On leaving the EU with no deal: Potential disruption to air travel

In her Lancaster House speech, Theresa May said:

And while I am confident that this scenario need never arise – while I am sure a positive agreement can be reached – I am equally clear that no deal for Britain is better than a bad deal for Britain.
(emphasis added)

Given this position, it’s worth knowing what the consequences of “no deal” would mean. In the worst case scenario (e.g. talks breaking down) this means looking at the consequences of Britain reaching the Article 50 deadline without any sort of agreement whatsoever having been struck with the EU.

In this scenario, on the day before Brexit, Britain will still be a full member of the EU enjoying all the privileges and subject to all the obligations that entails. On the next day, Britain will be outside the EU completely, treated in the EU’s parlance as a “third country” and having to deal with the EU on the default terms they apply to any non EU/non single market country. When references are made to a “cliff edge” in the media comment on Brexit, it is this sudden transition from full EU member to being outside the EU (and the single market) that is being referred to.

Here, I consider the consequences of leaving without a deal for the airline industry, where recently the Guardian reported that UK airlines may have to open bases of operation in other EU states and/or sell off shares to EU nationals post Brexit or lose major routes.

I conclude that if there is literally no deal, the likely consequence will be considerable disruption to UK/EU airline industry. This is in neither the UK or EU’s interests, though and a deal that ensures the UK remains part of the regulatory system for aviation in the EU should be feasible. Read the rest of this entry »

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The EU referendum was not intended to be advisory

I contend that, contrary to the claim that the EU referendum was intended to be advisory, it was in fact the clearly and repeatedly stated intention of the government to honour the result of the EU referendum, that our Parliamentarians knew this was the intention when they passed the legislation and voters were told clearly that this was the case in the campaign itself.

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It’s too early to assess the impact of Brexit

Since the vote to leave the EU on the 23rd of June there have been a number of reports in the media on the state of Britain’s economy.

On the positive side, the reports have included:

On the negative side, the reports have included:

I have a few problems with these reports:

  • We haven’t left the EU yet! The indicators at best indicate what the impact of the vote to leave has been, and will in fact be some combination of that and other factors. To the extent they reflect the impact of the vote, they will be indicating the uncertainty that has arisen as a result of the vote but prior to even the beginning of negotiations which won’t start until 2017.
  • Some of the indicators are likely to be lagging indicators that will not yet show the impact of the June vote, e.g. figures relating to employment/unemployment will be showing mainly the impact of pre-vote decisions/factors.
  • There’s huge amount of uncertainty that will persist until we know what the outcome of the negotiations with the EU will be.

To claim that predictions about the impact of Brexit, whether positive or negative, are now being proven true (or false) is thus extremely premature.

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Labour’s dilemma regarding Corbyn

With Labour MPs voting 172-40 for a motion of no confidence in Labour leader Jeremy Corbyn, and Corbyn resolutely staying put, citing his solid majority when he was elected leader by Labour party members,  we have a stand-off between the leader and the party’s MPs when unity is needed to form an effective opposition and to fight the next general election properly.

On one side we have the bulk of Labour MPs who say they’ve lost confidence in Corbyn, accusing him of a lack of leadership, and who are afraid Labour will lose  the next general election with Corbyn at the helm.

On the other side we have Corbyn and his supporters claiming that he has the backing of the party’s membership, that it would be a betrayal of the members for him to step down and that his opponents within the Parliamentary Labour Party have organised an unconstitutional coup against him.

This conflict can only be resolved if one side concedes defeat to the other, and the longer it continues the less impressed voters are likely to be with the party. How might a stable resolution of this conflict come about? I see only the following possibilities for a stable solution:

  1. Corbyn resigns, opening up a new leadership contest. For this to happen, Corbyn and his supporters would need to be convinced that he would lose if he were to contest a leadership election should one be forced on him. In this context, this means that there would need to be solid evidence presented that the party membership has deserted him. How that evidence would be gathered without a leadership election is unclear.
  2. Corbyn contests a leadership election and is reelected with a solid majority, ideally (for Corbyn’s side) with an increased majority of the party’s members. Those seeking to oust Corbyn would then have to concede defeat at least until the next election. It would however make for a difficult period for the party, as it would open the party up to attacks from the media and the government based on the fact that the bulk of the PLP have expressed no confidence in Corbyn.
  3. Corbyn contests a leadership election and is comprehensively defeated. This would allow the party to unite behind a new leader and put the Corbyn era behind it. But if Corbyn is correct about his support amongst the members how likely is it this will happen?
  4. The PLP decide not to mount a challenge to Corbyn’s leadership after all and to back down and see how he does at the next election. This will leave those MPs looking foolish and weak. Corbyn’s position in the party would be stronger, but he wouldn’t have an effective parliamentary team – who’d take them seriously?

