The Telegraph – Brexit Bulletin

Good evening. Chancellor Philip Hammond will speak tonight at the Confederation of British Industry. He will press business leaders to show their loyalty to the UK by investing here and hiring British citizens. But he will also attempt to soothe and assure them that he will listen to their fears about Brexit.

This closed speech should be seen in context of Mr Hammond’s longstanding dovishness on this issue. He has alienated many in the cabinet by repeatedly arguing for protecting jobs and the economy over cutting immigration, but the dismal election result has only strengthened his hand. He has similarly been the sticking point in the row over lifting the public sector pay cap, which the Government today ruled out until 2018.

His soft approach is not shared by Theresa May. She is under pressure to set out, at the party conference in October, a timetable for her departure. The expectation is that she will stay until June 2019 to make sure Brussels know they will be dealing with her until the curtain. On Sunday the Telegraph reported that she is plotting to dramatically storm out of Brexit talks over the EU’s “divorce bill” in order to show she is “hard-nosed” and “hard-headed”. Such a set-piece would play well with the British press but less well with Michel Barnier, and its rumour suggests that she believes a Tory leader will always benefit domestically from getting into a fight with Europe. Critics will say she is prioritising domestic headlines over foreign relationships, but given the results of David Cameron’s approach, which tended in the opposite direction, I can understand her thinking.

Meanwhile, Labour is experiencing its own political strife. Chuka Umunna’s rebellion last Thursday over membership of the Single Market has left Corbynites furious, and now party chairman Ian Lavery has  hinted at purging moderate MPs. The rebels, many of them from Remain-voting constituencies, believe that Labour must rally behind the Single Market to keep its coalition together.

On the surface, this makes sense. The parties’ fortunes in the recent general election are strongly correlated with the vote for Brexit. Labour captured 54 per cent of Remainers to the Conservatives’ 24 per cent, while the Tories won 65 per cent of Leavers to Labour’s 24 per cent. The Conservatives did best in areas where both the 2015 Labour vote and the 2016 Leave vote were high, suggesting Labour’s new coalition is intensely Remain-y. A full 43 per cent of Labour voters said they would like to stop Brexit happening if possible.

But those numbers are deceptive. For Conservatives, believing that Theresa May could “do a better job of negotiating the UK’s exit” was the single biggest reason to vote for their party (according to surveys by Lord Ashcroft). Yet for Labour – and indeed for the country as a whole – it didn’t even make the top three. And while 48 per cent of Tory voters brought up Brexit without being prompted as a reason for their decision, only 8 per cent of Labour voters did the same – behind spending cuts (11 per cent) and the NHS (33 per cent) and only barely beating poverty (7 per cent). What really motivated Labour voters was that they “trusted [its] motives”, “preferred [its] promises”, and believed it would run the economy better.

That suggests Labour’s voters are not actually fanatical Remainers, and are not going to be crestfallen when they discover that Jeremy Corbyn is a Brexiteer at heart (if indeed he is). Rather, they backed him because they believed in his values (though a cynic or a victim of IRA terror might suggest they cannot have known much about them) and agreed with his policies on welfare, public services, and other domestic issues. Their apparent enthusiasm for Remain is merely a proxy for their liberal, Leftist values.

If so, Labour moderates grandstanding over the Single Market are on a hiding to nothing. To Labour voters buoyed by Corbyn’s surprising success it is they and not he who will look like the wreckers. But perhaps the strife within the party is not really about Brexit. Perhaps it is, like the vote for Labour itself, about domestic politics and values. As Tom Harris writes, it is only the latest part of a very long battle between two sides who cannot coexist.

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The Telegraph – Brexit Bulletin

Good afternoon.

Humiliation seemed inevitable for Philip Hammond after it emerged, just before Prime Minister’s Questions, that he was shelving the flagship part of his Spring Budget, the National Insurance hike. But Jeremy Corbyn spared his blushes when he got to grill Theresa May. “Gentleman that he was, he would not dream of harassing a lady in so unchivalrous a manner,” writes Michael Deacon. “So instead he wittered about headteachers, informed the House that he wanted “a staircase for all, not a ladder for the few” – and, for the final time, sat down.”

