Highlighting the difference

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Some people are being jolly unfair to the government, mocking their obsession with the colour of the UK passport.  Of course it’s true that they could have changed the colour at any time, regardless of Brexit, but why did they need to?  After all, whilst the UK remains a member of the EU, passport holders enjoy the same rights as other EU citizens.  But now we’re leaving, and are going to ‘enjoy’ reduced rights of travel across the EU, there are practical considerations.  A different colour will assist passport authorities in the rest of the EU by drawing attention to those travellers who have fewer rights so that we can be monitored more closely.  That is what Farage and others wanted and are now celebrating, isn’t it?  The only problem I see is that dark blue isn’t really distinctive enough – why couldn’t they have chosen a nice bright fluorescent colour to make our possession of reduced rights even more obvious?

It's not over yet

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The result of the elections in Catalunya is very similar to the result of the previous elections.  Pro-independence parties have a narrow majority of seats but a little less than 50% of the popular vote.  All other things being equal, the democratic outcome would be a government very similar to that which was deposed by the Spanish state which would lead to a return to the confrontation between the Spanish nationalists and the regional government over the status and degree of autonomy of the region.

All other things aren’t quite equal, though.  With some of those elected being currently incarcerated and others in exile (and likely to be jailed the minute they re-enter Catalonia), the Spanish nationalists may have a de facto majority – with 70 pro-independence members out of 135, it only needs a handful to be ‘unavailable to vote’ when or if the Catalan parliament is reconvened.  And unless the legal proceedings against former ministers are halted, the number of elected members imprisoned, in exile, or currently out on bail and likely to be imprisoned or disqualified at the end of those proceedings is a significant proportion of the total.

Common sense, a respect for democracy, and a desire to find a negotiated way forward would all suggest that the best approach would be for the Spanish government to ensure that all those elected to the parliament are free to take their seats and participate in discussions.  Unfortunately, none of those three characteristics immediately spring to mind when I look at the Spanish central government.  What I see are people who are determined to ‘win’ – by which I mean crush Catalan aspirations once and for all – and it’s far from certain that they won’t seek to hide behind ‘the rule of law’ and take advantage of the situation to install a government more to their liking.  In a parallel of sorts with the UK, when it comes to the question of independence, the Spanish equivalents of the Labour, Tory, and Lib Dem parties have far more in common than they like people to think.

Proving the wrong point by accident

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That strange fellow Nathan Gill kindly sent me a leaflet through the post this week.  Well, I say ‘sent me’, but I’m guessing that ‘he’ has gone to the enormous expense of sending this to every household in Wales.  But more of that a little later.

The leaflet purports to tell us why the single market is a poor idea, and how we voted to leave it last June, but it’s packed full of statements which are, to say the least, ‘contentious’.  It would take too long to deal with all of them here, but I’ll pick on two in particular:

He tells us categorically that “The UK Government will match £3bn subsidies [for farmers] after Brexit.”  Really?  Has that been confirmed by the government yet?  Because I rather thought that the Leave campaign had told us that all the money we send to Brussels was going to be diverted to the NHS after Brexit.  Perhaps the lettering on the side of that infamous bus was just so small that I read it incorrectly.

“Both Leave and Remain said that leaving the EU meant leaving the Single Market.”  Now, if he’d said that campaigners (i.e. some campaigners, not all campaigners) on both sides of the debate had said that, then he’d be telling the truth, albeit not the whole truth.  But claiming in a blanket fashion that both campaigns said it is a long way from the truth, because I could point to campaigners (on both sides) who said the precise opposite.  I actually agree that leaving the EU whilst remaining in the single market isn’t really leaving (BINO, it’s now apparently being called by some: Brexit In Name Only) – it’s just not what many of them said at the time.

But anyway, back to the munificence of Mr Gill and ‘his’ funding of this little leaflet.  Although the UKIP logo appears at the bottom, the main logo on the leaflet is that of the EFDD group in the European Parliament.  And my guess is that it is that group, funded by the EU itself (out of our contributions), which has paid to send this missive to around 1.3 million households in Wales.  Still, in a rather curious way, I suppose that for the EU to fund a leaflet containing what is, shall we say, ‘misleading’ information about itself does in some small way support the UKIP critique of wasteful spending of the money which we pay in by some of the politicians in the EU parliament.  I’m sure that isn’t quite what Mr Gill intended to demonstrate though.

The fudge won't last forever

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One of the things which guarantees that phase 2 of the Brexit talks will be even harder than phase 1 is the continuing failure of the Brexiteers to face up to the simple reality that their determination to scrap EU rules is what guarantees the imposition of a hard border somewhere, the only question being where.  This blog post sums up very simply the factors that lead to the requirement for a hard border, noting that:

There are essentially 3 reasons why customs borders exist:

1.    To impose tariffs and quotas;

2.    To confirm the imports’ countries of origin;

3.    To ensure compliance with regulations and standards.

A free trade agreement with the EU would only get us over the first of these. To avoid the second would require continued membership of the EU Customs Union (or the negotiation of something similar). To avoid the third we would need to stay in the European Economic Area and abide by the rules of the single market.

Whether because they don’t understand that very simple explanation, or because they’re being deliberately dishonest, the Brexiteers continue to insist that the EU27 will allow the free movement of goods and services across its boundaries from a country which no longer follows the same regulatory regime.  In their dreams, they fondly believe that they can scrap employees’ rights (such as the Working Time Directive), reduce environmental controls, scrap any EU rules that they don’t like, hand UK companies, as a result, a trading advantage in that they can produce goods and services with fewer constraints, and that the EU27 will simply allow a lower-regulation country to undercut their own companies on price.  Why?  Well, because they need us more than we need them, obviously.  And because the UK is very, very special.

Calling those who question the logic of all this traitors who are undermining the glorious charge into certain defeat may make them feel better, but it doesn’t alter the underlying logic, which is, at its simplest, that there is no way in which the EU27 are deliberately going to put their own businesses at a competitive disadvantage.  And that means, at its very simplest, that regulatory divergence mandates border controls.

