The Liberal Leaver

Apologia pro suffragium meum, or, How to Make the Best of Brexit

Ok, I voted Leave. I voted Leave and I rather like Boris Johnson. Friends and colleagues have expressed bafflement and anger. After all, I am not exactly in the leave demographic. I live in North London, have a couple of university degrees, fall into the marketers' AB category and am still under fifty. I am not against travel, trade and globalization. There were many decent and reasonable people on both sides of the referendum, but many remainers are cross and confused about why people voted to leave.

Am I a hate-filled xenophobe? I hope not - I think I am quite a nice person. I married an immigrant. And I believe in the liberal international order, globalization, foreign travel and so on. But I still voted against the EU, because the EU is not really that liberal. The EU is not really the evil bogeyman that some imagine, bent on the destruction of nation states and their way of life. But it's not perfect. It tends to promote producers' interests over consumers, it can be over heavy with regulation, and its trade policies are less than ideal. Its three main economic activities are wholly or partially illiberal (the Common Agricultural Policy, inter-governmental structural funds, and the external tariffs of the single market). I voted to leave the EU because it is not liberal enough.

But we shouldn't let Britain turn in on itself and become isolated and disconnected from the world. Here are some positive suggestions for how we can make the best of Brexit and keep Britain open and successful.

Boris Johnson wants to skewer Labour on a dilemma to get a Deal approved

29 August 2019

Most commentators have missed the point of the five-week suspension of parliament. It is not done in order to achieve No Deal, but rather to achieve an agreed Deal and to force Labour to vote for it.

In his letter to MPs, Boris Johnson devotes six central paragraphs to introducing a Withdrawal Agreement Bill and getting parliament to vote for it after the EU heads of government meeting on 17-18 October.

Boris Johnson is hoping for a revised deal, where the Irish backstop is removed, or rewritten, or watered down, or cosmetically tweaked. But it needs to be changed in some way. If not, then the EU will be blamed for its intransigence and the inevitable no deal. But if there is some change, he will bring it back to the Commons.

He knows that a block of his own MPs will be against it, including ERG hard-liners like Iain Duncan Smith, Steve Baker, Owen Patterson and David Davis. That's maybe why they're not in the government. Twenty-eight Tory Brexiteers voted against the the Withdrawal Bill at its third presentation, so Johnson could be 20-30 votes short.

Jeremy Corbyn and Boris Johnson
Jeremy Corbyn and Boris JohnsonPhotos: Sophie Brown (CC BY-SA 4.0); Prime Minister (Open Government Licence v3.0)

But the political thumbscrews will not be turned on those Conservative rebels. Instead they will be deployed on Jeremy Corbyn and the Labour party. The prorogation of parliament is not designed to enable No Deal but to cut off the possibility of more delay to Brexit. Without the option of further delay, Labour will be offered the stark choice of Deal or No Deal. This will not be the cosy Noel Edmonds' version of the question, but a deadly dilemma to Labour where both options are unattractive.

The choice will be perilous for Labour. If they choose 'Deal' then they convert a "Tory Brexit" into a Brexit of National Unity which they will co-own, and enrage many of their Remain supporters.

But if they join the ERG in the No lobby and precipitate a No Deal exit, then they will be accused of bringing about the catastrophe their supporters abhor, and they will look more hard-line than the Conservatives.

The Prime Minister is trying to close off all the other avenues. By mid-October it will be too late to have a No Confidence motion. The subsequent fourteen-day delay would then go past the Brexit date of 31 October and No Deal would happen by default. The Government must also be hoping to block any legislative attempts to delay or revoke Article 50 in that brief period, perhaps by threatening an election if delaying legislation is proposed.

By framing the Deal or No Deal question, Boris Johnson hopes to force Jeremy Corbyn to accept the Withdrawal Agreement and achieve what Theresa May failed to do.

The strategy is not without risks. If the EU refuse to change anything, then the Conservatives will be set on a course to exit without a deal. And if the backstop changes are only cosmetic, then the schism between the Conservative and Brexit parties could become entrenched. But there is a chance of pulling off a spectacular political coup de théâtre rather than a coup d'état.

Brexit Process needs more Democracy not less

10 June 2019

Decisions taken openly and democratically tend to be more legitimate and generally acceptable than those taken privately by small groups. And these factors become more important for more important decisions. The post-referendum process of negotiating and approving the Brexit Withdrawal Agreement has not been as open and democratic as it should have been for such a crucial issue. The process has been almost a caricature of narrow and secretive decision taking, and it has not worked out well.

That may have been due to Theresa May's natural inclinations, or to the imprint of her tenure at the Home Office, or to the over-cautious advice of the civil service at its worst. Who can say? But it is undeniable that was the approach.

For clarity, here are the key decisions laid out in tabular form showing who took each decision, whether there was open discussion, and overall whether the decision was taken openly and democratically.

DateDecision to takeDecision TakenDecision TakersNumber of
Decision Takers
June 2016Leave or RemainLeave EUUK Voters46,500,000Public🙂🙂🙂
Jun-Jul 2016Choose new PMTheresa MayConservative MPs331Private😐
Jan 2017Negotiating positionRed lines on single market
and customs union
PM + AdvisorsSmallPrivate🙁
Jul 2017Who governs Britain?
General Election
minority government
UK Voters46,850,000Public🙂🙂🙂
2017 to
Jul 2018
Negotiation itselfConcede Sequencing;
Agree £39bn, NI Backstop
PM + Civil ServiceSmallPrivate🙁
Jan-Mar 2019Meaningful vote on
Withdrawal Deal
Not approvedMPs650Public😐😐

Let's look at the democratic failings of some of these key stages.

Conservative leadership election 2016

This was decided by about 330 Conservative MPs, who arranged to avoid even consulting their party membership. Although they achieved a rapid decision, its price was a reduction in the winner's legitimacy. The lack of public debate by the candidates about possible Brexit strategies missed an opportunity to develop an understood and accepted negotiation framework.

Negotiating position

In the absence of any public discussion, this was conducted in private with a small decision-taking circle around the Prime Minister. The decision, to leave the Single Market and Customs Union, might have been a good one or a bad one. But the method of taking it was bad for a matter of this magnitude. It had scant legitimacy and few people in parliament or the country felt any ownership of it. This stored up trouble for the future when the position came under challenge from both the EU and the Labour party.

General election 2017

This was a democratic exercise which enhanced Theresa May's legitimacy after her elevation by Conservative MPs. But, in terms of the Brexit process, it did not lay out clear alternatives before the public and did not add clarity or definiteness to the negotiating position.

Negotiations with the EU

On the British side, the negotiations seem to have been conducted with a high degree of secrecy and a small amount of consultation. By September 2017, Britain's chief negotiator had been promoted to report directly to the Prime Minister, by-passing the Secretary of State for Brexit. Controversial decisions were taken to agree to the EU sequencing demands, to give way on the financial settlement, and to agree the Northern Ireland backstop customs union. None of these decisions were debated with parliament or the public, and even the Cabinet does not clearly appear to have been in control of events.

This contrasts unfavourably with the European side of negotiations. The EU is not known for its strong democratic processes, and the general public were not consulted. But their negotiators had discussion channels with both the European Council of Heads of Government and the EU Parliament.

Meaningful vote

The fateful meaningful vote was held on three separate occasions in the first three months of 2019. Each time it was rejected by a large majority of the House of Commons. It was not perfectly democratic to bring the same motion forward three times, but the result was clear enough. That result reflected, in part, the lack of legitimacy and democratic involvement in the pre-negotiation and negotiation stages, as well as the inconclusive general election result. Put bluntly, few MPs other than the Prime Minister felt ownership of the Withdrawal Agreement, and few people in the country did either.

However parliament also rejected leaving without a deal and rejected taking steps toward revoking article 50. So parliament is deadlocked, with no clear path through.

How Democracy can help now

To make progress and restore legitimacy to the process, we need to introduce the missing democratic element. It is not too late, but it will take a few months. The first step is to have a democratic decision on the political end state. The obvious way to do this is to have a public referendum on the particular questions of whether we should stay in the Single Market or not and whether we should stay in the Customs Union or not. That would be two binary questions, on which the public could decide. This would replace the secretive decisions of 2017 with an open discussion and public vote.

This referendum would involve all voters, whether they voted Remain or Leave in 2016, and create a jointly-taken decision on how hard or soft Brexit should be.

Whatever the result of that referendum, it would be fully legitimate and would give a justification for Britain to re-open negotiations with the EU on that basis. The EU might or might not agree to re-negotiate, but they would know that refusal might be counter-productive. Because in either case we should move on to the next democratic stage.

There would then be a final referendum to decide whether Britain should leave the EU with the Withdrawal Agreement and Political Declaration (as amended by the possible re-negotiation) or whether Britain should leave the EU without an agreement on WTO terms. Although that is a stark choice, it is democratic and avoids the un-democratic danger of re-running the original referendum. The existence of this final referendum would also give some encouragement to the EU to re-negotiate.

"Why isn't Remain on the ballot?" some will ask. The answer is twofold. Firstly, the Remain or Leave question has already been asked and answered in a very democratic way with the 2016 referendum. Democracies are allowed to change their minds, but usually only after the original decision has been implemented. Another 'Remain' referendum looks like an (undemocratic) refusal of the losing side to accept the result. And secondly, on a practical point, the leaderships of both the two big parties are unlikely to support it.

This plan would require legislation for the two new referendums to pass through parliament. This in turn would require Labour support. The motivation for the Labour leadership to do this has three components. Firstly, it softens of Theresa May's "red lines", by opening them up to democratic confirmation or rejection. Secondly it avoids Labour having to vote for a "Tory Brexit" and lets them champion a "People's Brexit" instead. And thirdly it guarantees that Brexit still ultimately happens, which seems to be their objective.

On the Conservative side, hard Brexiteers have to see that this is the only chance they have of a legitimate "no deal" exit, but at the price of having softer options on the table. Hardline Remainers in either party may oppose it, because Remain is not an option on the ballot, but moderate Remainers may be attracted by democratic and pragmatic aspects of the proposal.

The process has been too undemocratic so far, and that has contributed to the current mess. It can be fixed, but it will need a healthy dose of democracy to do so.

How many of the public want a 'No Deal' outcome?

9 April 2019

Sunday Telegraph columnist Janet Daley caused a mini uproar on last Saturday's edition of the BBC's Dateline London programme by declaring that a majority of the public supported a 'No Deal' exit. The actual words used by Daley, were "there is now a majority of people asked of the options say we should come out with no deal". The rest of the panel pounced on the remark and said it was "absolutely untrue". But what is the truth, and how popular is the 'No Deal' option amongst the public?

Although Daley did not say so, she could have been thinking of a recent YouGov poll conducted from 31 March to 1 April, sampling 2,098 GB adults. The Daily Telegraph website has been making much of its last two questions, the former of which asked:

In March the EU agreed an extension to the Article 50 process until April 12th. If Britain has not agreed a withdrawal deal by April 12th then we will either have to leave the EU without a deal, ask for a further extension, or withdraw our application to leave and remain a member of the EU.If Britain has not agreed a deal by April 12th, what do you think should happen?

Respondents were given three possible answers:

Preferred outcome if deal not agreed by 12 April, YouGov poll

So it is true that, of the three outcomes presented, 'No Deal' is the most popular. YouGov also asked respondents to directly choose between 'No Deal' and Revocation (withdrawing our application to leave) and 'No Deal' won by 44pc to 42pc (with 13pc don't knows).

That gives some support to Daley's contention – a majority of chose 'No Deal' over Revoke, excluding the "don't knows".

But the YouGov survey asked some other questions, which give different insights. The question above was quite narrow and gave the 'No Deal' alternative as a straight revocation of article 50 without a referendum. An alternative question asked people for their preferred outcome, where the four options were:

For this question, the new referendum is the most popular option, with 'No Deal' second most popular on 26pc support.

