Over the next few days I will share with you the text of my lecture in
Speaker’s House on Tuesday evening. Today I start off by disagreeing
with the assumption that we have been winners from the single market and
we will lose from leaving it.
Let me question the thoughtless assumption of some who think this should
be an argument about trade and not about these wider truths
Let me challenge their view that our membership of the single market and
customs union has boosted our economy
They wish us all to discuss in worried tones what we might lose from
leaving
If you look out the economic growth figures for the UK you will discover
that the UK economy grew faster from 1945 to 1972 when we joined the EEC
than in the long years since we joined
You will discover that the growth rate did not accelerate again in 1992
when the EU claimed it had completed its single market
The immediate sequel to joining the EEC and to completing the single
market was the UK plunged into recession on both occasions
In 1974 it was the oil and banking crisis that affected much of the
west. Not the EEC’s fault, but the EEC offered us no respite from it.
In 1993 it was a recession created by European policy
Our period shadowing the DM and then as a member of the Exchange Rate
Mechanism gave us a nasty boom and bust
Our early experience of the completed single market was a 5% loss of
national output and income.
We were told then that creating currency stability was a crucial part of
a single market.
The only problem was the policy to achieve it did the opposite.
The EU itself has sought to study the impact of the single market
They concluded that the UK got the least benefit of all the states out
of the process
They said we experienced a single gain of just 1% over the whole time we
have been in the single market.
It is difficult to find even as much as that that in the figures.
Instead the UK’s entry into the EEC’s so called common market of the
1970s speeded painful losses of industrial business in the UK
The lop sided freeing of trade, removing barriers where France and
Germany were strong but not doing the same where we were strong
hastened large closures and output losses in steel, cars and other basic
industry.
In 1972 the UK made 1.92 million cars. Ten years later in the EEC that
had fallen to a low of just 888,000.
We lost Austin and Morris, Wolseley and Riley, Vanden Plas and Hillman,
Sunbeam and Triumph, Jensen and Rover
It is true there were home made problems with the way the industry was
managed, but no-one can say we got a boost from EEC membership.
In 1972 the UK steel industry had 323,000 employees and the UK was the
world’s fifth largest producer
Today we have 35,000 and are in twenty first place
The large coal industry that produced 147 m tonnes in 1970 has seen all
the deep mines closed
with just a small residual of surface mining left
The German steel and coal industries flourished and the German car
industry exported large volumes to the UK replacing our output
EU regulations have played a part in the demise of parts of our energy
industries
EU energy policy is turning the UK into a net importer despite being a
country rich with energy resources
In chemicals and textiles too the UK lost out to continental competition
Under Labour and Conservative governments there was a remorseless
decline of important parts of our industry throughout the period of our
membership.
It is difficult to see why people think there will be any additional a
loss of output when we leave the single market when there was no gain
from joining it
The argument seems to be based on the dubious idea that our exports to
the continent will suffer because we will find the EU impedes our access
to their market
This assumption too needs examination
Given the way the rest of the EU exports to us much more than we export
to them imposing barriers could be a more costly choice for them
I assume the UK will retaliate should the rest of the EU impose tariff
and non tariff barriers, and would match any such restrictions
Tariffs will be strictly limited under WTO rules which bind both us and
the EU
We should not exaggerate the impact moving to World Trade terms would
have.
Many countries have increased their exports to the EU at a faster rate
from outside the customs union than we have from inside
Non tariff barriers too have to conform with the Facilitation of Trade
Agreement which the WTO brought into effect last year.
It is just possible the rest of the EU will want to punish us and punish
themselves more by imposing what barriers they can
The UK economy would have several ways of adjusting
It could import cheaper goods from the rest of the world, removing
tariffs on imports in return for free trade agreements with other
countries
The UK could reimburse consumers and companies that had to pay the
additional tariff by giving them offsetting tax cuts out of the
substantial tariff revenue the UK state would collect
The UK Treasury would collect about £16bn in tariff revenue on EU
exports to us, giving plenty of scope to compensate. Meanwhile the rest
of the EU would collect just £6bn on our exports to them. All of that
money of course would go to the EU, not to member states governments.
UK business could divert some production from export to the EU to the
domestic market
Our farms could greatly expand production behind the substantial tariff
wall that is allowed under WTO rules for food
so that we all enjoy more home produced food as we used before entry
into the EEC.