The Brexit secretary talks blithely about Canada plus, plus, plus.  But Whilst the Canada agreement removes almost all tariffs and quotas, it does not do away with the need for customs controls for the other two reasons.  And as the EU’s website makes clear, “All imports from Canada have to meet EU rules and regulations on technical standards, consumer safety, environmental protection, animal or plant health and food safety (including rules on GMO's).”.  The goods sold by Canada to third parties (or in their own internal market) do not need to meet EU standards, but those sold to the EU do.  How many companies selling into the EU market from Canada will really decide to produce their products to two different regulatory regimes – that of the EU and that of Canada itself?  My guess is very few; most businesses will attempt to produce their products to a set of standards which meets the requirements of both regulatory regimes.  Exactly the same would be true for the UK.

It doesn’t matter how many pluses Davis adds to the word Canada, UK companies selling into the EU market will still need to meet all EU standards, as well as any different ones set by the UK government, and will therefore, in effect, see an increase, not a decrease, in regulatory requirements.  It is only those UK companies which either do not export at all, or which only export to less-regulated markets than the EU that will see any ‘benefit’ from regulatory divergence.  And that’s a rather smaller subset of the UK economy than the Brexiteers would have us believe.  And of course, as soon as the UK’s standards diverge, there would need to be border checks to ensure that only goods meeting EU standards and covered by the free trade agreement were crossing.  That in turn means that there is a basic, fundamental contradiction between the desire for regulatory divergence and the commitment to avoid a hard border across Ireland.

It’s a contradiction which they show no sign of even understanding let alone getting to grips with.  Some of them seem seriously to believe that the Irish Republic will shortly see the error of its ways, recognise the folly of independence, and beg to re-join Wales and Scotland under benign English dominance.  Others positively relish the thought of returning to what they see as the past glories of an island nation standing alone, based on a view of history which owes as little to fact as the case that they made for Brexit itself. 

(As an aside, every time they use the word ‘buccaneering spirit’ I find myself wondering if they really understand what the word means.  There may be a certain romanticism to murder, pillage and piracy – and licensed pirates are what buccaneers were – but trying to take whatever we want by force, deceit, and trickery doesn’t look like a particularly promising future for a middle-ranking European country in the 21^st century.)

I’ve argued before that the Brexiteers’ position makes little sense if Brexit is seen in isolation; it makes sense only as the first move in destroying the single market and the EU with it.  In that sense, their view of European diplomacy and the UK’s objectives in it have changed little over two centuries – sow division and make sure that no other country can achieve dominance.  The future is essentially unknowable, and they may even be proved right in time.  I have to say, though, that the evidence to date is not very supportive of that outcome.  So far they’ve managed to build more unity in the EU than we’ve ever seen before, and what they’ve sown in European minds to date looks more like bewilderment than division to me.

Differences between theory and practice

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In recent days, the Welsh Government has been busily producing economic strategy documents.  Some of what they say is a welcome change, some rather less so.  The original idea of having specific target sectors for economic development was basically sound, but undermined by the peculiar Welsh insistence on leaving nobody out, which meant that all sectors were target sectors.  And, as the old saying goes, if you have more than two priorities, then effectively you have none.

The bigger problem than the content of the strategy however is whether any strategy is actually deliverable in practice.  The record is not good; fine-sounding words rarely get translated into effective action.  No doubt at least some of those in the Assembly would argue that it’s a question of powers – the Assembly / Welsh Government simply don’t have control over the main economic levers and their influence is therefore limited.  I agree with that, but if it’s true, then what exactly is the point of spending time and effort on producing strategies which you know you can’t implement?

The question of the extent of devolved powers isn’t the only issue though.  In theory, all those missing powers reside in Westminster, but the record of effectively setting an economic strategy isn’t much better.  The real powers over the economy don’t reside with government at all – in Cardiff or in London – they have been outsourced to the owners and managers of capital.  And unless governments are prepared to tackle that stranglehold of economic power, they will continue to have minimal influence on the real economy.

And there are those who even challenge whether the government should be making any attempt to spread prosperity more evenly.  This report suggests that if the goal is to improve productivity in the economy, then investment should be chanelled to those areas where the wealth already resides.  I don’t like the conclusions; such an approach leads to a concentration of investment and growth in some areas at the expense of others which simply provide the labour force and suffer the loss of young people stemming from that.  But if the objective is to improve the overall productivity of the country as a whole, and the overall average GDP per head, then I tend to agree that it’s the most effective strategy.

That is, though, a very big ‘if’.  For those of us who believe that the success of economic policy should be about more than overall averages, there is a trade-off here.  Increasing the average in this way might look like ‘success’, but it is success bought at the expense of increasing inequality and deliberate abandonment of more rural and far-flung areas.  The problem is that, for all the fine words from the Welsh government about strategies for spreading growth across Wales, their actions look more like implementing the approach laid out by the iea author – concentrating investment and growth in the south-east of Wales.  Actions speak louder than words.

Business and circuses

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The early invitation by May for Trump to make a State Visit to the UK looked pretty silly at the time.  The more time passes, the more reason he gives people for demanding that it be cancelled.  If I thought that anything he said was thought out before he pressed finger to keyboard, I’d almost be tempted to suggest that it was entirely deliberate – he wants it to be cancelled.  Not only would that spare him the prospect of protests against his presence, it would also fuel his claim to be willing to stand up for America in the light of all criticism.

It seems unlikely that the invitation will actually be rescinded, though.  It’s more likely to sit behind the clock on the White House mantelpiece gathering dust in the vain hope that all concerned will simply forget about it.  The UK Government responds to every call for the visit to be cancelled with a resounding ‘no’.  Whether the messages being delivered privately by diplomats are any different is another question, but I doubt it for two reasons.  The first is that if any different message had been passed on quietly, Trump would surely have tweeted about it.  He struggles to keep quiet about anything, and certainly not any suggestion of a slight to himself.  And secondly, there is the long history of the UK according official state visits to a succession of tyrants, dictators, and crooks.

There are reasons aplenty to withdraw Trump’s invite; I don’t think I even need to spell them out.  But can it really be said that he is a less worthy invitee than many of those already on the list?  Turning the issue into a question of whether or not one person should come is to avoid the real underlying issue, which is the willingness of the UK state to welcome all manner of undesirables to these shores in the hope of economic advantage, lavishing them with honour in the process.  The best way to stop Trump’s visit is to abolish the whole business of state visits, which are anachronistic and irrelevant, a throwback to a Ruritanian past.

Economically and politically, we have little choice but to deal with the world as it is, and that sometimes means dealing with some very unpleasant people whose values few of us share.  But we don’t have to fete them in the process.

