The UK's Future Relationship with the EU

I was asked what I thought of the deal, so I looked at the material placed before Parliament. I'm not going to read it all, rather I will rely on  the commentary provided by others. If that is enough to make you stop reading, please follow this link to a subject I do know something about.

Good. Let me start, as I did five years ago, as I campaigned for us to Remain. It was about far more than economics, as I wrote in a number of blog pieces in the run up to the referendum, probably not least this: the EU has kept us safe. At the start it was the practical, bringing under common control iron and steel - the raw material of war. For me, though, the key was free movement through which people get to know people of other nations by living alongside them for work or study. This enriches the individual and the country. It is not without its downside. Residents of Boston in Lincolnshire will point to the disruptive behaviour of young eastern Europeans who had come to pick vegetables, jobs eschewed by local people. They forget the similar behaviour of longer term residents of the same age, and of course any sense of offering a welcome to those visiting. The Future Relationship ends free movement. The failure of the UK government to buy into the Erasmus programme robs our young people of a chance to join in this truly international study programme. It breaks my heart.

The Future Relationship, by and large, is free of tariff barriers, and this is welcome; however, the way common standards has been handled in nonsensical. Surely, anyone seeking to trade across borders would welcome having only to follow one set of standards. To have such a scheme across twenty eight countries must be positive; the more the merrier. So why set up a parallel system, which in practice will probably follow EU rules except that we will have no say in their drafting. 

I suspect services were too complex to bring within the Future Relationship Agreements, but again common standards must be worth having: a French audit compared to a British one; a German engineer alongside one from Scotland; a Spanish dentist or one from Wales; a Belgian optician or one from Northern Ireland? I do know that the devil is in the detail and country by country deals may emerge.

The big area, from which we have walked away, is the table of twenty-eight nations joining together to grapple with problems too big for single nations: global warming and migration, to name but two. Ideally the forum would be wider than just the EU, by twenty-eight is a good start. It is easy to point to the short comings of the EU, but why not make it stronger by being part of it?

The sovereignty argument has always been false. It is up to a nation which areas of law they choose to pool with other nations. Pooling makes sense in many areas, such as standards, but it is always up to the nation whether or not to pool. The Future Relationship has many instances where sovereignty is pooled, but in a more bureaucratic way than the existing EU treaties.

The immigration argument is probably where most tears will be shed. People I know who voted leave did so to 'keep out the Muslims' or 'to make Britain white again'. This is both ignorant and offensive, but played to by the Leave campaign. The Future Relationship makes minor provision for EU workers, but does nothing to stop the very much larger cohort of non-EU immigration. 

I have little doubt that the deal is better than no deal. I also believe that British people will work hard to make it work. But we have lost something very precious and I for one will continue to campaign to win it back.

Changes in employment as a key to the impact of Covid 19

The table below was taken from data provided by the Office for National Statistics and shows the number of jobs split between Manufacturing (including Construction) [Orange line] and Services [Blue line] between 1978 and 2019 taking each quarterly return.

Service sector jobs increased by 11 million and manufacturing reduced by 4.5 million.

Looking at services, the biggest increases were Health and social care 2.3 million, IT and Management Services 1.3 million and Accommodation, food and beverage 1.2 million and education 1 million.

In his book, Social History of Britain - British Society 1914-45, John Stevenson offers some broadly comparative statistics.

In 1914, textiles, coal, iron and steel, and shipbuilding employed almost a quarter of the total workforce. The comparative percentages for 1978 and 2019 are 14% and 2% respectively. The 'new' industries of motor vehicles, plastics and electrics rebuilt manufacturing jobs between the wars and, in the fifties and sixties, making up 11% of total jobs in 1978. They make up 3% in 2019.

If we go back further, David Cannadine in his book, Victorious Century, offers again broadly comparable figures. Agriculture came first with just under 2 million, followed by 1million in domestic service. Next came cotton textile workers at half a million; whilst this number was equally split between men and women, men predominated in agriculture and women in domestic service. Next in number came building craftsmen, labourers and then a third of a million milliners, dressmakers and seamstresses, and 300,000 wool workers. There were 200,000 coalminers. Instead of listing the remainder, Cannadine observes that there were more blacksmiths than iron workers and more working with horses on roads than with steam on railways. The total employed workforce in 1851 was 8.5 million (out of a total population of 27 million) compared to 31 million in 2019.

I look forward to getting access to hard copy of the Censuses to assess more clearly how employment patterns have changed.

The crash of the 1930s was in the context of an economy more reliant on manufacturing. Would a crash from Covid19 have the same impact given the massive swing towards services?

Six weeks ago the UK economy depended on our passion for spending, buying things and experiences. Could this change, and, if it does, what would be the impact?
Retail was suffering in any event, but will we have kicked our addiction? Zoe Wood asks someone good questions in her piece in the Guardian. 

How do we pay for it all?

The Chancellor has so far earmarked £200bn to bailout business and support individuals. This in in the context of total public expenditure approaching 900bn. There is a comparison with the bailout of the banking system in 2008. I think there is also one with the  two world wars where we paid whatever was needed, to quote the then Chancellor Lloyd George in WW1. We met the cost by increased taxation and borrowing. I explore this further in my blog piece on the comparisons with 1914-18 and 1939-45.
There is a difference. We are now paying people not to work, rather than work in the armed services or in the manufacture of war materiel. It is thus less wasteful. We are not consuming millions of tons of iron and steel in making tanks, ships and aircraft, or brass and explosives in makIng shells..

