Politics, Covid, Economy, Trade 9 th Sept 2020 Peter Lilley
“ THE MOST DIFFICULT THING TO SEE IS WHAT IS RIGHT IN FRONT OF YOUR NOSE ” GEORGE ORWELL
THE CONVENTIONAL WISDOM
POLITICAL SITUATION GOVERNMENT HAS 80 SEAT MAJORITY SO IT CAN GET ANY MEASURES THROUGH PARLIAMENT – to tackle Pandemic, Economic Crisis, Brexit, Trade etc
PANDEMIC LESS THAN PERFECT HANDLING!! WE MUST IDENTIFY ERRORS, ATTRIBUTE BLAME AND REMOVE RESPONSIBLE MINISTERS (AND EVEN OFFICIALS AND ADVISORS)
ECONOMIC SITUATION WE FACE LOOMING UNEMPLOYMENT CRISIS NEED KEYNESIAN FISCAL BOOST BUT CRIPPLING DEBT (OVER 100% OF GDP) LIMITS SCOPE
BREXIT/TRADE DEALS OUR ABILITY TO TRADE WILL DEPEND ON NEGOTIATING FREE TRADE DEALS - WITH EU AND/OR REST OF WORLD UK MAY NEED TO USE TRADE AS LEVER IN TENSION WITH CHINA AND RUSSIA
“GOVERNMENT HAS 80 SEAT MAJORITY SO IT CAN GET ANY MEASURES THROUGH PARLIAMENT” Members of Parliament Shopping trolley
“GOVERNMENT HAS 80 SEAT MAJORITY SO IT CAN GET ANY MEASURES THROUGH PARLIAMENT” FACT: EVERY PARLIAMENT SINCE 1970s HAS BEEN MORE REBELLIOUS THAN ITS PREDECESSOR Tory MPs cast 4,259 votes against Thatcher Labour MPs cast 6,520 votes against Blair Boris already forced to U-turn by rebellions on Huawei, school meals etc
PANDEMIC: “ We must ide identify ify erro errors, , attri tribute blam lame and rem remove res responsib ible le Min inis isters (a (and Advisors)” The pandemic revealed systemic weaknesses in the government machine which we need to tackle Above all, chronic failure of project management
Why can’t the Civil Service do project management? Civil Service believes its function is POLICY ADVICE not MANAGEMENT It attracts people who want to offer POLICY ADVICE It promotes people good at writing POLICY PAPERS Officials change jobs every 2 or 3 years – never long enough to MANAGE A PROJECT Recruits are largely Arts/PPE graduates – good at manipulating words, ideas, arguments Need more Engineers/Scientists – used to making things work, addressing facts
ECONOMY: “ WE NEED A FISCAL STIMULUS” Most recessions are caused by shortfall of demand Remedy - boost demand This recession caused by suppression of supply . And there is a lot of pent up demand Remedy – relax lock down of supply - unleash enterprise to create new activities
ECONOMY – “crippling level of debt >100% of GDP” A third of that debt is what government owes itself! Net debt still high – 65% - but not crippling
Economy – a posit sitiv ive less lesson from from pandemic ic Regulators proved they could speed up decision making - under political, parliamentary and public pressure So: • Set time limits for decision making – no decision = “deemed consent” • Make regulators report speed of decision making every six months • Select Committees must hold regulators to account on delays
TRADE: “ We nee eed fre free tra trade dea eals ls wit ith EU EU and/or Rest of World to trade successfully” Since Single Market and WTO set up: UK Goods Exports to EU Single Market(14) have grown only 10% UK goods exports to WTO(14) without FTAs have grown by 88%
Brexi xit: t: What t if if no Fre ree Tra rade Dea eal? l? If no UK/EU Free Trade Deal – each side must apply its tariffs to the other Cost to EU exporters to UK = £13 billion Cost to UK exporters to EU = £5 billion Saving on UK net contribution to EU budget = £10-12 billion
Will ill ten ension with ith Chin hina and and Rus ussia aff affec ect tra trade? " Free trade is God's diplomacy ... the more freely goods cross borders, the less likely it is that troops will ever cross borders.” Richard Cobden
“Protection … is to do to ourselves in time of peace what enemies seek to do to us in time of war.” Henry George
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