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16 December 2018

Postscript (2)

Tag(s): Foreign Affairs, Politics & Economics
I began my final blog in 2017 with the following:

This is my last blog of 2017 which has been a momentous year in which the speed of change in many areas accelerated and most political leaders failed to keep up with it. In writing a blog I try to reach a definitive conclusion on an issue, but such is the speed of change that soon events have also left me behind. Here are a few afterthoughts on issues I addressed during the year, but where new information has come to light.”

It seems apposite in 2018 to do the same as it has been another momentous year …etc.

Brexit

Again as last year I have to start with Brexit. And again as last year I can say that there simply has not been the progress that there should have been. I blogged on Brexit three times in the year [i]  There is fault on both sides and considerable suspicion in many quarters about the real motives of the protagonists. The British people are as split on the subject as ever and indeed it is not just that the people are split down the middle on Leave vs Remain but those who wish to leave are split on what terms they want and even those who want to remain are not agreed on how that can be implemented. It all adds up to a constitutional crisis as well as a situation that presents serious risks to business confidence and the economy.

If there really was goodwill on both sides a much better situation could and should have been reached but the British negotiators have not played their hand well.
  1. Article 50 should not have been triggered until the UK negotiating strategy was clear. By doing it prematurely it set the clock running and the EU negotiators are masterly at running down the clock.
  2. The UK should not have accepted the EU’s three conditions that had to be met before talks on trade could start. As I said in last year’s Postscript, the second of these, the question of the Irish border,  is about trade and so the UK find themselves in a Catch 22. Their so-called solution to this, the so-called Backstop has been the cause of much prevarication and the deal that at the time of writing has still not been put to Parliament is wholly unacceptable because of this part.
  3. The position of “No deal is better than a bad deal” should have been maintained, and further backed up by putting into hand serious preparations for a “No deal” situation led by a senior Minister and with a proper budget. The Treasury prevented this, an act of gross irresponsibility as it weakened the British negotiating position.
  4. The lack of a working majority in the Housie of Commons after the misjudged General Election in 2017 meant that the Government needed to build consensus across parties to get a satisfactory result. This would not have been easy but was not even tried, although there are now reports that the Conservative Chief Whip is having extended talks with his Labour opposite number.
  5. The agreement to a divorce bill of £39bn has come too readily; this was one of the UK’s strongest suits and it has never been clearly explained how it was arrived at.  As I explained in last year’s Postscript it should have been straightforward for a few actuaries to do the calculation over a fairly short period of time. From a senior source I understand that the sum is derived from two factors:
  1. The estimated UK net contribution. For the last year’s accounts available of £8.9bn the two year period of transition would give you, say, £17.8bn.
  2. The other £20bn+ is a bung for a trade deal. But we still don’t have a trade deal!
From here, it is difficult to see the way forward, except by preparing for a No Deal situation. Even if politicians are not doing this, any business man who will be directly affected must do so. One senior business leader I talked to recently, who imports all the products he sells in the UK, tells me that while Dover may have problems other English ports on the south and east coasts are saying “Bring it on!”

New World Order

But while everything looks chaotic from a British perspective with a feeling that this has damaged our reputation, there are problems everywhere you look. The problem is essentially one of leadership. Again as I pointed out in last year’s Postscript in my comments on “Strong and Stable” the truly strong and stable leaders are the despots Putin in Russia and Xi in China. To those you could perhaps add Erdogan in Turkey. Among major democracies only Abe in Japan and perhaps Trudeau in Canada look strong; Merkel in Germany is a lame duck while Macron in France, as I forecast last year, is in deep trouble attempting to deliver his programme of reform. If he can’t do it at home, how will he do it in Europe as he has claimed he would do?

Trump is strong only among his home base but is weakening the US as a global power by openly withdrawing or threatening to withdraw US support for the global institutions it has led for seven decades.

Competence

While the Government is preoccupied with Brexit it seems unable to move on important issues at home. I blogged twice in the year on the Carillion scandal[ii]. At the root of the scandal is the habit of successive governments in outsourcing public contracts to enterprises whose principal skill is to win such contracts, but in many cases the contracts are performed to a low standard and the savings prove illusory. The pressure on public finances is such that as the leadership prioritises the hot potatoes of the likes of the NHS, other ministries are starved of public funds leading them to make bad decisions such as outsourcing.

Most recently the National Audit Office has reported on the complete failure of Capita, another large outsourcing firm that features regularly in the pages of Private Eye as Crapita, to fulfil its obligations in recruitment for the Army. The report shows that both the Ministry of Defence and Capita have underestimated the difficulty of introducing a new online system of recruitment and in consequence fallen short by several thousands on their targets for recruitment.  The result is that an Army which was planned to be severely reduced in size has been even further reduced in size.  The first duty of a government is to defend its citizens. While I can see how the private sector could help out with much of what is performed publicly this is not that area.

The traditional style of recruitment for the Army involved feet on the ground just as service in the Army involves. Charismatic veterans would tell their stories to impressionable young men and women backed up by motivational advertising campaigns.

My own Livery Company is affiliated to a regiment and we saw these problems at first hand. We have helped them with their recruitment campaigns and despite Capita they have successfully met their targets.

Economic performance

On 31st March my blog was addressed to the Chancellor of the Exchequer.[iii]  This followed his Spring Statement in which he had departed from tradition by not offering a Spring budget but rather made a statement about future intentions and then of course brought his so called budget to the House in the Autumn. I offered some support for this approach, but also listed ten areas of concern: Economic growth, Public Finances, Budgeting, Productivity, Education and Training, Employment, Research & Development, Infrastructure, Housing, and Tax simplification.

I do not know if the Chancellor ever read my Open Letter. If he did he certainly did not act on it and all the problems remain.  In September I met the Chancellor at a function in the constituency where I live. There was a Q& A session and I did not get the chance to ask him ten questions so I concentrated on one. I asked him how he justified the high marginal rates of tax which, if you include national insurance which is a tax in all but name, are as high as 62% at some salary bands.  Mr Hammond fully understood the question and was familiar with the detail. But he simply blamed his predecessor for creating this situation and said it would cost too much to fix. Another gentleman on the other side of the room was so incensed that he followed up my question with one of his own, which was on the political dimension. How could a Conservative Chancellor of the Exchequer justify such punitive rates of tax? Mr Hammond simply shrugged his shoulders and said if we wanted our public services we had to pay for them.

It is not only on the question of Brexit that they have lost the plot.

It only remains to wish all my readers a very Merry Christmas and a New Year in which you and yours get more of what you wish for and less of what you don’t need.  Thanks to all those who give me feedback which I really value. I’ll be back in 2019.


[ii] 20th January Carillion Squillions https://www.davidcpearson.co.uk/blog.cfm?blogID=550
21st April Carillion Squillions (2) https://www.davidcpearson.co.uk/blog.cfm?blogID=560
[iii] 31st March An Open letter to the Chancellor of the Exchequer. https://www.davidcpearson.co.uk/blog.cfm?blogID=557
 




 




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