Progress?

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Today’s news about an apparent ‘breakthrough’ in talks over Brexit is better than many of us had expected, although whether it’s much more than a form of words to enable the next stage to commence remains to be seen.  The wording looks like a bit of a fudge; something which can be interpreted in more than one way in order to satisfy multiple audiences, but which will need to become a lot clearer than that over the coming months.

The statement that "the UK will maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all island economy and the protection of the 1998 Agreement” seems to avoid both a hard border across Ireland and the imposition of a hard border in the middle of the Irish Sea, but the devil will be lurking, as ever, in the detail.  How will they determine which areas of ‘alignment’ are the ones which support ‘North-South co-operation’, for instance? 

There was talk, in advance, of effectively remaining in the single market for some sectors but not others, but regulating that produces immense challenges.  It could mean, for example, that lorries containing agricultural produce will flow freely but those containing widgets won’t.  It doesn’t take a genius to work out that the implication of that is that those claiming to be carrying meat might just need to be checked to make sure that there are no hidden widgets – which brings us straight back to the hard border issue.  The simple, practical, cheap, and effective way of determining in which areas alignment should be maintained is not to bother – this agreement looks to me like the first step towards tearing up another of the government’s red lines and remaining in the single market.  It’ll take a few more months of drama and crisis to reach that point, though.

I thought that yesterday’s remarks by the Chancellor, that any suggestion Britain might walk away from talks without paying off its obligations to the EU was “not a credible scenario.  That is not the kind of country we are.  Frankly, it would not make us a credible partner for future international agreements” was one of his more sensible pronouncements.  The fact that he was so roundly ‘corrected’ by Number 10 within hours by a spokesperson for the Prime Minister saying that honouring our debts was “dependent on us forging that deep and special future relationship” makes it clear that reality is dawning on May only slowly, and only one step at a time.

The end state – something which the Cabinet have not even felt it necessary to discuss yet, apparently, probably because thy know that they won’t agree – looks increasingly like being membership of the single market and customs union, no independently-negotiated trade deals, a continuing role for the European Court of Justice, continuing payments to the EU’s funds, and acceptance of EU rules with no input to their drafting.  Brexit means anything but Brexit.  No wonder the Brexit ideologues are getting increasingly restless.

Blaming the 'marginalised'

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The offensiveness and insensitivity of the remarks made by the Chancellor to the Treasury Select Committee yesterday mean that an important point about the way in which productivity is measured and its importance to the economy is in danger of being lost in a barrage of wholly justified criticism of Hammond’s choice of words.  Describing the disabled as a marginal group in society was an open invitation for the attacks to concentrate on the man rather than the message.

Productivity is a simple enough concept at the level of any individual enterprise – it’s a mathematical calculation of output divided by input, or in practice the value of the goods or services produced divided by the number of hours worked by employees to produce that output.  That doesn’t necessarily match what many might think of though.  Certainly it means that ‘productivity’ can be increased if the same output can be produced with half the workforce; but it also means that ‘productivity’ can be increased by simply upping the price of the product, as long as the labour costs remain the same.  But does that really mean (in terms that most of us can relate to) that the workers have suddenly become more productive?

Using the same measure scaled up for the economy as a whole brings other problems.  Dividing the GDP of the UK by the number of hours worked by all employees of all organisations certainly provides a ready measure of something, and if all countries are measured in the same way, it provides a handy basis for comparison.  But it does also mean that an economy which adds lots of jobs at low pay rates for small increases in overall GDP will appear to be losing productivity compared to other economies which do not follow that path.  It doesn’t matter that the overall GDP of the country has increased, whether measured in absolute terms or in terms of GDP per head. 

On this measure, it doesn’t matter that there are more people in work and fewer on benefits; a measure of productivity per hour worked will react in the ‘wrong’ way to an increase in employment in jobs which only add marginally to overall GDP.  Note that – and this is why the Chancellor was so wrong in the way he made his remarks – it doesn’t matter who the people doing those jobs are; it’s not that the people doing the work are in marginal groups, it’s the low-paid low-output nature of the jobs which are being created which is the problem. 

More important still is how we respond to the situation.  If productivity as currently measured is the prime driver, then it could actually be improved by closing down marginal enterprises, and cutting the numbers employed in the less marginal enterprises.  Total GDP would fall, and GDP per head in the economy would fall, but ‘productivity’ would apparently increase.  That merely underlines the fact that ‘productivity’ as currently measured is a poor tool for judging overall economic success.  None of that means that the low level of productivity in the UK economy compared to others isn’t a problem.  It means, rather, that we need to look at what else can be done to improve the situation, rather than blaming marginal groups or even marginal enterprises.  It's a question about what sort of economy we want.

We could start by looking at the performance of those companies which are sitting on large sums of cash rather then investing them.  I’m sure that some of them would argue that the uncertainty caused by Brexit is a reason to hold back on investment.  They’d be right up to a point – but this is a phenomenon which long preceded Brexit.  It’s a failure of capitalism to serve the needs of the community as a whole rather than the greed of the few.  But it’s much easier for a Tory Chancellor to blame those he regards as ‘marginal’ than to look a lot closer to home.

Border myopia

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I don’t really expect ministers of the Crown to understand the entirety of their briefs; that would be too much for people who are generally little more than political figureheads.  So the fact that one former Northern Ireland Secretary, Owen Patterson, managed to get his figures wrong in relation to cross-border trade is probably just the result of him being a ‘former’ minister and no longer having civil servants loyally hanging around ready to ‘clarify’ what he really meant.  The point that he was trying to make, as I understood it, was that because trade levels are so low, the existence of – or nature of – a border really isn’t that important.

Much more worrying than his lack of grasp of the figures is that a spell in the Northern Ireland office has done nothing to open his eyes to the fact that borders are about more than trade and economics.  There are few borders, anywhere in the world, which are as highly charged as that on the island of Ireland, and the fact that he still thinks it’s all about trade shows the power of a financial-based ideology to blind its holders to all other factors.

It does, though, provide a good insight into all that’s gone wrong with the Brexit process and negotiations from the outset.  Other borders within Europe may not be as sensitive as that between the Republic and the North, but the continental approach to borders and the European project has always been imbued with a significance which goes well beyond trade and economics.  The UK position, on the other hand, has always been driven by the ideologues who see humans as little more than economic animals, driven solely by pursuit of their own best financial interest, at the expense of others whenever necessary.