The one non farm tariff that does cause some to worry is the 10% tariff
on cars
Here you would expect the combined impact of the stronger Euro and a 10%
tariff to cause more UK car buyers to switch to domestic suppliers
Helping offset any impact on export volumes to the continent.
The UK does run too high a balance of payments deficit.
It has been persistent for many years of our membership of the EU
It is heavily influenced both by the substantial budget contributions we
have to make
and by the large deficit in goods we run with the EU
On exit we will be able to cut the deficit by no longer making payments
We will be able to rebuild our agricultural industry.
Posted: 22 Feb 2018 09:09
PM PST
Why we will be better off out of the EU
Prosperity, not austerity.
That must be our aim.
Prosperity will be easier won once we are out of the European Union.
Restoring the freedoms of a once sovereign people.
That is the overriding task we face.
On June 24 2016 17.4 million voters gave a great mandate to Parliament
To take back control.
During the referendum campaign I was asked one of the questions designed
by Remain to damage the cause of freedom.
Would you, the media avidly asked, accept being poorer in order to
regain lost freedoms?
I replied that fortune meant there was no so such choice before us.
The very right to govern ourselves that we wished to reclaim will allow
us to follow policies that made us richer, not poorer As an optimist I
anticipate we will do better out than in.
No-one can be sure what
loss there might be in store if we remain in the EU
Or how many gains we will seize out of the EU.
What we do know is our fortune will rest more on our own decisions once
we are free
So let me begin my account of life after Brexit by explaining how we can
be better off.
I appreciate this will be at variance with several modelled forecasts
put out by an establishment afraid of freedom and scared of change.
It is an establishment that has a proven track record of error. They
told us the ERM would bring us a golden scenario of more growth and low
inflation. Instead it brought a deep recession.
They told us if the UK stayed out of the Euro it would be deeply
damaging to our business. Instead our business flourished with the pound
and the Euro area had several years of crises and low or no growth.
They said the big build up in debts prior to 2007 were fine because
banks had found new ways of managing risks. That forecast didn’t work
out too well either.
My forecast will be criticised, for it is not backed up with a model nor
expressed in precise figures. It does however come from someone who did
forecast the ERM crisis, the problems in the Eurozone and the banking
crisis.
I must warn that no-one can deliver a precise and accurate 15 year
economic forecast. I have no intention of trying to deliver one.
Too many things will change.
I can, however, point to the opportunities and the favourable changes
that we can expect in the few years that follow Brexit that will boost
whatever our growth rate then is. I do not expect a sudden fall in
growth or income thanks to Brexit. The Treasury’s short term forecasts
of such an outcome for the year after the vote have already proved wide
of the mark.
In future as in the past the main forces shaping our growth rate will be
the pace of innovation, the monetary and fiscal policies being pursued,
and the state of the world economy.
The most obvious gain that the anti-Brexit forecasters rarely put in to
their models is the chance to spend our tax money on our priorities.
The £12bn we send every year to the EU and do not get back is lost money
to the UK.
Worse still it is a large drag on our balance of payments every year.
To pay that bill we either have to borrow more money from abroad to pay
it or we have to sell more of our assets to overseas buyers, cutting the
investment income we earn on those assets.
Stopping that drag will boost our economy.
Spending the £12bn at home each year will mean more jobs and more items
bought from UK suppliers.
That will boost our economy with extra growth of 0.6% of our total
income. That’s a one third increase in the current growth rate in the
year we start it, with the same extra output in every year that follows
In the referendum campaign I set out a draft budget to illustrate how we
might spend the money
I recommend it to the government.
I also recommend that we advise the EU that if they do not offer a wide
ranging and sensible free trade agreement anytime soon we should
discontinue payments to them on March 30 2019 and start the benefits for
us.
There is no need for a Transition or Implementation period if there is
no good deal to transit to.
We know we can trade well under WTO rules and with WTO tariffs, as that
is what we do today with most countries outside the EU.
Out of the EU we will be free to fix and levy our own taxes.
We were told by past governments that tax was a red line issue
That we would always be able to decide our own taxes
That proved to be untrue
Out of the EU we can take VAT off feminine hygiene products
We can remove VAT from green items ranging from boiler controls to
draught excluders.
Promoting fuel efficiency without the drag of extra VAT will help us
keep warm and be better off. We could do more to combat fuel poverty by
cancelling the VAT on domestic heating.
We can also levy the amount of tax we wish from larger companies.
EU tax judgements on UK corporation tax have made us repay tax we
thought had been fairly and legally levied.
