Category Archives: Politics

Britain, Business, Economic, Government, Politics, Society

Budget 2018: ‘A shot in the arm’ for British businesses

BUDGET

BUSINESS leaders have welcomed a shot in the arm for the British economy following the Chancellor’s pro-enterprise Budget.

In the final Budget before Brexit, Philip Hammond announced a raft of fresh tax reliefs and spending pledges to help solve the UK’s ongoing productivity problem.

The plan included extra funding for research and development “to secure the UK’s position as a world leader in new and emerging technologies such as artificial intelligence, nuclear fusion and quantum computing”.

Seeking to exploit concerns about how the economy would operate under a Labour government, the Chancellor said: “We will always back enterprise. As we finalise our departure from the EU, we must unleash the investment that will drive our future prosperity.

“So I can announce a package of measures to stimulate business investment and send a message loud and clear to the rest of the world: Britain is open for business.”

Among the policies Mr Hammond announced were:

. An increase in the annual investment allowance (AIA) from £200,000 to £1m for two years, giving extra relief to firms that invest in machinery;

. Tax breaks to encourage businesses to invest more in factories, offices and other places of work;

. £1.6bn for R&D to promote science and tech innovation;

. £50m for artificial intelligence fellowships;

. A two-year freeze on the VAT threshold.

The measures were welcomed by business.

The director general of the British Chambers of Commerce, Adam Marshall, said: “Philip Hammond has sent important and positive signals to businesses across the UK, many of whom have been wavering on investment and hiring.”

On the increase in the AIA, he added: “This will be a huge shot in the arm for businesses across the country, giving many thousands of firms renewed confidence to invest and grow.”

Among the science-friendly measures, the Government will plough £50m in new Turing AI Fellowships to lure artificial intelligence researchers to the UK, £235m to support the development of quantum technologies and increased funding to explore distributed ledger technologies such as blockchain.

Under the Industrial Strategy, total R&D investment is due to hit 2.4pc of GDP by 2027.

One of Mr Hammond’s headline business policies was a change to the Annual Investment Allowance. While business groups were mostly supportive of the move – with the allowance rising from £200,000 to £1m for two years starting in January 2019 – analysts added that firms might choose to delay investment plans to coincide with when the higher rate of relief will come into force.

A real estate tax partner at PwC said: “Longer term, this should encourage much more investment, but short-term there may be a lag while businesses wait for January.”

Entrepreneurs were directly targeted through an extension to the British Business Bank’s start-up loans programme, which will run until 2021, and amendments to a policy called Entrepreneurs’ Relief – which had been in the line to be scrapped.

They pay a lower rate of tax at 10pc, compared with the standard rate of 20pc on capital gains when they sell off some or all of their business assets.

Mr Hammond has now doubled the minimum qualifying period from 12 months to two years and shareholders will now have to hold a 5pc economic stake in the company to receive the relief.

The Chancellor also announced smaller-scale measures, such as £20m of skill-training pilot schemes.

In a Budget that was welcomed for supporting smaller and more risky start-up businesses, the Chancellor said he would help UK pension funds invest in such firms.

The Treasury will consult next year on the pension charges cap, which restricts the amount some pension providers can charge in fees.

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Britain, European Union, Government, Politics, Society

A Brexit Plan B is needed

BREXIT

TIME is running out for Theresa May to save her Chequers plan.

The Cabinet have given the Prime Minister one last chance to sell her proposals to EU leaders at a summit next week.

Ministers have now warned, however, they will demand a Plan B if there is a repeat of the humiliating rejection she faced in Salzburg last month.

European Union negotiators have been talking up the chances of reaching an agreement at the meeting on issues such as the Irish border. But, largely, they are still refusing to accept the proposals set out in Mrs May’s Chequers plan on how a trade deal could work.

The European Commission is expected to offer the UK a “supercharged” free trade deal but will reject about 60 to 70 per cent of the Prime Minister’s blueprint, including the demand for frictionless trade.

Despite the anticipated setback, ministers are planning to hold off on moves to force Mrs May into ditching her Chequers plan until after next week’s meeting in Brussels.

Hopes of a breakthrough in Brexit talks have continued to rise as Ireland said the chances of a deal were good.

Dublin’s deputy prime minister Simon Coveney said: “The withdrawal treaty is already about 90 per cent agreed in terms of text – the issues that have not been signed off yet relate predominately to Ireland and the two negotiating teams need to lock themselves in a room.”

The more optimistic remarks came after both European Commission president Jean Claude Juncker and his counterpart at the European Council, Donald Tusk, delivered an unusually upbeat message.

 

YET, Theresa May remains adamant that it is either her Brexit plan or nothing. Brexiteers, most notably Boris Johnson, takes issue with Mrs May’s assertion and set out an alternative approach that would keep the promises previously made to leave the EU in a manner that fulfils the referendum mandate to return control to the UK.

Mr Johnson resigned from the Cabinet in July in protest at the policy thrashed out at Chequers, so his antipathy to that plan is well known. But, in the meantime, it has become clear that not only does he and many Conservative (and Opposition) MPs oppose Chequers, but so does the EU. Mrs May’s humiliation at Salzburg should have convinced the Prime Minister that her way is a dead end. Instead, she has decided to plough ahead with a set of proposals hardly anyone thinks can work.

The alternative put forward by Mr Johnson – as it was by the European Research Group of Conservative MPs recently – is for Britain to seek a Canada-style trade deal when talks on the future relationship begin after Brexit.

Mrs May insists that this would not solve the problem of the Irish border, in that the so-called “backstop” to which she has agreed would mean Northern Ireland staying – unlike the rest of the UK – in a customs union with the EU, thus breaking the Union.

