John Redwood's Diary
Incisive and topical campaigns and commentary on today's issues and tomorrow's problems. Promoted by John Redwood 152 Grosvenor Road SW1V 3JL

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Gibraltar deal, another government give away

The long draft EU UK Treaty reveals once again a UK government that thinks negotiations with the EU are about taking dictation of theit terms. So often there does nit seem to be anyone speaking up for the UK.

Facts4eu have set out sone of the detail and implications of this latest give away. I have asked the Minister in the Lords to set out high high the financial cost if this deal will be for Gibraltar. How much will the handling charges be? What excise tariffs will be imposed by joining the Customs Union? What will be the compliance costs of all the EU regulations to be imposed? How much money will be given to the adjacent area of Spain in levelling up funds?.Which other taxes will be raised? What impact will thus gave on the Gibraltar business model where lower taxes and sensible regulation have helped create prosperity. The Minister had no reply on the total costs. When I buy something I expect to know the price before I say Yes, it is good value.

The government claims there will be no loss of sovereignty.How come? If Gibraltar has to accept EU laws whenever they add or change them, and put taxes and charges at their demand, surely that is a material loss of sovereignty?

The only good thing about the Treaty is the get out clause. Future governments of the UK and Gibraltar may need a unilateral exit without penalties. The Opposition in Gibraltar is understandably concerned about the role of Spanish officials in controlling entry into Gibraltar in future. The UK government should be concerned about EU and Spanish leverage over the airport. Our crucial military base needs free access for military personnel and materiel, where the small print of the Agreement needs careful testing.

OBR, the good, the bad and the ugly

Was there anything sensible in the OBR forecast? They were probably right to push their growth forecast down to nearer the consensus at 1.1% for this year, and to increase their unemployment forecast to 5.3%. Most were assuming this from private sector forecasts anyway.

They forecast that inflation will be at the target level of 2% in 2027, 2028, 2029 and 2030. That would be highly unusual. One of its foundations is their forecast that oil prices over those years will stay within a narrow range of around $62-68. That is also unlikely.

They assume that housebuilding will boom from the current 220,000 a year to hit 300,000 a year by 2029-30. So by the last year of this Parliament housebuilding will at last have reached the annual run rate the government promised, but will of course have fallen well short of the 1.5m target over the 5 years. There is no obvious reason to forecast such a big rise.

They think base rate will start to rise again from next year. They also expect the average government borrowing rate to hit a crippling 5.2% in 2029/30, up from 4.4% this year. This is not a background for more home purchase. It will confirm it has always been dearer for Reeves to borrow than the previous government.

They do make some plausible forecasts. They say the tax burden which was 38.8% of GDP in the last Conservative year will hit a terrifying 42.5% in 2029/30. That’s a 12% real increase in tax bills.

They expect gas production in the UK to halve (2030/31 on 2024/5) as a result of the manic close down our industry policy. They expect welfare spending to surge by £75 bn or 24%.

They estimate Bank of England losses to be paid for by taxpayers at £89 bn between 2025/6 and 2029/30! Still they do nothing to reduce them.

More fiddles and implausible numbers

Down comes the growth forecast for 2026 to just 1.1%. Up goes the forecast for unemployment to 5.3% this year.

The Chancellor claimed credit for getting inflation down , yet it is up from the 2% she took over to 3% today. She said she had got interest rates down, yet longer term UK interest rates have been higher than the worst day under Truss all last years and so far this year.

The OBR want us to believe borrowing will come down by the end of the forecast. This is the result of a sudden new outbreak of tough spending control with resumed productivity growth. How likely is this?

I cannot believe she can sit there and do nothing. Youth unemployment has surged thanks to her Jobs tax, High Street taxes and employment law changes. Housebuilding is down with many unable to afford to buy a home of their own.

She presses on with bans on our leading exports of oil, gas and vehicles, factory closures from dear energy and surging unemployment.Her tax rises, new regulations and net zero self harm conspire to keep us poor.

