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Friday, May 26, 2023

The impact of Brexit on food prices

The Independent reports that new research has found that Brexit red tape has cost each household £250 in higher food bills alone since the UK left the EU.

The paper says that the analysis suggests that food price rises would have been 8 percentage points lower – nearly a third – without Brexit, at 17 per cent, rather than the actual rise of almost 25 per cent:

Annual food price inflation in the UK is near historic highs, with some basic goods rising by up to 46 per cent in a year, official figures show, exacerbating the cost-of-living crisis.

Non-tariff barriers in force since Brexit include customs checks, rules-of-origin requirements and health paperwork for animals and plants.

A previous version of paper, Non-tariff barriers and consumer prices: evidence from Brexit, found that leaving the European Union on 31 January 2020 added an average of £210 to household food bills over the two years to the end of 2021. Now that figure has risen further.

Between January last year and March this year, the price of food products that were more exposed to Brexit because the UK imported them in high volumes from the EU before the referendum increased by about 3.5 percentage points more than those that were not, the research found.

The report authors blame these changes entirely on products with high non-tariff barriers.

Prices of products such as meat and cheese imported from the EU have increased by about 10 percentage points more than similar products not exposed to Brexit since January 2021, when the trade and cooperation (TCA) agreement began, the study says.

The price rises of products more exposed to Brexit are not linked to other factors such as Covid lockdowns or Russia’s invasion of Ukraine.

“The fact that the results are driven entirely by products with high non-tariff barriers imported from the EU offers strong evidence that Brexit is the driving force behind these effects,” the researchers say.

EU supporters argue food inflation will become even worse when the government introduces new border checks in October.

The checks will mean health certification on imports from the EU of medium-risk animal products, plants, plant products and high-risk food and feed of non-animal origin.

With a new study by the Centre for European Reform finding that Brexit has cost the UK £33bn in lost trade and investment, it is little wonder that most people think the whole concept is a disaster.

Thursday, May 25, 2023

A chequered history?

I just love this headline from the Guardian. The phrase 'Undisclosed Covid-era Johnson events occurred at both Chequers and Downing Street' just seems to sum up Boris Johnson's premiership.

And nobody should be surprised at the contents of the article, in which the paper says that about a dozen previously undisclosed gatherings at both Chequers and Downing Street, allegedly held during Covid, have been referred to the police by civil servants. Has the establishment finally tired of Johnson's shenanigans and decided to sell him out completely? It certainly looks that way.

The report says that Government sources have suggested that approximately 12 potentially illegal events formed the basis of a dossier handed over to two police forces last week, adding that while it was initially thought they were all held at the prime minister’s Buckinghamshire grace-and-favour mansion Chequers, insiders said they also took place in No 10:

They were said to include events which did not form part of the Met police’s investigation last year, nor the Whitehall inquiry led by then-senior civil servant Sue Gray.

After Johnson’s allies made clear their fury at the situation, No 10 stressed Rishi Sunak had no involvement in the decision to hand over the former prime minister’s pandemic diaries.

“We have not seen the information or material in question,” said Sunak’s official spokesperson on Wednesday, adding that ministers had “no involvement in this process and were only made aware after the police had been contacted”.

Police were contacted on 16 May about the issue, according to the Cabinet Office. Thames Valley police said they received a report about “potential breaches” of Covid rules on 18 May, while Scotland Yard said the bundle was passed to it the following day.

Sunak found out the police had been informed at some point between 19 May and the facts becoming public on 23 May, No 10 said, without offering a specific date.

Downing Street refused to say whether Johnson would lose the Conservative whip should he be charged with further lockdown breaches, with Sunak’s press secretary saying No 10 would not respond to questions about the “hypothetical” scenario.

However, they were much more categorical that Sunak had not attended the events in contention at Chequers. Asked whether the then chancellor broke Covid rules there, the press secretary said: “No, definitely not.” They also rejected suggestions Johnson was the victim of a politically motivated stitch up.

Just as compelling is Johnson's reaction to these latest revelations. The paper say that his allies have issued a dramatic warning to Sunak, saying they would meet on Wednesday to “consider options” about how to force the government to stop “witch-hunts”:

They upped the ante on the already febrile Tory benches by calling the decision to hand over evidence of gatherings at Chequers during Covid the “final straw”. Johnson’s supporters accused Cabinet Office ministers of having signed off the decision to pass on the former prime minister’s diaries to police.

The prospect of a Tory civil war beckons. I'll just get my popcorn.

