Tory grassroots urged to ‘chuck Chequers’
Letter to grassroots rebuts Theresa May’s Chequers compromise and asserts UK does not need EU deal
Jacob Rees-mogg and his fellow Tory Eurosceptics have written to local party associations saying the Prime Minister must “chuck Chequers”. Mr Rees-mogg’s letter is a rebuttal to one sent by Theresa May to members earlier this month. It states that the UK “does not need to do a deal with the EU”. It comes as Dominic Raab, the Brexit Secretary, publishes around 20 technical papers setting out no-deal plans on areas such as customs, health and farming.
THERESA MAY must “believe in Britain” and “chuck Chequers”, Jacob Rees-mogg and more than 60 Tory Euro-sceptics have said in a letter to grassroots Conservatives. Earlier this month the Prime Minister wrote a letter to all members of the Conservative Party defending her plan, saying that it “honours” the result of the referendum.
Mr Rees-mogg, the Eurosceptic backbencher, has now written a letter to all Conservative associations with a point-by-point rebuttal of Mrs May’s Chequers compromise, describing it as the “wrong deal for Britain”.
It states that the UK “does not need to do a deal with the EU” but the EU “needs to do a deal with us at all costs”.
It comes as Dominic Raab, the Brexit Secretary, today publishes around 20 technical papers setting out plans for a no-deal on areas including customs, health and farming.
The Daily Telegraph has learnt that one of the most contentious papers will require British businesses to treat EU nations as “third countries” in the event of a no-deal Brexit, declaring all imports from the Continent and paying customs duties.
In the letter Mr Rees-mogg says: “The Government would be wrong to be fearful of Britain enjoying an independent future. Theresa May’s Chequers proposals would shackle us to the EU forever. We would be out of Europe yet still run by Europe. This is why the Prime Minister should “chuck Chequers” and instead seek a Canada-style free-trade agreement with the EU to make the most of the global opportunities that lie ahead.
“It is time the Government realised that the EU stands to lose much from no deal being agreed and stopped being cowed by the EU’S threats. It is time to face down vested interests in the establishment and put democracy first.
“Yet, most of all, it is time ‘to chuck Chequers’, respect the referendum, be out of Europe, take back control and believe in Britain.” He says that should the European Union continue to “bully” Britain the UK would leave with a Canada-style trade deal or World Trade Association terms. “We believe in Britain,” the letter says.
The briefing note states that the Chequers deal would “prevent taking back control of our borders”, and warns that proposals for “reciprocal mobility arrangements” are “dangerously close to free movement”. It warns that the Prime Minister’s plans to retain EU rules on goods would force the UK to accept the rulings of the European Court of Justice.
It also rejects Mrs May’s claim that there will be “no more vast annual sums paid to the EU”, highlighting the Brexit divorce bill and continuing payments into the EU’S aid budget and defence funding. The Chequers compromise would inhibit Britain’s ability to do free trade deals and “tie our economy and our future to the EU indefinitely”.
‘It is time the Government realised that the EU stands to lose much from no deal being agreed’
How wrong can anybody be? It was just a little over two years ago, in an alien political universe, that George Osborne was threatening the electorate with a masochistic punishment beating were they to have the temerity to back Brexit.
Merely voting Leave – as opposed to actually extricating ourselves from the EU – would cause an almost immediate “DIY recession” and a £30 billion “black hole” in the public finances, our then chancellor claimed. This would necessitate a kamikaze “emergency Budget”. Income and inheritance taxes would shoot up, and NHS spending would be slashed: Project Fear succeeded in scaring some into voting Remain, based on the shoddiest piece of economic forecasting since the collapse of Lehman Brothers.
By now, two years on from the referendum, house prices “would be hit by at least 10 per cent and as much as 18 per cent”, Osborne said. “As many as 820,000 jobs [would have been] lost” and “youth unemployment would [have risen] by over 10 per cent”, all caused by the demagogic claim that “a vote to leave will push our economy into a recession.”
