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Westlake Legal Group > Posts tagged "City of London"

Dean Godson: How the Conservatives divide on policy towards China

Dean Godson is the Director of Policy Exchange.

On occasion, there really is something new under the political sun: so who would ever have predicted that China policy would become a key Conservative fault line post Brexit?

Historically, the People’s Republic of China (PRC) never occupied a prominent place in the British Conservative cosmos, after the fashion of the American Right. There was no “who lost China?” debate in Westminster – such as convulsed Washington following the Maoist takeover in 1949.

All that is changing: nearly everyone now has an opinion on China because of Covid19. One measurement of the salience of an issue is the proliferation of party caucuses – such as the Huawei WhatsApp Group and the China Research Group. There is also talk of an alternative to the China APPG, seen by some as insufficiently challenging to the PRC.

Critics claim there is a flavour here of the People’s Liberation Front of Judea versus the Judean People’s Liberation Front. But as with Brexiteer factionalism, emerging fractions also reflect a certain dynamism. As Mao said: “let a hundred flowers bloom”.

Those Europe rebellions differed from the Huawei mutiny of 2020 in one key respect: they occurred when the Conservatives’ margins were slender. By contrast, this rebellion took place under the biggest Conservative majority since 1987. But for the prestige of Boris Johnson with the 2019 intake, it would have been much bigger; Anthony Mangnall (Totnes), was the sole dissenter amongst the newcomers. Soundings suggest he will not be alone next time.

The Conservative PRC-sceptic coalition is disparate, but broad. Not all of them were Huawei rebels, or are even MPs. The emerging balance of forces is, however, clear: out and proud PRC sceptics tend to be appreciably more vocal than advocates of the Government line. The sceptics can roughly be divided into eight strands of thought, some of which overlap:

  • Pro-Brexit Atlanticists such as Iain Duncan Smith and Owen Paterson — who don’t want Huawei to jeopardise an FTA with America and who identify with the current bipartisan Washingtonian view of the PRC.
  • Senior former Ministers who are also Atlanticists – but who are not purists on PRC policy. They feel that if the PRC is admitted into international institutions, it must then abide by their rules. This viewpoint was most prominently articulated by William Hague at the recent Policy Exchange webinar on China; it is shared by Liam Fox and Damian Green. Hague and Green were Remainers, whilst Fox was a Leaver.
  • Younger liberal internationalists who voted Remain – most prominently, Tom Tugendhat, Chair of the Commons Foreign Affairs Select Committee (this panel has proven notably cohesive across the party divides).
  • Civil libertarians worried by the Chinese surveillance practice, most obviously David Davis (who overlaps with the first camp).
  • Religious freedom andhuman rights advocates – such as Fiona Bruce (Congleton) and Benedict Rogers (co-founder of Hong Kong Watch).
  • Opponents of the dumping practices of the PRC – many of whom come from “Red Wall” seats with steel and ceramics industries.
  • Tory critics of globalisation – such as Nick Timothy.
  • Those who claim to be sympathetic to most or all of those strands – such as Bob Seely (Isle of Wight).

One noteworthy “neutral” is the influential Conservative Environment Network. Its members worry about animal welfare and a Chinese reversion to coal; but they also note the PRC’s part in reducing carbon emissions and in the manufacture of electric vehicles. Zac Goldsmith, the International Environment Minister is also seeking a global new deal on nature – and wants the PRC on board for that.

The Conservative Animal Welfare Foundation likewise holds the PRC to account on such issues as wild life markets; one prominent activist Henry Smith, the MP for Crawlet, was a Huawei rebel. Its website lists Stanley Johnson and Carrie Symonds as leading lights.

Defenders of aspects of the existing policy towards the PRC are less vocal, but they are still there. Again, there is some overlap between the different strands:

The upshot of such frictions is that Westminster is a colder house than it once was for the PRC. Thus, Dominic Raab stated on 16 April that “we can’t have business as usual” — and that a “deep dive” review is coming; Priti Patel took a little-advertised decision to ban Hikvision from a security conference because of its role in surveillance of the Uighurs; and there was controversy over the PRC role in an attempted boardroom coup at Imagination Technologies. It won’t be the last.

But is the Government’s apparent change of approach one of substance or style – or, in the jargon of the Huawei decision, is it about the policy “core” or the tonal “periphery”? For example, it remains to be decided what the “deep dive” review will consist of; who will undertake it; and when it will emerge.

A new policy has not yet come into being because senior Ministers are often reminded by permanent servants of the State that the UK is heavily invested in the current broad terms of trade with the PRC – from which it cannot easily be extricated. Indeed, one senior former Minister notes with grudging respect Mark Sedwill’s part in persuading two very different Prime Ministers, May and Johnson, to stick with Huawei.

This approach is reinforced by the Treasury — which sees itself as the guarantor of economic growth and, increasingly, of big infrastructure projects to help the country out of recession. The PRC potentially has an important part to play there; Philip Hammond’s appreciation for Belt and Road is one legacy of his Chancellorship. And then there is the Government’s immediate dependency on the PRC for PPE.

So as with Brexit, much of the Conservative family finds itself pitted against the permanent State on how Britain aligns itself in the world; as with Brexit, the China rebels face a long (reverse) march through the institutions; and as with Brexit, Conservative Ministers find themselves caught between those contending forces.

One PRC-sceptic senior Minister has given colleagues copies of The Hundred-Year Marathon by Michael Pillsbury – a prominent US Sinologist admired by Donald Trump. The Minister’s point is that Conservative MPs need the same patience and craft as the PRC. The Parliamentary politics of China will be determined by whether Ministers have the credibility persuade backbenchers that they are genuinely playing that long game.