It is the same blindness to the non-economic factors which led the Brexiteers to tell us that German carmakers, backed up by Italian Prosecco producers, would force Merkel and the others to give us a better deal outside the EU than we get inside.  It was that attitude which led to talk of the deal being the “easiest in human history” (© Liam Fox).  And it was that attitude which led to the “they need us more than we need them” approach to the possession and consumption of cake.

But if a spell presiding over the Northern Ireland office, dealing with one of the most emotionally-charged borders in the world, can’t reduce this myopia, then what can?  After the events of this week, I suspect that the answer is ‘nothing’.  The gulf in perception of what opening borders is about remains as great – perhaps even greater – now than it was at the outset.  And one of the worst aspects of all of this is that I see little by way of a better understanding on the opposition benches.  The opposition parties seem almost as fixated by the economics as the government.

Accidentally cancelling Brexit?

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Unsurprisingly, the Brexit fanatics are taking their ire out on the Republic of Ireland over the issue of a border across the island.  For those who have never really understood, let alone accepted, the idea that the Republic is an independent state rather than still part of, or a vassal to, the UK, this is only to be expected.  It overlooks the fact, however, that there is a sense in which what is being presented as an ‘Irish problem’ is only the specific and obvious example of what is in fact a generic issue.  That issue is, as Ian Dunt puts it here, that a divergence of regulatory regimes means that “you need to check that goods and services are of the required regulatory standard, that the correct tariffs have been paid and that products originated where they say they have”.  It only looks like a specific ‘Irish’ problem because it’s only in Ireland that there is a land border between the EU and the UK.

The solution proposed by May, guaranteeing no regulatory divergence between the North and the Republic, is a neat solution to the specific, but it does nothing to resolve the generic.  It merely shifts the issue from a line drawn across an island to a line drawn in the sea – it is the Brexiteers’ desire to opt out of the EU regulatory regime which causes the problem, not the Irish Government.  The only thing surprising about the opposition of the DUP to anything which effectively puts the North outside the UK regulatory regime – which is the apparently inevitable consequence of what the proposed agreement said – is that it did, indeed, seem to come as a surprise to May.

The call from Scotland, Wales and London to be given the same deal as Northern Ireland makes eminent sense politically.  As Nicola Sturgeon put it, “If one part of UK can retain regulatory alignment with EU and effectively stay in the single market (which is the right solution for Northern Ireland) there is surely no good practical reason why others can’t.”  Whilst I wholly agree with the sentiment, I don’t agree with the bit about there being ‘no good practical reason’.  For the reasons referred to above, putting Wales or Scotland in a different regulatory regime from that operating in England requires borders between those countries; and doing the same for London requires a border around that city.  Theresa May – or any other UK Prime Minister – is not going to ‘solve’ the problem of the Irish border by creating three new borders within the island of Great Britain.

There was one phrase in the proposed agreement which has received scant attention, and that was that the continued regulatory alignment would happen only "in the absence of agreed solutions".  I’m sure that May thought that would be enough of a fudge to be able to move on to the next phase, during which she and her team still fondly believe that they can negotiate a deal which gives the UK all the advantages of, and access to, the single market without being a member.  If they could pull that off, then of course the deal that she almost agreed to yesterday would become irrelevant; there would be no need for a border at all.  It would probably signal the end of the single market and possibly the EU itself (why would anyone want to remain a member if they can get as good a deal outside?) and for that reason alone it won’t happen.

There is, though, one other way in which May could honour the agreement she so nearly made yesterday, and that is to retain regulatory alignment with the EU for the whole of the UK – to remain a member of the single market and the customs union, cancelling Brexit "in all but name".  Did she effectively, albeit accidentally, come close to committing to that yesterday?

That, apparently, is not what he meant...

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I’m not exactly the biggest fan of the idea of designating a particular city as the Capital of Culture for a period.  It does seem to bring some economic benefits to the areas concerned, but I wonder how long-lived they are, and how well - and fairly - the benefits are spread amongst the wider community.  I suspect that there might be other ways of spending the same amount of money for better outcomes.  Whatever, the competitions exist, and as long as they do, I cannot fault those cities which do their best to get whatever investment is available, from whatever source.

One of the competitions is the ‘European Capitals of Culture’ Programme.  It’s run by the EU and the funding comes from the EU’s budget, but is not only open to EU countries; it is also open to EEA/EFTA countries, as well as candidate and potential candidate EU members.  And it was supposed to be the UK’s turn to have one of its cities nominated for 2023 under the rules of the scheme.  However, the EU Commission has, not at all surprisingly, pointed out that after March 2019, as a result of the Brexit referendum and the government’s hard line decision to refuse membership of the EEA/EFTA as well as of the EU, the country will no longer fall into any of the eligible categories, and cannot therefore nominate a city for 2023. 

It’s an entirely reasonable and logical conclusion – unless you’re a Brexiteer, in which case it is “a pathetically childish act” according to Leave.EU, and has been described by various commenters as an example of the EU’s bullying approach, or another reason why the UK is right to leave.   Even Nigel Farage is apparently sad about it.  Yes, that’s right – people who think we should walk away without paying a penny more into EU funds really are arguing that the funds to which we are no longer contributing (and this funding would come after the period covered by the misnamed divorce bill) should still be available to the UK.  Or even that the fact that the funds to which we currently have no commitment and to which we will not be contributing are not available to us is a good reason or not paying for anything to which we have committed.

As one of the more rational commenters put it: “Don't think you quite understand how this Brexit thing works do ya?”.  But then, who can be bothered with mere facts?

Delusion and reality

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One of the problems from which the delusional often suffer is that the real world has a tendency to intervene, and can’t always simply be imagined away. For Brexiteers, the hard reality that they are not going to persuade anyone to give them any new concessions by threatening to simply renege on existing financial obligations has been a long time coming, but there does seem to be an inkling of progress towards a more realistic position.  It’s not agreed yet, of course, and we don’t yet know the final figure.  It will almost certainly be higher than the headline figure being quoted, but a bit of skilful negotiation on both sides might be enough to hide the final total in a plethora of rebates, discounts and conditional payments.