A no cost way to promote growth

Rachel Reeves has been right to keep quiet and to try to squash discussion of the Spring economic statement this week. The long run ups to her 2 budgets encouraging gloom and speculation of big growth killing tax rises did harm.

It would however be wrong for the Chancellor to let the Spring Statement go by without trying to salvage a growth strategy from her anti growth packages of measures to date. Here are some easy changes that do not entail spending any more public money and in some cases will bring in more tax revenue

1. End the ban on new oil and gas exploration
2. Grant licences to develop existing proven oil and gas reserves
3. Redirect new grants from wilding the countryside and stopping food growing, to grants to promote more food production at home
4 Refuse to continue with big gift of our fish to EU trawlers given the absence of any wins in the EU re set negotiations
5. End the ban on new petrol and diesel cars from 2030 to avoid big factory closures
6. Delay implementation of job harming Employment Act
7. Require higher proportion of UK work in defence contracts
8. Amend Habitats Directive restrictions on new housebuilding

The tyranny and folly of international lawyers

I have set out the very questionable international law the UK government has prayed in aid for its monstrous give away of Chagos. The government failed to read the clear opt outs from International Court of Justice jurisdiction for defence and Commonwealth matters, and the opt out for defence from UN law of Sea.

Now we have the government inability to see that Iran is a constant and worrying threat to us, and particularly alarming that she might soon develop nuclear weapons. There is a good case in international law for US action.

What is angering so many of us is this further legal essay in two tier justice. Iran murders its own citizens, removes human rights from women, kills people in hospitals, attacks civilian targets abroad, funds and trains terrorist groups in several countries. So why does Starmer’s famous international law never stop them? What is the point of international law in these matters if Iran, Russia, China, North Korea and others break it when they choose?

International law is important to control people and goods moving across borders. Between sovereign states,affairs are controlled by International Treaty. If one of the parties breaks the Treaty there is no police force, army and prisons to enforce against the offending government.

The PM needs to ask the Attorney General to improve his legal advice and to fit it into international politics.The question to ask about the US action is not is it legal but will it work? It needs Iranian domestic regime change to make it a success.

Decapitation?

The latest tactics of the US is to target killings or arrest of murderous and tyrannical leaders of regimes that disrupt the peace or do serious harm.
Time was when some condemned the idea of targeting the commander or leader of an enemy regime, probably encouraged by their own commanders or leaders who did not favour retaliation. It has often been the case that successful killing of the enemy has led to peace. When Henry Tudor’s army killed Richard III that was the end of the War of the Roses. When Hitler killed himself recognising he was about to be captured that ended the 2 nd World War in Europe.
The ability of the US and its leading allies to kill leaders in hostile countries whilst protecting their own leaders does provide a relatively easy way of shortening wars and saving many lives. Should we welcome this development? Killing the Supreme leader of Iran who has authorised mass murder of his own people for daring to undertake peaceful protest requires a concentrated attack on him and his key helpers.
The EU leaders and the UK PM were an annoying irrelevance to relieving the brutality of the Iranian regime. They sheltered behind international law to ignore the voices of the suffering masses in Iran, and failed to see the need to find the quickest way to end the evil regime at minimum risk to the Iranian people. The assertion that the US acted illegally has not been backed up by proper legal argument. Is this international law view any better than the nonsense the government put forward to justify giving away Chagos?

2 weeks in the Lords

Some reflections now I have had two weeks in the Lords in session. I have given my maiden speech, asked questions, intervened following a Statement and delivered a speech on growth and the EU re set.

My first impression is there is plenty to do. My working week when in session will include more than a standard 37 hours on Lords business including time in the chamber and committee, dealing with correspondence, talking to other peers,MPs and people seeking to influence public policy, reading to decide what to pursue and to offer policy advice, and to keep up to date with the wide ranging work of the revising chamber. Running this website is also relevant to what I will do in the Lords.

My second is that the Lords does do a lot of detailed useful work on legislation that needs doing. Tge Commons often is too busy to do all the detail and government often introduces lots of new material at the Lords stage.

