Douglas Carswell's Blog

09 APR 2014

Britain's export enigma

British exports to the world aren't rising, but falling. In February sales of UK exports were down 1.6 percent to £23.5 Billion.

This is the lowest level since November 2010 – despite the fact that the world economy is 5 to 10 percent bigger now than it was then.

What has gone wrong?

Mainstream economists have struggled to account for this export enigma. Despite all the best efforts of government to rebalance the economy, and make the UK less reliant on domestic consumer growth, we are today more reliant on domestic demand than ever before.

In my recent paper on monetary policy, I hinted at one possible explanation.

Years of ultra easy money – low rates, QE, cheap credit – have created lots of "zombie firms". According to some estimates, 1 in 10 UK businesses is now a zombie firm, in that they have debts that they are able to service – while rates remain low. But have little chance of ever being able to pay the debt back.

Zombie firms are undead. They are able to keep on going. Serving existing customers, but not expanding into new markets – as exporters would need to. They can carry on doing what they do, but not adapt or change.

Normally an economic downturn means that economic resources – capital, plant, people – are reshuffled. The process in painful, but leads to restructuring that ultimately leaves everyone better off.

Low interest rates in recent years might have prevented this process from happening. Much of that malinvestment, made during the Brown boom, is still there in the system. Like cholesterol, it continues to clog up our economic arteries.

Britain last ran a current account surplus in the mid 1980s – at around the time we abandoned monetarism. The massive trade current account deficit that now looms seems to me to be a clear indication that we are, as a country, living far beyond our means.

Years of using cheap credit to engineer growth has given us lots of shopping malls. But fewer factories producing goods that foreigners want to buy. It has encouraged overconsumption, not export driven production.

It is not a coincidence, in my opinion, that countries that have maintained a sound approach to monetary matters, like Germany, tend to have done better as exporters.

07 APR 2014

It's game over for the Association of Chief Police Officers

At a little-noticed meeting at the Home Office a few weeks ago something remarkable happened: England and Wales's 41 Police and Crime Commissioners confirmed that they had effectively voted to end Acpo, the Association of Chief Police Officers.

"So what?", you might think. "One branch of officialdom squabbling with another".

Except it isn't. Those Police and Crime Commissioners – however low turnout might have been in their first ever elections – are not officialdom. They are us. We elect each one of them directly to decide police priorities where we live.

By endorsing a report by Sir Nick Parker on the future of Acpo in January, our locally elected Police Commissioners not only sealed Acpo's fate. They overturned the idea that police rules and guidelines should automatically be determined from on high, and imposed uniformly across the country.

For years, policing policy has been decided by Acpo. Technically a limited company, Acpo was accused by its critics of ignoring Freedom of Information requests. They did not properly answer to anyone – either the public or Parliament. Yet they wielded enormous power.

It was Acpo that decided – unlawfully – that any DNA profiles, taken from anyone under almost any circumstances, would only be deleted in "exceptional circumstances". They played a key role in setting by the sinister Confidential Intelligence Unit, apparently.

Acpo's worst offence was not to sell data from the Police National Computer for £70 a pop – despite it costing them only 60p to access according to critics. Nor to market "police approval" logos to commercial anti theft devices.

The real problem with Acpo was that the policing "guidelines" they issued had a habit of becoming hard and fast rules. Acpo did more than any other organisation to promote a culture of centralised policing – one in which compliance with procedures coming from on high determined how a local community was policed. "It's Acpo guidelines" I kept being told.

With Acpo's demise, your locally elected Police and Crime Commissioners ought to have a far greater say in deciding how you are policed where you live. "Stuff Acpo, it's what the locally elected Commissioner has decided" is what I want to hear.

Acpo's demise proves that a single MP, if persistent and bloody-minded enough, can change the way we are governed. Mark Reckless, the Member of Parliament for Rochester, has for years waged a lonely campaign against Acpo. And now he has won. Not since David slew Goliath has something quite so big, bloated and grossly overrated been so magnificently felled.

The end of Acpo provides us Conservatives with an important strategic lesson, too.