The Chancellor still had to eat humble pie in the Commons afterwards as he had to explain his retreat. MPs ribbed him mercilessly after he declared that the first person to make him aware after the Budget that he had broken the Conservative manifesto by pledging to raise National Insurance was BBC Political Editor Laura Kuenssberg, which suggests that no one in the Treasury saw this would be a problem. The decision to park the tax rise came just after 8am this morning, he admitted, which surprised Tory minister Rory Stewart, who had been defending the rise on the Daily Politics later that morning. Mr Hammond didn’t disown the idea outright, insisting to MPs that it aimed to sort a “structural issue within the tax base on which we will have to act”.

Obviously, the short-term headlines will be awful for the Chancellor. Spreadsheet Phil’s reputation for forensic management has taken a hefty knock, as he now has to find £2 billion over the next few months from a less controversial source than the self-employed. But could there be a longer-term strategy at work? As Theresa May prepares to trigger Article 50, she will need all her political capital to thrash out a deal that will convince her cabinet, Parliament, and the public. That would explain her reluctance to spend it on things her MPs hate the sound of, like hiking National Insurance or her new schools funding formula. To sail Britain through the Brexit process, the Prime Minister may have decided she has to get the ” barnacles off the boat” first.

Given the Government’s overarching focus on Brexit, there is one group who will gain from the humiliation of the former Remain backer: Tory Brexiteers. “A Chancellor who was the champion within government of a softer form of Brexit has been weakened, possibly fatally,” writes James Kirkup. “The balance of power in the Conservative Party has just shifted, again, in favour of the Brexiteers, and the hardest form of Brexit.”

 

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Morning Briefing – The Telegraph

Good morning.

Theresa May is building a big, beautiful Brexit, but Brussels is trying to make her pay for it. The suggestion from the European Union’s chief negotiator Michel Barnier that the UK must settle a £50 billion “exit bill”, resolving its budget contributions until 2020,  has enraged Eurosceptics. Some suggested it was simply the EU’s opening position in any attempted negotiation, as Iain Duncan Smith insisted the amount Britain owed was “probably peanuts”. Others were derisive, with Dominic Raab concluding that it’s “good to know he [Barnier] has got a sense of humour”.
 
The EU member states have made sure to toe the line following the European Council meeting in Brussels. Tomas Prouza, the Czech Republic’s Europe minister, told Sky News that Britain should “definitely” expect a bill worth tens of billions of pounds, adding: “This is what the UK has already committed to pay, and we would expect that the UK would honour its commitments”. Downing Street insists that any financial settlement after leaving the EU would be a matter for negotiation, but that it would meet its obligations while part of the bloc. Is there a figure the Prime Minister could settle that would satisfy Leavers? Possibly not, as some seem to be insulted by the idea that she would even discuss the issue. Ukip MEP Roger Helmer tweeted that Mrs May had “lost the next general election” if she did, and that she should “just say no” to the bill.

Mrs May will be grateful at least to have her MPs behind her as she negotiates Brexit, ready to lambast anyone who stands in her way. Conservatives have already been taking Sir Ivan Rogers to task after he suggested that it could take a decade to negotiate a new trade deal with Europe, as MPs suggested he was “completely out of his comfort zone”. This came amid the revelation that EU officials believe privately that a deal could be done in less than seven years. Stephan Mayer, home affairs spokesman for Angela Merkel, suggested this might be the case on the Today programme this morning, remarking that ten years “is a very long period of time”. But he refused to go into specifics, declaring: “Now is not the time to announce a clear number of years”.

The key question at the end of the Brexit process will be what type of relationship Mrs May pushes for with Europe. Philip Hammond has told reporters that he doesn’t support the World Trade Organisation model, whereby Britain would rely on its WTO membership for access to European markets. “I hope that we would be able to agree with our European partners tariff-free access but on a reciprocal basis,” he said in Seoul. But we won’t see what model emerges until Article 50 is invoked and negotiators get down to the detail.

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Morning Briefing – The Telegraph

Good morning.

Parliamentary business is starting to wind down as MPs prepare for Christmas recess next week. Theresa May faces her final Prime Minister’s Question Time today for the year. But her in-tray remains as packed as ever, so there will be little time for jollity.

Following yesterday’s Commons debate on Syria, MPs will certainly want to ask the Prime Minister about the plight of war-torn Aleppo. Boris Johnson insisted that the government had been trying to reduce the suffering there with “every diplomatic lever at our disposal”, while Andrew Mitchell and George Osborne – speaking for the first time from the backbenches in 13 years – lamented Britain’s inaction.

