It ain’t easy
In the last few weeks, I’ve noticed a new Facebook trend. Every time I log in, another one of my friends is asking their social network the same question: “how do you think I should vote in the referendum?”
Depressingly, this is almost always followed by that friend saying that they feel completely let down by the people who are supposed to be giving them the guidance they need. “How can I trust any of them?” they ask.
I don’t blame anyone who feels like that. Too often, it seems the debate is being dominated by people just hurling abuse at one another, making a bold assertion which is then instantly denied by the other side. The message they seem to be sending is: “Look, this is easy. Just vote for us. If you don’t, you’re an idiot.”
But the question on the ballot paper is anything but easy. We insult people’s intelligence if we pretend that it is. You can’t just tell someone that they’re a moron for disagreeing with you and hope that that’s good enough to get them on board.
So, in the interests of trying to help out those friends of mine who are still unsure, and in an attempt to do so in a way that takes some of the heat out of things, below are my thoughts on a few key areas of the debate, and what you might want to think about if you are still undecided. It’s a slightly longer blog than usual, but I hope it’s helpful to at least a few people.
To be upfront and honest – this will not be an unbiased read. I am vehemently pro-Remain, and so I’m not going to sit on the fence. But I’ll try to explain it in a way that shows how I got to that position.
And I promise I won’t think you’re an idiot if by the end of it all you don’t agree with me.
The cost of membership
We pay to be a member of the EU. There is no getting away from that fact. It is a club with a fee. Larger and more prosperous countries like the UK pay more than smaller, less well-to-do ones.
It’s important to get that figure right, though. It is not – despite what you might have seen from the Leave campaign – £350m a week. That figure is simply incorrect, and it’s calculated by doing some pretty dubious maths.
The accurate figure is £8.5bn a year. The Leave campaign’s figure assumes a much higher amount of £18bn. That’s how much the UK would pay, if you didn’t factor other things in. For instance, we have an instant rebate of £5bn, taking it down to £13bn. And then the EU directly spends £4.5bn on the UK – investment in infrastructure, medical research, support for the poorest regions in the country – bringing it down to £8.5bn.
As a standalone figure, that sounds like a lot – and of course, when we’re talking about taxpayers’ money, it is. Any government should be making sure that a sum like that is well spent. But it is also worth thinking of it in context: every year, our government spends over £730bn in total. That makes our EU membership fee a little over 1% of total spending. Put another way, of the £11,500 that is spent per person per year in the UK, just £133 is spent on being a member of the EU.
Some people will still argue that’s too much – and you might agree – but it’s important we do it on the basis of proper figures, and that we put those figures in context. It is also worth considering, of course, that our relationship with the EU is not purely transactional, and that our £8.5bn arguably delivers a lot more for us, which is a little harder to directly quantify.
Trade and the economy
Respected estimates put the number of British jobs linked to our membership of the EU at three million. But it’s hard for people to know what that means. Which jobs? If we left, would they disappear overnight? And isn’t the UK one of the world’s largest economies anyway? Wouldn’t we cope on our own?
Firstly, it is worth saying that – as with all economic predictions – no one can really tell you the exact impact of leaving the EU. There are too many variables for precision.
But it is at least worth bearing in mind that pretty much every respected economic voice – the Treasury, the Bank of England, the IMF, the Institute for Fiscal Studies – think that the impact would be negative. And we are already seeing examples of the kind of economic trouble that we might face. Last weekend, a number of polls gave the Leave campaign a lead. On Monday morning, the pound fell 1.5 cents against the dollar. And in April and May of this year, investors took a total of £68bn in cash out of the UK – that’s the biggest withdrawal since the financial crisis. And that’s just what’s happening when people think we might leave.
Secondly, you need to define the timescale we are talking about. In the short term, absolutely everyone – including the Leave campaign – agrees that there would be a significant shock to the UK economy, and it would be a negative one. The disagreement is then over how long it would take to recover.
Brexiteers argue that the EU needs us more than we need them, and so it would be in their interests to arrange a new trade deal with the UK as soon as possible. To justify this, they point out that while £223bn of UK exports go to the EU every year, some £291bn of EU exports go to the UK. By that measure, we are more important to them than the other way around.