For a generation or more, even when we have won elections, we have tended to lose the political war. Why? Because ranged against us have been structures and institutions – Acpo, the BBC, the Foreign Office – with outlooks and objectives inimical to ours.

What Acpo was doing to policing, the Foreign Office has done to Europe policy, and the BBC to public discourse. In fact the sprawling alphabet soup of quangos that preside over us has been doing it to Britain. Powerful corporate bureaucracies, pursuing their own agendas, without reference to the rest of us.

In order to ensure the public policy outcomes we want, we Conservatives need to recognise that we must put in place structures that will yield those outcomes. Elections are not enough.

Create a cadre of directly elected local Police Commissioners, and sooner or later they will begin to insist that they – not a remote bureaucracy – decide things. There could be something in this direct democracy after all...

31 MAR 2014

After Out: what do we want Britain to be like after the EU?

And so it begins. The In/Out referendum campaign is under way. The actual vote may not happen until 2017 – or even 2020 – but the big decision day on Britain's EU membership is coming.

It has been a long march for us Euro sceptics – during which we sang some beautifully sceptical songs. Yet as we enter this new, decisive phase, we must change our tune to sing something that chimes with the whole country.

It will not be enough that people resent the intrusion of Brussels into their lives. Instead of anger, people need uplift. Folk are going to need to know what an independent Britain will look like.

Voting to hand back our membership of the Euro club is not so much a vote to leave anything as to rejoin the rest of the world. When we signed up to the Euro club in the 1970s, we thought we were joining a prosperous trade block. It turns out to be a declining customs union. The EU is holding Britain back. Voting Out will allow us to trade more freely with the world.

"But what about the single market?" lots of perfectly sensible folk will ask. "Or those new free trade agreements Brussels wants to make with the world?"

In politics and plebiscites, people need to do more than merely agree with you. They need to know that you are plausible. There is only one plausible place to be when it comes to trade policy: in favour of liberalisation.

We Outers need to show that the single market is not in fact synonymous with trade liberalisation. Far from freeing us to trade – which is what we thought we were signing up for – the single market has become a vehicle for all that blizzard of red tape. Single market rules are created by vested interests to rig the market.

British firms, like Swiss, American, Australian and Chinese ones, should only have to comply with single market regulations when selling to the single market.

Far from giving us more clout when negotiating free trade agreements with America, India or China, the EU has dithered and delayed. The trade agreements the Eurocrats want to put in place are anything but free. It is precisely because Brussels wants deals based on quotas and red tape that it is taking forever. Tiny Switzerland now has more trade deals with the major economies of the world than the EU has managed. Vote Out for a Britain that trades openly with the world.

Immigration, many Outers seem to believe, is our strongest card. It links one of the public's number one concerns with the question of our EU membership.

Perhaps.  But the Out campaign must not descend into any kind of angry nativism. First and second generation Britons must feel as comfortable voting to quit the EU as those whose ancestors came over before William the Conqueror.

An independent Britain is not going to have no immigration. It will have democratic control over immigration – like Switzerland, where one in five workers is non-Swiss. Or Australia, where thousands of new arrivals become new Australians each year.

In the coming referendum, the Outers will be the insurgents. Ranged against us already are the established interests of Westminster, the CBI, corporatist lobby groups and the giant Whitehall machine.

To prevail, we must be more than just a guerrilla campaign, mounting hit and run attacks on the SW1 elite. We must prepare to hold and defend fixed positions.

Post-EU we want a series of sensible, coherent reforms that push power outward and downward. There is no point in returning powers from Eurocrats in Brussels, only to leave them festering with a narrow clique of special advisers in Whitehall.

We want open primaries and recall powers to make individual MPs properly answerable to their constituents – not just party whips. We want real localism. The smug, out-of-touch mandarinate in Whitehall – that sort that tell us we cannot leave the EU – need to be made answerable to the rest of us.

To win over small "c" conservative voters, nervous about what change might mean, we must show we have grown up plans to make Britain a better run country. The Out campaign must not simply pile high every expression of discontent with the modern world. We need a coherent, credible theme and philosophy.