There remains the question of just how it will be paid for and Philip Inman offers some fascinating thoughts in The Observer. He dismisses yet more austerity and looks toward taxation. Raising taxes on individuals will reduce the amount they can spend and so further depress the economy. He adds this, which to me would seem to be key  :

“Unless, that is, the taxes are applied to households that save more than they spend, or target wealth. This is desirable, though unlikely, even from a free-thinking chancellor. Sunak is still a Tory, after all, and unlikely to sanction any attacks on core constituencies such as wealthy and older voters.”

Military historian and former editor of the Daily Telegraph, Max Hastings, said on Radio 4 that his (our) generation have been extraordinarily lucky. We should put our hands in our pockets rather than leaving it to younger and future generations.

It takes a virus for us to come clean on the shape of the economy

In 1914 government was worried that the war would lead to unemployment. In the event the whole nation came together to produce the munitions the army needed.

In 1939, all parts of British industry met the varied and massive demands of the armed forces. 

In 2020 the economy is largely based on services and, with the coming of Covid-19, consumers are deciding that they don’t need those services and the government is advising against social contact on which many services are based. We therefore face unemployment rather than people working at full tilt. This is totally  different. In parallel with the domestic service economy, there is an economy based on the consumption of largely imported products with deliberately short lives to encourage repeat purchasing.  Will it expose the 21st century economy as a con, or can we return to an economy where we each serve each other but without the manic need for never ending consumption?

The crisis is offering an insight into the actual shape of the economy. In this article in The Guardian, Richard Partington underlines the massive significance of the hospitality industry ‘Britain’s hospitality industry contributes more than £120bn a year to the economy and is worth more than the automotive, pharmaceuticals and aeronautics industries combined. More than 3.2 million people work in pubs, restaurants and other outlets, making it the third-largest sector for employment. A further 2.8 million work in the wider supply chain. In an economy no longer dependent on people making things, we are dependent upon them buying services. When they are told not to, the knock on is dreadful. I have done some analysis of the statistics 

Book Reviews

I was speaking about this year's Lincoln Book Festival and the great authors we have lined up. It made me think as my interviewer asked me about the book I enjoy. In 2008 I wrote a number of book reviews when I was studying for my MA in Professional Writing and I posted them on the blog I now use for my military books. I have now moved them, and subsequent reviews, to this more general blog.
I was struck by two books in particular: Engelby by Sebastian Faulkes, which I thought then and still think was masterly, but also Revolutionary Road. There are already some later reviews on this blog and I plan to write some more reviews in the future. At the end of this blog I have placed links to some of those reviews now over ten years old. Some a very short, and some rough and ready; some perhaps shed light. One is on Middlemarch, which is very brief, and I am intrigued by its link to my own book on William Smith Williams who recognised the genius of Charlotte Bronte. He was friends with George Lewes the partner of George Eliot whose portrait hung on William's office wall.
Here are those links:
Engelby
Revolutionary Road
Middlemarch
In Cold Blood
Notes from an Exhibition
Ordinary Thunderstorms

Concentrated wealth is bad for an economy

The concentration of wealth in the hands of the few is a drag on any economy. Such wealth is saved in the form of nonproductive assets. In contrast, wealth more widely distributed is circulated within the economy to the benefit of most if not quite all.

Quite why I had seen this as a 21st century phenomenon, I don’t really know. It was the case in 19th century Britain, but many of those with wealth then invested it in industry which in turn created employment and, to a degree, distributed wealth. 

In her masterly book, the Team of Rivals, Doris Kearny Goodwin tells of the Southern states of America before the abolition of slavery. ‘Slavery trapped a large portion of the Southern population, preventing upward mobility. Illiteracy rates were high, access to education difficult. While a small planter aristocracy grew rich from holdings in land and slaves, the static Southern economy did not support the creation of a sizeable middle class.’

In contrast of the Northern states, she sees a land ‘teaming with bustling, restless men and women who believed passionately in progress and equated it with growth and  change; the air was filled with the excitement of intellectual ferment and with schemes of entrepreneurs.’

I can’t help seeing a parallel with 21st century Britain, where we are told that employment is at an all time high but so much is part time and low paid, and that wealth is again concentrated in the hands of the few and invested in empty London penthouse apartments. 

Schools in poorer areas, for all the efforts of teachers, are not enabling upward mobility. Our public schools, great educational establishments though they are, are overwhelmingly the preserve of the wealthy whose children go on to Oxbridge and well paid jobs.

Are we so different from pre-civil war USA?

Cutting income tax - again

Sajid Javid has told how he would have cut income tax had he presented the forthcoming budget. Labour proclaimed in their manifesto that they would increase taxes for the rich.
Who is right?
Well, look around at our public services: hospital waiting times, schools closing early to save money, the disappearance of sure start, the number of people without homes, the growth in food banks...the list goes on.
The point is very simple, if we want public services we must pay for them. Mrs May was right, there is no magic money tree. However, JM Keynes was also right that governments can borrow to pay for infrastructure which in turn will provide income to workers who will spend and so increase economic activity and hence tax revenue. Wealth spread widely is like manure, it aids growth without killing the young plants.
The choice of project is important. Green energy rather than a third Heathrow runway; better rail links in and to the north rather than HS2. Council houses, schools and hospitals, rather than roads.
The knock on from infrastructure spending alone will not cure the crisis in public services, but in the long term it would help. The answer is simple albeit unpopular, most of us need to pay more tax.
There are lessons from history. The UK led the world in the 19th century, but then had to meet the cost of two world wars massively increasing public debt. The banking crisis didn’t cost lives, but, by bailing out the banks, government debt increased as if there had been a war. UK Government responded with austerity; it could have borrowed to finance infrastructure as the US did under Obama. Will it now? Adair Turner, writing in 2015, still has much of the answer.