The new Labour Opposition will be worth watching. Labour sources state that precisely because Keir Starmer was author of Labour’s disastrous pledge for a second referendum, he now needs to show to the lost Red Wall heartlands that he is no Blairite globaliser – and will turn to the institutions of the nation state to defend distressed British companies going for a song to Chinese investors.

Both front benches share a common vocabulary – describing the absence of alternatives to Huawei as “market failure”. So how open will Labour be to cooperation with the Conservatives – either with the rebels, or even the Government? Or will the Conservatives succeed in determining policy on their own terms?

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Howard Flight: What the virus means for the City. And a watershed moment for the ECB.

Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasury.

The Bank of England has slashed interest rates to a new record low of 0.1 per cent and launched a further £100 billion of money printing to relieve stress in the financial markets. The Bank of England has also had a new Governor installed, Andrew Bailey – though few seem to have noticed this. He has cut interest rates to the lowest in the Banks 326-year history.

This is, however, outscaled by direct fiscal intervention with the State committed to paying the wages for those forced out of work by the Coronavirus – and in particular in the pubs, restaurants and leisure facilities. The Chancellor’s Keynsian measures to help the unemployed and the self-employed, plus additional help for employers, comes on top of the £350 billion package for businesses.

The overwhelming majority of those working in the City are salaried employees who will be well protected by the Chancellors 80 per cent of salaried support (up to the total of £2,500 per month per employee). The group which remains the most vulnerable and needs more support than currently proposed, is the self-employed. They will be able to access Universal Credit at an equivalent rate to statuary sick pay for which employees qualify.

This does not put the self-employed on effectively the same deal as the employed, and the Chancellor was thus lobbied to come up with a parity deal for the self-employed. Late last month, the Chancellor announced a deal for the self-employed under which they can draw an amount equal to 80 per cent of their historic profits, up to £2,500 per month. It is to be hoped that this very generous scheme will be quickly activated. Most SMEs have not got the cash resources to wait to the end of June for the cash support.

Not surprisingly in the wake of the Coronavirus crisis, City deal-doing has for the time being gone on hold, but can be expected to pick up, particularly given the massive Government underwriting of incomes. Financial markets have welcomed the Government’s massive intervention to save jobs and keep the economy afloat.

This has also proved to be a watershed moment for the ECB. The meltdown in vulnerable Bond markets forced the it to issue a E750 billion bond recently, to prevent dangerous debt dynamics from spinning out of control. The ECB is stepping up to its role as a lender of last resort, obliged yet again by fast-moving events to rescue the EU monetary union and indeed the EU project itself, after the failure of EU states to come up with a coherent economic response to Covid l9.

This time round, it is tearing up the rule book entirely announcing that it will not be bound by “self-imposed limits”. It will intervene in the sovereign debt markets wherever needed – meaning that it can deploy its vast arsenal to defend Italy or Portugal. It has vastly expanded the range of assets available, and will do as much as is necessary for as long as is needed. Risks spreads on Italian ten-year bonds, halved after threatening disaster last week.

Under the pandemic emergency purchase programme, the ECB will buy commercial paper and will relax rules to let banks submit small business loans and even letters of credit as collateral. This intervention followed a disastrous week during which Austria’s ECB member stated that the bank had run out of ammunition and could no longer do much to help. The ECB package flouts EU treaty law and may face opposition in Germany’s top Court.

The bank’s president, Christine Laguarde, took the tough decision of forcing through these measures by majority vote. The ECB could no longer wait when Italy’s real borrowing costs had jumped by 170 basis points in a matter of days. A ferocious credit crunch was taking hold. This was happening as analysists began to talk of a 15 per cent contraction in the EU’s GDP in the second quarter. Covid 19 may ultimately raise Italy’s debt to DGP ratio by 20 per cent to over 150 per cent.

While Laguarde has averted the worst, the ECB’s actions are not in themselves stimulus: they amount to a firewall. Monetary policy has no traction against an economic sudden stock caused by lockdowns and factory closures. It will take a vast New Deal of actual spending to lift the region out of Coronavirus slump and head off a deflationary depression.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Stephen Booth: We’re about to take back control – but what do we want to do with it?

Stephen Booth is Acting Director of Open Europe.

The UK is leaving the EU in two weeks’ time but, as Mark Wallace noted recently on this site, “much of the Government’s policy for life after EU membership is as yet unpublished and unknown.” What we probably can say we know is that this Government will prioritise the ability to diverge from EU rules in the future over securing the best possible EU market access after the transition period ends in January 2021. In other words, its priority will be to “take back control”.

As I have argued in previous columns, the UK-EU trade negotiations over the next 11 months will be important and the specific details will matter for individual sectors and firms. Nevertheless, whatever the exact form our new trade relationship with the EU takes, it will mean greater freedom for the UK to set its own course on matters of trade, regulation and immigration. The question is what the UK should do with this independence.

The Prime Minister yesterday outlined the broad shape of the UK’s new immigration regime. “By putting people before passports, we will be able to attract the best talent from around the world, wherever they may be,” he said. Immigration is arguably the policy area in which it will be easiest to reach a new post-Brexit consensus. There is already evidence to suggest that the prospect of the Government regaining the ability to fully control who can legally work and live in the UK is changing attitudes. According to YouGov, prior to the 2016 referendum “Immigration and Asylum” ranked above “Health”, “Crime”, “Environment” and the “Economy” as the issue voters thought the most important facing the country. It has now completely slipped down the public’s list of priorities.