For most of the last century, big was beautiful in business, economics and geo politics. Small countries were overtaken by big ones. The future seemed to lie in trade blocks. The EU is itself a creation of these residual assumptions about the needs for size and scale.

But many of those assumptions are becoming redundant. We want out because we see that the world is changing, and we want to change with it, not – like France or Italy – try to hold out against it.

Instead of mass marketing and mass production, the future lies in the niche and the nimble. With the world just a click away, a business in Essex can trade as easily with a customer in Canterbury, New Zealand, as with one in Canterbury, Kent. Future prosperity lies with start ups, not just the FTSE 100.

Vote Out not in defiance of the modern world, but in order to embrace it and shape it.

26 MAR 2014

Questions the BBC never seems to ask

Faced with a threat to their £3.7 billion-a-year licence fee, the BBC is going into overdrive to try to demonstrate to MPs how jolly balanced and fair it really is.

Not for one moment do I doubt that the BBC gives equal airtime to different political parties. But it is the lack of balance in terms of outlook and assumption that I find so appalling. Again and again, the premise behind so much of the BBC's output - not simply current affairs programmes - is leftist and corporatist.

With £3.7 billion to spend each year, you can ask a lot of questions. When did the following questions ever form the premise of any BBC programmes?

The economy: How can you call it austerity when the government continues to spend £100 billion a year more than it takes in tax? That's a spending stimulus, by definition, no?

Education: If your child can have a personalised music playlist on Spotify, why can't they have a personalised curriculum for their learning? Why have a national curriculum at all?

European Union: Why do otherwise rational people imagine that Britain would be better off being run by unelected officials in Brussels rather than by deciding things for ourselves?

Bankers: Instead of blaming "neo liberalism" for the banking crisis, wasn't it the incompetence of state-run central bankers, who stoked up a credit bubble with low interest rates?

Health: If supermarkets manage to be open 24 hours a day, why are most GP surgeries shut on weekends? Where is the consumer power?

International affairs: Why do we at the BBC always characterise baddies in Russia, Iran or any place else as being "Right wing"?

Middle East: In a region of turbulence and strife, what is it about the liberal democratic state of Israel that makes it such a remarkable success story?

Immigration: When considering the pros and the cons, shouldn't we look at more than just the economic implications?

Climate change: Isn't the climate in constant flux? And if the Roman or Medieval warmings weren't caused by industrial activity, why do we suppose that any contemporary warming, if it exists, must be down to human activity?

BBC: The BBC has the most extraordinary sense of self-regard, with changes in personnel within the corporation reported though they were stories of national significance. Yet strangely the Beeb never seems to find the time to ask why its top management trousers over a quarter of a million pounds a year each. Or why the same clique of opinion-formers seem to be commissioned to tell the rest of us what to think.

The digital revolution is making the world better in all sorts of weird and wonderful ways. As well as dooming the licence fee, it is democratising the process of opinion forming. The priesthood of liberal-leftie pundits and commentators, so long used to telling the rest of us what to think, are being displaced.

I delight at the prospect of self-styled "progressives" raging against modernity and the implications of the digital revolution.

24 MAR 2014

Europe's missing mojo - how to get it back?

Venice has just voted to become an independent city state once again. Last week, an overwhelming majority of the two million or so people living in Venice and the surrounding region opted to break away from Italy.

The online poll is not, however, legally binding. Despite the overwhelming support, Venetian independence is unlikely to happen just yet.

But what should we make of this Venetian vote? Just another example of crazy Italian politics? Another daft turn from the country that gave us Silvio Berlusconi, then the Five Star Movement?

The idea of an independent Venetian city state is not as daft as it might at first seem.

Venice was, after all, an independent city state for around a thousand years – and a jolly successful one. Until the French dictator, Bonaparte, snuffed out the Serene Republic, Venice had not only existed as a free state for centuries, but she had flourished. A tiny mud bank off the coast of Italy, Venice rose to become a great power, as well as a centre of trade and commerce and learning.