Many Britons will share their concern, although some will be more annoyed about issues closer to home, like the ongoing rail strikes. The walkout by drivers and conductors on the Southern Rail line crippled more than 400 miles of track and 156 stations throughout Sussex, Surrey, Kent and other home counties, forcing trains to be cancelled for 300,000 commuters yesterday. Those affected won’t be too happy to know that they’ll be paying for this disruption, as the taxpayer has to pick up the £50 million bill.

The scale of disruption has prompted ministers to consider what action they can take to rein in the trade unions. Transport Secretary Chris Grayling said he would take a “careful look” at strike laws after the dispute ends. Tory MPs are increasingly suspicion that the unions are using coordinated action as part of a political campaign against the Conservative government. They won’t be reassured then by the Mail’s profile of the strike leaders, which found that one Aslef chief refers to Jeremy Corbyn as “the Messiah”. The strike action will continue today, and on Friday, followed by a further wave in the run-up to Christmas and the New Year, so this issue has longer to run

The Brexit process continues in the meantime. Boris Johnson used the Foreign Office’s Christmas party last night to joke about the recent row he was caught up in about whether or not he backed European free movement. “I’m in favour of free drinks, which you are all enjoying tonight, but I’m not necessarily in favour of freedom of movement,” he told those assembled. He also banged the drum for Brexit, declaring that Britain has to be “more energetic, more outward looking, more engaged with the world” outside of the EU. But when will it get there? Philip Hammond suggested that Britain should seek a transitional deal as part of a “smooth departure” that would take longer than two years. But some Brexiteers will worry that the Brexit he wants is so soft that it is barely an exit at all. He may win support from David Davis, as we report that the Brexit secretary privately accepts that Britain may have to enter into a transitional agreement to bridge the gap between a formal exit and the start of new trading relationships. Might he hint at this in public later this afternoon in front of the Exiting the EU Select Committee?

Philip Johnston defends Hammond’s stance on Brexit in today’s paper, but suggests he will need to show his “Eeyorish” rhetoric isn’t a sign of reluctance. “For now, Mr Hammond’s is the voice of common sense. But it wouldn’t take much for him to become Fainthearted Phil,” he warns.

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Morning Briefing – The Telegraph

Good morning.

George Osborne’s successor at the Treasury pledged to enact a “new plan for the new circumstances Britain faces”, and it doesn’t bode well for his legacy. Philip Hammond will show today how different his agenda will be in his first Autumn Statement.

Some parts of Hammond’s plan will be similar, we report, like more money (£1.3 billion ) going on Britain’s roads, affordable homes (£1.4 billion) and fuel duty remaining frozen. But other parts will mark a significant departure from Osbornomics, like his £1 billion boost for welfare. The new Chancellor will ease the impact of Osborne’s cuts by increasing the amount of benefits those on Universal Credit can keep while in work, so that they lose 63p rather than 65p for every pound they earn once they find a job. Iain Duncan Smith, who battled Osborne at length over potential cuts, has declared himself “over the moon” about Hammond’s decision to invest more money in Universal Credit, which will increase the earnings of more than 3million working families. This shows that Theresa May’s government is unpicking one of “Osborne’s misjudged projects”, James Kirkup writes, “the Tory war on welfare claimants”.

Another shift from Osbornomics is Hammond’s plan to ban letting agency fees, which makes the front pages of this morning’s Times and Guardian. He will argue that the ban will save millions of renters from having to pay up front charges of £337 on average, although the policy was strongly opposed by David Cameron’s Government just six months ago. We’ve been rounding up the predictions, leaks and rumours about what else Hammond might have in store here.

Chancellor Hammond’s room for giveaways will of course be constrained by the numbers. He hasn’t earned his reputation for “arguing like an accountant” for nothing. Official forecasts are set to show that the UK faces an additional deficit of up to £100 billion over the next four years in the wake of the Brexit vote, although Eurosceptics have warned that he will be making a “huge mistake” if he endorses “nonsensical” figures suggesting growth would collapse. They will both be pleased to hear that according to the deputy head of the International Monetary Fund, Brexit is not the biggest threat to word stability. Instead, David Lipton told the Telegraph, it is Europe’s failure to break its anemic economic growth cycle.