Theoretically, EU membership did not prevent the UK from attracting the brightest and the best from the rest of the world, but the political reality was that an almost unlimited supply of labour from Europe meant that policy towards the rest of the world became too restrictive. Many UK industries will still be reliant on lower-skilled labour and future governments may differ in their view on the appropriate scale of immigration, and how much of this to leave to the market. But the UK will have far greater flexibility to tailor policy to prefer higher skills, which, all things being equal, is likely to be more economically productive.

Withdrawal from the EU provides a necessity and an opportunity to illustrate that the UK is “open for business”. While some EU regulation has liberalised trade across the single market, the UK must now consider how it might alter existing EU rules it has inherited, diverge from EU rules in the future, and also ensure domestic legislation is geared towards maximising the UK’s competitive position.

Financial services are one of the UK’s natural strengths and a crucial part of the economy, contributing seven per cent of economic output and 23 per cent of UK service exports. There are several examples of financial regulations the UK would have approached differently independently of the EU. For instance, the EU’s Solvency II rules for insurance firms do not adequately reflect a UK market where insurers tend to play a bigger role in providing long-term savings, such as annuities, than in many other EU countries. UK regulators have resorted to cumbersome “workarounds”, but instead the Government should prioritise reforming the rules to allow the sector to more effectively channel funds towards long-term investment, such as the infrastructure projects beloved of the new administration.

The bankers’ bonus cap is another example of how EU policymaking can go awry. The cap was introduced under the EU’s implementation of the global Basel III banking rules on capital requirements. The UK opposed the cap but not for the laissez-faire reasons often assumed. The UK was actually leading the calls to enable national regulators to impose tougher capital requirements on their banks, against resistance from France and Germany, which feared that higher capital thresholds might expose their banks’ fragility in the wake of the eurozone crisis. The result was a fudge, which the European Parliament felt compelled to adorn with the bonus cap. Ultimately, the cap did little to curb the problem it sought to solve: ending excessive remuneration and incentives to take risk. Meanwhile, rival financial hubs, such as Hong Kong, Singapore and New York, do not have a cap on bonuses; the rule therefore acts as a drag on UK competitiveness.

An independent trade policy represents a different challenge and opportunity. It is unlikely that, in and of themselves, new trade deals will radically transform UK GDP in the short-term. However, Brexit or no Brexit, it is vital that the UK diversifies its economic relationships away from Europe. It was Angela Merkel who pointed out that Europe had only seven per cent of the global population and produced only 25 per cent of global GDP, but that it accounted for almost 50 per cent of global social expenditure. We know that the first two figures are only bound to fall, due to demographics, and reducing the third will be incredibly difficult for European politicians already fearful of a populist wave. The UK will lose the EU’s mass but will gain flexibility with new and old trade partners. It must ensure that it uses its new-found suppleness in order to give itself a head start on positioning itself for the global economy of the future.

Ultimately, what I am describing are examples of the choices the UK can make as a self-governing national democracy. I suspect that the increased scrutiny, accountability and responsibility that flows from this change of circumstances will be the greatest benefit of Brexit, although this is of course unquantifiable.

With greater freedom and independence comes opportunity but also greater risks. Elections will be higher stakes, as any government with a majority can steer the country on a radically different course, for good or bad. But no longer can the EU be blamed, rightly or wrongly, for the nation’s ills. We will all be forced to up our game.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

“Get out of London.” Now watch Johnson and Cummings turn the world upside down. Or try to.

“You guys should get outside London and go to talk to people who are not rich Remainers’.” (Dominic Cummings, September 2019.)

– – –

Britain’s political and economic model from Margaret Thatcher through Tony Blair to David Cameron had roughly the following in common.

A dominant capital city, London, with its south-eastern hinterland.  A flourishing City of London.  An economy based on services rather than manufacturing.  A high level of immigration, at least recently, to service its needs – both internally and externally.  Pressure in this wider South East on schools, hospitals, roads, rail, cohesion, and especially the price of housing.

An Ascendancy class of civil servants, lawyers, journalists, academics, and media workers doing well out of this system, whichever of the main parties governed.  Government focus on message and spin to feed the London-based newspapers and media.  A recent Ministerial and Whitehall preoccupation with Parliament, reflecting the unwillingness of voters to elect a government with a strong majority since 2005 – and the increasing rebelliousness of backbenchers.  A currency that some believe to have been overvalued (further reinforcing this system).

Outside this greater South East, a provincial Britain in relative or sometimes absolute recession.  A growing gulf between its view of this system’s success and London’s.  A sense that it has done less well out of the growth of the capital city, the universities, the media, services, the law – and infrastructure spending.  A less favourable view of immigration.  Less expensive housing but also lower wages.  Skills and employment gaps.

– – –

All this is about to change – at least, if a new post-Brexit Conservative Government based broadly on Thursday’s results, serving at least two terms and with Boris Johnson and Dominic Cummings in place, has its way.