Preferred outcome from four options, YouGov poll

YouGov also asked, for each of those four possible outcomes, whether respondents thought it would be a "good outcome", an "acceptable compromise", or "bad outcome". Those results are also different:

Acceptability of Brexit outcomes, YouGov poll

On this question, there is a majority that thinks 'No Deal' is a bad outcome. Whilst the "Soft Brexit" of withdrawal agreement plus Single Market and Customs union appears to have a majority in its favour. Both the Government's deal and a second referendum are fairly balanced in the public's view.

A more recent poll was conducted by ComRes for the Daily Telegraph which shows a similar result (full tables). Asked to judge whether various Brexit outcomes were "acceptable" or "unacceptable", the public found all six of the offered outcomes as more unacceptable than acceptable.

Acceptability of Brexit Outcomes, ComRes poll

This shows similar figures to YouGov, with ComRes measuring support for 'No Deal' at 38pc and opposition to it at 49pc, with 12pc undecided. Only the "Soft" Brexit, defined here as the government's deal plus a Customs Union, seems much less popular than YouGov's equivalent finding.

In summary, support for 'No Deal' is quite strong in the country. Around 43pc of people with an opinion think it would be an acceptable outcome. It's not yet a clear majority opinion, though it is more popular than revoking article 50, or extending the negotiating period. And it is much more popular in the country than it is in parliament.

Depending on the final proposed deal, if 'No Deal' were on the ballot paper for any future referendum it could be a strong contender.

The EU's four-card trick to get another referendum

22 March 2019

Although the EU is very keen for the UK to accept its proposed Withdrawal Agreement (WA), it has recognised that Theresa May has only a low chance of getting it through parliament with her current strategy. And they are not wrong. With the DUP, the European Research Group (ERG) of Tories, and Labour still opposed, it doesn't look likely. The punters on political betting markets agree - those on Betfair Exchange (as at 22 Mar 2019) give it only a 22pc chance of passing in March.

EU leaders are unimpressed that Theresa May does not have her own plan B ready if the meaningful vote fails again. So they have come up with their own. Whilst not fully public, its shape can be seen from private briefings and a little kremlinology.

The text of the EU summit conclusion is rather dry: "the European Council agrees to an extension until 12 April 2019 and expects the United Kingdom to indicate a way forward before this date for consideration by the European Council". That suggests that the UK will have a choice of options. But the EU is trying to steer the outcome.

EU's Four-card trick for a second referendum
The EU's four-card trickPhoto: Newwhist CC (adapted)

EU Council President Donald Tusk was clearer in his remarks: "The UK Government will still have a choice of a deal, no-deal, a long extension or revoking Article 50." This still sounds like a good range of options, with four possibilities for consideration. But this is just a four-card trick, where the conjuror wants to force you to pick a particular card. Let's look at the four options a bit more closely:

  1. Deal : although the EU would be pleased if this were chosen, they are pretty sure it won't happen soon.
  2. No Deal : the EU doesn't want this option, but it knows that most MPs fear or dislike it more than they do. The EU use the threat of No Deal to force MPs to pick their preferred option.
  3. Long Extension : this is the EU's preferred option.
  4. Revoke Article 50 : a topical item, given the parliamentary petition started on 21 March. The EU know there is no majority in the House of Commons for this, but its inclusion helps make their option look like a centre-ground compromise.

Now Theresa May might not want a long extension. But the EU is trusting that the House of Commons will pick this option over the others. Other solutions, such as changes to the Withdrawal Agreement or a short extension, have been kept off this table. If May fights, she might be removed as Prime Minister. The EU would not shed tears. Neither would Labour MPs or many Conservative MPs, which makes her position more dangerous. But the process is more important to the EU than personalities, so we should get back to that.

With or without Theresa May, Britain starts discussing possible "ways forward" with the EU. Since the EU is the sole judge of which kind of way is acceptable, it has the power to shape the plan. Possible British proposals could be:

But all of these are likely to be rejected by the EU. Here's why:

So what would get EU agreement? Fairly heavy hints have been dropped that a second referendum would give the required certainty. The German justice minister, Katerina Barley, suggested in January that Britain should hold a second referendum.The Times reported last week that "Mr Tusk is a strong supporter of a second referendum and he will tell EU leaders that there is opportunity during an extension of at least a year for Britain’s political course to be changed". The results of the summit suggested that this EU/German view won out over French opposition.

On the evidence available, and assuming parliament doesn't approve the withdrawal agreement, it seems likely that the EU's plan is to push for a second referendum to settle the Brexit question.

Whether that is good for democracy is another question, but UK politicians and the public should brace themselves. It could be coming soon.

Odds narrow on Second Referendum

Posted 26 February 2019

Punters on political betting markets marked up the chance of a second referendum following Labour's announcement of potential support on 25 February. The chance of another referendum, with Remain as an option, jumped up to 28pc. A month ago it was a longer shot, being priced around 20pc. These chances are derived from the two-way betting market on Betfair Exchange.

Correspondingly, the chance of a No Deal Brexit has dropped from 22pc to 14pc (or odds of six-to-one against). The chance of Theresa May's deal passing the House of Commons before the deadline has also declined from 34pc to 28pc.

Brexit outcome chances from the betting markets

The chance of a delay to Brexit has also jumped up from 71pc to 82pc (or odds of five-to-one on), but the probability of Brexit happening at all is fairly stable at 78pc.

These numbers are based on real people staking their own money, so they think they are getting it right, but these are only an indication of the actual probabilities, rather than a precise calculation.

Agreed Deal 'more likely' say punters

30 January 2019

Following the votes in the House of Commons on 29 January, betting markets have reacted to increase the estimated chance of a withdrawal deal being agreed.

Using two-way prices from punters on Betfair Exchange we can estimate probabilities of the various possible outcomes.

Compared with two weeks ago (see post below), the chance of the withdrawal deal being agreed before the end of March has risen by 5pc to 34pc. Correspondingly, the chance of a second in/out referendum has slumped by 13pc down to 20pc. The chance of a no deal Brexit in March is now at 22pc, up from 14pc on the day before, though similar to where it was two weeks ago.

Brexit outcome chances from the betting markets

The chance of a new general election this year is stable at around 40pc. And the odds of Brexit being delayed are still very high at 71pc, though slightly down compared with two weeks ago.

The chance that Brexit happens at all is extremely high, with odds of it happening in the next three years of 83%.

These numbers are based on real people staking their own money, so they think they are getting it right, but these are only an indication of the actual probabilities, rather than a precise calculation.

May can get her deal with the right referendum

22 January 2019

Theresa May is facing long odds against getting the House of Commons to approve the deal negotiated with the EU. Online betting market BetFair Exchange has only a 28pc chance of it passing by 30 March this year. That may even be a generous estimate since it was defeated by 230 votes on 15 January and the EU has not shown any willingness to improve it.

The Prime Minister has limited room for manoeuvre between Brexiteers and Remainers on each side and worried pragmatists in the middle.

Unless the Labour party support the deal in the House of Commons, it looks dead. And Labour have no interest in appearing to help the Prime Minister deliver a "Tory Brexit", even if Jeremy Corbyn is content with a Brexit outcome.

But there is another way. The Prime Minister can appeal over the heads of MPs to the country. She can hold another referendum. But not another in/out referendum. She can hold a referendum on the question of how, not whether, to leave. This might have two or three questions on the ballot, but the first is the most important. The first question would ask: "Should the UK agree to the proposed withdrawal terms or leave without agreed terms?"

Example Ballot on the United Kingdom leaving the European Union
Example Referendum ballot 

That effectively puts the similar choice to the public as May has been trying to frame for MPs. In essence: Deal or No Deal? It would let the people decide what parliament is incapable of deciding, and provide a clear and definitive answer. Whether the proposed deal is "unacceptable servitude" or whether no deal is an "unthinkable catastrophe" would be decided by the public.

The referendum would deliberately not offer Remain as an option. This for both principled and pragmatic reasons. The princple is that the question has already recently been asked, and it is not credibly democratic to ask it again because the first answer was unwelcome to some. The political reason is that the Conservative party would not support putting Remain on the ballot. And the Labour leadership might also resist that option.

But the referendum would provide some comfort for remainers that they can still shape the design of Brexit, as will be explained below.

The attitude of Labour will be key. Realistically, the new referendum will require Labour support (or abstention) to pass the Commons. And the simplest response of the Labour Party would be to oppose it and watch the Prime Minister continue to flounder. There needs to be something in it for Labour.

So the referendum should go on to ask the people, in the case where the withdrawal terms are approved, whether the UK should stay in the Single Market and the Customs Union. For straightforwardness there should be two additional questions: one specfically on the Single Market and the other on the Customs Union. This would put two of the Prime Minister's "red lines" up to public decision, and give Labour a chance to overturn one or both of them. It would also give Remainers a chance to shape the type of Brexit which the country gets.

Example Ballot on Single Market membership
Example Single Market question ballot 

Example Ballot on Customs Union membership
Example Customs Union question ballot 

This would make it harder for Labour to oppose. They have talked a lot about a public vote being an "option", and it might be difficult to oppose one. They would also be passing up a chance to get the Brexit that they have publicly supported. On the hard-headed side, Jeremy Corbyn would fulfill his ambition of seeing Britain leave the EU, and he would not be personally blamed for the precise nature of Brexit. It would be the "people's Brexit" not a "Labour Brexit".

What about the politics for other groups in the Commons? The Conservative Brexiteers could see it as a path to getting what the really want — a no-deal Brexit. The limited amount of polling on the main question suggests that is is fairly balanced (see chart), so they have a hope of victory. And it has the strong advantage for them of ruling out a "stolen Brexit", since Remain is off the table. The Brexiteers have (legitmately) made much of the first referendum and would find it hard to argue against a new and fair second referendum, which was clearly not a re-run of the first in/out vote.

Polling on whether no deal is better than the current deal

Though the DUP might vote against, nervous that the proposed Withdrawal agreement might well be approved, along with some irreconcilable Tory Brexiteers.

Conservative moderates should welcome the plan as an attempt to restore order and have a process which will produce an actual result. And they will notice that they are less likely to be blamed for whatever outcome, since the public as a whole will be responsible.

Ardent Conservative Remainers will be dissatisfied that Remain is not on the ballot and might vote against the new referendum. More likely they would seek to ammend the referendum to add Remain as an option. They would be joined in this by some on the Labour side. The government would need Labour support to defeat such an ammendment.

But with some support from the Labour leadership, the measure could get through the Commons.

This does require compromise on both sides of the House. The government's compromises are to accept that no deal is a real possibility rather than a frightening phantom, to give up two key red lines to public decision, and to agree to a Brexit delay to allow for the referendum. Labour's compromises are to accept that Remain is no longer an option, and to give the government some co-operation in passing the referendum bill.

In exchange, the Brexit process moves from having no apparent workable options to having at least four possible outcomes from the public vote. Politicians of all persuasions can see a potential outcome which would suit them quite well. This small table shows them clearly:

GroupDeal/No Deal?Single Market?Customs Union?
BrexiteersNo DealLeaveLeave
Government supportersDealLeaveLeave
Soft Brexiteers, Norway-styleDealStayLeave
Labour supportersDealStayStay

Having a new referendum with new questions solves the parliamentary deadlock, and provides a democratic way forward. We should have done this earlier, but it's not too late to do it now.


  1. Opinium poll for the Observer on Brexit, 16−18 Jan 2019,

Bettings markets think Brexit delay likely

Posted 14 January 2019

What are the chances of the various possible Brexit options? One place to look are the online betting markets where punters have to risk their money to back their own opinions.

With the major vote in the House of Commons due tomorrow, Electoral Calculus had a look at what bettors think is likely to happen. We looked first at Betfair Exchange, since it has two-way prices, so we can work out a mid-price probability of each event.

Not surprisingly, punters think the first vote on the Withdrawal Deal is likely to be defeated, with the odds showing a 95pc chance of a government defeat, and only a 5pc chance that the deal will pass first time. However, as some comfort to Theresa May, they think there is a 30pc chance that the deal will pass by the end of March deadline.