Wednesday, May 24, 2023

Behind the headline figures

It seems rather bizarre to be celebrating inflation at 8.7%, but at least it is no longer in double figures. The New Statesman however, sounds a cautionary note. The headline figure is misleading and offers no relief whatsoever to most families.

The magazine says that prices across the economy are still rising far more quickly than wages, and they are not doing so in the even manner suggested by the headline CPI rate:

The annual rate of inflation on food is still 19.1 per cent, down just 0.1 per cent from last month. In some shops – such as Lidl, where the same goods cost 24.9 per cent more than they did last year – prices are growing more than four times as fast as wages (which are up 5.8 per cent in a year).

To be absolutely clear, falling inflation does not mean prices are falling, but that they are rising slightly less quickly. For goods and services to become more affordable, inflation would have to fall below wage growth for a sustained period. This is unlikely to happen because unemployment is rising, and falling headline inflation could give employers more of an excuse to reduce or reject workers’ pay rises. At 8.7 per cent, inflation is still more than four times the Bank of England’s target. Workers across the economy are still becoming poorer at a very concerning rate.

Rishi Sunak promised at the start of the year to “halve inflation” and the latest headline inflation figure takes him some way towards that target. However, the main reason it’s lower is mathematical: CPI is a measure of how much prices have grown in the last year, and the biggest single element in recent price rises – the 54 per cent hike in everyone’s energy bill that occurred when Ofgem raised the price cap in April 2022 – is now more than a year in the past. The Prime Minister’s contribution to the fall in inflation has been to experience time passing, and then take credit for it.

This underscores just how mediocre the promise to halve inflation was in the first place: it was an offer of an economy in which the purchasing power of your income dwindles rapidly, but your impoverishment is slightly less aggressive than it was under the previous administration.

The headline figure also conceals a more disturbing trend. The prices of some goods and services, such as energy and food, can rise and fall rapidly, distorting the headline number, so “core” inflation – price rises in the less volatile parts of the index – is seen as a more stable representation of the overall temperature of the economy. Core inflation has not peaked: it rose from 6.2 per cent to 6.8 per cent in April, the highest level since March 1992.

A stubborn rate of core inflation may mean that the Bank of England is forced to raise interest rates still further, putting more pressure on low-income families who increasingly use debt to buy essentials, and homeowners who are remortgaging at much higher rates. Financial markets expect rates to peak at 4.75 per cent, which would mean they are likely to rise once more this year.

At the same time, the freezing of tax thresholds means that many middle earners such as nurses and teachers are being pushed into higher tax brackets. This squeezes their income wiping out reliefs such as child benefit and leaving precious little extra to compete with the racing prices in supermarkets.

Andy Bruce of Reuters believes that the UK has the highest rate of food inflation in Western Europe, as illustrated by this graph:


He has also set out some inflation figures April 2022 to April 2023 for some key items:

Sugar +47%
Olive oil +46%
Car insurance: +41%
Eggs +37%
Natural gas +37%
Sauce/condiments +34%
Milk +34%
Small electrical hh appliances: +32%
Frozen veg +31%
Cheese +31%
Sausages +28%
Pasta +28%
Pork +27%
Non-fiction books +27%
Potatoes +25%

It is pretty scary stuff, and shows that we are a long way from escaping this cost of living crisis.

Tuesday, May 23, 2023

Will the Lib Dems seize their opportunity over voters' Bregrets?


Back in January I wrote about a poll from Pollster UnHerd Britain that highlighted which areas of UK have the most and least regrets about Brexit. Their research suggested that the constituencies which most strongly voted for or against Brexit are still entrenched in their views almost seven years on despite the national mood shifting. Well things have moved on a bit since then.

The Independent reports that a new poll has found that Brexit regret among Leave voters has reached a record high.

The YouGov poll found more than a third of those who backed Leave in the referendum say Brexit has been more of a failure than a success, while just a fifth of Leave supporters said Brexit had been “more of a success”:

Overall, 62 per cent of voters said leaving the EU had been “more of a failure”, with just nine per cent saying it had been a “success”.

Among 18-24-year-olds, more than two thirds said Brexit had been “more of a failure”. Less than one in 20 considered it a “success”.

Support remains stronger in older age groups, but almost half of over-65s now consider Brexit to have been a “failure”.

The stark findings come just a week after Nigel Farage declared that Brexit had “failed”.

The former Brexit and UKIP Party leader said the UK had not “benefitted from Brexit economically”, claiming that government policy had deterred businesses from investing in the UK.

We are still a  long way from winning a referendum to rejoin the EU, even if they would have us back, but there is clearly an opportunity here for a political party prepared to tap into the mood and start to articulate a clear vision of how we can recover from the disaster that Brexit has been.

