump it all on line floor management may convince the increasingly discredited establishment and their cosy blame averse culture, but it convinces nobody else.

It is very good news for manufacturing and exports and business generally needs to be fleet of foot to take advantage the the opportunities which this presents. It is an open window which may close, so no delay. It provides scope for home production as imports will become more expensive. Since we import almost everything we use, that may stoke inflation. That in turn may provoke a rise in interest rates. Borrowing costs for the government may rise because of the general uncertainty as to where Britain is headed, in or out. If it is out that will trigger a further fall in the value of sterling. Suddenly the economy will be hit by a major rebalancing shock at the start of the summer holidays.

It is obviously bad news for holders of assets valued in pounds and very bad news if those assets have been used to secure loans in another currency such as US dollars.

The short answer is yes, so Cameron is right and Gove wrong? Well no. The true answer is they are both right if you express it all correctly which neither of them has. They have both left out the tricky bits which dent their cause.

The deal is a legally binding international agreement with the force of international law. It can only be challenged if an injured party can show to the European Court of Justice that some aspect of it breaches the terms of an existing treaty. This is very unlikely but, because some of the issues are contentious and agreed to with reluctance to keep Britain in the EU, it is possible. The European Court sits above our Supreme Court and the UK parliament ceded sovereignty to it by the Treaty of Accession in 1972.

So in the normal course of business it is a done deal but as a matter of law whether it conforms with previous treaties in all respects is not for Britain, its politicians, or its courts to say. The EU Court has the last word. That is the whole idea of it.

The report from Ofcom suggesting that Open Reach can be made an arm’s length company while still owned by BT is fundamentally ridiculous. In the end both companies are owned by the same people with the same shareholders. The proposal to allow other companies to put wires on poles and in tunnels is even more stupid as it will cause congestion under ground in many places, more digging of holes and problems with multiple wires on poles in the country. When failure occurs it may not always be easy to identify who is at fault. It is unlikely to enhance good service and will have to be paid for in the end by customers. It is almost as silly as proposing multiple water mains, or sewers.

While it is acceptable to allow privatized communications companies to offer a competitive service to customers, it makes no sense for a private monopoly to control the infrastructure which carries that service. Open Reach should be publicly owned and charged with the delivery of high speed internet and phone communications as a service to every house and business, for which a monthly or annual rental is charged, in much the same way as water, gas electricity and drainage. The owners can then shop around for the right choice of provider. If a break occurs the owner rings Open Reach, not the provider, which is the reverse of the current frustrating arrangements.

There should be a Ministry of Communications responsible for all of this with a Minister answerable for its efficiency. The idiotic quango Ofcom should be disbanded. This notion that government responsibilities can be contracted out to statutory agencies provides unaccountable governance with huge inertia, endless reports and very little action. Moreover it removes responsibility from ministers who are accountable to voters whose money is funding the fiasco, to a whole lot a statutory public servants who appear to be responsible to no one but a rule book.

It is hard and unwise from this side of the Atlantic to try and call American elections, but it is becoming obvious that Trump now has momentum which may not be stoppable. He narrowly lost Iowa but has won comfortably everywhere else. Indeed the margin is going up. In Nevada he polled twice the votes of the next man, Rubio. The question now to be pondered is not what will happen if Trump gets the nomination, but what happens if he becomes President? Quite a lot probably.

Bit by bit we shall see key points emerge from the Remain and Leave camps to explain the superiority of their analysis and the better value of their offer. Although this Blog has declared it is for Remain no matter what, I will still unpick the detail of arguments deployed by either side in order to help readers drill down to the core issues which affect them personally and which will inform their choice in the referendum.

Several times in the last few days I have heard Leave enthusiasts assert that the fears about London’s position as a world, actually the world, financial centre are groundless in the event of Brexit and to back this bold claim, they cite City anxiety about not joining the Euro, which turned out not to matter. Maybe not for the City but it did matter for everybody else. Here is why.

By staying out Britain made a huge miscalculation. It failed to see that to be part of a market based on a universal currency from which we excluded ourselves, would place us at a severe disadvantage as an industrial and manufacturing power, because the pound has for most of the time been valued way above the euro, whilst each unit buys roughly the same in its area of circulation. This makes British goods expensive in the Euro market and Euro goods cheap in the British market. So the EU sells us about £50 billion a year more than we sell to it. The last point is often made by Leave, but they fail to make the currency connection to the problem.

Equally unrestricted EU migrant immigration is the trump card of Leave and the big doorstep issue up and down the country. Both the free movement of people and the entitlement to benefits are seen as problems which leaving will somehow resolve. The problem is not caused by benefits, it is caused by the fact that earnings in pounds have a higher value when repatriated to the EU than the euros to which they convert. Had we been in the Euro this would not be happening.

The shortage of housing, excessive housing costs, low wages at the base of the economy, frightening trade deficits, record breaking debt per household are all issues which would be on a far more manageable scale if we had been in the euro. The currency would also have been far better run with a much more assertive system of governance. In a nutshell ordinary people would have been better off. Like in Germany.

So the City was right to lament that we did not join. It was wrong to believe it would be adversely affected. The snags would have to be born, as so often in these things, by the weakest elements of society. The few would be all right Jack. But the many would pay. And will go on paying.