Brexit outcome chances from the betting markets

Brexiteers will be disappointed that there is a 78pc chance that Brexit will be delayed beyond the end of March. Remainers might be glad of that, but will be less happy that the chance of a second in/out referendum in 2019 is only 33pc.

Betfair doesn't have a market in "no deal", but both Coral and Ladbrokes price that event at 25pc (offer only).

In terms of having another general election, there is a 41pc chance of a general election in 2019, but that might be after Brexit has happened.

Let's remember that political betting markets are not guaranteed to be right. Indeed they got it pretty wrong at the EU Referendum in 2016. But that's their message today.

It's hard to get a better deal

5 December 2018

The Brexit crisis gripping Westminster seems to have no good outcome. The main possible options include the proposed deal, no deal, or remain. But no option has a clear majority amongst the public [1].

But the public does know what it wants. A fairly large majority would like a Canada-style free-trade deal with the EU. Electoral Calculus own poll conducted by Survation [2] shows that 63pc of people would like a Canada-style deal as either their first or second preference (out of five possible options).

OutcomeFirst or Second
Preference (%)
No Deal38%
Customs Union34%

But that isn't the proposed deal. The proposed deal is unattractive and doesn't give the public what they want. But why haven't we been able to achieve better? Have the British negotiators failed us? The answer comes when we consider things from the EU's point of view for a moment.

From the EU's perspective, Brexit is bad news on its own. But it would be catastrophic if it encouraged more countries to leave. Italy, Greece and even France could decide to leave the EU if that looked like an attractive option. So it is in the EU interests to make sure that the deal given to Britain is unattractive. The reason that the deal feels unreasonable is that it is unreasonable, and it is meant to be, and it is meant to look it.

So the EU has loaded the proposed deal with a set of unattractive features:

Protectionist voices within the EU have also pushed for Britain to remain subject to the Common External Tariff which increases prices for shoppers; to maintain high levels of expensive regulation; to protect agricultural producers with name rules; and to push for access to fisheries.

Theresa May is right when she says that this is the best deal available, given our initial weak negotiating position. The public are probably right to think that Jeremy Corbyn could not have done better (by 54pc to 21pc in the ComRes poll).

Interestingly, the same poll found 65pc to 13pc agreeing with the statement: When Brexit is complete, the UK should try to become the lowest tax, business-friendliest country in Europe, focused on building strong international trade links.

But that's not the deal on offer. Britain started the negotiations as a weak supplicant, and had little power to shape the outcome. It's very hard to change the proposed deal now without drastic measures.

No New Deal without No Deal

It's paradoxical, but the only way to get a new deal might be by choosing no deal as a temporary first step.

The EU has no reason to change its negotiating position unless the facts change. If the UK left without a deal, and managed to survive that process with only moderate disruption, then that would be a big new fact.

Suppose no deal were shown to be feasible in that way. Then after a period of stability, the UK could re-commence negotiations with the EU on a new and more equal footing. The EU's leverage would be reduced as Britain would have a workable and proven alternative. Britain would not be under pressure to agree a deal at any cost.

But it's not an easy path. If the no deal exit does not go well and there is serious disruption, then the situation might be even worse than before. And it would involve a twofold change for companies and people as firstly we move to the no deal status and then change again to an agreed new deal.

And it would be difficult to get the House of Commons to agree to it. It would probably need a referendum to confirm this path.

What a Transitional No Deal could look like

It would take some effort to make a Transitional No Deal option work as well as possible. It wouldn't be easy and it would require hard work and lead to some inevitable disruption. It would require:

The first two of these are in notably short supply at the moment, which increases the risks of this strategy. The last item would involve some economic changes which would meet resistance from some quarters, amongst both Brexiteers and producer interests. The temporary economic measures could include items such as:

But by undertaking the hard work necessary to show that the country can survive completely outside the EU, the basis of negotiation would be transformed. Britain would no longer be faced with unappetisting choices, but would have a good chance of a good deal and a workable fallback.

Power is Choice

The current options before the British people are not attractive. Polls show that they do not like them, and would prefer to negotiate a new deal that could ideally deliver a Canadian-style free trade arrangement. But that is not on the table.

Diplomacy is about creating options for yourself. To create the option of a new deal, Britain might have to take the bold step of going for No Deal. It is a risky strategy, but it has a chance of taking the country to a stronger position. Will the country and the politicians take the gamble?


  1. ComRes poll for the Daily Express on Brexit outcomes, 30 Nov − 2 Dec 2018,
  2. Survation poll for Electoral Calculus on public preferences, 7 Sep 2018,

Public likes May but not her Deal

22 November 2018

Recent polling shows the public wants Theresa May to continue as Prime Minister, but that they don't like her proposed deal with the EU. The public still remains split on whether to leave the EU or not, but has little appetite for another general election or change of Prime Minister. But Theresa May's deal is not popular with the public, and a plurality would rather exit with no deal.

After the proposed deal was announced, there have been three polls published giving useful insights into the views of the British public. The polls, from Opinium, ComRes and YouGov, give an early indication of how the public views the crisis at Westminster.

May's support with the public

Two of the pollsters (ComRes and YouGov) directly ask whether May should continue as Prime Minister. They both show a clear majority of around 13pc in favour of her continuing. But the public's support is open-ended. ComRes see a majority for May remaining in office until the date of Brexit (29 March 2019), but no longer. And YouGov have a majority of 8pc for May resigning if her deal is rejected.

In terms of potential successors, ComRes did not find much support for possible Brexiteer candidates. ComRes asked people for their views about Boris Johnson, Jacob Rees-Mogg, Michael Gove and Jeremy Hunt and found large negative majorities of around 30pc-50pc for all of them. Johndon and Rees-Mogg were marginally less unpopular than the others, but each had three times as many detractors as supporters.

Given the public's current view, it looks like a big mistake of the Conservative Brexiteers to have focused on trying to remove the Prime Minister at this stage. Instead they should have kept their attention on the deal itself.

No Deal is better than this Deal

Despite the public's appreciation of the Prime Minister, they are not happy about the proposed deal. Both Opinium and YouGov were told by the public that they thought the negotiations had been handled badly, by a majority of 26pc (Opinium) and 52pc (YouGov). On the key question of whether the deal is "acceptable" or "unacceptable", Opinium received the verdict of unacceptable by a majority of 36pc to 22pc (with 42pc undecided).

Strikingly, the public seems to prefer No Deal to the proposed deal. Opinium measured 33pc agreeing that No Deal was better than the negotiated deal, compared with 23pc who disagreed (with 44pc undecided).

Second Referendum

The public is still split on whether we should leave the EU at all. When ComRes asked voters whether we should Leave or Remain they found a slim majority of 2pc for Remain, and YouGov saw a majority of 6pc for the hindsight view that it was "wrong" to leave. Opinium had a wafer-thin majority of 1pc for Leave.

But this does not translate into a strong call for a second referendum on the in-out question. ComRes saw a small majority of 5pc against having a second in-out referendum. And Opinium found only 20pc of people who thought that the crisis would be best resolved with another membership referendum.

It's worth pausing to reflect that the people might be right. A second in-out referendum would provide a result, but not a solution. If the result is "Remain", then the immediate crisis would abate but at the price of longer-term fracturing of democratic confidence and a running sore at the heart of British politics. Conversely if the original referendum result to "Leave" were confirmed, it would not help to choose between the various types of Brexit on offer or whether the proposed deal should be accepted or not.

Projected Fear

The public have worries about the possibility of No Deal. Whether driven by "project fear" or not, there is measurable nervousness about a non-negotiated solution. Opinium saw 56pc respond as "worried" compared with 44pc "unworried". On specific issues ComRes found substantial numbers of worried people about inflation (54pc), medicine shortages (40pc) and food shortages (35pc). Whilst many people are unworried, about half the country have some worries.

Next Steps

On the practical question of what should happen next, the pollsters' crystal ball is cloudly. Opinium ask what voters think should happen, assuming that parliament does not approve the proposed deal. And public opinion is split over these five possible outcomes:

OptionSupport (%)
Exit with no deal22
Referendum to choose between proposed deal and Remain20
Hold a General Election16
Renegotiate to get a better deal14
Referendum to choose between proposed deal and No Deal9
Don't know18

This isn't very helpful. Another General Election would not be popular (ComRes see a 24pc majority against) and would not directly resolve the question about the proposed deal. A renegotiation may be attractive in theory, but it is unlikely to yield much of substance.

A referendum between the EU's proposed deal and "Remain" has the obvious drawback of looking like a rigged question from the Remain "establishment".

But a "No Deal" exit which had no popular mandate would also create democratic discontent. A referendum between Deal and No Deal would perhaps be a logical and democratic solution, but it is the least popular option with the public.

More polling would be very useful in judging the public's relative attitudes to these alternatives. And more good political leadership might help shape public opinion in a positive direction.


Brexit Trade Deal and Public Opinion

4 December 2017

The second phase of Brexit negotiations approaches, which will focus on trading arrangements after Britain leaves the EU. The public has some strong ideas of what should happen, and what is a fair price to pay.

Let us start by looking at what the public thinks and then move on to the reality of the choices available for Britain.

Fifty billion reasons to bemoan

A detailed survey on Brexit attitudes was published in the Mail on Sunday on 3 December by Survation, who were one of the most accurate pollsters at the 2017 general election. They asked the public many questions about Brexit and the negotiations. To simplify their findings, let's just look at the questions where the difference in opinion was more than 20pc. In other words, these are the questions which the country had a pretty clear view about, and are also well outside the margin of polling error.

There are nine questions which had this clear majority and they are, in order of their net support:

StatementNet support
Brexit will happen49%
The EU is demanding £50bn because they want to punish the UK for leaving43%
Disapprove of the UK agreeing to pay £50bn to the EU as part of a Brexit ''divorce bill''37%
Boris Johnson has performed badly in the negotiations28%
Theresa May will have to agree to the UK paying £50bn because she is weak after the results of the 2017 election28%
EU has been more successful in the negotiations27%
Theresa May has performed badly in the negotiations26%
Disagree that the UK is paying £50bn because that is what it owes the EU25%
I will be worse off financially as a result of Brexit21%
Net support (agree minus disagree)Survation/Mail on Sunday, sample 1003, 30 Nov to 1 Dec 2017

So the public believes that Brexit will happen and that we are paying the £50bn "divorce bill" because we have a weak negotiating position, and not because the UK actually owes all that money. And the public does not like it.

Although Theresa May and Boris Johnson are being blamed for performing badly in the negotiations, it doesn't mean that the public disagrees with their overall strategy. Another poll, conducted by YouGov for Eurotrack, asked people what their three top priorities for the Brexit negotiations are. Their replies are shown in this table:

Negotiation issueSupport
Allowing British companies to trade with the EU without tariffs41%
Maintaining co-operation on security and anti-terrorism40%
Allowing Britain to make its own trade deals with non-EU countries35%
Allowing Britain to control immigration from the EU34%
Minimising the amount of money the UK has to pay to leave31%
Protecting the rights of UK citizens already living in the EU27%
Making sure Britain does not have to obey the rulings of the ECJ21%
Preventing a hard border between Ireland and Northern Ireland13%
People naming each issue in their "top three" prioritiesYouGov/Eurotrack, sample 1648, 18-24 Oct 2017

The top three issues emerge as keeping the ability to trade freely with the EU, maintain security co-operation, and to trade with non-EU countries. Some keen Brexiteers have a focus on eliminating ECJ involvement and not giving ground over the Northern Ireland, but these are not seen as important by the public. Interestingly, more of the public favour free trade with the EU than care about minimising the departure bill. This mirrors the government's negotiating strategy.

A beginner's guide to trade rules and deals

It looks like Britain is on track to start negotiating a trade deal. But what sort of trade deal might it be, and what happens if the negotiations break down?

