Brexit ideology will be bad for exports

If visions from ministers were effective in boosting UK exports we would long ago have surpassed the £1 trillion target set by George Osborne when he was chancellor.

Last year we managed total overseas sales of £616bn, according to the latest official data. With just three years to go before we were supposed to hit the magic £1 trillion figure, we need exports to grow at an average annual rate of 17 per cent. So only triple the average rate of 5 per cent achieved since the turn of the millennium.

Could it be a sign of intruding realism that the trade secretary Liam Fox has quietly dropped the £1 trillion target and replaced it not with a nominal target for exports, but a target as a share of GDP? Fox, in a speech yesterday, said he wants total UK exports to be equivalent to 35 per cent of GDP, up from the current share of around 30 per cent. That at least gives him the opportunity of hitting the mark via a big UK recession and consequent collapse in GDP even if exports sales don’t actually budge.

The past eight years have been a nightmare for the Greek economy, but its exports as a share of its (collapsing) GDP have leapt from 20 per cent to 32 per cent.

But then perhaps realism hasn’t yet breached the walls of the trade department because Fox is still burbling vacuously about the great trade “opportunity” presented by Brexit.

There’s something supremely frustrating about hearing Fox rabbit on about the potent’exporting superpower’ial of selling more luxury goods to the Chinese when the preeminent trade challenge over the coming years for the UK is simply standing still.

Leave aside, for a moment, the question of our future trade arrangements with our dominant commercial partner, the EU. We also urgently need to “grandfather” the 50-odd existing trade deals between the EU and other countries, from Mexico, to South Korea, whose coverage the UK will fall out of after the post-Brexit transition ends at the end of 2020.

This is by no means a simple task, either politically or technically, as Peter Holmes and Michael Gasiorek of the UK Trade Policy Observatory have painstakingly explained. Some countries may seek to extract concessions from the UK as a price of rolling them over. And then there’s a planet sized headache over “rules of origin”, relating to finished exports made with components from third countries.

The details are too complicated to outline here but the bottom line is that successfully grandfathering these trade agreements would require the agreement not only of the UK and the third countries involved, but of the EU as well.

There was not a word on any of that in Fox’s speech. Instead we got a cargo container of spurious assertions.

Fox spoke as if world trade intensity is booming. But it’s not. Since the global financial crisis a decade ago trade as a share of global GDP has actually fallen from 60 per cent to 55 per cent. And then there’s Donald Trump’s trade war and the White House’s attempts to undermine the World Trade Organisation, which Brexiteers routinely herald as the UK’s safety net in the event of a no-deal Brexit.

Again, all this seems to have passed our chronically incurious trade secretary by.

So does the fact that the Office for Budget Responsibility, the government’s own official forecaster, expects the UK’s share of global trade to stagnate, not grow, over the coming years. We should probably just be relieved he didn’t call the OBR traitors, trying to sabotage Brexit Britain.

But the fact is that only an incorrigible ideologue could survey the horizon in 2018 and see a vista of burgeoning trade opportunities.

The views of Fox on the Brexit negotiations are of little value given he’s been kept well away from them by Theresa May. But, when asked about them yesterday, he offered this warning: “If the European Union decides that it wants to put…the ideological purity of the bureaucracy of Brussels ahead of the wellbeing of the people of Europe, it will send a very big signal to the rest of the world about exactly where Europe is heading.” But the fetish for ideological purity belongs not to Brussels, but to the Brexiteers.

And that, alas, shows the direction they’re dragging us.

#Brexit #exports #LiamFox

Why posh white men get more second chances

One of the salient features of Boris Johnson’s career is just how many second chances he’s been given over the years.

He fabricated a quote when he worked at The Times, a mortal sin for a journalist. He was fired, but rapidly popped up at The Telegraph as if nothing had happened.

As an MP, he later brazenly lied to his party leader over an affair, got fired as a shadow minister, but was later selected as the Conservative candidate for London mayor. As foreign secretary he endangered a British citizen imprisoned in Iran through sheer incompetence. He wasn’t fired.

The list goes on and on. Perhaps it’s a class thing.

The former Test Match Special cricket commentator Henry Blofeld, an Old Etonian like Johnson, was much loved. But he often made basic mistakes, including misidentifying players.

As my colleague Jonathan Liew pointed out in a memorable article, it’s hard to imagine that someone younger, someone without Blower’s grand social background, would have lasted so long.

Or is it a gender thing? Charlotte Hogg felt she had to resign last year from a senior role at the Bank of England after failing to follow the code of conduct she had set, as its chief operating officer, for declaring interests, specifically failing to record that her brother worked for Barclays.

By coincidence, around the same time, it emerged that Barclays’ chief executive, Jes Staley, had been trying to root out a whistleblower, disregarding the rules of the bank. But Staley wasn’t required to resign.

The outcome was a fine, a bonus cancellation and a slap on the wrist from the regulator.

Or perhaps such double standards are a race thing? As Ta-Nehisi Coates has written of Donald Trump: “The mind seizes trying to imagine a black man extolling the virtues of sexual assault on tape, fending off multiple accusations of such assaults, immersed in multiple lawsuits for allegedly fraudulent business dealings, exhorting his followers to violence, and then strolling into the White House.”