After six years of Osbornomics, Hammond will be keen to show that he is his own man at the Treasury. “In a time of political turmoil, boring is good,” Philip Johnston writes in today’s paper. Next spring, when Theresa May kickstarts Brexit by invoking Article 50, Johnston suggests “that will be the moment for Mr Hammond to break free of the Brown/Osborne political style that has essentially held sway for nigh on 20 years…rather than being Spreadsheet Phil, as he has been dubbed, he can metamorphose into Visionary Phil, looking ahead…to where the country needs to be in 20 years’ time rather than always looking in the rear-view mirror.”

Morning Briefing – The Telegraph

Good morning.

Philip Hammond didn’t beat around the bush on Sunday about the economy. “We have eye-wateringly large debt, we still have a significant deficit in this country and we have to prepare the economy for the period that lies ahead,” the Chancellor told Andrew Marr, ahead of his first Autumn Statement tomorrow. There is some good news in advance at least, like that more than £1billion is to be spent ensuring that millions of homes and businesses across the country have access to the “gold standard” of hyper-fast broadband. But other stories show the scale of the challenge facing Hammond.

The NHS remains in a parlous state. The Department of Health’s top civil servant has suggested that every patient could be asked to show their passport before they receive healthcare in a bid to stop the taxpayer being “taken for a ride” by health tourists. The National Audit Office has been even starker, warning that a staffing crisis crippling NHS finances may take years to resolve. It also accused officials of making “pie in the sky” assumptions about how savings can be made, so they will have to work harder to fulfill their orders to make £22 billion in savings while meeting unprecedented demand from an ageing population.

That ageing population may also force the Government to force people to work longer before receiving the state pension, as part of plans to save the Treasury’s coffers around £240 million, or around £8,000 off their entitlement. Policymakers would be likely to give a green light to the move, we report, which experts argued would be a “politically painless” way to drastically cut spending as future pension cuts “feel a long way off”.

There are some useful things the Chancellor could do tomorrow. Paul Johnson, from the Institute for Fiscal Studies, outlines in today’s paper how he can get rid of stamp duty. “That will cost more than £7 billion,” he writes. “At least some of that should be made up by increasing council tax on more expensive properties.” Labour MP Wes Streeting has written about what Hammond can do to help students, while Nigel Fletcher sees tomorrow as a chance for the Chancellor to show “the good that government can do”.

 

Morning Briefing – The Telegraph

Good morning.

It’s that time of year again. The leaves are crinkling underfoot, the birds have flown south, and the Chancellor of the Exchequer is once again preparing to deliver an Autumn Statement which owes its current form as a second Budget to the jealousy of Gordon Brown (who thought it would be nice to have two sets of headlines instead of one every year).

There are now just three days to go until Philip Hammond’s big day and the headlines are queuing up. The Chancellor, under attack as always for his “relentless negativity”, is expected to freeze fuel duty and ban pension cold callers, after writing in the Sunday Telegraph that he will “prioritise ordinary working families”. But any attempt to help Britain’s 10 million or so “Jams”, short for “Just About Managing”, will be hemmed in by two factors. One is the massive projected gap in government finances some fear he will announce – perhaps £100bn a year. Another is the planned cuts to Universal Credit, which will affect the poorest most and which Mr Hammond is now being urged to soften or cancel. 

But if any of that worries Theresa May, she isn’t showing it. Tonight she will speak at the Confederation of British Industry’s annual conference to explain her long-awaited “industrial strategy”. First, she will try to neutralise some of the criticisms she has faced since assuming office, reaffirming the Bank of England’s independence after appearing to criticise its actions and declaring herself “unashamedly pro-business” after calling for workers on boards and threatening to name and shame those who employ foreign workers. Second, she announce an annual £2 billion government investment programme for science and research and an additional £1.3 billion for infrastructure. Third, she will pledge to give Britain the lowest corporation tax of the world’s top 20 economies.

Yet she will also set out a broader message: that only she can save capitalism and globalisation from the populist revolt which is now sweeping the first world. Business, she will say, must “spread [its] benefits around the country, playing by the same rules as everyone else when it comes to tax and behaviour.” They must “invest in Britain for the long term.” In other words: do what I say, because if I fall, my replacement could be far worse.

I have written here before about the previously repressed, now blossoming tension between pro-immigration capitalists and anti-immigration conservatives. This sounds like Mrs May’s way to square the circle. By brokering a deal between business elites and sceptical ordinary people she will seek a very British solution to the populist revolt: change just enough to ride the wave, without getting sucked under it.