Perhaps wrongly, I read the briefing in much of Sunday’s papers about the new Government’s intentions as Classic Dom.  In the short to medium term, expect to see the following:

  • Less of a focus on Parliament and the media.  Johnson has a majority of the best part of a hundred.  He won the election despite, even arguably because of, intense media scrutiny, opposition and pressure.  I suspect that the Prime Minister won’t care much what Labour, which is likely to vanish into chaotic opposition for the best part of a year, or the Liberal Democrats, who have just lost their leader, do or say in the Commons, at least for the moment. Furthermore, Philip Hammond, Rory Stewart, David Gauke, Amber Rudd, Oliver Letwin, Dominic Grieve* and his most persistent critics are no longer there.  And Cummings won’t be remotely flustered by what’s said on a Today programme or a Newsnight or by an Andrew Neil that, in his view, only the Westminster Village bubble is bothered about.
  • A Government restructuring to concentrate on delivery.  Johnson and Cummings thus won’t worry too much if Ministers flounder in the Commons or TV studios – at least in the early part of this Parliament.  They will want delivery, delivery, delivery for the new blue seats in the Midlands and North.  That will mean tearing up the Government reshaping undertaken by Nick Timothy for Theresa May and starting all over again.  Briefing that Business and Trade will be amalgamated; that the Environment and Climate Change, a Johnson and Carrie Symonds preoccupation, will again have its own department, and that the Foreign Office will absorb much of DfId sounds about right.  A post-January post-Brexit reshuffle will reveal all.
  • Ministers appointed to govern rather than perform.  Monday’s reshuffle will see gaps filled at Culture – which will have an important role with regard to digital and the media – and Wales.  I expect the bigger January shuffle to see Cabinet Ministers appointed who Number Ten expects to work with outsiders to transform Whitehall.  There will be a big emphasis on NHS spending, police numbers, border control, northern infrastructure, skills and, maybe especially, Cummings’ spoor: the words “Invest in Science”.The sort of names to look out for include Matt Hancock, Rishi Sunak, Oliver Dowden, Robert Jenrick, Jesse Norman, maybe Chris Skidmore and the rehabilitated Michael Gove.
  • Expect the unexpected.  All those are men.  Johnson will want to appoint a lot of women – an intention made all the more intriguing by the fact that many of the Ministers currently being tipped for the sack are female.  The most senior women outside Cabinet itself are Esther McVey, Caroline Dinenage and Lucy Frazer, who could easily slot into one of the Law Officer posts.  But there is no way of knowing what Johnson, Cummings, Downing Street and the Whips will come up with. And other names in the mix include Victoria Atkins, Anne-Marie Trevelyan and a revitalised Penny Mordaunt.  Cummings’ instinct will be to bring in good outsiders as Ministers and promote quickly from the massive new intake of Tory MPs if necessary – over the head of convention and perhaps advice.

There are some oddities about bits of the briefing, or at least parts of what’s being written.  For example, if a new department for Borders and Security is to be set up, what becomes of the Home Office – which under the Theresa May/Timothy reforms became a department for security and borders?  Is it to be amalgamated once again with the Justice Department?  Might Johnson want to mull reviving an updated Lord Chancellor’s department?

And if the SNP is to campaign for a second independence referendum, with Northern Ireland undergoing huge post-Brexit change, wouldn’t it make sense to have a Secretary of State and department for the Union – perhaps headed by the ubiquitious Gove?  What becomed of the traditional power of the Treasury?

Finally, Johnson could do all the restructuring and appointing available to him with his near three-figure majority…and find that the economic and political model he inherited is too entrenched to be shifted.  Because the commanding heights of our culture have so big a stake in it that they won’t willingly let it go.  Buy your ringside seat now for the clash between the Ascendancy’s instincts and Cummings’ Nietzschean plans. With Johnson refereeing.

– – –

* Mr Grieve…we’ll see what he is right about.” (Cummings, August 2019.)

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Ryan Shorthouse: How to boost integration

Ryan Shorthouse is the Founder and Director of Bright Blue, and co-author of Distant neighbours? Understanding and measuring social integration in England

Concern about a lack of social integration in the UK has been high for some time. In 2015, David Cameron even ordered a review into the state of social integration in the country. Published a year later, Dame Louise Casey’s Review into opportunity and integration concluded that successive governments have failed to ensure that social integration in the UK has kept up with the “unprecedented pace and scale of immigration”.

But what is social integration, and how can we strengthen it? That is the focus of Bright Blue’s latest report, published today.

We propose that neighbourhood trust should be at the heart of our understanding and measurement of social integration, since it is indicative of positive, meaningful and sustained interactions in a local area. Admittedly, neighbourhood trust is only capturing that between members of a community, not necessarily between people from different ethnic groups. In truth, then, neighbourhood trust would only be a good measure of social integration if that trust is high in an ethnically heterogeneous community.

Furthermore, since it is possible for people to trust their neighbours on the basis of them being in the same ethnic group, high levels of neighbourhood trust in ethnically diverse communities only indicate high levels of social integration when the local area is not residentially segregated. This is an important qualification that needs to be included when measuring levels of social integration.

We recommend that the Government, as well as local and combined authorities and public bodies, utilise this new measure of social integration. Specifically, the Government should produce a ten-yearly Social Integration Index, measuring levels of social integration across all different local authorities in the country. This Social Integration Index could consider incorporating other measures, such as levels of deprivation.

Bright Blue has had an initial attempt at this new Social Integration index, through independent statistical analysis the 2009-10 and 2010-11 Citizenship Survey, the 2011 Census and the 2015 Indices of Deprivation, as well as further analysis of the Index of Dissimilarity and the Index of Ethnic Diversity. Based on our proposed measure of social integration, we identified the four most socially integrated local authorities in England as those with relatively high levels of neighbourhood trust, relatively high levels of ethnic diversity and relatively low levels of residential segregation. These are the City of London; Cambridge; Richmond upon Thames, and Milton Keynes.

Our report proposes original policies to boost social integration in England. These are targeted at individuals, to better equip them to socially integrate, and institutions, to increase the opportunities for social integration. In particular, we focus on improving English language competence across all social groups, and reforming schools so they can support greater social mixing between young people.

First, on English for Speakers of Other Languages (ESOL) course. Overall funding for them has fallen by 56 per cent from 2009-10 to 2016-17, which has been accompanied by a decline in participation from 179,000 to 114,000 people in the same time period.