Lowering taxes, spending our own money and boosting industries like
fishing and agriculture which have been damaged by EU membership should
add more than 1% to our output, which is more than belonging the single
market has ever done.
Posted: 23 Feb 2018 09:43
PM PST
Restoring our fish and farms
Once we leave the EU we can take back control of our fishery.
There have been many EU policies damaging to jobs and incomes for the UK
but none more consistently unhelpful than the Common Fishing Policy.
We have been changed from a country with a rich fishery and a strong net
exporter of fish into a country with a badly damaged fishery lamely
importing our own fish from foreign interests that have taken it.
A UK designed policy can do better at conserving our stocks whilst at
the same time delivering more fish through UK boats to meet our needs as
consumers. The long period of forcing discards of many dead fish at sea
has pillaged our fishery in a bad cause.
If a UK fishing policy requires fishermen to land everything they catch
we will catch less and eat more, a win win for the industry, the country
and the fish.
That too will boost our economy.
Out of the EU we can restore our farms...
We have moved from 95% self sufficiency in temperate products to under
70%.
Our local supermarkets now are full of Danish bacon, Dutch salad stuffs,
flowers and vegetables, Spanish fruit and French dairy products. UK
consumers have to pay higher prices than world prices for things we
cannot grow for ourselves.
Common EU policies on beef and milk and much else have proved damaging
to UK farmers.
A UK based policy can help farmers cut the food miles and gain a larger
share of our domestic market. A growth in the UK policy will also boost
our economy.
Our membership of the EU confronted us in its early days with the
abolition of tariff walls which had protected some of our industry.
Whilst leaving up barriers against services where we had a competitive
edge.
Predictably we slumped into large and permanent deficit in our trade
with the rest of the EU.
In the first two decades of our membership the UK lost large amounts of
our industrial capacity. German industry proved to be more competitive
and we turned to huge imports as we saw unemployment in our
manufacturing heartlands mount
Out of the EU we can manage our trade more effectively.
Posted: 23 Mar 2018 10:02
PM PDT
My speech during the
debate on the economy
What a catalogue of
misery we heard from the Scottish National party spokesman, the hon.
Member for Glasgow Central (Alison Thewliss). It was just bizarre. I
thought there was an SNP Government in Scotland and that she might have
found something about Scottish public services or the state of the
Scottish economy of which she was proud, but no, everything is miserable
and, of course, everything is the direct fault of the Westminster
Parliament. The SNP takes no responsibility for anything. I thought the
Scottish Government had put up taxes and were going to endow their
public services with even more, but the hon. Lady did not mention that.
Perhaps she does not like the potential economic consequences of that,
but it is absolutely typical that we get nothing positive and the SNP
accepts no responsibility for the economy.
I wish to talk about the
huge opportunities for the United Kingdom economy as we leave the
European Union. I know it is fashionable for Labour Members to be wholly
negative about the Brexit for which their constituents voted and
which—to try to keep their constituents’ vote and have some confidence
from their vote—they said in their 2017 manifesto they would deliver,
but their voters, like me, think that there are huge opportunities for a
United Kingdom that will be more prosperous and successful outside the
European Union than inside it.
David Linden (Glasgow
East) (SNP): The right hon. Gentleman says the SNP talk about
misery; may I enlighten him with a little reality? This week, Dunnes
Stores, an Irish company, announced that its store in the Parkhead Forge
in my constituency was closing down. The company said that that is
because of Brexit, and it will have a direct impact on jobs in my
constituency. That is the reality.
John Redwood: I
can find many examples of companies that have come pouring in with extra
investment post the Brexit vote. The national figures show that we have
had more jobs, investment and growth following that vote. Those
ridiculously pessimistic Treasury forecasts were launched just in time
for the referendum vote. At the time, I and a few others put our
professional reputations on the line, said that the forecasts were
completely wrong, explained why the economics behind them was misleading
and why the forecasts were likely to prove widely inaccurate. We were
right; the Treasury, World Bank and others were comprehensively wrong
and have been rightly confounded.
I am pleased that my
right hon. Friend the Chief Secretary to the Treasury agrees with me
that it is a pleasure that those forecasts were wrong. She and the
Chancellor are exactly right to be cautious about the latest set of
official forecasts, which are likely to prove too pessimistic for the
future years. It is important that we aim to beat those forecasts. We
know that they keep changing the forecasts and that they tend to be too
pessimistic, on average. Now is a good opportunity to go out and beat
those forecasts. We should make that one of the main aims of our policy.