Again, though, context is everything. For the UK, that £223bn is nearly 50% of all our exports. For the EU, their £291bn is just over 10%. In that sense, we are much less important and in a much weaker negotiating position.
Of course, we can’t – and shouldn’t – deny that the UK is the fifth biggest economy in the world, and so will be able to strike reasonably good trade deals with other countries around the world in time. But we would be doing that as a standalone country of 65 million people, and not part of the world’s biggest trade bloc of 500 million. And it would take time: the EU-Canada trade deal currently on the table has taken seven years so far.
So in the long run we could get back to a position of strength, following the short-term economic shocks of Brexit. But, as John Maynard Keynes said, “in the long run we are all dead”. How long is acceptable for the UK to be suffering economically, and for people to be out of jobs or in low-paid ones? Five years? Seven? Ten? If you’re 20 now, then that’s the first decade of your working life hamstrung by trying to find a job in an underperforming economy. Is it worth doing that to ourselves – administering a self-inflicted shock so soon after the financial crisis?
Immigration
Last, but far from least, is perhaps the most emotive and divisive issue of the referendum: immigration.
To a large extent, people’s views on immigration in the EU debate will reflect their views on immigration as a whole. Fair enough, you might think. But it is still important to be clear about what exactly is on the table – and what isn’t.
Immigrants currently arrive in the UK from both EU and non-EU countries. In 2014, 168,000 people from outside the EU came to the UK. You might think that figure is too high, about right, or too low. But it has nothing to do with the referendum on our EU membership. The UK government has the power to restrict that number to zero if it wants to, whether we are in the EU or not.
Immigration from EU countries is different. Being part of the EU means signing up to the free movement of people (as well as of capital, services and goods) and that means allowing other EU citizens to come and work in our country. By the same token, UK citizens are free to go and work elsewhere. The figures suggest that this is generally balanced: there are about two million EU citizens living in the UK, and about two million UK citizens living in other EU countries. So you could see it as an equal exchange, if you want to look at things in that way.
Added to that is the fact that EU migrants are net contributors to the UK economy. They tend to be highly educated, of working age, and they pay more in taxes than they take out in benefits (in fact, just 0.2% of EU migrants claim out-of-work benefits without having contributed first). We are not part of the so-called ‘Schengen’ system (of passport free travel), and we cooperate closely – through Europol – with our EU partners to make sure that suspected terrorists and people with criminal convictions are not allowed to enter the UK.
And lastly, there is the fact that those countries which are in Europe but outside the EU – like Norway and Switzerland – have to accept the principle of free movement if they want access to the single market. So if we want to secure that good trade deal, we might not be able to close the borders anyway. And if we prioritise lowering immigration, then the price tag would come in the form of a much worse deal economically. That’s a key question for the Leave camp: which is most important to them, protecting the economy or reducing levels of immigration? Because it’s very hard to see how you could have both.
The fact is that for a lot of people such statistics won’t matter. Theirs is an emotional response. They don’t like that, over time, they have seen – or worry that they will see – the culture and traditions of their town, city or whole country changed by immigration. They don’t like that whenever they have tried to raise those concerns they feel they’ve been labelled a bigot or a racist and told they’re not allowed to think like that. It’s a vein of sentiment that Nigel Farage has very cleverly tapped into, telling people that he is the only one who understands those concerns and somehow – pretty disingenuously – saying that if we only left the EU these things would be better.
I think we need to have a national conversation about immigration. I think it needs to be of a level and a calibre considerably higher than anything that we’ve had so far, and certainly than we’re seeing in the referendum debate. In fact, I think if we’d had it a lot earlier then the polls probably wouldn’t be looking as close as they are now. But we simply do not have time to have and resolve that debate in the next 11 days.
Instead, I think it’s best for people to consider the multiple elements of the EU debate before they cast their vote:
- It does cost money to be in the EU. But that money is a fraction of what we spend as a nation, the tangible returns are good and the intangible benefits are enormous.
- It’s hard to say exactly what our economic future would look like outside the EU, but everyone says that it would be bad in the short term, and that “short term” could be seven years or more.
- Immigration is of course part of the debate. But only a part of it, and one that is intrinsically bound up with economics. There are as many Brits in the EU as there are EU citizens in the UK. And those that are here are contributing. Leaving the EU would not address the concerns that many people have about immigration, valid or otherwise.
