14 June 2018
Lens on the Week
UK
BREXIT: For those who read Hansard in the bath, the last couple of days must have been fascinating as the bill governing the machinery of Brexit (The EU Withdrawal Bill) returned to the House of Commons. The main purpose of the Bill is relatively non-contentious. All EU law as at the date of Brexit will remain part of UK law, but we are unaffected by changes in European legislation after that. Parliament can then decide to change the old law or introduce new rules as it sees fit. So far so sensible, you might think, but the position is complicated by the fact that in addition to its main purpose the Bill has become the vehicle to which those who have concerns about Brexit seek to attach clauses marking their positions.
Take the House of Lords as an example. The majority there is strongly Remainer and they took the advantage of the Bill’s passage through their chamber to add a few things on. For example, there was an amendment requiring ministers to “outline” the steps taken by the Government to continue participation in the Customs Union. True, the clause didn’t require the Government to negotiate an agreement to keep us in the Union, but it carried an implication. As it is Government policy to take the UK out of the union it was not popular with Mrs May.
Then there was a clause requiring any deal to be put to Parliament with the possibility of a further referendum. Again it would have made things difficult for the Government who, when asked by the EU if the UK would agree something, would have to reply, “It depends”.
In fact, the Lords amendments did not go through because a deal was done with a group of Remainers led by Dominic Grieve. His idea is that if the Brexit it deal is not done by February 2019, Parliament should be able to give the Government directions as to strategy. That was enough to stave off government defeat on the Lords amendments, but the devil is going to be in the detail and we have yet to see whether everyone understands the deal in the same way.
Meanwhile, the Bill goes back to the Lords with the risk of a game of Parliamentary ping-pong developing between the two chambers. The Commons cannot simply overrule the Lords, save by virtue of the Parliament Act which in this case could not be used before September. Still, the Lords are not the elected house and will not want a stand off.
A tale of fire and fury to be sure, but what does it signify? It is no news to the EU that opinion in Britain is divided and if they are hoping to do a deal they will have to work around the Parliamentary issues just as Mrs May will. MPs will also need to keep in mind that if they are seen to mess up the Government’s negotiating position, the electorate is not likely to be particularly forgiving.
For the classicist one point is striking. In the ancient world, you suspended democracy and appointed a dictator at times of national emergency. Handing the negotiations over to Parliament if the deal fails would be to move in exactly the opposite direction.
SCOTTISH NATIONALISTS: So as not to be forgotten in all the excitement, the Scottish Nationalists walked out of Prime Minister’s Questions on Tuesday to protest at the failure by the Speaker to give sufficient time to the issue of the Westminster power grab. Their concern here is that too many of the powers which will cease to be exercised by Brussels will go to Westminster and not enough of them to the Scottish Parliament. Very little time was left to debate this issue and Ian Blackford refused to resume his seat when asked by the speaker to do so. As a result, they all walked out. Ach, weil.
International
G7 – G1 = G6? So what really happened at the G7 meeting in Quebec? Who stitched up who? Irritatingly self-righteous prime minister Justin Trudeau may well be, with his ceaseless virtue-signalling, but to call him “very dishonest and weak” does seem a bit strong. And if claiming to be polite and reasonable but not to be pushed around constitutes a “stab in the back” then the murder rate around the world must be a lot higher than we think. I can’t help feeling I’ve missed something here. Also in Quebec, President Trump suggested that Russia should be readmitted as an eight member, so President Macron squeezed the Donald’s hand so hard that the world’s press was able to take photographs of the damage.
Never mind. Things went better in Singapore. No doubt Kim Il-jung understood. “Yes, the neighbour who shares Korea with me – he’s just like the neighbour who shares North America with you – he keeps on banging on at me about his moral superiority too. He’s always boasting about his democracy and attacking my human rights record. Until recently he used loud-speakers to broadcast it at full volume across the border!” No doubt they had a good old moan about trade, too. “What’s that, Mr Donald? Germany sticks a whacking great tariff of 10% on cars imported from the USA, while the USA charges a mere 2.5% tariff on cars imported from Germany? Well, that isn’t fair, is it? And the EU pretends to be a champion of free trade? It’s absurd! As crazy as China also pretending to be a champion of free trade these days! Still, you know all about trade with China, don’t you, Don? But you’re lucky, they’ve had me well and truly over a barrel since I started, the peanuts they paid me for my coal and seafood, you wouldn’t believe it! And the prices they charge me for oil..!”