I look forward to Opposition Members trying to help us, instead of doing
all that they can to peddle misery and gloom to try to dampen spirits
and reduce confidence at a time when there are good reasons to be more
confident and to believe that those forecasts were wrong.
Let me take one obvious
point. I have some disagreement with my Front-Bench colleagues, because
I would like to stop paying any money to the European Union after March
2019. Some of my Front-Bench colleagues seem to wish to be more generous
than me, but I think they agree that we must quite soon get to the point
at which we are not paying any more money to the European Union. When we
have full control of our money, which is what we voted for, we will have
£12 billion to spend on our priorities here in the United Kingdom rather
than on the European Union’s priorities somewhere else across the
continent. That will give us an immediate 0.6% GDP boost. When a country
is growing at 1.5% to 2%, an extra 0.6% represents a material
improvement in its growth rate. We will not just get that £12 billion as
a one-off in the first year; we will get it in every successive year,
because we will have that money available to spend.
I campaigned in the
previous election for the Brexit vote to be properly implemented, and my
constituents gave me a majority knowing that that was my view. I also
campaigned on the ticket of prosperity not austerity. I do want more
money spent on the schools and hospitals in Wokingham and the local
area. I am very pleased with our latest settlement, because health staff
need more money. I am also very pleased that the weighting of the
percentage increases is much more generous to those on low pay, because
in my area it is extremely difficult getting by on those low pay rates.
We need to recruit and retain more and to give more people in those jobs
the hope that they can go on to better paid jobs with good career
progression.
I want more money spent,
but I do not want it spent irresponsibly. I am offering the Government
the biggest spending cut that they will ever make, which is the £12
billion a year that we do not need to keep on sending to Brussels. In
the spirit of the Brexit vote, I say bring our money back, take control
of it and spend it on our priorities.
Before the referendum, I
took the precaution of setting out a draft Budget that I would like the
Government to adopt. I explained that I was very unlikely to be the
Chancellor of the Exchequer and that people could not take my draft as
a promise; it was a set of ideas on how that money could be spent. I
suggested, mainly, more spending on areas such as health and social care
and education, and also on tax reductions—getting rid of our damaging
VAT rates on green products, on feminine hygiene products and on
domestic heating fuel, which hit those on the lowest pay most heavily.
Those are things that we cannot do for ourselves all the time that we
are in the European Union.
Alison Thewliss:
The Government’s failure to negotiate a zero-rate tampon tax does not
give us great hope for any further negotiations with the EU.
John Redwood: I
think that the hon. Lady will agree that this is one area where even she
must see that getting out of the EU is a big positive, because she and I
will be able to unite on something for once, and shove the abolition of
this much-hated tax through the House. Is it not a disgrace that the
world’s fifth largest economy and an important country cannot even
control its own taxes? Over all those years in the EU, we were assured
by Governments of all persuasions that tax was a red line and that the
House of Commons would always be able to decide what the tax rates would
be and what was going to have to be taxed. That simply will not be true
until we leave the EU.
That is the first bonus.
The Brexit dividend is to take control of our money and to spend it on
our priorities. It will have a double advantage: not only will it give a
boost to growth the first time we do it, but it will cut our balance of
payments deficit. I am more worried about our balance of payments
deficit than our state deficit, because the Government have done a great
job in getting the state deficit down to perfectly reasonable levels,
whereas the balance of payments deficit needs working on. The simplest
way of cutting it is to stop sending money to the EU, because that is
like a load of imports.
Jonathan Reynolds (Stalybridge
and Hyde) (Lab/Co-op): I wish to ask a serious question. The right
hon. Gentleman is very well remunerated for his views on finance and is
very much sought after for advice in the City. He will know that, if we
were to lose just 10% of, say, the financial services sector in the UK,
as a result of market access ending through Brexit, that would
constitute a loss of £8 billion to £9 billion in taxation to this
country. Is he genuinely not worried at all that we need to retain some
elements in our economic relationship with the European Union as part of
those Brexit talks?
John Redwood: I am
an optimist. We will have a perfectly good economic relationship even if
we do not get a comprehensive formal deal of the kind that I know those
on the Front Bench would really like to secure. The hon. Gentleman
shakes his head. Well, let me give him the evidence. When I studied this
subject before the referendum—I always like to ensure that I give good
advice, so I try to find out what I am talking about and have some
facts—I looked at the economic performance of the United Kingdom during
the early 1970s, when we first entered the European Economic Community,
and took great interest in the economic growth rate around 1992 when the
single market was completed, which people say is so crucial to our
growth rate. From that, I can assure the hon. Gentleman that we cannot
see any positive kick up in the graph of UK growth either when we first
joined the EEC or when the single market was completed in the early
1990s. Indeed, the growth rate fell off on both occasions. I do not
blame the EU for all of that, but it shows that there was no great
benefit.