After thinking about all of those things, I vote to Remain. I vote Remain for many more reasons, as I’ve written about before – because I want my country to be at the top table internationally; because 70 years of unbroken peace didn’t happen by accident; because I’m proud of a Union that makes our environment healthier and our working lives safer – but I don’t want to pretend that it’s an easy decision for anyone. It’s hard. The implications are massive. It deserves thinking about.
And it’s in that spirit that I hope, in some small way, for at least one person, all of the above helps them when they’re considering which box to cross on 23rd June.
Everything is not in its right place
If international tax evaders were a band, they would be Radiohead.
Bear with me.
In many ways, 2014’s ‘Lux Leaks’ – the scandal which broke when a whistleblower from PricewaterhouseCoopers published thousands of documents showing some pretty shady tax deals were to be had in the Grand Duchy of Luxembourg – was the super-rich equivalent of Pablo Honey.
It was a solid debut, no doubt. It contained some absolute gems – the hyper-complicated financial equivalent of ‘Creep’ or ‘Anyone Can Play Guitar’ – but you couldn’t help but feeling that we hadn’t really seen their full potential. It was big, but was it big enough? There was a real risk that everyone might nod approvingly, think about it for a while, and then forget.
And then, earlier this month, came ‘Panama Papers’ – the smash follow-up that not even the biggest fans of morally bankrupt tax fiddling could have foreseen. The scale! The ambition! Over 11 million documents stemming from one single law firm, and dragging in everyone from the Icelandic Prime Minister to our own David Cameron. Here, without doubt, was the fiscally dubious counterpart to The Bends.
It’s hard to classify the Panama Papers phenomenon. What word should you use to describe something breathtaking in its shock factor and yet heartbreakingly, crushingly predictable at the same time? How can you quantify something so enormous as tax avoidance on that scale? So brazen that it is able to hide in plain sight?
There is one statistic in particular that brings it home to me, and that’s the fact that 60% of all international trade is intragroup – that’s to say it is conducted between two branches of the same company, rather than between two independent companies.
That means that nearly two-thirds of all transactions that take place anywhere in the world basically have to be taken on trust. How can you know that MegaCorp Sweden is selling widgets to MegaCorp St Lucia at a fair price if the whole thing is taking place within one giant company and with no external competition?
The fact is that you can’t. And so companies take advantage of the fact that national governments have so far been really, really bad at working together on this stuff. MegaCorp Sweden will find out that the tax rate there is a lot higher than in St Lucia. They’ll get the St Lucia branch to lend millions of dollars to the Sweden branch, loading the Swedish branch with debt so that it looks like it doesn’t turn a profit. Voila! No more tax paid in Sweden.
This is happening all over the world, right now, and in much more complicated and egregious ways than that. And it would take a special kind of narrow-minded nationalist to think that one country – even one as influential as Britain – could act alone to stop it from happening.
Tax evasion and aggressive tax avoidance thrive when countries refuse to work together. This is something that the European Union understands and is trying – slowly at times for sure, but certainly – to fix.
The EU has introduced new rules to limit the kind of sweetheart deals that we saw in Lux Leaks. Last week, it announced new plans to make multinational companies report publicly exactly where they make their profits and where they pay their taxes. Hard to believe that anyone could object to a principle that simple, and yet some businesses do – but they then come up against the combined will of 28 countries representing 500 million consumers between them, and they start to back down.
The UK would be walking away from all of this if we were to leave the EU. Tax avoidance – and the outrageous, growing injustice it serves to embed in our societies – is one of the major issues the world faces today, alongside other cross-border challenges like climate change, terrorism and mass migration. None of these things can be solved by acting alone.
If the UK voluntarily left the world’s largest and longest-standing attempt for countries to work meaningfully together, the people celebrating will be those whose money is sitting in Panama when it should be paying for British schools and hospitals and easing the burden on the rest of us. Because there would now be that bit less cooperation in the world – meaning a few more opportunities to make some money in the cracks that would inevitably appear as a result.
Which is where, circuitously, I come back to Radiohead.