The Controlling Migration Fund is a £100 million bidding fund launched in 2016 by the government to assist local authorities which are impacted the most by recent immigration to ease pressures on their services. Plans for the Controlling Migration Fund beyond 2020 are supposed to be considered during the next Spending Review.

Considering the importance of English language skills for social integration in this country, we recommend in our report that the Government continues the Controlling Migration Fund beyond 2020 and dedicates a minimum and significant proportion of it for funding ESOL projects. This will give local authorities who are under the most pressure a guaranteed resource with which they could provide ESOL courses to meet higher levels of demand.

Second, on National Citizen Service, which is a government-sponsored voluntary initiative for 15-17 year olds where they engage with a range of extracurricular activities that include outdoor team-building exercises, independent living and social action projects. The scheme currently operates both a four-week and a one-week version during school holidays.

National Citizen Service appears to improve some indicators of social integration in its participants, including increasing levels of trust in others and making it more likely to describe their local area as a place where people from different backgrounds get on well together.

We recommend that the UK Government trials delivering at least one week of NCS to all Year 9 or Year 10 students in all state secondary schools in England during term time. If the trial is successful, the Government should introduce a legal duty for all state secondary schools in England to provide at least one week of NCS to either all Year 9 or Year 10 pupils, depending on which cohort is found to be responding best to the scheme. The optimal length of time of the NCS during term time, ranging from one week to one month, should also be discovered through the trial and introduced during national rollout.

Finally, on school linking programmes. This involves bringing together classrooms of children from demographically diverse schools with the aim of increasing social contact between groups who would otherwise not meet. This can involve a range of collaborative activities, including exchanging work, joint drama, arts and sports sessions, and even community projects for older pupils. School linking can have a positive impact on many aspects of pupils’ skills, attitudes, perceptions and behaviours, including broadening the social groups with whom pupils interact.

The Pupil Premium is additional funding for state-funded primary and secondary schools designed to help disadvantaged pupils, such as those receiving free school meals and looked-after children, perform better. It is awarded for every eligible pupil in school and schools have significant freedom in how to spend it. Making part of this funding conditional on participating in a school linking scheme could incentivise participation in such programmes. As independent schools are not eligible to receive Pupil Premium payments, their participation in school linking programme must be incentivised through a separate mechanism. We recommend making the charitable status of such schools contingent on participation in a school linking programme.

There is no simple, straightforward solution to strengthen social integration. The limitations of public policy have to be recognised and respected, especially in regards to people being free to develop the relationships they want. And, crucially, social integration is a two-way street. It is not enough to say migrants and their children must do more to integrate; native Brits must also make an effort to welcome and involve newcomers.

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Alan Mak: Conservatism 4.0 – We must ensure that no-one is left behind by the Fourth Industrial Revolution

Alan Mak is MP for Havant and Founding Chairman of the All-Party Parliamentary Group on the Fourth Industrial Revolution.

Stanley Baldwin said the Conservative Party stood for “real England” – a Party defined by voluntary organisations and Christian patriotism, little platoons and big national causes.

His Conservative Party of the 1920s faced an upstart opposition in a Labour Party that had usurped the Liberals to become the second party of British politics. Outlining the growing threat from Labour, Baldwin described them as being for a nation of class divisions and over-mighty trade unions.

Under Jeremy Corbyn, Labour has come full circle and is once again challenging the success and legitimacy of our free-market economy.

A century on from Baldwin, and despite being the natural party of government, our Party has often struggled to break out from its vote base of shire counties and market towns. It’s over 30 years since we won a majority of over 21 at a general election.

But there are signs of change. Our electoral success in recent years has been driven by securing more votes in Labour’s industrial heartlands. Dudley, Mansfield, Copeland and Teesside have all elected Conservatives in recent years, whilst the West Midlands and Tees Valley have elected Conservative Mayors on a region-wide basis.

This Conservative momentum in areas once dominated by trade unions and the Old Left shows that our message of hope, personal freedom and low taxation can re-define our path to a majority.

Yet our progress in these Labour heartlands is not concrete and shouldn’t be taken for granted. A pro-Leave electorate that has trusted another party for so long will be looking to the Conservatives to not only deliver Brexit, but ensure they are not left behind by the next big technological revolution either. As I said in yesterday’s article, this commitment must be a central tenant of Conservatism 4.0 – Conservative ideology for the Fourth Industrial Revolution [4IR].

The last time our country went through a technological revolution we had a strong leader with a firm ideology. The computing revolution of the 1980s powered Britain to economic success – and political success for Thatcherism. Through deregulation and an unwavering belief in the free market, the City of London prospered from the Big Bang, and our economy was transformed into a services-based powerhouse. From the stuttering, strike-crippled, state-dominated closed market that Thatcher inherited, the foundations were laid for rapid economic growth and the business-friendly, pro-innovation environment we enjoy today.

Our next Leader will also find themselves at an inflection point. They will have to harness the Fourth Industrial Revolution (4IR) as artificial intelligence, big data and automation change our economy and society beyond recognition – and ensure that every community and region benefits from the wealth that it creates. Whilst Margaret Thatcher’s transformation of Britain’s economy for the better is undeniable, there are mining and industrial communities who felt they were left behind as other parts of the country raced ahead. To win a majority at future elections, today’s Conservatives need to attract working class and northern votes, so we cannot allow the positive impact of the 4IR to be absent from any region or for its benefits to be inaccessible to any social group.

The 4IR will radically change how we work, regardless of sector or industry. Instead of dockers and miners being at risk of automation, in the near future it will be call centre operators, lorry drivers and factory workers. With a path to electoral victory that increasingly runs through industrial towns, every factory closure or job lost to robots without alternatives emerging, will make a majority harder to achieve for our next leader.