There has also been talk for a while about progress on protecting the rights of EU citizens.  If it weren’t for the innate dislike that some people seem to have of all foreigners, this should have been the easiest of all to resolve.  All they ever had to do was to extend the rights of UK citizens to match those of EU citizens.  Again, progress has been hindered by an unwillingness to give the citizens of the UK more rights.  I think it’s called ‘taking back control’.

That leaves the one that the UK imperialists always thought was going to be the easiest of all to settle, and that’s the question of the border with the Republic of Ireland.  There was never any rational basis for assuming that it would be easy, but a failure to understand that the republic is an independent state, with full membership rights of the EU, rather than some sort of vassal state of the UK has blinded them to the fact that the EU 27 were always going to be more likely to unite behind a loyal continuing member than to abandon that member's interests in pursuit of a deal with a troublesome departing member.  The treatment being meted out to Ireland by some sections of the press well displays the lingering imperialism and exceptionalism which has dogged the UK for generations.

In purely logical terms, I have some sympathy with the position adopted by Liam Fox, which is that the nature of the border required depends on the nature of the trade deal between the EU and the UK, and might therefore be better dealt with in phase 2.  Or rather, I would have more sympathy if the UK government had not, during phase 1, removed from the table all the practical options which would allow an open border to continue, demanding instead that the EU come up with a proposal to avoid the logical consequences of Brexit for the border.

The key word there is practical, and how it is interpreted.  It has long been clear that the real objective of the Brexiteer ideologues isn’t simply to remove the UK from the EU, it is to abolish the EU and replace it with a purely economic relationship based entirely on trade.  How else can anyone interpret the demand for a trade agreement as good – or better – that the one we have, but without membership of the single market or the customs union?  Now if somebody believes – as I suspect that Fox does – that Brexit is just the first step towards that goal, and that the UK crashing out with no agreement on a future relationship will help to bring that about, then the position being adopted actually makes some sort of sense.  But to repeat the opening line, one of the problems from which the delusional often suffer is that the real world has a tendency to intervene, and can’t always simply be imagined away.

Truth and political advantage

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A few days ago, one of the Chancellor’s aides insisted that the much-criticised pledge to provide an extra £350 million a week to the NHS could in fact be met after the UK leaves the EU.  The idea received support from Glyn Davies, the MP for Montgomeryshire, who argued that making that cash available “would totally undermine the most continuing bone of contention”, and by implication the arguments of those of us who feel that the electorate were misled into voting to leave the UK.  I think that they’re both right – it can be done, and it would alleviate a running sore.  But being right isn’t the same as being honest; such a move would be, if anything, even more dishonest than the original pledge.

Firstly, the amount available as a result of leaving the EU isn’t the £350 million a week that is quoted.  It is well-established that that is the gross figure before the UK’s discount.  The net amount is more like £250 million.  So around £100 million needs to be immediately deducted from the claimed £350 million.

Secondly, however, we even get some of that lower figure back for things such as payments to farmers and the development funding which Wales receives.  Any suggestion that the money going to the NHS would be the ‘same’ money which is currently being sent to the EU implicitly assumes that the UK Government would simply cancel all payments to farmers and all regional aid.  If that is not what is being proposed (and I’m fairly sure that it isn’t), then these payments need to be deducted from that £350 million as well.

Thirdly, some of the money which we don’t get back goes on what some like to call the ‘Brussels Eurocrats’.  Now, of course we won’t need to pay for them any more, will we? No, we won’t; but neither can we simply assume that none of them add any value to anything and that we can simply do without them.  The UK will need to employ its own trade negotiators instead of those eurocrats, it will need more staff to deal with customs and borders; it will need its own people to take on all the tasks currently performed collectively by the EU.  Any honest assessment of the amount available for the NHS after Brexit has to deduct all these costs from that infamous £350 million.

Fourthly, there is the misnamed and misunderstood ‘divorce bill’.  In reality, this isn’t a cost of leaving, but a payment of sums to which the UK has already committed.  Whatever the final sum paid (and we don’t know that yet), it amounts to a continuation of part of the membership payments for an agreed period.  It’s the same money, and therefore needs to be deducted from the £350 million a week.

Finally, there is the hardest and vaguest question of all – what is the impact of Brexit on the UK economy and therefore on tax receipts at the Treasury?  This is, ultimately, a matter of opinion and assumption rather than unassailable fact.  If the Brexiteers are right, then in the long term, the benefit to the UK economy will be so great that it will fill the entire gap that I’ve outlined above, with lots of lovely money to spare.  And if they’re wrong, then the reduction in revenues as a result of Brexit also needs to be deducted from that mythical £350 million.  Who’s right?  In the short term, I, like most others, believe that the UK economy will take a hit.  And to the extent that that is true, the amount of that loss in revenue also needs to be deducted from the so-called Brexit bonus, before we can begin to allocate that money to the NHS or anything else.  (In the longer term, I’m less certain – I’ve argued before that I’d have had more time for the Brexiteers’ arguments if they’d been upfront and admitted that there’d be some short term pain for an anticipated longer term gain, but arguing that there would be an immediate gain was always an outright lie.)

So, given that the £350 million a week doesn’t stand up to any sort of objective examination, how can I say that Kwasi Kwarteng is right to argue that the UK Government could decide to put an extra £350 million a week into the NHS after Brexit?  Simply because that decision actually has nothing at all to do with Brexit.  Austerity and debt reduction are political choices, not economic necessities, and the money could be made available by the simple expedient of making different political choices.  It’s ideology, not membership of the EU, which prevents investment in the NHS.  It’s ideology, not economic necessity, which prioritises cuts to services over any increase in taxes or borrowing. 

Presenting the possibility of a £350 million a week additional investment in the NHS as a consequence of Brexit is fundamentally dishonest.  That won’t necessarily stop them doing it, of course.  But I rather suspect that ideology will continue to blind them even to the obvious political advantages of simply adding another big lie to the ones already told.

Debating the tax bill

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There is nothing at all unreasonable about a departing member of any organization arguing about the legal basis on which outstanding debts should be settled.  Money is either owed or it isn’t, and there is little doubt in my mind that the EU27 have a reasonable basis for demanding that the UK meet the obligations to which the country has committed.  I’m equally clear that the UK can, if it wishes – and this is what the extreme Brexiteers are saying, simply renege on previously-made commitments and walk away, although I don’t share their optimism that those left with a hole in their budgets will simply shrug their shoulders and place their trust in any commitments that the UK Government makes in the future.