"But that is all ancient history", you might think. "Today Venice would be too small to be a separate state".

Too small? Estonia has a population of a mere 1.4 million – and she seems to be doing pretty well. In fact, if you consider how her public administration has adapted to the internet, I reckon Estonia has a thing or two to teach us. Singapore is small and successful. So is Iceland, Norway, New Zealand, Dubai. In fact if you look at the richest countries by GDP, they tend to be the smaller states.

For much of the past 200 years, geopolitics was all about size and scale. Bigger states eclipsed smaller states. The English eclipsed the Dutch, before in turn being overtaken by Prussia, America and Russia.

Modernity and mass production meant everything seemed to favour size. Economies of scale seemed paramount. It was on the back of such mid-20th century assumptions about the need for size and scale that Jean Monet and co founded what we now call the European Union.

I suspect that the digital revolution means that the era of bigness is coming to an end. Mass markets are giving way to niche markets. Mass production to tailor made, additive manufacturing. With the whole world just a click away, proximity to markets has never mattered less.

Underpinning the idea of big political units is often an assumption that human social and economic affairs are best arranged by grand design. Digital changes that. We cannot only do collectivism without the state. We do not need a big state arranging things for us.

There is growing evidence that smaller states are better governed because they have less government – and the governance that they do have is less remote, more accountable, and better able to adapt when things need to change.

Attempts to organise Europe by grand design – with a common currency and standardised approach to policymaking – are failing. After the EU, I hope Europe consist of lots of smaller, self governing units. Provided post-EU Europe manages to retain the free movement of goods, services, ideas and – with a couple of caveats – people, having more self governing units might give Europe back her missing mojo.

18 MAR 2014

Who will head the Defence Select Committee?

A secret ballot looms. MPs are being canvassed for the coming contest. Quiet words are being exchanged along the corridors.

I refer not to some idiotic idea of a Tory leadership contest (note to bored press pundits: there ain't going to be one), but to the ballot to decide who'll chair the Commons defence select committee.

There are some superb candidates to choose from. The list includes Julian Brazier, author of some good ideas about reservists, the uber-sound Julian Lewis, James Gray and Bob Stuart, the widely respected Keith Simpson, the excellent Crispin Blunt, Tobias Ellwood and Rory Stewart. It will be a genuine contest – thanks to some subtle tweaks to House of Commons rules that prevent the whips from rigging it like they used to. With MPs on all sides of the House voting, the winner will have powerful mandate to put the spot light on the government over defence.

So who to vote for? Here are four questions I will be asking before deciding:

1. Have you ever defied the government on a three-line whip?

It hardly matters whether it was over widgets or Syria, but at some point you really ought to have defied a three-line whip over something. The whole point of having select committees is to hold ministers and officials to account. The chair needs to be someone prepared to do precisely that.

2. Can you work with the other lot?

Consensus is a much overrated virtue in politics. You need to have a clash of ideas.

But to be fruitful, the clash and clang within any committee ought not be along party lines. If so, the debate becomes phoney and theatrical – and the ministers and mandarins get off scot free.

3. What do you think of the Defence Industrial Strategy?

As chair of the committee, you will be lobbied intensely by various defence contractor interests. They will present you with all kinds of arguments – sovereignty of supply, cyber security, skills – to justify the racket that is Britain's Defence Industrial Strategy.

Don't fall for it. The defence budget is not supposed to fund giant job creation scheme. It is meant to equip our armed forces with the kit they need, when they need it.

For a generation or more, many in the upper echelons of the Conservative party haven't just been on the wrong side of the argument over Europe. They got it seriously wrong over defence procurement, as well (think Westlands, think Nimrod, think Eurofighter). It is time to get it right, and ditch many assumptions about how we spend the defence budget.

4. What is defence policy for?

Many in SW1 use the term strategy when they mean tactics, and tactics when they talk of strategy. The next chair of the defence select committee needs a clear head, and a sense of strategic direction.