Whether or not there is an EU trade deal, Britain will be set to rejoin the WTO as a full member and be subject the famous "WTO rules". The WTO is a useful framework for international trade and is not anything to be scared of. Despite talk of "rules", the WTO does not actually specify particular tariff levels. The basic idea is that countries set the tariffs for goods imported into their territory. The tariffs for exported goods are set by the receiving country, and they don't need to be the same.

There are four main rules to the WTO framework:

Currently Britain's tariffs are set by the EU, as part of the EU's Customs Union. Tariff rates vary by product, with agricultural products having particularly high tariffs to protect EU farmers. The average EU tariff for agricultural products is 11pc, with the maximum tariff for some products being 170pc. For non-agricultural products, the average is 4pc, with a maximum of 26pc.

Tariffs vary greatly between products, and there are many hundreds of different product categories. Electoral Calculus explored the WTO database to check the EU tariffs on six example products, with the results shown in the table below.

CategoryProductEU Tariff Rate
AgriculturalNew Zealand Lamb (carcass)42pc
AgriculturalUS Chicken (plucked)16pc
AgriculturalSouth African wine35pc
Non-agriculturalMedium-sized car10pc
Non-agriculturalComputer Monitor0pc
Non-agriculturalHandbag (leather)3pc
EU Tariffs for selected lines (Equivalent AVT)WTO Database, Electoral Calculus

The examples demonstrate that EU agricultural tariffs are relatively high. These tariffs increase prices for British consumers by making imported goods more expensive. The increase in food prices is particularly hard for less well-off families who spent a higher fraction of their income on food.

And this reflects another less-admitted fact about tariffs. Tariffs are a tax paid for by consumers in the country which imposes the tariffs. It's not the exporter who pays the tariff – it's the consumers who pay.

Britain's future trading has a range of options, which depend on two key things. The first is whether we get a relatively free-trade deal with the EU. If that happens, then our import tariffs from the EU will be held at zero, and with symmetry the EU's import tariffs from the UK would also be zero. The second big question is what we do with our power to set Britain's MFN tariffs. These can be anything between zero and the WTO bound tariff maximum. The current EU tariff rates are nearer to the maximum than zero.

In essence, there are four main options, depending on the answers to the two questions.

EU TradeBritish MFN TariffsUK ConsumersUK ExportersEU Consumers
No dealUnchanged at EU levelsIncreased prices of EU goodsLess demand from EUIncreased prices of UK goods
No dealSet to zero with full trade liberalizationDecreased prices of non-EU goodsLess demand from EUIncreased prices of UK goods
Free trade dealUnchanged at EU levelsNo changeNo changeNo change
Free trade dealSet to zero with full trade liberalizationDecreased prices of non-EU goodsNo changeNo change

From the point of view of British consumers, the best thing for the government to do is to liberalize trade and set tariffs to zero, whether or not there is a deal with the EU. From the point of view of EU consumers, the best thing for the EU to do is to have a free-trade deal with Britain.

But the best overall option is for a free-trade deal with EU accompanied by a reduction in British tariffs towards zero. And that option is looking more possible as the first phase of EU negotiations seems to be approaching a successful conclusion.


Brexit Choices and Public Opinion

by John Joseph Boylan, 13 November 2017

It’s over a year since my last article on Brexit . There have been some developments but no progress.

Article 50 has been triggered and the UK will leave the EU in March 2019. It will be the second country to leave the EU after Greenland in the 1980s – not a lot of people know that .

The snap General Election resulted in the Conservatives losing their majority and increasing the prospect of a Softer Brexit . This coupled with Labour’s policy shift has added to that. It would be amazing if there were not a General Election prior to the one scheduled for 2022.

Before trade talks can begin there are the issues of a divorce bill, the border between Northern Ireland and the Republic and EU citizens in the UK and vice versa. There has been no breakthrough at all. The issue of Gibraltar could throw a spanner in the works too.

What are the options?

We could have continued membership of the EEA single market like Norway, an individual deal like Switzerland which has strong links to the single market, or looser trade deals like the Canadian free trade agreement or Customs Union like with Turkey. The Prime Minister has ruled all these out – but not World Trade Rules (WTO), that is 'No Deal'.

Donald Tusk, President of the European Council has summed up the options as being a good deal, no deal or no Brexit . There is another option – sub-optimal. The EU Chief Negotiator, Michel Barnier suggests such a Canadian-style deal – but this isn’t very attractive as well as taking years to negotiate .

Let’s look at the options.

A good deal

A Soft Brexit , that is staying within the Single Market is the most attractive in my view. It respects we are leaving the EU but without the economic risks associated with no deal . Of course you still have to accept freedom of movement and you still pay into the EU budget albeit at a reduced rate. There is a chance Parliament could still vote for this.

The Referendum was about membership of the EU – not the single market. Further, Leave voters had a number of priorities. Yes, immigration but also sovereignty and the infamous £350m a week for the NHS. The Chief Executive of the NHS said this was a key issue in the campaign and argues even Vote Leave acknowledge it swung the referendum to Brexit. .

Brexit Poll Question on EU Immigration vs Free Trade, ORB 3-5 Nov 2017

Public opinion is fairly split on the question. A recent poll by ORB International shows that more, but only slightly more, of the public prefer to put free trade with the EU above immigration control.

However, it may not be possible. The Government argues when we leave the EU we leave the single market and that to be in the single market or European Economic Area (EEA) you need to be a member of the EU or EFTA – which has Norway, Iceland, Liechtenstein and Switzerland as members.

There will be a legal challenge . Advocates of EEA membership argue to leave the EEA we need to actively trigger Article 127 of the EEA Agreement and that this is a standalone treaty. In any case I’m sure this will be decided at European level regardless of what wealthy British lawyers say.

No deal

The OECD predicts this will have a harmful effect of the UK economy , in particular growth and a declining pound. Further, it's claimed the UK does not have the capacity to strike multiple trade deals anytime soon .

The UK has a trade deficit with the EU. The argument therefore is that the EU needs the UK more than the UK needs the EU. Arguably though, this could hinder any bespoke trade deal – for why would the EU want this imbalance to continue, especially if UK argues against free movement and paying into the budget? From an EU perspective , the UK outside of the EU would be their largest trading partner – but still only representing one sixth of all their trade.

There is an alternative much rosier picture that states the UK can thrive outside the EU on WTO Rules . Perhaps this view should conclude “and they all lived happily ever after”. It has that feel to it. The recent case with Bombardier shows us that the US is increasingly protectionist and a deal – in which we have a trade surplus, is likely to be difficult to say the least. We live in a world of regional trading blocks and protectionism.

To leave without any agreement – and no safety buffer of a transitional period would be unwise and would adversely affect our Financial Services and the broader economy with expected higher unemployment, plunging pound and higher export tariffs under WTO rules .

No Brexit

There are some, such as the Lib Dems, Greens and the aforementioned OECD who argue we need a Second Referendum. The Lib Dems and Greens combined got less than 10% at the election and the OECD is elected by nobody. It’s easy to disregard democracy when you are accountable to not many or any voters.

Those arguing for such a policy are advised to be careful what they wish for. A new vote could simply mean another Leave vote. Hard Remainers would be best advocating the Softest of Brexits instead.

A bad deal

Brexit Poll Question on PM will get good deal for Britain, ORB 3-5 Nov 2017

Legal considerations and the view of the EEA could rule out a Single Market approach. (Although we could of course re-join EFTA, where we were members prior to joining the EU). Political reality means a No Brexit is impossible. Economic considerations will veto any idealism about a No Deal. The UK is trundling towards a less than satisfactory deal – at least in the short term. This could be a Canadian style agreement or the Government’s own untried Customs Union proposal . Neither would deal with services which make up 80% of the UK economy. The Government doesn’t want the former and the the latter to date is vague and unclear.

And polling suggests the public are mostly sceptical that Britain will get a good deal.

Getting a good bespoke deal will be difficult. It would take a long time, the EU would be in no inclination to provide one and the the plain, simple fact, you can’t have your cake and eat it. If the UK wants most or all of the current advantages then that comes at a price.

Parliamentary Process

There is growing pressure for Parliament – rightly – to have the final say . It is possible MPs could vote against Brexit – but it is hard to envisage that. More likely some will press for continued membership of the Single Market – if possible. The Great Repeal Bill is going through Parliament. It will be possible to vote on amendments to stay in the Single Market or Customs Union . The Government has already conceded ground on releasing the Brexit impact reports .

Transition Period

It is clear that a final agreement will have to be made by October 2018 as any deal has to be ratified amongst the 28 members. This doesn’t seem long enough given trade talks haven’t even begun. The Prime Minister Theresa May has now said a transition period may not happen if there is no agreement . I expect “clarification” on this and there would be such a transitional period – which she previously argued for .

It is hard to see what the final outcome will be. It would be interesting to see how MPs would vote in a stark contrast between no deal and no Brexit.

The extremes, 'No Deal' or 'No Brexit', however, seem less likely than some kind of deal. The ideal solution would be to remain in the Single Market.

If we have a good bespoke final deal it will more likely than not come in the transition period after we have left the EU. There is no quick fix.


Diesel Engines : London T-charge ignores the evidence

Posted 23 October 2017

Today marks the start of London's new T-Charge which penalizes old diesel and petrol vehicles, to discourage them from entering London. London has significant problems with air quality, a large part of which is attributed to diesel engines. But the design of the scheme ignores the real scientific evidence and may even make things worse.

A BBC investigation by Tom de Castella, using the results of real-world driving experiments, shows that the T-Charge has got it all wrong. The BBC used experiments conducted by Emissions Analytics which use real-world driving conditions to measure the emissions of dangerous NOx particles from car exhausts. These tests are a much better guide to actual vehicle emissions than the standardised official tests which have been comprehensively "gamed" by the car industry.

The graph shows the shocking truth. The legal maximum for new cars, both diesel and petrol, is 80 milligrams of NOx per kilometer driven. And all new cars "pass" the official test. But the reality very different. Although 92% of petrol and hybrid engined cars pass the real-world test, only 14% of diesel engines are good enough. So a staggering 86% of new diesel-engined models emit more than the legal maximum. And they are not just a little bit above. The average diesel emissions level is a massive 399 mg/km, or five times as much as the official limit. Some models emit much more than that, such as the Nissan Qashqai with a lung-busting 1460 mg/km which is eighteen times the limit.

NOx Real-world emissions by car type

The BBC also tested an older Skoda from 2009. Although it was well above the legal limit, it was better than the average new diesel car.

The evidence is clear. Transport for London have got it wrong by making their distinction between old and new cars. The real distinction is between petrol and diesel engines. The T-Charge should apply to diesel engines old and new, until new diesel engines are actually as good as they are falsely claimed to be.

See the longer article on the Diesel Engine Pollution Scandal.

A Quick and Simple Solution to Trade Negotiation

Posted 9 January 2017

With the start of the new year, it is time to think seriously about Britain's trade after Brexit. Article 50 is likely to be triggered in the next few months, which will put Britain on the slip-road to leave the EU and make its own way in the world in 2019.

Diplomats and others have already warned of the Herculean-sized task not just to negotiate a new trade arrangement with the rump EU, but also to forge new trade relationships with the rest of the world. The British government, it is suggested, does not have the time or the skills to do all this work by 2019.

But this view is too pessimisitic. There is a way to cut through the diplomatic negotiation processes and quickly get to a working trade model for the next few years. This model will be great for the British economy, fantastic for British consumers, and provide a healthy competitive environment for British industry. In Sir Humphrey's famous phrase, the plan is quick, simple, popular and cheap.

We will come to the plan shortly, but first let us clear away some misconceptions about trade.

The biggest misconception is the "Mercantilist fallacy". Mercantilists, who were dominant in Europe around the 17th century believed that the point of trade was primarily to export goods. They would encourage exports and discourage imports through tariffs and regulations. This was in order to increase the state's power and was favoured by absolutist rulers such as Louis XIV of France.