I doubt, though, that many of us would find our banks terribly understanding if we went to them and said, in effect, “We’ll offer to pay you part of what we previously committed to pay you, but only on condition that you allow us to dictate the terms under which we’ll bank with you in future”.  That, though, seems to be roughly the position of the UK Government in relation to settling debts with the EU.  In fairness, it is an approach that most of the extremely wealthy individuals and the biggest multinational companies would recognise, because it is precisely the approach which the UK Government adopts when it comes to taxing the rich and powerful.  They are allowed to pluck a figure out of the air, negotiate around it and arrive at a settlement under which they pay as much as they agree to pay, regardless of their actual tax liability, basically because that makes things easier for HMRC than having to go through all the bother of making a proper assessment.  So I can see why ministers might believe that it can work, although I’m far from certain that the EU27 will roll over as easily as HM Treasury does.

Underlying all this is that, instead of trying to debate and agree what the UK actually owes by considering the elements of the ‘bill’ carefully and reasonably, the UK government – egged on by a media which has little interest in facts or details – is obsessing over the total sum, and trying to create a spurious link between meeting agreed obligations on the one hand and demanding favourable future treatment on the other.  And they wonder why the EU27 are losing patience with them.

Latest update from Planet Zog

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I thought that David Davis was simply making an attempt to re-affirm his extra-planetary origins in his speech last week.  The BBC’s Europe Editor saw it as evidence that the two sides were inhabiting “parallel universes”, but EU chief Donald Tusk dismissed it as simply an example of the “English sense of humour”.  It’s a kindness of approach which the UK Government has done little to deserve.  In the course of the speech, the Secretary of State for Exiting the EU gave us his latest take on the state of talks.  It was full of absolute gems:

·       The minister charged with ending the UK’s existing membership of the world’s most successful free trade area declared that he wants the “freest possible trade in goods and services”, and even that the UK’s current close economic ties “should continue, if not strengthen” after the UK breaks those ties.  Yes, he really is arguing that the ties with a non-member can be stronger than those amongst members.

·       The same minister, who is also charged with implementing the political decision to leave the EU, strongly warned the EU against “putting politics above prosperity”, because, after all, "Putting politics above prosperity is never a smart choice".   An understanding of irony is clearly in short supply on Zog.

·       With his responsibility for ending the over-regulation for which he and his team have been blaming the EU for decades, he made it clear that he wants the UK to lead a "race to the top on quality and standards" rather than engage in a "race to the bottom" that would mean lower standards.  Adding more regulation and standards is now better than abolishing them, apparently.

·       To complete his full house of demands for everything to change whilst everything stays the same, he went on to say that being able to resolve disputes without being subject to the rulings of a supranational body like the EU Court of Justice would require the creation of a supranational body to whose rulings both the UK and the EU would both be subject.

There is, of course, a very simple and obvious way in which he and the UK Government can have all that they claim to want here, but that is simply not the way that things are done on his home planet.

Only dealing with equals?

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Last month, Wales’ First Minister gave us the benefit of his opinion on free trade deals following Brexit.  Superficially, his suggestion that we should not do free trade deals with countries that have lower levels of income than us is politically attractive. None of us wants to see Welsh companies being undercut or Welsh jobs being exported to low wage economies elsewhere.  There is a problem with this approach though, because it looks at things only from one narrow point of view.

If every country took the same view, then no country wealthier than Wales would ever want to do a deal with us.  After all, they wouldn’t want to see their jobs lost to a lower-wage economy like Wales, would they?  So one possible logical consequence of the First Minister’s position is that countries only ever do deals with other countries whose income per head is roughly similar; and that’s a recipe for locking the relative wealth of different countries and regions into its current position.  If free trade helps to spread wealth – and that’s the implication of the First Minister’s position - then under this approach the rich stay rich and the poor stay poor.  An ‘interesting’ stance for a Labour politician. 

But the likelier consequence is that there would simply be no free trade deals.  Perhaps that’s what the First Minister meant, even if it’s not quite what he said.  It would be a radical change of policy, and it would be interesting to see him spell out what it might mean in practice.  Some of the outcomes might well be positive over the longer term  - in terms of relocalising the economy and reigning in globalisation - even if, overall, it led to a reduction in international trade.  If moving towards that was really what he meant, he has a point worthy of much more detailed discussion and examination, not least in terms of handling the shorter term negative impacts.  I suspect, though, that he just hadn’t thought through what he was saying.

Redwood just being honest

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Some commentators have been more than a little unkind to John Redwood, for telling people in his capacity as an investment advisor that they should “look further afield as the UK hits the brakes” after telling us in his capacity a an MP that the “economic gains of leaving the EU will be considerable”.  Now I don’t really object to people being unkind to Redwood; it’s not as if he hasn’t done anything to deserve it.  His ‘rendition’ of our national anthem alone is a debt worthy of repeated repayment for decades to come, and that was but a small part of his performance as Secretary of State for Wales.

But are the two statements really as inconsistent as they appear?  As far as I’m aware, he didn’t tell us that the economic gains of leaving the UK would occur within the UK itself nor that they would accrue to all of us.  And rich people benefiting from the undermining of the UK economy is hardly a new phenomenon.

I suspect that people are confusing Brexit and British patriotism here.  For sure, ‘patriotism’ was one of the means used to persuade people to vote in a particular way, but that doesn’t mean that they ever intended it to apply to themselves.  Capital is never patriotic because it knows no boundaries; it only ever pursues its own interests.  The problem with the response to what Redwood said is that it’s political froth dealing solely with the apparent inconsistency of one politician.  It leaves untouched the wider question of who owns wealth and where real power lies.

The Best Pretender

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The UK Government’s proposal to write the date of the UK’s departure from the EU onto the face of the bill is a powerful symbol of their determination to go ahead with Brexit without compromise.  It’s not much more than a symbol, though.  If there is one single principle or tenet underlying the UK Constitution, it is that Parliament has absolute sovereignty vested in it by the monarch, and that anything parliament can do it can subsequently undo.  So, yes, parliament can declare the date of departure on the face of the bill; but if it becomes clear that a change is needed, parliament can make that change.