That’s the reason why, whilst we still have an opportunity to shape the 4IR, our policies must be focussed on creating an Opportunity Society centred around social mobility powered by lifelong learning, high-quality education and skills training for everyone at every stage of their lives. Our Opportunity Society must be more than just a short-term policy objective. It has to be an integral part of the future of capitalism and a key part of Conservatism 4.0.

As robots slowly replace human workers, many on the radical-left are arguing for a Universal Basic Income (UBI), a minimum wage paid by the Government to every citizen regardless of their productive capacity. Every single country that has trialled UBI – from Kenya to Finland – has found it expensive and ineffective. Research by the International Labour Office has estimated that average costs would be equivalent to 20-30 per cent of GDP in most countries. In Britain, this would be more than double the annual budget of the NHS, yet John McDonell says a Corbyn-led Labour Govnement would trial it. These are just two of the reasons why we Conservatives should reject UBI as the solution to growing automation in the 4IR.

The truth is work has always paid, and work for humans will always exist. Work drives our economy, multiplies and makes the world richer. It takes people out of poverty and gives them purpose, and this will continue to be the case in the 4IR. In fact, many more new jobs are likely to be created than are lost to robots because the technology of the 4IR will drive economic growth, which in turn will create new and more interesting jobs, especially in new tech sectors such as advanced manufacturing, 3D printing, precision medicines and AI-powered creative industries.

Not enough is made of our job creation miracle since 2010, which has seen our economy put on three million new jobs. As we enjoy the lowest unemployment rates since the 1970s, we need to re-emphasise the value of work and the benefits to be derived from a good job. A UBI would be defeatist, signifying that humans had ceased to be useful in a world of machines, and be the antithesis of social mobility – there would be no need to work hard to move upwards on the income and living standards scale if we are all paid to stay at the same level. A UBI would also stall our economy through either crippling debt on the public purse or new taxes imposed on innovation. Similarly, Jeremy Corbyn’s proposed Robot Tax would simply mean a left behind country – a nation that fails to attract foreign investment and which becomes known for its anti-innovation approach to technology.

Instead, true devolution must be at the heart of delivering an Opportunity Society and making sure no community or individual is left behind. Our next Prime Minister must invest in the Northern Powerhouse and Midlands Engine so regional economic growth is put in the hands of regional leaders. The benefits of the 4IR, from new start-ups to overseas investment, must be enjoyed beyond the “Golden Triangle” of London, Oxford and Cambridge. As Juergen Maier who led the Government’s Made Smarter Review, argued, it’s about creating an “innovation climate” in regions such as the North.

We cannot expect the heavy industries of the past to return, but instead our focus should be on ensuring the new technologies of the future are exploited in every area of the country to create new jobs and rising skills levels in every community. The Liverpool City Region understand this, and have already taken the initiative. They have launched LCR 4.0, an ambitious plan to support manufacturing and advanced engineering organisations in the region by funding practical support to transform businesses through digital innovation. By helping traditional manufacturers upgrade their technology, they enable firms to stay in business and keep their workers employed by becoming more productive. Conservatism 4.0 should support more initiatives like this.

Moving towards a system of local business rates retention will also encourage further investment in skills and business support from local authorities as they reap the rewards of encouraging local growth. There should also be more scope for local taxation and decentralisation as a central tenet of Conservatism 4.0 to empower local areas to evaluate their workforces and set-up true long-term strategies for delivering local economic growth, building on the work of existing Local Enterprise Partnerships and new Local Industrial Strategies.

Conservatism has always evolved and must do so again as we enter a new technological age by putting social mobility and reginal devolution centre stage. They are the two key building blocks to ensuring that every community and region can benefit from technology-driven economic growth. While Thatcherism delivered for the Third Industrial Revolution, we need a new brand of Conservatism to build an Opportunity Society for the Fourth. My final article in this series, published tomorrow, will set out the four principles that should guide us as we re-calibrate Conservatism in the Fourth Industrial Revolution.

This article is the second in a three-part series explaining why adapting to a society and economy shaped by technology is key.

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Alan Mak 1) Alan Mak: Conservatism 4.0 – Adapting our Party for the Fourth Industrial Revolution is our greatest challenge

Alan Mak is MP for Havant and Founding Chairman of the All-Party Parliamentary Group on the Fourth Industrial Revolution.

Later this year, the international commission that oversees the official geological timechart will meet to debate and decide whether the world has entered a new epoch. The “Anthropocene”, named after the humans that have had such a profound influence on our planet would, for example, sit alongside the Upper Jurassic and Pleistocence (Ice Age) periods and represent the biggest turning point in history for over 500 million years.

Advocates for the Anthropocene say this new distinct era started in the 1950s, identifiable from the radioactive fallout from nuclear weapons tests, the appearance of fossilised plastics, the rise in carbon pollution from the global post-war economic boom, the pervasive use of concrete, and the rise of mechanised agriculture. Opponents feel none of these changes has been sufficiently impactful to merit a new phase in history – and the debate continues.

In contrast, the start of a new Fourth Industrial Revolution (4IR) in the late 2000s is not in dispute. My previous ConservativeHome series on this topic outlined the historical background and economic importance of the 4IR – the fourth phase of industrialisation after previous eras defined by steam, electricity and then the internet. This latest series of articles, which begins today, outlines its political implications, and argues in particular that adapting conservatism to the politics and society of a Britain radically re-shaped by the 4IR is our Party’s biggest challenge in the coming years – not Brexit.