My third is that when a government with a majority loses control of its own MPs or lacks clear direction and purpose the Lords has a more important advisory role, offering options and pushing back on bad compromises and temporary fixes grasped at by a sinking administration.

I remain wedded to the doctrine that the elected House should make all the big decisions and Manifesto measures approved by electors should be allowed to pass. As an MP there were times when I thought the Lords right to challenge a Conservative government over a non Manifesto measure or a bad response to new developments.The Commons need to ensure the Lords is not a better judge of the public mood or a better voter champion than elected MPs.

My criticism of the Lords then and now remains the same. There are too many peers who read out dull repetitious Establishment speeches. They use foolish, disproved and tired old soundbites to defend net zero, EU compliance, the tyranny of poorly performing “independent” bodies and strange interpretations of international law hostile to UK interests.The Lords for example should be interested in how the Bank of England presided over 11% inflation when it was meant to keep it to 2% and how it is now losing taxpayers £20 bn a year. Giving more speeches about the wonders of independence does not help.

The by election

The win of new pro Gaza Greens is bad news for Labour. It will mean Starmer’s MPs will intensify the pressure to spend more, borrow more and tax more and give in to the EU and foreign governments more. This will intensify the problems this government’s policies are causing. It will add to Labour’s unpopularity with most of us. They will prove beyond doubt that high taxes kill enterprise and jobs, spending more does not solve public sector management problems, and being nice to foreigners does not boost growth. It makes government financial stress more likely and condemns us to high youth unemployment.

My speech in EU re set debate (Hansard text)

I welcome the Government’s emphasis on growth and I look forward to future debates when we can exchange positive ideas on how to get more people into work, have better-paid jobs and extend investment in these islands. However, I must say to the Government that the measures currently being discussed, often in secret without proper text, are very worrying. They will either add nothing at all to our growth rate or, worse still, they will subtract from it and do damage. Look at what will happen to our fishing industry now that, for many more years, so much of the catch will be offered to continental super-trawlers and other vessels. This has delayed the rebuilding of the British fishing industry and means that we do not get all the inward investment and domestic investment in fish processing and food processing that would follow from having more catch landed in the United Kingdom.

Or look at the idea that we should join the carbon taxes and emissions scheme and the electricity scheme of the European Union. It would be another ratcheting up of the costs of electricity and energy in this country. Their carbon taxes are higher even than our high ones. Are not our carbon taxes doing enough damage already? Does the Front Bench opposite not see the factories closing and the plants being destroyed by ultra-high energy prices? Yet they want to volunteer for more of the same and take it out of our control.

If the Government decide to offer large new sums of money to the European Union, as they usually seem to when they visit Brussels, it will all be borrowed money. We are in a time of stress in our public finances; we are not looking for new ways to spend money. The more they spend giving it to Brussels, the more it will be resented by many people here in the United Kingdom and the more it will mean that those high levels of borrowing keep our interest rates above those of our competitors and stifle private investment and private growth, which is what we so clearly need.

We do not need to look forward, or even to forecast, to know what will happen with ever closer alignment to the European Union, because we have lived through it. In the 20 years that elapsed before we joined the European Economic Community, our economy grew at 3.4% per year: a very good rate of growth. In the 20 years of our early membership when we were a member of the European customs union, until the full single market was declared in 1992, our growth rate slumped to 1.76%. Of course it did, because we took all the tariffs off the things that the European continent was good at and just watched as it laid waste to so much of our industry, with all those closures, and we did not get the market opening on the services that drive the success of our economy. So of course that is what happened.

If you then roll the camera forward to our years in the single market, from 1992 to 2020, our growth rate fell again, even compared with the poor performance when we were just in the customs union. Again, of course it did, because of the anti-innovation, high-cost spirit of so many of those regulations. The last thing we need for a growth strategy now is more laws made in Europe. We know that they do not work; we know that they slow us down. Why do we want to link to the part of the world that is growing so slowly, when our great friends and allies in the United States of America are growing at twice the pace of the European Union? We seem to be negative about them and positive about joining the slow lane. We should not want to join the slow lane. This set of negotiations is bad for Britain and bad for growth.