Empty store shelves in Venezuelan store in November 2013
Bolivarian Mercantilism: Empty shelves in a Venezuelan shop, November 2013Photo: ZiaLater CC

Let's tackle mercantilism head on and see if it really makes sense. One way to do this is a thought experiment where we assume the mercantilism is 100pc successful. Suppose a country succeeds in exporting abosolutely everything it produces - food, goods, services, energy - and imports nothing at all. Is this good? The main benefit would be receipt of a large amount of paper money. But the country does not import anything and there are no goods in the shops (because they were all exported), so there is nothing to spend the money on. The population would be sitting on a large amount of useless paper, but would be deprived of food, electricity and everything else. The country is "rich" but dead. (This scenario is sadly not a mere satirical fantasy. North Korea's "self-reliance" policy came close to achieving the mercantilist dream and caused the death of around 330,000 people from starvation in the 1990s [1].)

In the interests of fairness, we could run the experiment the other way. Suppose a country exports nothing at all, and tries to import as much as possible from the rest of the world. Polarity is reversed and the shops are full of goods, both domestic and imported. Consumers have more choice and more goods. The material situation is very pleasant. Of course, it is not sustainable in the long term as the country would run out of money. In practice, the exchange rate would devalue before that happened and the stream of imports would slow. But of the two, the anti-mercantilist scenario looks a lot more pleasant.

The truth is that we need both imports and exports and we shouldn't try to reduce either of them.

Although absolute monarchs have faded from the democratic world, legacies of mercantilism still survive in industry lobby groups and trade unions who want to be subsidised by consumers by restricting competition. There is always a push from business and labour against imports. They dislike the extra competition which can depress their profits and wages. This is especially true when they have a comparative disadvantage. But their actions are hurting consumers more who are deprived of better goods at lower prices. Economic theory tells us that the "gains" from helping producers are smaller than the extra costs paid by consumers [2]. So the interests of the country require us to put consumers ahead of producers.

Now here is the plan. We can call it Full Free Trade, and in the economists' jargon it is called "unilateral trade liberalization". This is what it means. The idea is simple. We open Britain to trade with the world. In particular:

There are several important advantages to this approach. The first and most important is that it is do-able. It does not need diplomats, trade negtotiators, or even any trade negotiations. All it needs is for Britain to be outside the EU's protectionist customs union. It is also compatible both with and without membership of the EU single market. It is quick and simple to implement - it just needs an act of parliament. It is also cheap, and doesn't cost the taxpayer anything.

EU College Meeting in Strasbourg
It doesn't have to be like this: EU CommissionersPhoto: ©2014 EU

It is also economically great for the country. With Britian open for business, confidence will be maintained, and consumers (and the economy) will benefit from better choice and lower prices. British business will also benefit from the competition, even if not all businesses welcome that.

The third benefit is softer. Although the plan is designed to benefit Britain, it will also send a strong and positive signal to the rest of the world. It will improve Britain's image as globally engaged, which has inevitably been tarnished a little by the fact of Brexit, and encourage reciprocity. It will make Britain a beacon of free trade in the world, and be a model for other countries seeking to leave the EU. It could even develop into a free-trade club for ex-EU members and other countries around the world.

What other countries do is up to them. If they reciprocate and let in British imports, then their economies and consumers will be better off. If they don't then their economies and consumers will be worse off. That is their decision and their problem. We don't need to pander to or compromise with protectionists. We can say our piece and confidently leave the room. Free trade is "mic drop" diplomacy.

Italian sparkling Prosecco and rose Spumante wines on ice being chilled
Consumers over producers: British consumers should still be allowed to buy ProseccoPhoto: James Cridland CC

In terms of the famous Prosecco debate, the British position should not be about whether Italian producers are happy or not, but whether British consumers are happy. They should be able to continue to buy Prosecco without tariffs.

Now some will say that this plan is strange and a radical departure. But Brexit is a big decision and needs a bold response to implement it. We have to decide something, and we cannot duck taking a decision on trade.

On a practical note, it could be worth introducing full free trade for an initial period of, say, five years from 2019. That would re-assure the public, and allow time for trade negotiations with the EU and the rest of the world. In the course of the five years, we could decide whether we liked it or not. If not, we have time to negotiate an alternative.

And this solution is neither radical nor a departure. It is essentially a return to the free trade of the Victorian era, which Britain led against the protectionist instincts of continental europe. And in fact its roots are much deeper than the nineteenth century. The Magna Carta of 1215 has a ringing section, just after the guarantee of a fair trial:

"Omnes mercatores habeant salvum et securum exire de Anglia, et venire in Angliam, et morari, et ire per Angliam, tam per terram quam per aquam, ad emendum et vendendum, sine omnibus malis toltis, per antiquas et rectas consuetudines"

"All merchants may enter or leave England unharmed and without fear, and may stay or travel within it, by land or water, for purposes of trade, free from all illegal exactions, in accordance with ancient and lawful customs."

Free trade is in Britain's history and in its bones. It is the politically and economically right thing to do. And it can be done quickly and simply.


Top Ten Consumer Rip-offs which Government can Fix

Posted 9 October 2016

Now is the season for identifying areas where consumers are paying too much for goods and services. Some of this is driven by corporate greed but also by European and national legislation. In a post-Brexit Britain, the Government (of any political composition) has the power to make things better for consumers and cut back on economic rents. Policymakers and the competition authorities will have their own ideas, but here is the Electoral Calculus Top Ten List of consumer rip-offs which can be fixed.

1. House Prices

As everyone knows, but not everyone admits, UK house prices are too high. This is caused by a lack of supply. There are too few new houses being built. The main culprit is the planning system and planning legislation, particularly the Green Belt rules. An increasing number of people, both young and not-so-young, are having their lives blighted by an unholy combination of town hall planners and environmental activists. Families are living in small and expensive accommodation when they deserve, and should have, spacious and affordable housing.

Government should relax planning rules for new housing and look seriously at weakening the Green Belt rules.

Read the full story: House Prices are Too High.

2. Food Prices

Food prices have been kept artificially high ever since we joined the (then) European Economic Community. This is achieved both by direct agricultural subsidies of £5 billion each year and, more importantly, by tariffs imposed by the EU Customs Union. Economists estimate that UK supermarket prices are 17pc higher because of the CAP [1], costing households about £900 each year.

These high food prices hit the less well-off more than most, and are unfair and unjust. In a case of history repeating, they are a replay of the Corn Laws of the mid 1800s which kept food prices high and hurt ordinary folk.

Now is the time to leave the EU Customs Union and abolish tariffs on food imports, and abolish agricultural subsidies for British farmers. That would make food for everyone cheaper, and reduce some government spending which does more harm than good.

Read the full story: Millions suffer from food insecurity because EU rules keep food prices high – we can now change that.

3. Energy Prices

Gas and electricity prices in Britain are too high, but for two different reasons. One reason is the slippery behaviour of the established energy companies who treat loyal customers badly by putting them on their most expensive tariff. Often called the "standard variable tariff", this penalises customer loyalty, and takes advantage of consumers who don't keep up and scan around for new offers every year.

Windturbines and pylons near Dungeness Nuclear Power plant
Danger – High Prices! Nuclear and wind power are not the cheapest power sourcesPhoto: DAVID ILIFF. License: CC-BY-SA 3.0

The other culprit is the government itself, which interferes in the energy market to increase prices. This is often done in the name of environmental measures to reduce CO2 emissions, but the overall effect is to bump up energy prices substantially today in order to make a small reduction in long-term environmental harm. An egregious example is the planned Hinkley Point nuclear reactor whose high-priced electricity (according to the National Audit Office) will cost consumers £29.7 billion [2].

Government should think hard about its own actions in increasing the price of energy, using a cost-benefit framework. And Competition Authorities should take a closer interest in the energy companies' price structures.

4. Copyright

As we move more towards a knowledge economy, it is increasingly costly that national and international copyright laws have been captured by large media companies. Following intensive corporate lobbying, the length of copyright protection has increased out of all proportion. Although there is a public benefit to fostering creativity, the current law now serves corporate interests more than creators'. The law now gives copyright protection (a licensed monopoly) which extends to the death of the author plus seventy years. It's not clear how that motivates the long-dead author any more, but it certainly helps the big media firms to pick the pocket of people who enjoy films, books and music.

Government should reduce UK copyright protection back to the death of the author plus fifty years, and lobby at an international level to reduce it back to the patent-type duration of twenty years from the creation of the work.

See the full story: Copyright reform from two perspectives.

5. Professions

"People of of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." Adam Smith's timeless warning [3] is as true for professionals such as lawyers, doctors and architects as it is for bakers and widget-makers. One the main ways that professionals achieve this is by capturing government regulation and erecting barriers to entry into their profession.

These moves are often dressed up in public-interest clothes, such as protecting the public from rogue practitioners, but the real intention and effect is to raise prices and hurt the consumer of professional services.

There is a wonderful speech by the Liberal MP William Cowper-Temple in 1874 attacking the medical profession, which at the time was strenuously objecting to the introduction of women doctors:

"The members of a profession were often unable to consider without bias innovations relating to themselves; and much as he respected the medical profession, he would still say that Parliament ought not to give undue attention to objections which they might raise in matters relating particularly to their own profession." [4]

The Competitions and Markets Authority should be asked to examine the legal, medical and architectural professions from a competition standpoint and make recommendations for legislative change to reduce barriers to entry.

Additionally the Government should be careful of medical lobbying to raise additional hurdles to foreign doctors practising in the UK following Brexit.

6. Electronic Books

The publishing industry was very keen to avoid the damage that electronic formats caused to the record business. Music, both in physical CD form and as electronic MP3 downloads, is cheaper than ever in real terms. And MP3 is generally a bit cheaper than physical CDs for new releases. The same cannot be said for books and e-books.

Several new books are more expensive as e-books than as hardbacks. Current examples available on a well-known on-line marketplace include best-sellers such as the Harry Potter stage scripts, Robert Harris' Conclave, and Ben MacIntyre's SAS: Rogue Heroes. Why should this be? The creative and editorial processes are the same for both physical and electronic formats. But the e-books do not have to be printed, bound, warehoused, transported and stored.

Somethings looks strange here. How can the electronic version cost more than the hardback?

7. Diesel Engine Pollution

Sometimes consumers pay too much money for something, and sometimes they pay with their health. One bad example is that of diesel engines in cars and vans. After lobbying from the big car manufacturers, particularly from Germany, the EU and British governments jointly pushed to increase the number of diesel engines on the road, giving tax breaks for diesel cars.

Although diesel engines reduce CO2 emissions slightly, they cause a ten-fold increase in the dangerous nitrogen dioxide gas (NO2) which causes thousands of early deaths due to respiratory illness. The UK now has places where nitrogen dioxide levels are twice the recommended EU maximum. A recent study by King's College London on behalf of Transport for London calculated that nitrogen dioxide was the most dangerous pollutant and is responsible for around 5,900 deaths annually in London alone [5].

The car manufacturers tried to cover this up by gaming the emissions tests, which was exposed in the Volkswagen scandal.

The Chancellor of the Exchequer should abolish vehicle excise duty reduction for diesel engines, and think about increasing it to a level above petrol engines until diesel engine air is fit to breathe.

Read the full story: The Diesel Engine Pollution Scandal.

8. Mobile Phones

Although mobile phone rates have come down in recent years, the rates for some services are still extortionate. Data roaming charges can be one hundred times larger than domestic data charges, especially outside Europe.

Shocked people looking at a mobile phone
How much did that call cost?Antonio Guillem ©

Even within Britain, there are still some anomalies. For instance, the main four mobile providers (O2, Vodafone, Three and EE) all offer deals which allow calls to "standard UK landlines and mobiles" within the customer's plan. But they all charge excessive "access fees" for calls to other UK numbers. These are not premium rate lines, but everyday numbers like 084 (which is meant to be a maximum of 7 pence per minute) or 087 ("up to 13p per minute"). The mobile companies slap an "access charge" of 45-55 pence per minute on top for their own profit.