It certainly feels that some people have more leeway than others; that there’s more indulgence when they break the rules; that different standards apply.

A new study by Mark Egan, Gregor Matvos and Amit Seru – which looks at how women working in US financial advisory services are treated relative to men when they break the rules – backs up this intuition.

The researchers found that women face a harsher punishment for similar misconduct. Men also get a second chance in the industry much more than women. The paper’s authors call it a “gender punishment gap”.

But they found a similar effect for ethnic minority workers. African and Hispanic workers tend to get more severely punished for similar misdemeanours to white financial advisors.

Every large organisation nowadays proclaims its commitment to non-discrimination. Are they lying? Is it cynical public relations flannel? Perhaps in some cases. But not necessarily. The bias may be unconscious.

We’ve all seen how women can be somehow valued less than men, even when doing the same job.

Superiors seem to have trouble envisioning ethnic minorities as managers, despite their ambition. And when those workers err, they don’t get the benefit of the doubt. Interestingly, the researchers found more evidence of double standards in companies with fewer female and ethnic minority managers.

This is one of the reasons ethnic, gender and social class diversity in management is beneficial. It can short circuit the programme of unconscious bias of a management “in-group” when it comes to treatment of staff, whether it’s in relation to punishment, pay or promotion.

But this is a tough nut to crack. Like tends to hire and promote like. As most of us probably know, office politics often dominate merit when it comes to elevation. That cements a management’s composition and also its biases.

In the end, it’s about power. Inequalities of treatment stem from inequalities of power within an organisation. You’ll know when an institution is serious about tackling the former when it takes serious steps to rectify the latter.

#BorisJohnson #DonaldTrump #doublestandards #gender

Tory actions speak louder than words on social housing

“I don’t understand why you keep going on about the need for more social housing – it just creates Labour voters.”

Nick Clegg doesn’t recall whether it was David Cameron or George Osborne who uttered these words.

But he knows it was one of them. Why? Because he was sitting across the table from them in one of the coalition’s “guad” meetings when this nugget of unguarded Tory honesty slipped out.

The former deputy prime minister is in no doubt that this represented the cynicism-drenched view of the Conservative leadership on social housing and its residents, going all the way back to Margaret Thatcher’s Right to Buy revolution in 1980.

Have things changed? Ministers, scarred by the eruption of anger over the treatment of social housing tenants and government housing policy in general in the wake of the Grenfell disaster, want us to think so.

“Regardless of whether you own your home or rent in the social sector, residents deserve security, dignity and the opportunities to build a better life,” says the communities secretary James Brokenshire.

The new green paper on social housing talks of “tackling stigma”, “empowering residents” and “ensuring homes are safe and decent”. All sorely needed. But then there’s the kicker: “expanding supply”.

What better way for the Conservatives to bury the perception that they secretly regard social housing tenants as Labour-voting deadbeats than by creating more of them? But will they? Despite colossal pent-up demand – more than a million households have been on social housing waiting lists for at least a decade – the coalition deliberately ran down construction rates of homes for social rent.

The Conservatives, governing alone, have carried on with the policy since 2015. Official figures show that just 5,380 new homes for social rent were created in 2016-17, down from around 40,000 in 2010-11.

Cameron and Osborne devised a new category of social housing called “affordable rent”, which essentially means subsidised housing that is more expensive for tenants without being quite as dear as open market rents. It was essentially an indirect means of reducing government funding for social housing (although it didn’t contribute to cutting the deficit because it simply meant tenants needed to claim more in housing benefit to pay their rent).

The supply of new affordable-rent homes rose from zero in 2010-11 to 24,350 in 2016-17. But even if one adds new affordable rent to new social rent the supply of subsidised rental housing is still around a third lower than it was six years ago.

Kit Malthouse is the new housing minister, the eighth in eight years. He admitted yesterday that the annual supply of new social rent housing by 2021 is not likely to rise above 12,500. Which is not terribly surprising given the government, despite many flashy pledges of new funding, has not announced any major additional grants for social landlords to enable them to ramp up construction.

And the Treasury is still resisting pleas to scrap the borrowing limit on local authorities, something needed to enable them to start building council housing in serious volumes again, as they did between the Second World War and the 1980s.

There is a vigorous debate taking place among economists over whether increasing national housing construction rates to 300,000 a year, as the government is targeting, will actually have a significant impact on house prices. But regardless of the impact on house prices, it’s clear that the UK needs more and better quality social housing, whether from housing associations or councils.

There are some 80,000 households in temporary private accommodation because councils cannot house them permanently, up 64 per cent since 2010. And those who have secured social housing are more likely to be overcrowded than they were a decade ago.

The numbers of families living in unsuitable private rented accommodation has shot up, as home ownership rates have collapsed. Many of them would be better off in social housing – and that is what hundreds of thousands of them say that they want.

Given that there are around 4 million subsidised rental homes, many of which will need to be replaced due to age, Malthouse’s pathetic projected levels of new supply are essentially a prescription for the sector to wither.

Words are cheap. Creating more social housing isn’t. Ministers will rightly be judged on what they actually deliver.

#GeorgeOsborne #affordablerent #NickClegg #socialhousing #DavidCameron