If there was no benefit
going into the thing, why should there be something negative when we
come out? It is not asymmetric. There will not be a hit. I promise him
that when we look back on it all in five years’ time, he will not be
able to see—certainly on world growth graphs and, I suspect, on UK
economic graphs—when we left the EU. It will not be a big economic
event. It is a massively important political event, but it will not be a
significant economic event, because joining it was not. Indeed, even
worse, in the immediate aftermath of both joining the EEC and of
completing the single market, there were very big recessions where our
growth rate took a very big hit. I do not blame the EEC for the first
one—that was more to do with international banking and the oil
crisis—but I entirely blame the EU for the second one, because it was
the European exchange rate mechanism that ripped the heart out of our
companies and our economy and led to a boom and bust that was almost as
big as Labour’s at the end of the last decade. That was why we did so
badly.
Let me now go into a
little more detail on some of the crucial sectors that have been badly
damaged by our membership of the EEC, and then the EU and single market.
We can do rather better in those areas once we are out of the legal
entanglements.
Let us start with the
most obvious and topical one this week—the fishing industry. When we
first went into the EEC, we had a flourishing fishing industry, with a
large number of trawlers and successful fishing ports in Scotland,
England and Wales, and a net surplus of fish. We were an exporter of
fish because we had access to one of the richest fishing grounds in the
world in our own territorial waters and beyond. The common fisheries
policy destroyed much of that. Many of our boats were lost, and much of
our fishing capacity was lost. We are now a heavy net importer of fish,
as a result of being part of the common fisheries policy. Our fishing
grounds have been greatly damaged, because too many industrial trawlers
have been allowed in from outside to do damage to the seabed and to the
shoals of fish that we once had. The quota system has not really worked
because of the discard policy.
It would be easy to
design a UK fishing policy through which we would have both more fish to
eat and we would take fewer fish out of the sea. We would do that by not
having the discards. It would also be easy to design a policy in which
the fish was landed in the UK, so that there would be more economic
benefit for us in processing and selling it on, and in which we would
have much more capacity in the English and the Scottish fleets so that
we could capture more of the added value. I look forward to the
Secretary of State publishing a detailed strategy and offering us draft
legislation, and I look forward to the Scottish National party
supporting that legislation, because it must know how important the
recovery of our fishing industry is.
Peter Dowd: I know
that Mrs Thatcher was a great heroine of the right hon. Gentleman. She
said:
“Just think for a moment
what a prospect that is. A single market without barriers—visible or
invisible—giving you direct and unhindered access to the purchasing
power of over 300 million of the world’s wealthiest and most prosperous
people.”
It is now 500 million.
Was she wrong at the time?
John Redwood: Mrs
Thatcher was not always right. As her chief policy adviser, I gave her
extremely good advice on the single market, which she did not actually
accept. She took most of my advice on a lot of things, but I told her
not to give the veto away—it was not worth it, because we needed to keep
control of our own law making. However, the Foreign Office was more
persuasive than I was, and that was where things started to go wrong. We
were tricked into accepting what she hoped—and what a lot of British
people thought—was just going to be a free market where there were fewer
barriers for trade.
What actually happened
was that we were entrapped in a massive legislative programme, which
meant that more and more controls—often of an anti-business nature —were
imposed, even when the UK did not want them and even when we had voted
against them, when we were in the minority. That is why many British
people fell out of love with the Common Market that they thought they
had voted for in the early 1970s; they thought that it would just be
about more jobs and more trade, but discovered that it was about the EU
taking control. I am afraid that, on that occasion, Margaret Thatcher
was less than perfect. She did not choose the right advice to follow. If
she had vetoed the loss of the veto, the hon. Gentleman might have had
his way and we would still be in the European Union with a rather
different relationship from the one that we were forced into taking.
I turn now to the energy
industry. Under European rules we were trapped in a common European
energy policy, which meant that we went from being entirely
self-sufficient in energy to being quite heavy importers. There is a
wish to make us more and more dependent on imported electricity and gas
through interconnectors with the continent, meaning that we have less
security of supply and are more dependent on the good will of many
people on the continent—ultimately, on Russian good will, because of the
importance of Russian gas to the energy supply on the continent.