Defence policy is about more than equipment. How should defence policy tie in with foreign policy? What is defence policy for?

I am not sure I know the answers. Nor am I convinced that the mandarin machine in Whitehall really knows, either. All the more reason to have as the next chair of the defence committee someone who does.

17 MAR 2014

The campaign to keep us in the EU has begun

John Major was going to reform Europe. Oh yes!  Federalism has "reached its zenith", he said in 1995. There needed to be not inconsiderably less centralism. Reform would see powers "returning ... to the nation state". There would be less red tape and interference.

Then came the treaties of Amsterdam, Nice and Lisbon, which passed ever more power into the hands of unelected and unaccountable Eurocrats.

Tony Blair also set out to reform Europe and make it more to our liking. After much lobbying, he got his fellow leaders to sign up to the Lisbon Agenda in 2000. These reforms would turn the EU into the "most competitive and dynamic knowledge-based economy in the world" by 2010. There would be less red tape and interference.

Then came an economic crisis caused by the very integration and single market overregulation that was supposed to be Europe's salvation. Fourteen years on, Europe is the least dynamic continent on the planet.

Now David Cameron says he wants to reform the Euro club too.

There will be less centralism, with more power returning to the nation states, just like last time.

Those that we elect to national parliaments are, apparently, to have some sort of power to block Commission proposals. Some of the time.

Pan-EU immigration is to be controlled, or something. And there is to be less "unnecessary interference". And – as ever – the promise of less red tape.

Good luck with that, guys. Surprised you didn't throw in a line about subsidiarity, or closing the democratic deficit, too.

When the In/Out referendum comes, David Cameron and I will, I imagine, be on opposing sides. I will certainly be fighting the coming election as an Outter. The important thing we do agree on is that we should give everyone that In/Out choice in 2017.

Ed Miliband refuses to let you have a vote on our EU membership. By voting for the Conservatives, we stand a realistic chance of being out in 40 months' time. Or not, if all those powers have been returned to nation states, immigration brought under control and all that red tape scrapped.

12 MAR 2014

The Empire Strikes Back!

The magnificent Andrew Bridgen MP has tabled an amendment to the Deregulation Bill to make non-payment of the BBC license fee a civil, rather than a criminal offence. And quite right, too.

Now the £3.6 billion a year BBC empire has struck back.

In an unintentionally funny "briefing note" sent to naughty MPs minded to back the amendment, the BBC complains that "the BBC cannot turn off services for those who do not pay the licence fee".

Switching off services for those not wanting to buy said services is what normal service providers do - and not just in broadcasting. 

Switching off the service for those that do not pay for it, rather than trying to send them to prison, is called a subscription service.  In the era of digital technology, a subscription-based service, as opposed to a criminal conviction-based service, has to be the way forward.  It is a pretty straight forward proposition.

If you fail to pay a utility bill, you face civil sanctions. Yet fail to pay the BBC its fee, and you face criminal charges. 

The briefing note goes on to say that without the threat of criminal sanctions, the poor BBC might get less money.  Without the threat of criminal sanctions for non-buyers, all kinds of organisations get less money.  Inconvenient, I know, but it is the way things are done, chaps. 

Perhaps the BBC could stop squandering tens of millions of IT disasters instead? 

Or ease up on some of the £300,000 a year plus salaries that they pay their senior management

They might even need to look beyond the well-remunerated clique of talent when commissioning programmes, eh?  (No one has ever been able to explain to me quite how it works, or if anything ever gets put out to tender .....)

"Please don't do this to us" the briefing note seems to plead. "We will set up a working group of grandees to look at it". 

A little late for all that, don't you think? 

12 MAR 2014

What will Tory modernisation look like? The 2015 manifesto and beyond....

Do you like music?  I listen all the time. Thanks to Spotify, I've a playlist far bigger than any record or CD collection I ever owned.

But would you put up with it if I, an MP, was to decide for you what was on your playlist? Of course not. You would be appalled.

Even if you shared my taste in the Stereophonics or Shostakovich, you'd think it a bit of a cheek if I was to impose my preferences on you.