Elsewhere in Canada this week, legislation to decriminalise marijuana was presented to parliament by the government. And the Progressive Conservatives party won the elections in Ontario, the country’s most populous province; Doug Ford – the brother of Rob Ford who admitted to smoking crack while mayor of Toronto – will become premiere.
CHINA: Meanwhile, in Qingdao, President Xi hosted the leaders of the SCO (the Shanghai Cooperation Organisation) in a rival summit to the G7 in Quebec. The SCO includes China, Russia, a number of former Soviet republics and (as of this year) India and Pakistan. Iran attended as an observer member.
Chinese government hackers stole 614 gigabytes of secret data (including plans for a submarine-launched supersonic missile) from a US military contractor earlier this year, according to The Washington Post. The FBI is investigating, and US defence secretary Jim Mattis has ordered a security review.
Relations between China and Australia are deteriorating following Australia’s criticism of increasing Chinese influence in the small Pacific nations in Australia’s back yard, and accusations of covert intelligence activity by China in Australia. Exports to China (including the export of Australian wine) seem to be suffering as a result.
A number of US diplomats have been withdrawn from China suffering with illnesses such as headaches, dizziness, sleep deprivation and mild brain trauma associated with the suspected use of ‘sonic weapons’ which prompted the withdrawal of US and Canadian diplomatic staff from Cuba last year. Two more US diplomats were withdrawn from Havana this week for the same reason.
An image of what appears to be a Chinese supersonic stealth fighter drone was posted online, apparently by its maker, the Shenyang Aircraft Corporation. It seems to use drone technology for attacking purposes, rather than just reconnaissance purposes, and so may well be the first of its kind.
Financial
BUILDING BLOCKS: “Build it and they will come” says Kevin Costner in the movie Field of Dreams. He was talking about a baseball field but property developers in London’s East End will be hoping the same applies to housing. For almost a generation politicians, bureaucrats, and developers have agreed that London needs a lot more housing; now, just as the market seems to be hovering on the edge of price deflation (much more than hovering in the high price luxury end) the potential supply is accelerating. Silvertown is the latest big scheme about to leave the starting blocks, 50 acres of land on the river, not far from City Airport, and made up of some historic mill buildings for conversion and some nice vacant waterside space for new builds, to provide 7m square feet of mostly residential space (3,000 homes), with sizeable office accommodation and some leisure and retail. Silvertown procured outline planning some time ago, by a consortium made up of Chelsfield, First Base, (run respectively by Lipton father and son), and Macquarie Capital, the Australian developer and investor, and backed by the Greater London Authority . They have apparently not raised the debt to do the scheme and the two Liptons maybe have scented which way the wind is currently blowing; whatever the reason they have sold on to Lendlease, another Australian developer, and Starwood Capital, an entrepreneurial American investor and property fund. Lendlease know their way around the area, they are also busy on the residential areas of the former Olympic site in Stratford. They are not the only ones busy on the east London riverside. The Livingstone brothers’ London and Regional is about to begin a major mixed scheme on Albert Island near the Royal Docks, and Max James, in partnership with (again) the GLA is preparing to build 7,000 homes to the east of Silvertown. That’s a lot of new housing in an area most Londoners would be hard-placed to put a pin in on a map.
UNPLUGGING CONNECTIONS: The shares of BT rose last Friday to give the telecoms company an extra £200m value; good news for shareholders but not so much for CEO Gavin Patterson. He had just been defenestrated by his board and the market seemed to think that was good news. Patterson’s reign at BT has been a bit of a disaster, reflected in the share price, which has slumped considerably since he took on the top job. He got off to a good start, taking BT into sports broadcasting and taking over mobile operator EE. But since then circumstances have not been kind (pensions deficits, service issues, Italian accounting scandals) and there has been increasing disquiet as to how Mr Patterson has handled the core issue facing BT – the government’s desire to roll out a fibre based broadband network to cover the entire country. That has gone much more slowly than anybody envisaged, not helped by BT’s generous dividend policy which has kept investment funding tight. Ofcom, the regulator, has increased pressure on BT to get on with it, forcing Openreach, the broadband provider into an independent existence, albeit still owned by BT. Patterson’s departure suggests that the BT board have been under increasing external pressure and finally decided that responsibility lay at the top. The decision was undoubtedly sudden – BT has announced it is now searching for a successor, and that Mr P will stay until one is found. Whoever that lucky person is, their first act is likely to be slash the dividend and to get investing much faster. Or else they will be soon having not-so-friendly chats with Ofcom themselves.