Fortunately, the situation has not gone damagingly too far, and we can
rescue it when we come out of the European Union. Our gas supplies can
be much more dependent on Norway and Qatar, which are not members of the
European Union. That is a useful precaution because we can trust those
suppliers and the supply will not be subject to the same common problem
that might arise in the European system.
We need to be careful
about the framework of regulation. I am all in favour of cleaner air and
looking after the environment, but the rapid and premature closure of
coal power stations before we have good, reliable alternatives puts us
in a bit more jeopardy. We have already experienced cold days, when
there is big industrial demand but very little wind; it is extremely
difficult to balance the system and keep up the full amount of power
that people want. We may have to go on to industrial rationing in some
cases. If we follow European policy and shut all the coal stations
without having proper, reliable alternatives in place, running a good
industrial strategy will be that much more difficult.
What would I put at the
top of my list for a good industrial strategy? My No. 1 need would be a
plentiful and cheap supply of energy. Having had jobs that involved
running factories and dealing with transformation materials that have a
high energy content, I know the importance of reliability and relatively
low price for running certain kinds of process industry. The United
States are now reindustrialising because they will have access to a lot
more cheap feedstock and fuel as a result of their drive to have much
more domestic energy, at a time when we have been going in the other
direction by becoming more reliant on other systems that are not
reliable and on imports. We are now finding that we are becoming short,
and our power—certainly at peak demand—can be extremely expensive unless
people have a long-term contract that properly protects them.
I urge Ministers to use
the opportunity to rethink our energy strategy, and to put it at the top
of the list for the industrial strategy they tell us they want, because
it is the No. 1 requirement for a strong industry across the piece. The
other day I was talking to my hon. Friend the Member for Stoke-on-Trent
South (Jack Brereton), who reminded me just how important cheap and
readily available gas is to the Potteries. We want those industries to
grow and flourish—I used to be involved in them a bit—and there is huge
scope for that, but it will require a sensible, UK-based energy policy.
I turn next to the
vehicle industry, which I think will be just fine. It has been built,
with a lot of foreign investment and local talent, into a very fine
industry. But we need to remember its exact shape. The UK has the
capacity to make about 1.7 million cars per annum, but it has the
capacity to build 2.7 million engines. Last year 1 million of those
engines were diesel. Successive Governments have done a good job of
persuading large motor and engine manufacturers to come to or expand in
the UK. We now have a centre of excellence in diesel engine technology,
and engine production generally, for passenger cars and light vans. We
should be rightly proud of that, but it is important that the Government
understand this achievement and do not do things that inadvertently
damage it.
Car sales continued to
rise very nicely after the Brexit vote. We experienced a very strong
market and there was a good trend of car sales in the UK for the first
nine months after the Brexit vote, as was happening before. But in
spring last year there was a sharp reduction, which has continued. Why
has this happened? Well, it is nothing to do with Brexit. It is to do
with policy decisions taken in the United Kingdom. Three things happened
at the same time.
First, it was decided
that too many car loans were being advanced, so there was a restriction
on car loan credit. I think we worry too much about that. There is
security: people who get car loans usually have reasonable jobs and
incomes. I am pleased to say that we are not looking at a set of job
losses any time soon, so I cannot really see the big problem. Secondly,
there was the imposition of much higher vehicle excise duty,
particularly on higher-value cars, which are particularly profitable and
successful to make.
Thirdly, of course, there
were the general arguments that diesel is no longer acceptable. Diesel
technology in this country, and through European regulation, has reached
much higher standards of cleanliness and control of exhaust. As far as
we know, all these engines are more than meeting the legal requirements,
because we all want cleaner air. But if the idea gets abroad that all
these standards are actually going to be tightened very quickly, or
that it is going to become unacceptable to run a diesel engine, it puts
people off buying. There has therefore been a big collapse in support
for diesel engines and cars, which explains the pattern in that market.
I hope that the Government will look at a sensible compromise. Yes, we
want clean air, but we also need to say and do supportive things for
what is now a very important industry in our country.