Panama Papers is where I want the comparison to end. Because two years after The Bends, Radiohead released OK Computer – arguably the greatest album of the 1990s. And that’s what, stretching my analogy to breaking point, will happen with tax avoidance if we don’t work together. If countries like the UK, as part of alliances like the EU, don’t step up to the plate then the next round of tax avoidance schemes will be on a scale and of an audacity we can’t even imagine. I’m not prepared to let that happen.
In summary? This is no time to start playing Brexit music.
Did the Left win the twentieth century?
That rather provocative question was the title of a debate I attended last week, in honour of the New Statesman’s centenary. It culminated – shock, horror – in a London University lecture hall packed full of New Statesman readers concluding that, on balance, the Left really did carry the day (or, rather, all 36,542.2 of them).
What I found particularly interesting though, and what ultimately informed my brave decision to abstain, was the extent to which everyone was speaking at crossed purposes. Helen Lewis gave a compelling run-through of the Left’s great social victories: women getting the vote, the creation of the NHS, homosexuality being legalised, rights enshrined in law for those from minority backgrounds. Tim Montgomerie replied with an equally compelling account of how no one could really argue that Communism as an economic system had triumphed by the year 2000; in almost every corner of the world, free market capitalism was firmly established as the way in which civilised countries conducted their business.
And the question I was burning to ask, should any of the roving microphones ever have roved their way over to me, was this: could any of the panellists give me a convincing example of anything that the Right had won socially, or that the Left had won economically over the course of the century? I’m not sure they could (though kudos to Simon Heffer for gamely trying to co-opt Margaret Thatcher, arguing that she was left wing economically).
To me, the twentieth century was a 1-1 draw. Or, if you prefer, a triumph for Liberalism: we were socially more liberal as a nation, and indeed a world, in 2000 than we were in 1900; and national and global trade had been liberalised beyond recognition in the same period. I can’t go as far as Philip Collins did and say that this is wholly a good thing – 7 years after the end of the century, in spectacular style, Lehman Brothers and the rest showed us why a complete liberalisation of the market was perhaps not such a good idea.
But I do think that this ‘score draw’ way of looking at the debate is the best way to answer the question. And I think the majority of people were content with that state of affairs. I’d wager that most people, in Britain at least, as the century drew to a close would say that they liked a state of affairs where broadly speaking if they worked hard they were rewarded with a salary that could be spent on a wide range of goods, and were simultaneously safe in the knowledge that they were less likely to be discriminated against for their gender, race, religion or (dis)ability than their grandparents.
Most people would have accepted that as the status quo, which goes to show that “victory” in this sense – and to venture into the arch-Blairite territory of triangulation – is about claiming the centre ground, to such an extent that your approach begins to be seen as the norm, and just “how things are”. In this respect, we can see that social ‘norms’ were much further left at the end of the century, just as economic ‘norms’ were significantly further right.
But this is not an inevitable state of affairs, and nor is the direction in which things moved over the twentieth century. It’s more just a snapshot of where things happened to be when we ticked over from 31/12/99 to 01/01/01. Like a global game of ‘pass the parcel’, it’s more about who was holding what when the music stopped.
And already, I’d argue, we can see the potential for things to move in the other direction. The crash of 2007/08 and the subsequent depression have shown that entirely unfettered capitalism might, just possibly, have one or two flaws. And I don’t agree with Tony Blair that this “has not brought about a decisive shift to the left“. I think there is real scope for a re-evaluation of capitalism along more social democratic lines, and I think that Ed Miliband is making some headway in doing so.
On the other hand, certain social issues – most notably immigration and welfare – are seeing the general public turn sharply to the right. I do not agree with Iain Duncan Smith, but it’s hard to argue that he hasn’t done a powerful job of harnessing (and increasing) that rightward movement. You could even begin to draw a parallel with the banks: decades of increasing liberalisation (be it capital, freedom of movement or social security) have perhaps gone as far as people are willing to allow, and the pendulum is beginning to swing back: to the left economically, to the right socially.
That is where I see the big challenge for the Left as being in the early years of this century: how do we make advances into the Right’s territory economically, seizing the post-2008 mood, while holding on to the victories achieved over the last 100 years (where the post-2008 mood is turning away from us)? To what extent do we try to occupy the centre ground, and to what extent do we try to move it? By the time we get to 2100, we will be able to claim victory both economically and socially?
Can we go from a 1-1 twentieth century into a 2-0 twenty-first?
the unfinished article 
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