Like many activists around the country, I spent time during the local election campaign knocking on doors and speaking to voters. I found an electorate keen to talk about a range of topics, not just Brexit: the economy, schools, defence, the NHS. Brexit is certainly the focal point of our national discourse for now, and while it will continue to be the fundamental, short-term issue our new Party Leader must deliver on, a moment will arrive very soon where the Party must pivot to the future – and look beyond Brexit.

As the leadership contest begins, our next Prime Minister, who will take us into a second decade in power, needs to turbo-charge our domestic policy agenda post-Brexit.

The next general election, whenever it comes, will be fought against a Labour Party that has coalesced around a hard-left agenda with clear messages on austerity, state-aid, taxation and the state ownership of utilities. Worryingly, these big state, anti-capitalist arguments have gained traction for the first time in 40 years. Just as Margaret Thatcher defeated Michael Foot’s hard left ideology in the 1980s, today’s Conservatives need to re-win the argument for free markets and stamp out Corbynista thinking before it takes hold.

The battlegrounds for the next election are being shaped by the new, disruptive technologies of the 4IR, sometimes visibly, sometimes not. The underlying forces shaping the contours of our new society and economy – the automation of jobs, the creation of new businesses, regional growth and decline, the skills base in each community – are all driven by new technology. As our lives become ever more digital, our country faces a series of unique challenges that only Conservative values can fully address.

Our Party has to adapt to this new landscape – and develop a new set of positive policies that allows us to deliver on the changed aspirations of voters in this new setting. From helping people secure the new jobs that the tech revolution will create to tackling the downsides of growth such as preventing environmental degradation, we need to develop Conservatism 4.0 – conservatism for the Fourth Industrial Revolution.

Previous Industrial Revolutions saw Conservative leaders grasp the opportunity to reshape our Party as the country changed. Robert Peel repealed the Corn Laws, heralding Britain’s rise as a champion of free trade, and  Thatcher drove forward reforms that enabled the City of London to renew itself and flourish through the “Big Bang” of technology. Our next Leader must consider how the Conservatives will remain relevant to a new generation of voters whose lives, workplaces and communities are being shaped by artificial intelligence, robotics, big data, drones and a new phase of globalisation.

We Conservatives must adapt to this rapidly-changing social and economic landscape, just as Thatcher and her predecessors did. These four guiding principles should shape the next leader Conservative Leader’s thinking.

1. No community can be left behind

Young people thinking of careers after leaving school or university are now entering workplaces in every sector shaped by artificial intelligence and automation.

Just take the supermarket industry, a sector that employs 1.1 million people in the UK and which faces radical change. Ocado, for instance, has developed a warehouse in Hampshire dubbed “the hive” that sees robots processing 3.5 million items every single week. Meanwhile in America, the first trials have begun of “Amazon Go” – checkout-free shops where consumers walk-out with whatever goods they like bypassing traditional tills or scanners. Instead, camera-based tracking technology identifies the shopper visually, and the goods bought, and charges their credit card automatically. There are no staff in the “shop” – a radical departure from the high street shop my parents ran which relied heavily on human labour (including mine).

What do these innovations mean for shop workers, and the millions of others who will likely be displaced in similar ways in other industries? Just as in previous Industrial Revolutions new jobs will certainly be created, from app designers to data scientists to robot maintenance workers. Past experience also suggests more jobs will probably be created than are lost as the economy grows. But our challenge is ensuring we equip workers with the right skills to fulfil their potential and secure these new jobs.

That means a renewed focus on STEM skills and a wider strategic long-term plan for skills in our country. I’ve previously set out my belief that we should introduce a Future Skills Review, a big picture analysis of the skills needed for our economy over the next five years – akin to the Comprehensive Spending Review or Strategic Defence Review.

Automation will inevitably impact different areas of the country disproportionally. So our next Prime Minister needs to prevent widening regional inequality. The impact of the decline of heavy industry, especially in the North, is still felt to this day in areas that have struggled to fully recover. As the Fourth Industrial Revolution accelerates, we need to help every community adjust and prosper, getting a fair share of the fruits of economic success. Leeds re-invented itself as a hub for digital innovation, whilst Sunderland is home to Nissan’s highly productive car plant. So a new Northern Technology Powerhouse would be especially welcome in the years ahead, ensuring that it isn’t just the “Golden Triangle” of Oxford, Cambridge and London that benefit from the 4IR.

2. Public services should be more productive, more digital and more accessible

The smartphone generation demands services that are available at their fingertips, whether that’s ordering a taxi or making a bank payment. The average smartphone user can choose from around 2 million apps to download – everything from games to social media.

Technology means life is moving faster, and people’s expectations of similarly fast-movement and responsiveness from their government are rising too. Voters want a Smart State, not Big Government. And because we Conservatives are in office, we are expected to use new technology to deliver better, more efficient public services.

Perhaps one of the least recognised achievements of the Government since 2010 has been the digital transformation of our public services. The UK is currently fourth in the UN e-government league, having delivered more than £2 billion in efficiency savings through digital transformation since 2014.

But we shouldn’t rest on our laurels. We must strive to deliver more efficient public services by fully-digitising them in line with consumer demand. A poll by POLITICO in swing election seats showed that our Party still trails in the core issues ranked as the most important outside of Brexit – crime, housing and health.

We need to consider how we can use artificial intelligence to solve crimes; automated construction techniques to build much-needed homes; online courses to improve further education; and how we deploy apps to transform the NHS into a paperless service, so patients have their test results and medical records on their phones.

As a Party we need to harness technology to improve the delivery of public services and offer better outcomes, recapturing the initiative from Labour politicians whose focus on nationalisation and uncosted (yet endless) spending commitments often drives the debate.