Mr Johnson’s answer to this conundrum is for Mrs May to withdraw that promise. As he appreciates, that would mean a different type of withdrawal agreement would have to be negotiated and the Irish border question settled as part of future economic arrangements. It would, indeed, be a “difficult step” for Mrs May, who made the ill-advised pledge last December in order to move on to the next stage of the talks, only to find that it is proving an insuperable stumbling block to an acceptable agreement.

It may be a difficult step, but it is one she must be ready to make if the impasse is to be broken. We are now just days away from what is supposed to be the summit to settle the withdrawal agreement and only six months away from the Brexit date itself. We need a Plan B, and Mr Johnson has offered one. Not only Mrs May, but the Cabinet, too, need to consider that with time running out fast, accelerating towards the cliff edge is no longer a realistic option.

. See also Scotland’s EU Continuity Bill now being tested in Supreme Court

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Britain, European Union, Government, Politics, Society

A second referendum is getting closer by the day

BREXIT

IN Arthur Cash’s biography of the audacious 18th-century constitutional reformer John Wilkes, the author remarks that Wilkes’s lifetime spanned “the American Revolution, which he admired, the French Revolution, which he hated, and the Industrial Revolution, which he did not know was happening”.

Revolution, too, is in the air with Brexit a messy and complicated process. If the country isn’t to be caught out with unsatisfactory compromises being made that does little for her gaining true independence, it’s time to seriously talk about referendums – who organises them, and how. Those who want a new referendum on Europe must face questions about how, when and by whom this still-anomalous bolt-on to our constitution is to be organised. If Remainers are scornful of the Brexiteers’ refusal to propose an alternative, then they themselves must not make the same mistake.

This discussion is becoming urgent: another vote on Europe is moving fast from the highly unlikely to the distinctly possible.

Only the broad outlines can be discerned of the proposed exit deal that Theresa May’s negotiators and the EU are working on; but these will invariably be a development of the “soft” Brexit proposals agreed at Chequers earlier this year. Hardline Brexiteers hate it. There is little enthusiasm anywhere for the plan. There is, however, a growing suspicion that this may be the only available common ground with EU negotiators. It is for this reason that Theresa May stands a fair chance of getting her proposals through parliament’s “meaningful vote” near the end of this year. Staring into the muzzle of what could blast to smithereens a Tory government and very possibly Britain’s March 2019 exit from the EU, it would surely take nerves of steel not to blink first. Many Brexiteers will blink first.

But not all. Steel nerves (or straw brains) can be found among MPs in the European Research Group. It would only take about a dozen of these irreconcilables to sink May’s proposals.

There’s also a chance Britain and our EU partners will fail to find any agreement at all. The more Mrs May compromises, the more the irreconcilables’ numbers grow. The chances that her hoped-for deal is sunk either by Brussels or by her own MPs is floating at around 40 per cent.

Let’s suppose the prime minister does get a draft deal, then faces defeat over it in the Commons. What then? It’s unlikely she’ll want to resign, and will need a good, democratic reason not to. To put her deal to the people in a national referendum would provide such a reason.

Better still, announce that this is too momentous a decision for normal party whipping and make the vote on the deal a free one for government MPs. She could still lose her proposed treaty, but, unwhipped, such a defeat would not be a resignation issue.

But what next? The pressure for a referendum on her proposals would be strong. She has said she won’t countenance another referendum but in these unforeseen circumstances she might relent. Even if she did resign, demands for a general election could only be countered by an acting Tory prime minister pledging a referendum.

By different routes we keep coming back to a referendum as the constitutional logjam-breaker. Labour appears to have gone for this following its conference last week. Although not the likeliest scenario, there is now a strong chance. A government victory in the “meaningful vote” or a general election are equally likely.

 

WE should know who would actually make a referendum happen, what the question should be and what this would do to Britain’s plan to leave the EU on March 29, 2019.

There is probably consensus that the current deadline for negotiating our departure from the EU will have to be extended. The Electoral Commission would want a two or three-month period for the referendum campaign. Our EU partners would no doubt agree to an extension for this purpose.

Lord Adonis, a key figure in the “people’s vote”, along with Open Britain, a campaign group for another referendum to be held, believes parliament could “direct” the government to hold a plebiscite. The biggest problem would be the wording of the referendum question. Open Britain suspects that the Electoral Commission would want clarity, and would recommend a binary [two-option] question.

It would have to be a straight choice between the government’s Brexit proposals and remaining in the EU. But wouldn’t Leavers call this a false dichotomy by insisting there were other options on offer?

Open Britain insists that those who have campaigned to leave the EU have held the country to ransom for years. Referring to them as “charlatans”, the Remain body says they’ve had years to say what they propose.

How about “no deal” as a referendum option? Adonis says there’s no such thing as a no deal. Even leaving on World Trade Organisation terms would leave hundreds of agreements and arrangements having to be remade with our former partners. Bilateral trading agreements are hugely expensive.

Adonis has also posed the question that if the hardline Tory European Research Group can’t define what it is they propose, how can we put it to a referendum?  He also added that the government has a duty not to put to people a proposal they don’t think can be implemented. The inference here is that any proposal must honour Britain’s obligations to Ireland in our “backstop” undertakings to the EU over the Northern Ireland border issue.

 

IF parliament rejects the government’s Brexit plan, a referendum could take place without (depending on its result) impeding Brexit. A six-month extension of the negotiating period could very likely be arranged.

For Remainers, nothing short of getting their way (whatever that is) will be accepted by them as fair. However, a new referendum should be one of the ways in which an impending constitutional crisis could be averted. Let it not be said we sleepwalked into this. The time to start thinking about ways through is now.

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