The party best positioned to do that has to be the Liberal Democrats. Isn't it time our leaders woke up and got on with the job?

Monday, May 22, 2023

Are Labour handing local councils back to the Tories?

The Guardian reports that the Labour Party faces accusations of overcentralised meddling after the party’s national executive vetoed planned coalitions with the Liberal Democrats or Greens in a series of formerly Conservative-held local authorities.

They say that while it is longstanding Labour policy that local parties need a green light from the national executive committee (NEC) before forming coalitions, some activists say attempts to block deals risk allowing Conservatives to regain control instead:

In one council, Hertsmere, just north of London, where the Tories lost power for the first time since 1999 in this month’s elections, Labour councillors are threatening to sit as independents if the NEC continues to veto a deal with the Lib Dems.

“This has been a Tory area for the last 24 years, and we’ve worked so hard to change that,” one local Labour source in the Hertfordshire district said. “It’s quite insulting now to be told we can’t get the benefits.”

A similar stalemate at Cherwell council in Oxfordshire, where the NEC is refusing to allow the Labour group to govern with the Lib Dems and Greens, has prompted speculation it could end up returning to Tory control.

There have been similar vetoes at two other formerly Conservative-run local authorities that are now in no overall control, Lewes in East Sussex and Canterbury in Kent.

Several local Labour sources told the Guardian they believed the party was being overly rigid and interventionist. It comes after the NEC announced it would appoint the next leader of Birmingham council, following an internal report that said the Labour group was riven by factions.

Labour's control freakery is in dangwer of undoing the outcome of this month's local elections in some areas and actually put the Tories back in charge.

Sunday, May 21, 2023

Counting the voter suppression

The BBC add to our knowledge of those who were denied their democratic right to vote earlier this month, with their own survey of local councils and those turned away from polling stations for having no ID.

They report that information from 160 of 230 councils where polls were held this year shows 26,165 voters were initially denied ballot papers at polling stations. Of these, 16,588 people came back with valid ID, whilst 9,577 did not return:

David Cowling, a former BBC polling expert who is now a visiting research fellow at King's College London, also says it must be borne in mind that some voters initially turned away later return with ID.

He says evidence from metropolitan borough councils, and the pilots, suggests around 60% of people initially refused a ballot return with valid ID - producing a rough figure of 0.2% refusals of the votes cast.

"That's arguably 0.2% fewer people than there should be not participating - but on the other hand, it doesn't seem to me that the death of democracy is on the agenda either," he told BBC Radio 4's More or Less.

He adds, however, that there are "imponderables" in the council data, including the fact that people turned back by so-called greeters outside polling stations were not included in the published figures.

Labour MP Clive Betts, who chairs a Commons committee set to hold its own hearing on the new rules, also said official data would not reflect those who stayed at home, either because they didn't have ID or didn't know whether it would be accepted.

"The numbers of these people could be bigger than those who were turned away," he told the BBC.

He added that even if the number of people denied a ballot was in the thousands, it would be a "thousand times more" than the number of people prosecuted each year for voter fraud.

The Electoral Reform Society, a campaign group that opposes voter ID, warned that "far more" people would be turned away at the next general election unless the rule is scrapped.

"These figures, while not a complete picture, show what we've long feared," said Dr Jess Garland, the society's director of policy and research.

"One voter turned away is one too many, but these figures show that the impact was far, far greater."

The Electoral Commission will be collecting information on where greeters were used at polling stations, in order to assess the impact they had.

Jacob Rees-Mogg of course, has effectively admitted that the ID requirement is an attempt by the Tories to gerrymander elections, and that it backfired on them. There is no valid reason why ID should be required, with voter fraud being almost non-existent. 

It is time for a rethink, but will Labour commit itself to repealing the law?

Saturday, May 20, 2023

Ignoring the warnings

The Guardian reports that ministers were warned about the dangers of private equity taking over the water industry in a briefing that has been kept secret for 20 years.

The paper says that details of the analysis are still being withheld as sewage pollution and the failure of water companies to invest in infrastructure are under national scrutiny:

The report being withheld from publication predicted the state of the privatised water industry today, and warned against private equity being allowed to move into water firms.

It was prepared for the Competition Commission (now the Competition and Markets Authority, CMA) in 2002 and has never been published in full. It should have been released under the 20-year rule last summer, but despite repeated attempts to have it published it is being kept secret.

Today, as private equity dominates ownership of the water sector in England, bringing with it high levels of debt and underinvestment leading to sewage pollution, water shortages and leaks, the author of the report has called for full disclosure of his warning two decades ago.