Although Ofcom has taken action to make this problem more visible, it has not gone away. There isn't an economic justification for this charge, and the clustering of these excessive access charges suggests the possibility of anti-competitive behaviour. The Competition and Markets Authority should have a look into this as well.

9. Passports and Visas

Even in a post-Brexit world, people will want (occasionally) to leave Britain and visit foreign countries. And tourists and visitors from overseas will want to come to Britain and spend their money here. In both cases, they will be charged some eye-watering amounts by the UK and other governments for permission to travel. These permissions are known as Passports and Visas and have developed recently into a money-spinner for governments.

For instance, a full UK Passport now costs £72.50. That could be more than the price of the flight. And that rises to over a hundred pounds for a "one-week" service. It's worse for foreigners. A standard six-month British visitor's visa now costs about £95 to someone from India or China. And this can rise to over a thousand pounds for more specialised entry permits. Of course, there is no competition to the Passport Agency for these products.

We shouldn't be gouging international travellers whichever their direction of travel. These people are either our own citizens or inbound tourists spending sterling, or business people making trades. The Government should reduce the Passport Agency's fees to moderate levels. Immigration should be a service, not a profit-centre.

10. Free Trade

Not least of the consumer rip-offs is the high prices of goods caused by the EU's single market and customs union. It is the customs union which is the culprit here, because it keeps out cheap goods from the rest of world. This translates into higher prices in the shops for everyone.

Post-Brexit, we can lower our external tariffs and reduce the prices of goods in the shops. This is directly good for consumers because it makes their hard-earned cash go further. It is also healthy for the economy, because it keeps firms competitive. We don't do our own business any favours by trying to protect it behind tariff walls. That hurts consumers first, but also atrophies industry over time as it loses the ability to produce effectively. Tariffs are a lose-lose proposition. We should scrap them.

Read the full story: The most important Brexit negotiator is a spiv MP from two hundred years ago.


These ten rip-offs can all be cured by any Government that has the will to do so. Reform is never easy, but these changes will benefit real people throughout Britain who are getting a bad deal. They are not meant to be partisan – it should be neither left-wing or right-wing to want to see consumers hurt.

In some of these cases, the problem is companies being greedy, with a suspicion of anti-competitive price fixing (e-books, phones, energy tariffs). In some cases, corporate or vested interests have captured the very politicians and civil servants who should be regulating them, and they have got the law written to suit themselves and to hurt the public (copyright, professions, diesel engines). In other cases, it is the government policy which is itself wrong and is hurting the public (housing, food, "green" energy prices, passports, free trade). A wise policymaker is alert to problems closer to home as well as the potential of "market failure".

Leaving the EU allows us to address more of these problems, and politicians of all parties can decide whether they want to be on the same side as 64 million British consumers, or against them.


The most important Brexit negotiator is a spiv MP from two hundred years ago

Posted 25 September 2016

He was only in parliament for four years in the 1820s, and for a rotten Irish borough. He had a record of dodgy stock-market dealing around the time of Waterloo. His name is not very well known, and he has been dead for nearly two centuries. But David Ricardo had one big great idea which has lasted through the years. It has been described as one of the few propositions in the social sciences which are both true and non-obvious.

And this idea will affect almost all aspects of our Brexit negotiations both with the EU itself and with other countries around the world.

The idea is simple, though paradoxical at first glance, and everyone who is interested in politics and Brexit should take a few minutes to get to know it.

The idea demonstrates how trade between two countries will help both of them. In can be (and often has been) expressed in economics jargon, but let's skip that and start with a specific simple example.

Imagine a hypothetical world with two countries. Let's call them Rexland and Scanzia. And, in this world, there are only two products – automobiles and blankets. Both countries make each product. The countries happen to be at different stages of development and Rexland is better at making both products than Scanzia.

We can represent the productivity of workers in the two countries with this quick table:

Producitivity: annual output per worker in each country and industry

So Rexland workers are more productive than Scanzia workers in each industry. A Rexland car worker can make four cars a year, compared with only two cars from a Scanzian worker. And in blankets, Rexland workers are 60pc more productive than their Scanzian peers.

It looks like trade between these two countries would be pointless or dangerous. You might expect that Rexland would export both cars and blankets to Scanzia, damaging that economy and receiving nothing in return. But that would be wrong.

Both sides will benefit and flourish from trade. Here's how it works.

Suppose just one Rexland worker switches job from blankets to cars. The initial impact on the Rexland economy (annually) is that they have four more cars and 96 fewer blankets. But now let trade enter the picture. Let's suppose that the two countries trade together and the market "exchange rate" is 27 blankets per car. Then Rexland can export its four extra cars, and receive 108 blankets (108 = 4 × 27) in exchange. This more than makes up for the "lost" 96 blankets, and Rexland ends up as gaining by 12 blankets overall.

But have they just exploited the naive Scanzians with unfair trade terms? Not at all – Scanzia wins too. In Scanzia they need to retrain two car workers to be blanket makers. Initially they lose four cars (annually), but gain 120 extra blankets. When they trade with Rexland they pay 108 of those blankets to import the replacement four cars. They are also gainers to the tune of 12 blankets.

Both parties have benefitted and both are better off in terms of goods consumed.

Comparative Advantage graphic
Comparative advantage: As if by magic, both sides gain. But there are no tricks.©2016 Electoral Calculus

In economic terms, Rexland has a competitive advantage in both industries because its workers are more productive. But Ricardo's idea is to look at a different concept of comparative advantage which basically means comparing the ratios of advantage to find the best, or least worst for each country.

Relative advantage and comparative advantage

The "advantage" is just the ratio of productivity between the two countries. Rexland's advantage is bigger than one in each industry, because it is more productive in both of them, but is higher in automobiles. So Rexland has a comparative advantage in cars. Scanzia's advantage is less than one in each industry (because it is less productive overall), but is higher in blankets. So Scanzia has a comparative advantage in blankets. So Rexland should export cars to Scanzia and import blankets in return.

This always works, no matter what the productivity rates happen to be. There will always be some industry, even for a weak and unproductive country, at which it is least bad. That is the industry where it has a comparative advantage. This is Ricardo's great insight. Trade will always help, because everyone is (relatively) good at something.

The result can be rigorously proven to be true under more realistic assumptions than this simple example, such as having multiple countries, several industries, diminishing returns to scale and generalised utility (happiness) functions. In economic terms, we can show that:

There will be economic changes to each economy. These are summarised in this table:

Industry with
comparative advantage
Industry with
comparative disadvantage
Utility (happiness)Rises
Economic changes following trade

The detailed picture is mixed and does require some workers to change industry, either by re-training or generational change.

But any worker/consumer in both countries can be better off. They have more of whatever they desire (either cars or blankets). There are twelve extra blankets for each transferred worker in Rexland, and six extra blankets per retrained worker in Scanzia.

That is the genius of comparative advantage.

So with free trade between the two countries:

Politics gets involved

But the car workers in Scanzia complain about unfair overseas competition. The Scanzian Minister for Industry, whose cousin runs a large loss-making car plant, decides to take action. Protection is needed for the nascent Scanzia auto industry, he says in a speech at the factory. It can only grow to be strong if sheltered during its growth phase from harsh international competition. Plant workers give him sustained applause.

To begin with Scanzia imposes an import duty (tax) of a certain number of blankets on each imported auto. Effectively, economically the taxed blankets are destroyed (or at least lost to the traders). The import tax is set at the rate of 4 blankets per car.

At the current price, trading would be uneconomic. Let's suppose that the exchange-rate price increases to 29 blankets per car (pre-tax) or 25 blankets per car (post-tax). Rexland receives 100 blankets (post-tax) for its four cars, which leaves a net profit of only four blankets. Scanzia importers pay 116 blankets (116 = 4 × 29) for the cars, leaving them with a profit of four blankets too.

Trade is still worthwhile and productive but less than before. The key points are:

But it gets worse. Over in Rexland, a combination of green pressure groups and trade unions are arguing against cheap foreign imports ('dumping') from Scanzia, which are putting Rexland blanket-weavers out of work. There are also concerns about labour and environmental standards in Scanzia, which do not meet the high level of Rexland legislation in this area and lead to worker exploitation by unscrupulous importers. After a high-profile campaign by the Daily Rexlander supported by opposition politicians, the government imposes a 10pc import levy on blankets.

Now things are difficult. The most a Scanzian importer can pay for a car is 30 blankets (30 is the natural price of cars in Scanzia without trade, since workers make 30 times as many blankets as cars). But the car import tax is 4 blankets, and the blanket import tax is a further 2.6 blankets ( 2.6 = 10% × ( 30 − 4 ) ), leaving only 23.4 blankets for the car exporter. But the minimum price for cars in Rexland is 24 (natural price of cars there), so the trade would make a loss.

Trade now has stopped completely. Both countries and their consumers are worse off.

Back in the real world

In the real world, free trade is under attack from both left and right. Both US Presidential candidates have sounded doubtful about free trade, and in Europe opposition to the US-EU free trade TTIP deal is growing.

Countries can't expect to export in every industry. It's impossible to export everything and import nothing. But every country can export something and import something. And doing that leaves everybody better off. Trade is a swap, and a swap that benefits both sides.

That is the secret of Brexit negotiations. The UK should have as low tariffs as possible. If other countries put tariffs on British goods, they are hurting themselves as much as Britain. British trade negotiators don't need to look for special favours from the other side – just their own self-interest. If the other side can't see that, then we need to remember that even our own tariffs and trade barriers leave us worse off. So we shouldn't impose any of our own. David Ricardo is our negotiator.

The Diesel Engine Pollution Scandal

Posted 10 September 2016

Fans of Yes Minister may remember the episode when Jim Hacker and Sir Humphrey try to understand chemistry using Latin and Greek. They also had trouble with the basic concept that two dangerous substances could form an safe compound. Chemistry can also go the other way round, and two safer elements can form a more toxic compound. One such nasty is nitrogen dioxide (or NO2) which is a compound of nitrogen and oxygen, two commonplace gases in the atmosphere. Nitrogen dioxide is highly toxic in large doses but importantly also causes long-term health problems as an air pollutant, including aggravated asthma and respiratory infections.

The main producers of nitrogen dioxide are diesel engines in motor vehicles. There is an important difference between petrol engines and diesel engines. Diesel engines produce about ten times more NO2 than petrol engines, emitting about 620mg/km compared with 60mg/km for petrol [1].

But there is another difference between petrol and diesel engines — diesel engines are a bit more efficient than petrol and emit 15pc less carbon dioxide (CO2) [2].

Bank holiday weekend traffic jam on the A31(T)
Now every third car has a diesel engineCredit: Jim Champion CC

Policymakers in both the EU and Britain have given a high priority to reducing CO2 emissions, as part of tackling long-term climate change worries. Egged on by European car manufacturers, there was a big push for diesel engines across Europe in the late 1990s. Several European countries reduced the fuel price of diesel below petrol. Britain did not. But in his 2001 Budget, Gordon Brown reduced the annual 'car tax' (vehicle excise duty) for diesel-engined cars compared with petrol engines.

And consumers went for it. The number of diesel cars in Britain increased from 2 million to 12 million between 1994 and 2015 [2], [3].

But there were some safeguards. EU rules put limits on the nitrogen dioxide that diesel engines could emit [4]. It wasn't very tough, since it allowed diesels to emit three times more NO2 per kilometre than petrol (180mg/km compared with 60mg/km), but at least it gave some comfort. That is, until September last year when the Volkswagen scandal broke. Then the world discovered that the manufacturers had been gaming the laboratory tests, and the true emissions were more than three times higher than the limit (620mg/km rather than 180mg/km) [5]. So diesel engines are actually pumping out ten times as much toxic nitrogen dioxide as petrol engines.