So why let people like me impose our preferences on you when it comes to education, or healthcare, or social protection? Having a tiny clique impose their preferences is pretty much the way we run the country.

Not so long ago it was how we did music, too. Most folk could only afford a few dozen records or tapes at best. So it was left to a radio DJ to select music for us.  Sure, we had a bit of choice between stations, and some enterprising producers allowed the public to phone up for a "record request". But basically, we had to make do with what was chosen for us.

One of the reasons I am so optimistic about the future is because I see big changes happening round the corner.  The digital technology that now allow us to select our own music is going to make self selection the norm over many other areas of our lives.

Instead of a national curriculum (a learning playlist, if you like), digital technology will allow us to hyper personalise learning. Each child will have a personalised curriculum designed for them.

Elite Ivy League type degree courses, once the preserve of a carefully chosen few, will be accessible to everyone.

Soon our digitalised medical records will be as secure and portable as our online bank details. Instead of patients being made to stand in line and wait at the convenience of the health care provider, those who wish to do so will have different health care providers queuing up in front of them.

The average English household stumps up an estimated £650,000 tax bill over the course of a lifetime. Imagine if you could allocate even a small portion of the £650,000 of taxes your household pays into a personalised account?  A personalised education account?
A personalised health care account, perhaps? Or a personalised pension pot, which isn't funded by IOUs like the government run one today? What would have once seemed prohibitively bureaucratic will soon be simple.

"But how will people know what is right for them?" you might ask. "It is all very well letting people chose their own music, but surely not their kid's education".

What makes you think MPs are better at spending your money than you are? For years, we've left it to politicos to spend zillions on our account – and not give us what we need or want.

If you aren't prepared to have politicians select your music playlist for you, why trust them with something really vital, like your child's education or your family's health care?

The future for the Conservatives, I suspect, lies in first refining – then articulating - this upbeat, optimistic vision of how things could be.

10 MAR 2014

Cheer up! Technology will create jobs, not destroy them

"Imagine the horror", our early ancestors might have thought. "A handful of those newfangled shepherds will soon be able to grow all the game needed to eat. No more need for hunting! What are we hunters to do with ourselves?!"

Technology has been disrupting established human behaviour for a very long time. And every time it does so, humans fear that it will put them out of a job.

The agricultural revolution must have ended the careers many hunter gathers. The mechanisation of farming put a lot of farm hands out of work. At the start of the industrial revolution, a lot of weavers fretted about the impact of weaving machines.

So, too, with digital technology. As Roger Bootle's column suggests, advances in robotics and digital technology could have some very disruptive consequences over the coming years. Should we despair?

If everyone is mobile banking, who needs so many bank tellers? If folk shop on line, what happens to high streets? Driverless cars are going to have enormous consequences on everything from car hire to freight transport.

Won't this make us redundant? No.

Each time technological advances have put humans out of work in one area, we manage to find something else to do that is even more productive. As well as being generally more enjoyable and rewarding – which is why living standards rise.

In so far as technology creates under employment, it is under employment in the sense that we no longer have to labour quite so long, for so little. Humans are no longer – in most countries, anyway – having to labour from dawn to dusk doing back-breaking work, with no leisure, no career choices and no respite, the way our ancestors did.

Which is why we can have things like leisure time and weekends. No longer forced to spend every daylight hour chasing gazelle or scratching out a subsistence living, we have time to read, socialise, better educate our kids, write software, try a spot of gaming or simply chillax.

Technological innovation means that Homo sapiens gets far more for far less. Digital technology means we will get even more for even less.

We will have more leisure time. More people will earn a living by thinking and imagining than ever before. Educational opportunities that were once the preserve of a tiny few will be available to everyone. Living standards will rise as the cost of so many things plummets (think of what happened to the cost of phone calls, but for all the man-made stuff in your house!)

There are no limits to human ingenuity. Free from drudgery, there are no limits on what we can spend our time doing. Relax. The future is going to be even better.

As I suggest in my book, digital might even mean we find a better way of doing politics and government ...

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