It is a symbol to which all the Cabinet can sign up, of course - precisely because those who think it nonsense also know that it can be changed if (or when) reality requires.  And getting the Cabinet to agree to anything is something of an achievement in itself – the government’s internal negotiations seem to be more complicated and difficult than those with the EU27.  Unity on anything is a bonus; in a context where the UK pretends to make offers to the EU and the EU pretends to take them seriously, symbolism helps to strengthen the perception that the UK is better than the EU at pretending.  Perception can sometimes feel more comfortable than reality.

I can’t help but think, however, that the amount of time and effort being spent on symbolism to strengthen the UK’s posture of pretence might have at least some relationship with the lack of progress on the substance.

Intransigence and flexibility

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The position taken by the UK Government – that Brexit cannot be allowed to create an ‘internal’ border between Northern Ireland and the rest of the UK - is an entirely reasonable one for any government to take.  Even if it were not so, the reliance of the current administration on the votes of the DUP requires no movement on that question.

The desire of the same government to do nothing which unpicks the Irish peace process is an equally reasonable and sensible one; no-one in their right mind (although whether that’s a fair expectation of May and crew is a separate question) would wish to endanger the progress which has been made.  So avoiding a hard border across Ireland is an imperative for them.

And, given some of the wilder promises made by Brexiteers about freedom and independence, it’s understandable that ‘Brexit means Brexit’ requires departure from the single market and the customs union.

The problem for the UK Government is that the three positions - all in themselves reasonable and logical outcomes of the vote last year – are not concurrently achievable.  They can have any two of them, but will have to yield on the third.  It’s clearly an unpalatable choice, but it will have to be made.  Their position to date seems to consist of demanding that ‘someone else’ (i.e. the EU27) comes up with an imaginative solution of the type that they are themselves unable to either imagine or articulate, and that the other side’s unwillingness to do what they can't do themselves amounts to bully-boy tactics.  The default position - increasingly likely given the lack of any serious attempt to do otherwise – is a hard border across Ireland.  Like so much else of the 'negotiating' attempts of the UK, it's as though they are working in a vacuum, in a way which isn't going to impact on real people.

Confusing ends and means

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As an independentista, I am of course wholly supportive of devolving more tax powers – indeed, all tax powers – from London to Cardiff.  I don’t really need anyone to make the argument separately for any individual tax.  But the argument being made earlier this week for devolution of long-haul air passenger duty (APD) isn’t an argument about devolution at all; it’s an argument for abolition of the tax for certain airports.  Devolving the tax is presented as being simply a means to an end.

The core of the argument is that abolition of the tax would enable Cardiff to compete more effectively with other UK airports, and to expand the number of flights and destinations.  I’m not at all convinced that those are worthy objectives, and I’m conscious that the original objective of APD was, if not exactly to deter people from flying, then at least to make sure that the cost of doing so covered at least some of the environmental cost, particularly in a context where fuel for road traffic is heavily taxed and aviation fuel is not.  Whether APD is effective in that respect, or whether that aim is better achieved in another way is an issue on which I’m open to persuasion; but simple abolition with no replacement policy looks like a backward step to me.  However, I’d still support the devolution of that tax power, even if I were convinced that any conceivable government in Cardiff were likely to use it in a way which I don’t like.

That goes to the heart of my concern about the argument being put forward by those running Cardiff Airport.  Choosing where to place power over a particular tax on the basis of who is most likely to use that power in the way that a particular interest group wants looks to me like encouraging a ‘race to the bottom’.  It puts different tax authorities in a position of competing to see who can offer the lowest taxation regime.  That doesn’t look like a sound basis for deciding who should wield the power.

Ethics and the law

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The revelation that the rich and powerful use tax havens to shelter their wealth from the taxes faced by the rest of the population is about as surprising as a revelation about the Pope’s religious affiliation.  Of course those who own the wealth take steps to protect that ownership; they always have.  But that doesn’t mean that there are no surprising aspects of the affair.

I wouldn’t expect people such as the monarch to be personally managing their own finances; the real decisions are taken by the lawyers and advisors who oversee the day to day issues.  But I would expect those advisors to have been given some sort of steer on the way in which they should behave, and three general directives strike me as being key to such a steer:

·         Get the best returns possible,

·         Make sure that everything is legal, and

·         Don’t do anything that would cause embarrassment if it became public.

It is in relation to the third of those points that there has been a failure, and three possible reasons occur to me for that failure:

·         The steer given to the advisors didn’t cover that point,

·         It did cover that point, but the advisors ignored it, or

·         It simply didn’t occur to anyone that a perfectly legal investment would cause any embarrassment.

Whilst I can’t entirely discount either of the first two, it is the third which seems to me to be likeliest; and it is in line with the defence generally being presented (and emphasised again and again in the media), namely that ‘there is no suggestion of any illegal activity’.  It raises the question, though, about whether we expect the richer members of society to exercise any moral or ethical responsibility, or whether compliance with the law is considered adequate.  It’s quite clear to me that those involved in this whole affair consider that their responsibility starts and ends with that which is legal; they have effectively outsourced their ethical responsibility to the legislature.  If the legislature does not explicitly prohibit something, then it’s acceptable.

At one level, that abdication of responsibility is deeply depressing, but at another it actually provides an opportunity.  It’s almost an invitation to the legislators to take on the responsibility and outlaw anything which looks like an attempt to avoid taxation or otherwise outrages the wider public.  All we need to do is to find enough legislators with an operational financial moral compass.  That's the part which might prove difficult.

Following the mob

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On Wednesday, one of Wales’ former governors, William Hague, told us that he could not and would not support a second referendum on Brexit, because any such campaign would be ‘divisive and hate-filled’, even though he still believes that leaving the EU with no long-term deal in place – the favoured option of many of his political colleagues, and the outcome looking increasingly likely – would not be a good outcome.  It’s is clear that he believes that ending up with a poor outcome is better than the likely impact of a second campaign because of the way that campaign would develop.

In fairness, I think his fears about the nature of the campaign are well-grounded.  We’ve already seen the very ugly side of British nationalism at its worst on display in some of the tabloids – calling judges enemies of the people, and labelling opponents as traitors.  And that’s quite apart from the upswing in random racism and discrimination against foreigners.  I don’t doubt that it would get much worse than that in the event of any attempt to change direction, even if the condition which I’ve talked about before were to be met (i.e. evidence of a significant and sustained change of opinion). 

Notwithstanding that the promises made by the Leavers during the last referendum have been exposed for the lies that they were, and notwithstanding the increasing hard evidence of the impact of trying to implement that decision in a short timescale, any attempt to give the people a chance to express a different opinion would be fought tooth and nail by those who support Brexit, and we already know that truthfulness would be unlikely to feature in their response.