3. Technology can help us become more relevant to younger voters

The age divide in our politics is now well-documented, with a recent Onward report showing 49 per cent of Conservative voters are now over the age of 65.

Yet as separate polling for the Centre for Policy Studies found, young people are still more likely than the general population to think that the Government spends and taxes too much and are not inclined to back nationalisation.

Instead, they want more control over their lives, and that includes over the money they work hard to earn.
In the age of the Fourth Industrial Revolution, Conservatives need to deliver the same message of economic freedom that propelled Thatcherism to unprecedented electoral success. By embracing tech, and making Britain a global tech superpower, we will create more opportunities for young people to start their own business and have a stake in our society by owning capital and generating wealth for themselves and others.

Our next Leader must position Britain as low-tax, high-innovation, pro-tech economy. We must cut corporation tax to attract inward investment – Jeremy Hunt’s proposal to cut our rate to match Ireland’s 12.5 per cent rate is very welcome – and be pro-active in creating a regulatory environment that gives tech companies the freedom to innovate. We must not follow Labour’s example by trying ban Uber in London and Brighton. Platforms used by younger people should be smartly regulated, not shutdown.

We win back younger voters by proving that we are a Party that believes in the future – and that means embracing technology, and the benefits it brings to everyday life.

4. Green growth must be at the heart of Britain’s Fourth Industrial Revolution

The fossil fuels that powered previous industrial revolutions left a dirty legacy which we are only now coming to terms with as we take decisive action on climate change.

The 4IR will be the first industrial revolution that offers the tantalising prospect of clean growth, with renewable energy and the next generation of batteries potentially signalling the end for dirty fossil fuels.

Similarly, carbon capture and storage technology has the potential to limit CO2 in the atmosphere; blockchain to improve accountability across far-flung supply chains; “smart boats” to help fishermen manage their catch effectively; and biodegradable plastics to protect our oceans.

These are just a small number of the environmental technology breakthroughs that will soon become pervasive.

Britain should be an advocate on the world stage for green growth, helping us bolster our credentials at home as the Party of good environmental stewardship too. The current Government’s 25-Year Environment Plan and commitment to biodiversity has been one of our most popular policy areas since 2017. By committing to ensuring that this new industrial revolution leaves the planet cleaner we can turn green growth in the 4IR into a new source of electoral strength.

All four policy areas matter regardless of Brexit or our future relationship with the EU. The current Brexit debate has meant they are not getting the focus they deserve, but our next Leader should put these principles at the heart of our Party’s response to the Fourth Industrial Revolution.

By doing so, we can successful help our Party adapt to the new political and economic landscape that technology-driven change is creating, so voters continue to trust us to govern for generations to come.

This article is the first in a three-part series explaining why adapting to a society and economy shaped by technology is key.

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Michael Fabricant: It’s high time for us to rediscover our gung-ho spirit

Michael Fabricant is MP for Lichfield.

One of the many old jokes in the Carry On films is: “where is all your get up and go?” The answer comes: “it got up and went.” It seems, sometimes, that half the population feels that way, when I read some of the more depressing letters and articles about Brexit in the national press.

I travel to the United States three or four times each year – not for fact-finding at taxpayer’s expense, I hastily add – but with and to see friends. I was part-educated at the University of Southern California (Go Trojans!) and still have a home on the east coast near where my business had a base in New Haven, Connecticut. So before I became an MP I travelled a lot to the US on business, too.

I’m there right now – in San Diego, southern California. But thanks to the internet, I was able to hear Woody Johnson, the US Ambassador to the UK, on the Today programme yesterday. He was clear that the present terms of the Withdrawal Agreement and Political Declaration will prevent the US (or any other major economy, come to that) from entering into a Free Trade Agreement with the UK.

But the main issue expressed by Johnson – and Americans that I meet over here – is the surprise at Britain’s reluctance to let go of the apron strings that seem to tie us to the EU.

It’s a lack of self-confidence that might be appropriate in a developing country, but in not the fifth-largest world economy, which can boast more Nobel Prize winners than any other country apart from the US; intelligence services which match those anywhere in the world, three of the world’s top ten universities, with the top two places being British, and a major centre for biotech and space research. Why are we so timid in our dealings with Europe?

In Prime Minister’s Questions a few weeks’ back, Jeremy Corbyn claimed that the UK has “no leverage” with the EU.  No leverage? We are the biggest export market in the world for the German automotive industry – bigger than the US and Chinese markets combined. And Emmanuel Macron knows that the ranks of the gilets jaunes would be increased tenfold if French farmers could not export to their number one market – the United Kingdom.

So why all this timidity by government and civil servants in dealing with the EU, and the fear of leaving the EU by so many in the British population at large?

Friends of mine working in the City for large American banks admit that they explored the possibility of moving to Paris, Amsterdam, or Frankfurt after the referendum. But they soon realised that continental Europeans neither have the financial work pool nor the work ethic to keep long hours deep into the night when the need arises. Those plans to move were soon abandoned.

Johnson can see the opportunities open to the UK in leaving the UK and from being unshackled from the ball and chain of rules so beloved of European regulators. My American friends over here say to me “Why are you guys so lacking in self-confidence? We just don’t get it. Just leave!”

Having been in business and travelled abroad extensively exporting broadcasting systems to some 48 countries worldwide, I can see the huge opportunities that will be open to us after a clean break with the EU.

It is unfortunate that many commentators on Brexit, including journalists and some politicians, never had the get up and go in the first place. The gung-ho spirit eludes them. We should not allow their lack of aspiration and gloom to frustrate the opportunities that are there if only we have the confidence to seize them.

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