There is huge scope for
farming. The Secretary of State has made a start with his White Paper,
but it still of a fairly high level of generality. I look forward to
more detail soon. The motif of the policy must be that we can and should
grow more for ourselves. In the early days after we joined the European
Community, we were about 95% self-sufficient in temperate food, which is
the kind of food that we can produce; we are now under 70%
self-sufficient. We import a lot of food from the Netherlands and
Denmark—countries with similar climates to our own—and quite a lot from
Spain, which produces some things that we cannot grow for ourselves,
although we could buy cheaper alternatives from South Africa or Israel
if we were allowed to do so. We need to look at all that and do a better
deal for the lower-income countries that can sell us food that we cannot
grow for ourselves without the same kind of tariff barriers. We also
need to do a lot more work on how we can grow more of our own food.
Alison Thewliss:
The right hon. Gentleman’s point on growing our own food falls if we do
not have the people here to pick that food. It will be rotting in the
fields, as is already starting to happen, because EU workers who have
come over to do this job are leaving, and our own workers do not want to
do it.
John Redwood:
There is still quite a large number of net inward migrants to this
country. I look forward to higher wages and more automation. All these
problems are perfectly soluble. There are now some good automatic
systems for picking produce, if people do not want to do those jobs. I
hope that there will be more productive ways of employing people so that
they can be paid more—for instance, if they work smarter and have more
technology to support them. That would be good for the employee and for
the farming business. Some of this is about scale and some is about
investment.
I hope that we develop a
farming policy that still provides public money to support farms
sensibly, but that will be more geared to the production and successful
sale of food, particularly domestically. We want fewer food miles on the
clock and rather more local produce. I hope that the policy will allow
and encourage more agricultural businesses in the United Kingdom to add
value to the product coming from the field, shed or farm, because that
is an important part of developing a prosperous and more successful
economy.
The UK has enormous scope
in sectors such as the media because we have the huge advantage of the
English language. We largely share that advantage with the United States
of America, which is also very good at media and internet-related
businesses. I look forward to the tech revolution being an important
part of our better-paid jobs and in the increase in jobs in the future.
Once we are out of the EU, we will also be able to choose our own tax
and regulatory regimes. I trust that we will choose a best-in-class,
world-leading regime for both tax and regulation. Although I understand
some of the irritations that the EU and others have with existing large
technology companies, it is important that we also understand how
phenomenally popular their services are, how hugely important they are
as wealth generators, the choice they offer customers and the new jobs
that they will create. We therefore need a tax and regulatory regime
that is fair and is not part of a trade war between the EU and the
United States of America, which seems to be developing at the moment in
an unfortunate way.
Infrastructure is very
important. One thing that perhaps unites the House is that we would all
like more investment in infrastructure, although we then have
disagreements about pace, style, and ways of financing it. There is huge
scope for more infrastructure in this country. If we wish to take
advantage of our greater freedoms and the kinds of business developments
I have been sketching in different sectors, we will certainly need a lot
more capacity in road and rail. Rail capacity can be increased more
cheaply and more rapidly if we go over to digital controls. One of the
features of our railway system is that we run very few trains an hour on
any given piece of track. With better controls, we could increase the
number of trains we ran on existing track—a quicker and cheaper solution
than having to build lots of new tracks.
We are going to need
improved road transport. Internet styles of purchasing require road
capacity for all the van deliveries that will be made when people have
bought on the web. Road capacity is also needed for those who still like
going to a traditional shop and expect to find somewhere to park when
they do so. Only the shopping centres that have really good access and
really good parking are likely to flourish in today’s world, because
people naturally want convenience. I trust that the Government will find
sufficient public capital support for these necessary programmes, but
will also be imaginative in finding new ways of harnessing private
finance where that is appropriate, as it clearly is in areas like energy
and communications where there are defined revenue flows that should be
financeable through the private sector.
The aim of Brexit is to
cheer the country up, to get wages up, and to get jobs up. So far it is
all going reasonably well. There are more jobs after the Brexit vote,
despite the false forecasts. Pay is going up a bit. We would like more
improvement in real pay, and it is good to see some moves being made in
the public sector. The big Brexit bonuses we want comprise spending our
own money and knowing when, how much, and what we are going to get for
it; having a fishing policy that makes sense both for British fishermen
and for British fish; having a better agricultural policy that means we
can grow more of our own food; and having an energy and industrial
policy that supports more investment and more growth.
Peter Dowd: The
right hon. Gentleman is an advocate of a united kingdom, especially as
we are coming out of Europe, but there is the vexed question of Northern
Ireland. How does he see that fitting in with his vision for the future?
It is very important for Northern Ireland, as part of our UK economy, to
understand where he is coming from on this matter.