Chris Goodall, who wrote the report for the Competition Commission investigation into a proposed takeover of Southern Water, said: “My real concern was about the financial structure of the proposed deal. In my view the transaction created an entity which would prove impossible to regulate.

“Large external private equity shareholders would load the company with debt and Ofwat inevitably would lose any regulatory control. For example, it would prove extremely difficult to ensure that water companies invested enough in sewage control.

“This report should be published in full now because it helps to show why the last 20 years of increasing private equity dominance of the water industry has proved so disastrous.”

This year the chief executive of Thames Water, Sarah Bentley, admitted high levels of pollution in rivers were the result of “decades of underinvestment” by the privatised water company. New data from the Financial Times shows the 10 biggest water companies more than doubled their dividend payments to shareholders in 2022 to £1.4bn, despite an outcry over sewage pollution in rivers and a failure to invest in infrastructure.

The CMA said the report, written in September 2002, had been passed for publication. But eight months on from the date it should have been published, it has not been released.

The CMA has warned it would be exempt from releasing the report under freedom of information laws if a request to do so was submitted. The authority said: “Without wanting to prejudge the outcome of any request you may make under the Freedom of Information Act 2000, I wanted to refer you to the exemption at s.22 of the Freedom of Information Act 2000.

“This exemption provides that information intended for future publication is exempt from release provided the public interest in maintaining the exemption outweighs the public interest in release.”

The economist Dieter Helm has warned that the high levels of debt that the privately owned water companies have leveraged risk the stability of the companies.

So culpability on the part of all political parties. Surely, this report should be published now.

Friday, May 19, 2023

Infiltration?

The Independent carries an interesting article on the American influence on the National Conservatism Conference.

They say that when Suella Braverman delivered a half-hour-long speech railing against “identity politics” and “radical gender ideology” on Monday, it was the first time most people had heard of the National Conservatism Conference:

The conference was run by an American group that professes to be concerned for “Western civilization” in the face of supposed enemies, including “radical forms of sexual licence” and the loss of “traditional family”, where relationships should be between men and women.

It is the project of a think tank called the Edmund Burke Foundation, which declares its aim to be “strengthening the principles of national conservatism in Western countries”. It also has links to an Israel-based Zionist research organisation.

The foundation’s website states that it was founded in 2019, but it was registered as a private limited company in the UK through Companies House in March, by Cambridge University theology professor Dr James Orr.

Dr Orr served as chair of this week’s conference, and proclaimed the values of “faith, family, flag” to the crowd before claiming that the “cargo cult of transgenderism is triggering a social contagion that is inflicting irreversible physical harms on the young and the vulnerable”.

In a series of other speeches this week, communities secretary Michael Gove held forth on “biological reality”, Conservative MP Miriam Cates claimed birth rates were the “one overarching threat to the whole of Western society”, fellow Tory MP Danny Kruger praised the “normative family”, and Jacob Rees-Mogg was interrupted by a demonstrator warning of the “characteristics of fascism”.

Conservative Party deputy chair Lee Anderson brought the curtain down on the three-day event on Wednesday afternoon, undeterred by the outrage generated by a previous speaker who had described the Holocaust as “the Germans mucking up”.

Joe Mulhall, director of research at the counterextremism group Hope Not Hate, said the topics discussed at the conference “dripped with far-right and populist conspiracy theories”.

Three years ago, Tory MPs who attended this conference were warned that their presence was unacceptable, and that the views expressed by attendees were not in accord with the core principles of the Conservative Party:

The group’s website proclaims: “We are citizens of Western nations who have watched with alarm as the traditional beliefs, institutions, and liberties underpinning life in the countries we love have been progressively undermined and overthrown.”

It calls for the restoration of a “proper public orientation toward patriotism and courage, honour and loyalty, religion and wisdom, congregation and family, man and woman”, while decrying what it calls “universalist ideologies”.

The National Conservatism group’s published “statement of principles” is heavily focused on Christianity, along with ideas of “Western” identity and heritage and “traditional family”.

“The traditional family, built around a lifelong bond between a man and a woman, and on a lifelong bond between parents and children, is the foundation of all other achievements of our civilization,” one passage reads.

“The disintegration of the family, including a marked decline in marriage and childbirth, gravely threatens the wellbeing and sustainability of democratic nations. Among the causes are an unconstrained individualism that regards children as a burden, while encouraging ever more radical forms of sexual licence and experimentation as an alternative to the responsibilities of family and congregational life.”