Only possibilities 1 and 3 would really minimise damage to the party. 2 would at least make it clear Corbyn has the confidence of the party at large, but would leave the parliamentary party with a bit of a credibility problem or alternatively might see the party split in two. 4 would be leave the parliamentary party looking like a complete joke.

Any outcome that doesn’t comprehensively resolve the issue would mean the battles will rumble on.

This conflict thus risks the party splitting as it did in the 1980s or otherwise being seriously damaged, but with greater peril since this time round Labour’s already lost Scotland and has UKIP breathing down its neck in both England and Wales. If there is a leadership challenge and a resulting election fails to produce a decisive majority either way, that could actually make things worse.

I conclude therefore that it is not looking good either for Labour or for Corbyn.

 

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Can the Scottish parliament veto Brexit?

In short: in my completely non-expert opinion, based on plain reading of the Scotland Act and the evidence used to suggest this in the first place, no.

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On Britain’s debt and deficit

The new economics foundation recently claimed that is a myth that Britain is ‘broke’ citing several points in support:

  •  The national debt to GDP ratio is low compared to ratios seen in the last 300 years and low compared to other countries, e.g. Japan, the US and Germany.
  • The amount the government spends on debt interest payments as a %age of GDP is lower than at any time from WWII up to the year 2000.
  • The interest rate of government debt is low and has dropped since 2008.
  • They also cite the fact we have our own currency and central bank and thus more flexibility than places like Greece.

It seems to me that the argument presented fails on several grounds:

  • The fact that we’ve had high levels of debt before does not mean that it was a good thing or that there were not deleterious effects from such high levels of debt. I also note that Britain had an empire for much of the period concerned which will have provided opportunities to mitigate those consequences (in the later stages by letting the colonies go to ease finances by reducing the costs of running the empire) but that’s no longer the case.
  • That some other countries have higher levels of debt does not mean we can assume the current levels of debt are safe or that increasing them won’t cause harm.
  • They ignore the high deficit – spending £120 billion per year more than is received in taxes cannot be sustained for very long before the size of the debt interest payments starts to impinge on the ability of the government to spend money on welfare, public services, etc and on the economy as a whole to produce wealth. This gap has to be closed either through increased tax receipts or reduce spending. Realistically it’ll be a combination of both.
  • National debt effectively represents the total future tax bill that’s been run up by current and previous governments, and thus constrains future governments spending and tax policies. The fact that we have a high debt level implies a drain on national resources stretching far into the future. The fact we have a high deficit implies that the future tax bill is rising quickly too.
  • The official debt figures ignore “off the books” items such as PFI liabilities, pension liabilities, etc that weren’t major issues in the past.
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How would the independence of Leveson’s regulator be guaranteed?

An independent regulatory body should be established, with the dual roles of promoting high standards of journalism and protecting the rights of individuals.(Leveson Report, Executive Summary, Section 57, page 14, emphasis added)

My earlier article summarised Leveson’s proposals with respect to this body, the aim of this article is to examine the question of how independence is to be achieved. As the executive summary makes clear, the new body should be independent of both the press, MPs and the government. Leveson proposes to achieve this by:

  • Ensuring that a majority of the board are “independent” of the press with no serving editors, MPs or members of the government on it.
  • Requiring the appointments panel to have a “substantial majority” of members independent of the press, and no more than one current editor of a publication that could be a member to be on the panel.
  • Restricting the role of legislation to that of specifiying a process for recognising the regulator (via a recognition body) and certifying that it meets certain criteria laid out in statute.
  • The recognition body will not play any role in regulation of the press.
  • Leveson suggests Ofcom as the recognition body.

Thus we can envisage the following happening if Leveson were implemented in full:

  • Legislation is drawn up specifying the criteria for recognising the press regulator, granting the status of recognition body to Ofcom.
  • MPs will debate and vote on this legislation.
  • Once enacted, Ofcom will set up the appointments panel and they will appoint the board of the press regulator, in accordance with the legislation specifying the criteria by which both the panel and the board are to be appointed.
  • The press regulator, having been set up would oversee drawing up code of conduct, agree funding arrangements with the press, whilst the press would join the regulator based on the benefits Leveson sets out.

The level of independence achieved can thus be described as “operational independence” – its decisions about the code of conduct, whether a member has violated the code, whether to investigate violations of the code and what punishments to apply would be made by the board or by the arbitration service. However MPs will determine the criterion by which the regulator is judged and recognised when they legislate, and Ofcom will be charged with putting these criterion into practice and e.g. whether all “significant news publishers” have become members.

It seems to me this means that the regulator will be no more “independent” of the government than any other quango. It may have operational autonomy, but its role is still determined by MPs. Can we trust the MPs not to frame the criterion by which the regulator operates in a manner that protects their own interests?

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