John Redwood: I
trust that Northern Ireland, as part of the United Kingdom, will benefit
from the economic policies I have been describing. It is the settled
wish of a majority in Northern Ireland that they stay part of the
United Kingdom, and they are very welcome. If the hon. Gentleman is
referring to the alleged difficulties regarding the border, I simply do
not think that that is a serious, real problem. It is obviously a
political problem because the EU wishes to make it so, but the EU needs
to understand that this border is already a complex one. When goods are
being moved either way between the Republic of Ireland and Northern
Ireland, there is a currency change to be effected, and there are
different incidences in excise rates, VAT, income tax and corporation
tax levels on each side of the border. Yet we do not have a man or a
woman at the border stopping every truck and working out the sums on
what has to be done on the excise tax or the currency, because that
would be ridiculous. If we end up with World Trade Organisation-based
trading so that there do have to be tariffs at the border, it is no more
difficult to calculate the tariff electronically and charge it away from
the border than it is to charge the excise and the VAT at the moment. We
know how to do it; it is not that complicated: we live in the electronic
age. I can see that Labour Members want to live in the pre-computer
world and do not think that we can send data electronically, but I
assure them that it is a magical development.
Jonathan Reynolds:
The slogan of the leave campaign was “Take back control”. What does that
mean if it does not mean taking back control of one’s borders? There are
movements of people that need to be considered. There is still the
common travel area between this country and the Republic of Ireland. One
cannot simply introduce borders and then tell the British public that
those borders will not be physical, or even exist, because there will
somehow be a digital solution. It is not practical to say that those
borders are going to be put in place and then they will not exist.
John Redwood: The hon. Gentleman has been here long enough to
know that all parties have always agreed that we keep the common travel
area with the Republic of Ireland. That has always been a given. It was
not dependent on the EU in the first place, and everybody wants to keep
it.
Let us deal with the
question of our UK external border, wherever it may be, and the issue of
migration. Yes, the British people voted to have more controls over the
number of people who come to work and settle here. The Prime Minister
has promised on several occasions that she will get the net migration
total down to tens of thousands from the quarter of a million-plus we
have been experiencing each year, and I wish her every success with
that. We do not need new hard border checks because, as I understand the
way that thinking is going in the Government—the way I encourage it to
go—we just want to control two things. We want to control the right to
work through a work permit system and we wish to control the entitlement
to benefit by making sure that people are properly qualified for it.
That does not require big controls at the border. Anybody is welcome to
come as a tourist, to come and spend their own money, and to come and
invest. That is not what we are trying to stop. We can control the
things we wish to control through a work permit system and through a
benefit system.
Peter Dowd: I am
listening carefully to the right hon. Gentleman, if only out of a sense
of morbid curiosity, with regard to how he is going to explain
practically the situation in Northern Ireland. We have heard a lot of
abstract ideas; we need practical solutions. It is incumbent on him to
give us a serious, practical way forward in relation to that problem,
which is very serious, notwithstanding what he says.
John Redwood: I do
not agree. It is already a complex border. There are already
anti-smuggling arrangements. There are already methods that satisfy
those on both sides of the border as regards the possible passage of
criminals and so forth. All those things will stay in place. They are
not made that much more complicated by our leaving the EU. The Republic
of Ireland is not part of Schengen; it does not have those special
arrangements that the rest of the EU has, so this is making a mountain
out of a molehill. Indeed, I do not think it is even a molehill. I just
do not understand why serious people can think that it is a serious
issue. I understand why political people want it to be an issue—because
they want to extract a price from the United Kingdom, as if we had not
already offered enough in the interests of friendly relations, in due
course, with the European Union. I assure Labour Front Benchers, who are
meant to be pro-Brexit and have a lot of pro-Brexit voters, that I
cannot see any extra complication that cannot be solved by a bit of
electronics and the development of what we already have, because it is
already quite a complex border.
There are huge
opportunities. If we take advantage of these freedoms, we can boost our
growth rate. I have shown how we can do that in a few individual
sectors. I have shown overall how we will do it by spending our own
money, and explained how we have a huge opportunity to rein in some of
the excessive imports we are taking in at the moment by replacing them
with home production. We can do many good trade deals around the world
to extend and improve our trade with the rest of the world, which is
already good, growing and flourishing despite tariffs and WTO terms: we
know how they work and they work just fine. I just say this to the
Government: let us get on with it; let us not make any more concessions;
and let us make sure that if we do end up with a deal, it is a deal
worth having.
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