Hailing the Bible as the “surest guide ... to the political traditions of the nation”, the statement calls for public life in the UK and the US to be “rooted in Christianity”.

Signed by leading members of the National Conservatism group, it claims that “unassimilated immigration” is a “source of weakness and instability” and demands restrictions that could amount to an unspecified “moratorium on immigration”.

But the statement insists that nationalism can “offer a sound basis for conciliation and unity” between people of different races, and respects the “unique needs of particular minority communities”.

This is very much the agenda of the American right wing. How things have changed in the Tory Party.

Thursday, May 18, 2023

Not so fit for purpose

The so-called rock solid Brexit deal Boris Johnson sold to voters in 2019 contiunues to come apart at the seams.

The Independent reports that Rishi Sunak’s government is understood to be lobbying the EU to delay a change in manufacturing rules in the Brexit trade deal after Vauxhall’s parent company warned it could shut its UK factories:

Stellantis said it will be unable to keep a commitment to make electric vehicles in the UK without changes to Boris Johnson’s Trade and Cooperation Agreement (TCA).

Business secretary Kemi Badenoch has raised the issue with her Brussels counterpart, and held a pre-arranged meeting with Stellantis chiefs on Wednesday.

She has also raised the motor industry’s concerns about the TCA with chancellor Jeremy Hunt and foreign secretary James Cleverly, according to Whitehall sources.

The government is lobbying the EU to delay a 2024 deadline for changes in how much an electric car should be manufactured in the UK.

It comes as Labour leader Sir Keir Starmer said “we need a better Brexit deal” with the EU to ensure firms such as Vauxhall can continue to operate in the UK.

Stellantis has called on the government to reach an agreement with the EU to maintain existing rules until 2027 – rather than 2024’s planned changes which state 45 per cent of an electric car’s value should originate in the UK or EU to qualify for trade without tariffs.

Without meeting the requirements, cars manufactured in the UK would be hit with a 10 per cent tariff, making domestic production and exports uncompetitive with cars built elsewhere.

Stellantis – the parent of Vauxhall, Citroen, Peugeot and Fiat, which employs more than 5,000 workers in the UK – committed to making electric vehicles at its Ellesmere Port and Luton plants two years ago.

But in a submission to an MPs’ inquiry, the company said the Brexit deal was a “threat to our export business and the sustainability of our UK manufacturing operations”.

It said the rise in the cost of raw materials meant it was “unable to meet these rules of origin”. Part of the problem is that a battery pack can account for up to half a new EV’s cost, with batteries heavy and expensive to move long distances.

I hate to say that we told them so, but...

Wednesday, May 17, 2023

A crisis with no apparent end

The Indepedent reports on a study that has shown that more than 10 million adults in the UK are currently struggling with bills with some eating less and cancelling insurance policies in order to get by.

They say that the Financial Conduct Authority (FCA) found the number in financial trouble has grown by 3.1 million since May 2022 to now represent one in five of the population. Many have been forced to take measures such as using savings to fill an oil tank, using credit to pay for food shopping, cancelling insurance, quitting sports memberships and eating less:

The FCA research, which was published this week, found the number to have said they are struggling has risen from 7.8 million in May last year to 10.9 million in January 2023 - which is 21 per cent of the UK population.

The number of UK adults who had missed bills or loan payments in at least three of the previous six months is also estimated by the regulator to have increased by 1.4 million, from 4.2 million in May 2022 to 5.6 million in January 2023.

The regulator released the latest figures after gathering more than 5,000 responses as part of its UK-wide survey of people aged 18 and over.

Among people who had insurance and protection policies last spring, 8 per cent had cancelled one or more policies and 7 per cent had reduced their level of cover, specifically to save money due to rising living costs, in the six months to January this year.

Some did both – meaning that around 6.2 million adults who had policies in May 2022 had cancelled or reduced their coverage by January.

Richard Lane, director of external affairs at British debt charity StepChange, said: “The last twelve months have seen household budgets endure setback after setback, with once-in-a-generation levels of inflation compounded by rising interest rates and housing costs.

“Millions have had to make sacrifices to stay afloat, but many simply do not have the room in their budgets to absorb the dramatic price rises we’ve seen. As a result, demand for our services is at its highest level in more than three years, and we expect this to continue as cost pressures show little sign of abating.”

The FCA also found that around 28.4 million people in January 2023 felt more anxious or stressed due to the rising cost of living than six months earlier while 28 per cent had lost sleep.

With inflation in double figures, and likely to stay like that for some time, rising interest rates, soaring food prices and shortages caused by Brexit red tape, it does not look like there will be much relief for these families for some time to come.

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