London Marylebone Road: NO2 pollution
London Marylebone Road: NO2 pollution (rolling annual average)Source: DEFRA [6]

We can see the effect of this in air quality data from the government's air pollution monitoring stations. They are set up round the country and monitor a number of pollutants, including NO2. This is measured in micrograms per cubic metre (μg/m3) and the recommended EU standard is a limit of 40μg/m3 for the annual average. Looking at the results from London's busy Marylebone Road [6], the level has been consistently more than twice this limit for the last twenty years.

And these abstract numbers represent the early death for thousands of our citizens. Research conducted by King's College London on behalf of Transport for London [7] calculates that nitrogen dioxide emissions are more dangerous than fine soot particulates, and are responsible for around 5,900 deaths annually in London alone. The biggest contributor to this mortality is "NO2 London sources" — mostly vehicle diesel engines in the capital.

The European rush to reduce CO2 to address long-term climate concerns has produced real short-term pollution problems. It's time to abolish the vehicle excise duty reduction for diesel engines and consider whether it should be increased until manufacturers can reduce NO2 emissions.

Let's take a deep breath and fix the bad air.


Electoral Calculus would like to acknowledge Morland Sanders and Channel 4's Dispatches programme [8] which was one of the first to break open the diesel engine scandal.


House Prices are Too High

Posted 4 September 2016

UK House Prices are too high. Buying a home of your own is increasingly unaffordable for young people. For first time buyers, the average house price is over five times average annual earnings [1]. That is a big increase on thirty years ago, when the ratio was only around three times earnings. In hotspots like London the ratio is close to ten.

These high prices make it hard for people to get started on the housing ladder. Everyone suffers from moderately-paid public sector workers all the way up to skilled well-paid professionals. Housing is expensive and increasing out of reach.

This is not particularly the fault of the EU, but leaving the EU does provide some opportunities to make it better. The primary problem is political – many older voters benefit from high property prices, and resist moves to lower them. For that reason, house price inflation is much like the weather – everyone talks about it, but nobody ever seems to do anything.

The typical Georgian architecture of Bath, Somerset, as viewed looking north-west from Bathwick Hill
Green and pleasant, as well as urbanPhoto by DAVID ILIFF. License: CC-BY-SA 3.0

Although there are a plethora of schemes at the edges to help subsidise first-time buyers, the main cure to high prices is to increase supply.

Let's look at the elephant in the housing policy room. Agriculture takes up 78pc of all our land use, and built-up areas are only 12pc of the available space (only slightly more than the 8pc of the UK land covered by lakes and rivers) [2]. This blog has already argued [3] that leaving the EU is a great opportunity to cut farm subsidies and food price supports in order to reduce supermarket prices. Another key advantage is the opportunity to move land from agricultural use to make it available for urban development. In other words, to build on farms and the "Green Belt". That's not to say that we should build-up over all of the country, but just that the balance needs to change away from 78−12.

The Green Belt was introduced in 1947 when "planners knew best", but has been criticized since [4] for pushing up house prices, making new developments further from cities, and not providing high-quality recreational areas. It's time to look again at it.


Copyright reform from two perspectives

Posted 28 August 2016

One consequence of leaving the EU is that we can liberalise our copyright laws. This policy should have cross-party support, so to avoid any political bias and appeal to all readers, the arguments in favour are presented from both a left-wing and a right-wing point of view. Readers may choose which to read.

End the James Bond rip-off

Modern corporate greed takes many forms -- ranging from offshoring jobs to ducking out of paying taxes. But a particularly nasty form is when large multi-national corporations are effectively given tax-raising powers over ordinary people. Up and down the country, thousands of shoppers every day are forced by law to make small payments to multi-national media companies who have done nothing to deserve them. This is a high-street rip-off that has been made worse by the EU.

The scam operates through the copyright laws, which are meant to help authors and songwriters get a bit of money each time someone buys their book or music. These laws have been around for hundreds of years, and used to be pretty fair. The artist got rewarded up to their death, and a bit beyond for their heirs. But big business in the EU and the US has lobbied hard to change these laws and make them unfair, so that the corporations get bigger rewards even after the person who did the real work is long dead.

Sean Connery in Amsterdam, filming Diamonds are Forever
James Bond: licensed rip-offNetherlands National Archive

In 1993, the EU gave in to lobbying from fat-cat media bosses and extended copyright payments to seventy years after the death of the artist. Seventy years is a long time. That could easily be over a hundred years from when the book or music was written. This change doesn't do the artist any good since he or she has long-since passed on. But it does the media companies a lot of good. They had a lot of works that were about to go out of copyright, and this gives them a juicy windfall. And this windfall is paid for by the rest of us, every time we buy a book or song whose author died between 1946 and 1966.

Many well-known books are more expensive because of this corporate rip-off. All the James Bond books (Ian Fleming died 1964), Winnie the Pooh (AA Milne, 1956) and Chronicles of Narnia (CS Lewis, 1963) are caught in the trap. Also hit are detective Lord Peter Wimsey and children's classic Doctor Dolittle. Readers young and old are paying more for these books because of this unscrupulous law.

The good news is that by leaving the EU the government can change the law back to what it was before the EU meddled with British laws. The whole country will be behind the government to help make reading cheaper.

Intellectual Property Wrongs

Copyright protection, like patents, is a temporary private monopoly given by governments to encourage innovation. But like all monopolies it attracts economic rent-seekers who want money for nothing.

Following successful lobbying by the main media companies, both the EU and the US extended copyright monopolies in the 1990s from the author's death plus fifty years to the author's death plus seventy years. These monopolies deprive the public, other artists and creators of new opportunities to enjoy and build on the earlier works, and imposes an effective tax on consumers of the works.

The incentive effect on the original creator is modest indeed. He or she is long dead and will not get any of the benefits. The author's estate might benefit their offspring, but why should they continue to be rewarded for so long after the death of their parent or grandparent. We don't expect to reward the descendents of other occupations — heart surgeons, teachers and coal miners — for work their ancestors did in the past. Copyright monopolies must be temporary and should not long outlive their work's creator.

The comparison with patents is instructive. Patent protection lasts only up to twenty years, compared with copyright protection which could easily be five times as long. Governments have resisted the lobbying attempts of patent owners much more fiercely than those of copyright owners. Not coincidentally, governments spend a lot more on patented products such as medicines, than they do on copyrighted products such as books and music.

Portrait of Milton Friedman 2004
Milton Friedman: knows economic rights from wrongsFriedman Foundation for Educational Choice

The recent laws are a clear example of rent-seeking behaviour from the big book and music publishers. The noted free-market economist Milton Friedman argued against the US Copyright Term Extension Act on 1998, calling opposition to it a "no brainer". They benefit no-one, execept those corporations, and impose costs on the rest of the economy.

Governments, including the UK, have signed up to the Berne Convention which imposes a minimum floor of fifty years from the death of the author. But the government is free to roll back the EU directive which increased that to seventy years. This would liberate a number of celebrated authors from the dead-hand of private monopoly, including writers George Orwell, George Bernard Shaw and Aldous Huxley, poets Dylan Thomas and Sylvia Plath, and even (as a historian) Winston Churchill.

This policy costs nothing and benefits consumers and the economy. It's the brainy thing to do.

Millions suffer from food insecurity because EU rules keep food prices high. We can now change that.

Posted 21 August 2016

One of the worst things of the EU is the Common Agricultural Policy or CAP. And two of its key effects are positively harmful to poorer people in this country and abroad. It makes food more expensive in shops and supermarkets, which acts as a regressive tax which hurts most those with the least cash. It also restricts agircultural trade with countries outside the EU, which include many less developed countries whose farmers are kept poorer because of it.

Let's look at the details. The CAP has three main legs: direct subsidies to farmers, artificial rules to keep food prices high, and restrictions on food imports from outside the EU.

The direct subsidies are fairly well known. European farmers receive around £50 billion of subsidies a year, most of which goes to the largest farms. The big net recipients are France, Spain, Poland, Greece and Ireland. The UK pays in to the CAP around £5 billion annually, slightly more than it gets back [1]. The direct cost of CAP subsidies is £78 for each man, woman and child in the UK.

The Government has recently said that agricultural subsidies will continue to at least 2020. This has relieved some short-term political pressures, but the longer-term considerations point to a change.

Sunset over European wheat field
Time for the sun to set on agricultural price support.Photo: Dreamy Pixel, 2013

These subsidies are despite agriculture making only 0.7pc of Britain's total GDP [2]. Less than one pound in a hundred. And it takes up a lot of space on our otherwise crowded islands. Agriculture and forrestry occupy a staggering 78pc of land use in Britain [3]. We are devoting three-quarters of all our space to an industry that is economically insignificant. And that mismatch comes with a real cost to people. Housing costs for everyone are high because so much land is reserved for agriculture, and so little land is available for people to live in. Land is a scarce resource and should be sensibly allocated. As well as housing and offices, current agricultural land could also be used for recreational purposes - everything from football pitches to paintballing forests, theme parks and golf courses.

Agriculture also creates a dull and monocultural rural environment, with a loss of wildlife diversity and increased use of chemicals and pesticides. That isn't illegal, but it is not something that deserves a subsidy equal to half its total profit.

New Zealand abolished all farm subsidies in 1984, and have had a flourishing agricultural sector since then.

But worse, much worse, than the direct subsidies are the indirect subsidies through high food prices. Economists estimate that UK supermarket prices are 17pc higher because of the CAP [4]. This is a cost of around £900 per household each year. And this cost falls most heavily on those who are least able to bear it. Everyone needs to eat, so food costs are a larger part of the weekly shop for the less well-off. A recent report from the Food Foundation [5], based on UN data, shows that 8.4 million people in Britain have some food insecurity, and 4.7 million of those had "severe food insecurity". In simple lanaguage this means that people are sometimes going without food, for a meal or for a day.

If we abolish the artificially high food prices of the CAP we will do a great deal to ease this.

People of all parties should be able to support this reform. The Corn Laws of the mid-nineteenth century were overturned by working people coming together along with the moderate Tory PM Robert Peel, who took on the vested interests of the big landowners. So these modern day Corn Laws can be swept away by new PM Theresa May, who said in her first Prime Ministerial statement [6]:

"I know you’re working around the clock, I know you’re doing your best, and I know that sometimes life can be a struggle. The government I lead will be driven not by the interests of the privileged few, but by yours."
Let's end the folly of high food prices which cause so much misery to so many.


The House of Lords is an Affront to Democracy

Posted 8 August 2016

British democracy is among the best in the world. We can look autocrats and dictators straight in the eye and proudly point out the comparison between our British freedom and their repression. Our democracy has many strenths including fair elections, lack of gerrymandering, an active civic society and a free press. But in one respect it is as poor as some of worst authoritarian regimes – the House of Lords.

The House of Lords is not elected. Its members are appointed, mostly by the Prime Minister of the day. And that is the wrong way around. The people's representatives should choose the government, not the other way. The House of Lords used to be filled with aristocrats, but they have mostly departed to leave a chamber of appointees instead. The recent scandal over David Cameron's "Lavender List" of cronies just highlights the democratic failure of the second chamber [1].

© Parliamentary copyright. Reproduced with permission.

Opinion polls have repeatedly shown a majority of the British people in favour of a wholly or mostly elected House of Lords [2], [3], [4], but nothing gets better. With now heavy irony, the preamble to the Parliament Act 1911 declared:

And whereas it is intended to substitute for the House of Lords as it at present exists a Second Chamber constituted on a popular instead of hereditary basis, but such substitution cannot be immediately brought into operation.
The real reasons why there has been no progress in 105 years is that the politicians are against it. The party leaders, and especially the Prime Minister of the day, enjoy the powers of patronage of making appointments. This is close to outright corruption. They are bribing appointees by offering them what should not be in their power to give. The power to choose the British people's representatives should be with the people, not anyone else.

Electoral Calculus has explored the motivations of the key players in detail and why they will never back real reform.

The only realistic way forward is to have a referendum on Lords Reform. The EU Referendum has shown there can be a large disconnect between what the professional politicians prefer and what the British people actually want. The House of Lords is the most striking example of that divergence – politicians want to keep it as grubby bauble and toothless talking-shop, but the people want it reformed and democratic.