But here’s the question which Hague and others who take that stance need to answer: if it were to be clear that opinions had changed, and if it were to be clear that a change of direction would be in the best interests of the UK, would you really argue that we can’t have a second chance because those who ‘won’ last time round would use divisive and hate-filled tactics to try and repeat their victory?  Isn’t that at least a little bit like surrendering to mob rule?

Context and facilitation

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It is increasingly clear that events in Catalunya are leading increasing numbers of Welsh independentistas to turn against the EU.  There was an article along those lines on Nation.Cymru earlier this week.  It included other arguments against the EU as well, and I don’t entirely disagree with elements of the case which was made against the EU, such as for example the suggestion that “the EU is, in fact, a deeply anti-democratic institution which favours a parasitic Banking Sector and Big Corporations above all else”.  It’s worth pointing out, however, that that isn’t a position somehow adopted by the EU and imposed on its member states; it is rather a reflection of the position taken by the governments of the individual member states, and especially the larger ones.  And given a choice between that policy and the policies likely to be followed by a post-Brexit Tory government, I fear the latter rather more.  Being the lesser of two evils isn’t the best argument for anything, of course, but noting that the alternative is likely to be worse should give us at least a pause for thought.

That’s something of an aside; the question for me is about the context in which Wales moves to independence.  Many years ago, I came round to the view that the EU provides the best context for that step to ‘independence’.  Firstly, it redefines the word ‘independence’ itself in a way which fits the actual experience of most modern European states (and becoming a modern European state is what I want for Wales), and secondly it makes the step from where we are to that state of ‘independence’ a much smaller and even ‘safer’ one in a number of ways.  It’s not an ideal analogy, but within the context of the EU, it makes achieving statehood more akin to an internal reorganisation.

I fear, though, that some independentistas have assumed that the EU would be more than a context, and would be an active facilitator, and are becoming disillusioned when they see that it is not.  I see that as a delusion; I’ve never expected that a body which acts, first and foremost, on behalf of its member states would in any way seek to facilitate or assist the reorganisation of those states (which is surely what we independentistas are all about?) against the will of their central governments.  Why would it?  The task of bringing about that reorganisation, in the teeth of opposition from existing powers and interests, lies where it has always lain – with the people themselves.  The impetus will only come – can only come – from those who desire change.  And as Catalunya has demonstrated, it is unlikely to be an easy process, although it may be less difficult in some member states than others.

Right up until the very moment of the success of the new, the spokespersons for the old will continue to oppose and obstruct; expecting them to do otherwise is folly.  And the unionists will seize upon every such statement as ‘proof’ that what we seek is impossible.  The real question is this: once the people have spoken and the facts have changed, what happens?  In truth, none of us can be entirely certain, but I still believe that the response is more likely to be pragmatic than dogmatic.  The EU will adapt to new circumstances, not because the member states will be enthusiastic about it doing so, but because the European project itself demands that they can do no other.  Just don’t expect them ever to admit that in advance.

Silent majorities

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It was Richard Nixon who did most to popularise the phrase ‘silent majority’, but it’s become one of the most over-used phrases amongst politicians who generally want to claim that the majority are on their side in spite of the lack of any substantive evidence.  The claim by Spanish unionists, duly repeated and echoed by the BBC and other so-called ‘impartial’ media sources that the ‘silent majority’ of Catalans are against independence, and that if everyone had voted in the referendum, the independentistas would have lost is just one of the latest examples. 

It’s true that, on a 100% turnout, and assuming that everyone who didn’t vote would have voted against independence, the unionists would have won.  I’ve touched on the actual figures before; the problem with that assertion is that it makes too many assumptions, amongst them that the deceased could not only have voted enthusiastically, but would also have unanimously voted against independence.  Given the actual figures that we do have, it’s hard to see on any turnout less than 99% how the unionists could ever have won; and I find it hard to believe that, even on a very good day, the turnout could have been higher than 90%.  70% is a much more likely figure, and with 37.8% already having been counted as voting yes, the yes side had an unassailable lead.

But here’s the thing: there is only one way of ever knowing what the majority really think and that’s to allow them a free vote.  If the Spanish unionists really believe that they are speaking for the majority, they have an easy way of proving it.  The fact that they are so unwilling to take that path speaks volumes.  They’re only interested in votes which produce the ‘right’ outcome – after all, they’ve already indicated that, if the Catalans dare to elect the ‘wrong’ people to their parliament, they’ll simply be forced to vote again until they get it right.

Choose a number

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Last week, the President of the EU Commission, Jean-Claude Juncker, said, "I wouldn't want the EU to consist of 95 states”.  The statement begs more questions than it answers.  On what basis is 95 too many; and what is the right number? 

He seems happy enough with 28 – happy enough not to want it to reduce to 27 as a result of Brexit – and we know that the EU Commission is open to new entrants applying.  I somehow doubt that Turkey will ever make it to membership, but negotiations are in progress.  But I can’t see the EU refusing requests by Norway or Iceland for instance, should they aver make such requests.  Neither can I see them refusing Switzerland, although for its own unique reasons, I doubt Switzerland would ever apply.  Two former parts of Yugoslavia (Slovenia and Croatia) have already joined – if the other five wanted to join and met the conditions, would they really be refused?  I doubt it.  Or, again subject to the same caveats, would they refuse Albania or Ukraine?

It’s easy to see how, by a process of enlargement, the number of states could come close to 40 (perhaps the right answer should be 42, and Douglas Adams just never quite found the right question).  But the point is this: provided a state wants to join and meets the criteria, would the fact that the number of member states would then be too high be a reason for refusing them entry?  I can’t conceive that it would, even if it did somehow get to 95, because in each and every case the application would be considered on its merits, and in each and every case, the question becomes, regardless of the number of existing members, “can we cope with one more?”.  I really can’t see the answer ever being ‘no’; if states are refused entry, it will always be for a reason other than the simplistic numerical one.

Whether the applicant is ‘external’ or ‘internal’ doesn’t change that question or the answer to it, which makes his statement a nonsense, pulling a number out of thin air to suit his own predisposition for keeping the existing states as they are.  But then, since ultimately the EU Commission speaks first and foremost for its member states, why would anyone be surprised?