We should have a referendum to make the House of Lords elected. Only that can override the vested interests at Westminster. And the people will surely echo Cromwell's speech to the Rump Parliament of 1653:

"You have sat too long for any good you have been doing lately... Depart, I say; and let us have done with you. In the name of God, Go!"


A majority of voters favours retaining single market membership

Writes John Joseph Boylan, Posted 30 July 2016

The UK was always ‘semidetached’ from the EU. We had opt outs from the Maastricht Treaty including not joining the euro, and from Schengen (thanks to much maligned John Major for that). One of his ‘bastards’, Michael Portillo argues [1] that this meant a referendum was unnecessary – even though he is a sceptic. Clearly it divided the population and Brexiters won 52%−48% over Remainers.

Whilst we voted to leave the EU, and that must be respected, it is less clear what we voted to replace this. “Brexit Means Brexit” tells us nothing. Brexiters voted Leave for a variety of reasons [2] and immigration was only the main reason for a third of Leave voters.

There seems to be two alternatives – an EU-lite version which maintains membership of the Single Market and a more radical option which leaves the Single Market and plans to negotiate individual trade deals.

The first option means being part of the European Economic Area (EEA) and remaining in the Single Market [3]. This had all the economic advantages and security but without political integration or the disastrous Common Agricultural Policy.

Traffic light comparison of EU and EEA status
 UK as EU memberEEA nations
Single market participationYesYes
Financial services accessYesYes
Free/low tariff barriersYesYes
Freedom of movementYesYes
Free movement controlsNoEEA emergency brake
Saving on EU paymentNoCirca 50% per head
Independent veto on global bodiesNoYes
Single market acquis (21% of EU law)12% QMV*Most are global rules
Remaining acquis (79% of EU law)12% QMVExempt
Can agree independent FTAsNoYes
Common external tariffAppliesExempt
EU VAT policyAppliesExempt
Common Agricultural and Fisheries PoliciesAppliesExempt
Common foreign/defence policyMix of unanimity
and 12% QMV
Justice and home affairs policySelected opt-ins/
12% QMV
European Court of JusticeSubordinateExempt
European CommissionSubordinateExempt
Joint and several liability of EU debtsAppliesExempt
Ever closer union appliesPossiblyExempt
Charter of fundamental rightsAppliesExempt
EU science/education programmesParticipatesParticipates
*QMV = Qualified majority voting
© Roland Smith, Adam Smith Institute. Reproduced with kind permission.

This option comes at a price – free movement of people. Immigration to the UK won’t be reduced significantly. The figures show [4] that net migration to the UK in 2015 was about 330,000 or around the size of Iceland’s population. Further, there were more people coming from outside the EU than within it. The British public were misled – not by the Leave side – but by the former Prime Minister David Cameron and current PM Theresa May who say net migration can be reduced to the tens of thousands – fantasy.

The other option is to have individual trade deals with countries around the World [5]. The problem is it would be time-consuming, uncertain and probably not as advantageous as being within the Single Market. It might lead to greater control of immigration but at the expense of economic stability.

The choice is clear: Single Market (with little control of EU immigration) or individual trade deals which is the reverse – more EU immigration control but less economic stability. The public would appear to favour the former [6].

There has been speculation about retaining Single Market access – with a temporary seven year freeze on migration [7]. This has angered the Tory Right who want out of all things EU – though the Foreign Secretary Boris Johnson, seems more favourable to this. Expect more division in the Tory party over the years over the reoccurring problem of Europe.

If Parliament is sovereign – as most Leave supporters say it should be – then they have to accept that the vast majority of MPs supported membership of the EU [8]. You can be confident that an even greater number would support continued membership of the Single Market.

At the end of the day, the UK will probably remain semi-detached from the EU [9]. In the Single Market, but out of the political structures. Many Leave supporters will feel betrayed and many Remain supporters relieved that this whole process has produced limited change.


Eight hundred years of trade

Posted 19 July 2016

Some mistake free trade for a dull modern invention which only interests multinational corporations and technocratic economists. But free trade in Britain is older, deeper and more popular. The Magna Carta of 1215 has dozens of sections whose relevance has faded, but only a few that speak directly to us across eight centuries. Shortly after the famous section guaranteeing the right to a fair trial comes another which is less well known:

"All merchants shall be able to go out of and come into England safely and securely and stay and travel throughout England, as well by land as by water, for buying and selling by the ancient and right customs free from all evil tolls, except in time of war and if they are of the land that is at war with us."
[Footnote: The Charter was re-issued in two separate revisions, which dropped several of the "doubtful" or contentious original chapters. In both revisions this Chapter was retained as important and necessary.]

Only substituting "the United Kingdom" for England, this text clearly signals that Britain is open for international trade. It is a key passage putting free trade at the heart of British policy and even character and identity. At heart, it's very simple. If you as a purchaser want to buy something from a foreign merchant (overseas trade), then you should be allowed to. As long as it's a legal something. This is good for consumers by increasing choice and decreasing prices. It is also healthy for domestic producers because it increases competition and keeps them efficient, though they don't always welcome the experience and can oppose the idea.

More recently the Corn Laws (1815-1846) were an attempt to remove the advantages of free trade in grain by imposing high tariffs on grain imports. This harmed consumers of grain (everyone who eats) but benefited producers of British grain (landowners). This harm was worse when British harvests were poor, and the severe Irish Famine of the 1840s is an extreme example of the malign effects of high trade barriers on ordinary people. It was around then that ordinary and working people came to adopt the cause of freer trade, and the Anti-Corn Law League pressure group grew in popularity.

Conservative Prime Minister Robert Peel took on those vested producer interests, many of whom were in his own party, and repealed the laws in 1846. These reforms were continued by the Liberals under Gladstone and formed the bedrock of British prosperity in the second half of the nineteenth century, and were supported by large majorities of the working class [2].

Taking Rocks Out of Our Harbours

Able to go and come safely. A Cypriot container ship at Felixstowe container port.Photograph: Geof Sheppard

Now, post-Brexit, control of UK trade arrangements returns to Westminster under national control. It can seem dauntingly complex, but the basic choices are simple. On one hand there is the whole question of negotiating our trading arrangements with the EU, which deserves separate analysis. But let us look now at the prospects for trade with the rest of the world, which already makes up more than half of our foreign trade.

We can make our arrangements in either of two ways: bilaterally or unilaterally. Bilateral arrangements are normally government-to-government trade deals negotiated between the two countries and then formally agreed. These can be an effective way to agree on and implement free trade in goods and services. But the process can be long, or the other country might not be that enthusiastic.

The alternative is to liberalise trade unilaterally. That means that we allow in imports from the other country, and reduce tariffs on our side. This gives us the benefits of lower consumer prices and increased competition at home. If the other side want to reciprocate, that's fine, but it's not essential. As the old economics joke has it: if they want to put rocks in their harbours, that's their lookout. We don't need to put rocks in ours.

Economists suggest that trade liberalisation tends to benefit the liberalising country [3], [4]. In other words, our consumers and economy benefit more from the lower prices than any reduction in the profits of our producers. The reason that efficient overseas producers also gain is because trade is a positive-sum game and both sides benefit.

We should reject the old mercantilist fallacy that only exports are good and that high tariffs are beneficial.

The Antipodean Model

Unilateral liberalisation is a practical option, which has been pursued recently by developed countries which are not dissimilar to Britain. Both New Zealand and Australia have adopted unilateral trade measures, alongside bilateral and multilateral ones, and have enjoyed strong and resilient growth [5]. Over the last five years, while the Euro zone grew by only 3pc in total and the UK by 8pc, both Australia and New Zealand grew by around 14pc.

The European single market, although it has good advantages for intra-European trade, is bad for trade outside Europe as it also operates as a customs union with a "common external tariff". This imposes both tariffs which make prices higher, and also protectionist rules which prohibit some goods from coming in at all. This is bad for British consumers and also impoverishes developing-market producers in Africa and elsewhere. It also reduces the amount of trade we can do with Commonwealth countries and with the emerging growth economies of Asia.

A concrete example of this folly is the Common Agricultural Policy, which acts as a modern-day Corn Law. This hurts consumers both through the increased taxation needed to subsidise agriculture, but more importantly by keeping food prices high. In addition to the direct cost of £78 per person, economists estimate [6] this policy adds 17pc to everyone's grocery bill. This is equivalent to extra costs of around £900 per household each year.

Our new trade arrangements should look to open Britain to international trade and make sure we are not bound by the Common External Tariff which hurts British consumers. This would benefit everyone in the country, but especially the less well-off.

These measures can enjoy cross-party support in the spirit of Peel and Gladstone. And as Tony Hancock asked [7], does Magna Carta mean nothing to you? Don't let her die in vain.


It's the Democracy, Stupid

Posted 27 June 2016

According to a ComRes poll for the Sunday Mirror (26 June 2016), the most important issue for Leave voters was the ability of Britain to make its own laws. Over half of Leave voters (53pc) gave that response, compared with only a third (34pc) who said immigration. The Remain campaign had suggested that sovereignty was not a very pressing issue for most voters, but it turned out to have a strong effect when re-branded as "taking back control".

But the decision to leave the EU can be achieved in different ways, and this further decision will be as important as the original vote to leave. Our new democratic control is going to be very important very soon. Because different types of Brexit are available. One version is liberal Brexit (or "leave lite") which stresses free trade, relatively open immigration and an international outlook. Under this model, we may also keep farily close links to the EU, such as retaining membership of the single market or something similar.

Against that, is populist (or economically illiberal) Brexit which is keener on trade protection, such as steel tariffs, restricted immigration and keeping a clear distance from the EU.

Leave voters were not a homogeneous group, and some of them will lean towards the liberal model while others are attracted by the populist themes. It may not be possible to satisfy all their agendas and the Leave campaign may divide into opposing groups as the negotiation process starts.

The vote to Leave on 23 June only decided the fact of exit, but not the details. The style of exit and the numerous associated decisions still need to be chosen. But one thing is known: control is now back with Westminster. So Parliament and the UK political parties become crucial in determining the outcome. How will or should each party behave?

Boris Johnson, Vote Leave Rally 19 June 2016
The liberal wing of the Brexit campaign? : (from L to R) Steve Hilton, Lance Forman, Priti Patel, Kate Hoey, Michael Gove, Boris Johnson©2016 Electoral Calculus

The Conservatives are naturally liberal Brexiters. This will appeal to the Remain wing as it is closest to the EU status quo. Many prominent Conservative Leavers also have similar views, such as Boris Johnson's Daily Telegraph article (27 June 2016) which gave a very clear statement of the liberal Brexit manifesto. It is very plausible to see a Conservative platform based around these ideas. The new Conservative leader might also be tempted to call a General Election to endorse this view, which could play well in the South and the middle-classes, including with many Remainers.

Although UKIP has both liberal and populist strands, it is possible that its populist wing will win out. This would position UKIP for gains in working-class areas against both Labour and the Conservatives, especially in Northern England. This could ultimately lead to UKIP replacing Labour as the official opposition party at Westminster. But to realise this, UKIP will have to re-focus their message and leadership team.

Labour has a difficult strategic decision to make, which is more important than their short-term leadership crisis. They have three options, but none of them are trouble-free. They can fight the fight to Remain - which would be popular mostly in London, but might lose them the North and the Midlands. Or they could switch to support one style of Brexit or another. A liberal Brexit choice would be attractive to London and the middle classes, but Labour would be fighting there for the same ground as the Conservatives, whilst handing swathes of Northern England to UKIP. Taking the populist anti-immigration stance would be difficult for many Labour MPs, and play badly with their supporters in London and the middle classes. But it is crucial for Labour to make the correct choice. This is a literally existential question for Labour, where failure means they may cease to exist as a significant political force.

The vote on 23 June is not the end of the matter. The political battle has only just begun.

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