Some of the “predictions” – in fact, shameful propaganda produced by the Treasury, that most self-satisfied of departments – were set against a benchmark of us voting Remain, and are therefore hard to assess. But there has been no recession, employment has repeatedly broken records, and the public finances are buoyant. The unemployment rate has fallen to 4 per cent, its lowest since 1974-1975.
My guesstimate is that GDP is probably a little over 1 per cent smaller than it could otherwise have been, but that is relatively inconsequential when set against the 6 per cent “downside scenario” predicted by Osborne’s Treasury. Unusually, the Eurozone did better than the UK in 2017, but the picture is no longer clear-cut this year: Britain’s second quarter growth of 0.4 per cent was higher than the Eurozone’s 0.3 per cent. Better than expected Vat, income tax and National Insurance receipts suggest that the UK economy is in fact growing faster than the official figures would indicate.
Yet Eurosceptics shouldn’t be lulled into a delusional Panglossianism. Both sides have seen some of their predictions demolished since the referendum, including Brexiteers who thought it would be easy to sign a mutually beneficial free trade deal. The chances of a no deal remain elevated, and there will be more confidencesapping Remainer anguish as the Government releases some of its advice for such an eventuality today. There are major challenges ahead, and we are at the mercy of the least competent Government in living memory.
Osborne himself wasn’t wrong about everything. The pound did fall substantially, and this pushed up inflation for a while, even if not by as much as he feared, cutting real wages. Many metropolitan voters have put off buying homes, frightened by the incessant doom-mongering.
Where the former chancellor was definitely right was in his assessment that leaving the EU is the kind of seismic event that necessitates an aggressive fiscal reaction, even if his specific proposals were the opposite of what was required. Taxes needed to be cut, not raised. In fact, Osborne himself saw the light, a little late: two weeks after the result, he called for corporation tax to be slashed to 15 per cent, and for measures to show that the UK was “still open for business”.
One of the current Government’s most unforgivable errors – together with its bovine failure to flex its muscles during negotiations and its under-investment in no-deal preparations – has been its selfharming refusal to make use of fiscal policy to smooth Brexit and to make the economy more competitive. There should have been a game-changing, pro-growth emergency Budget over the summer of 2016; a version of the idea was at the heart of the doomed Stephen Crabb-sajid Javid joint Tory leadership bid, and a Boris-gove victory would undoubtedly have led to a fiscal revolution. It was not to be, and we are still paying a bitter price for the May Government’s lack of imagination.
Yet it isn’t too late for Philip Hammond, perhaps the least activist Chancellor of the post-war period, to put the full might of the Government’s fiscal power behind Brexit. The latest public finance statistics were spectacularly strong: over the first four months of the current financial year, the deficit was down by 40 per cent on last year, the lowest borrowing for the April-to-july period since 2002-03. The data are preliminary, and helped by the fact that government spending only rose by 0.7 per cent during the period, but the trend is clear. Yes, in an ideal world there would be a budget surplus by now, and the national debt is uncomfortably high. But these are extraordinary circumstances: the UK is seeking to regain its self-government, and this more than justifies some substantial fiscal loosening.
So what could Hammond do? Corporation tax receipts have surged by more than £10 billion over the past two years, thanks to lower tax rates, a bigger economy and various stealth cash grabs. Now is therefore the time to slash corporation tax further: not merely down to 15 per cent, from today’s 19 per cent, as Osborne was suggesting, but all the way to 12.5 per cent, matching Ireland’s level and sending a resounding message to the world that Britain is back.
If the EU doesn’t want to cooperate, we can find our own ways of attracting capital and cancelling out the damage caused by EU protectionism. The Chancellor should cut the banking levy: it is chasing business away from the City at a time when London needs to become much more competitive. He should also scrap the apprentice levy, cancel all other planned tax increases and propose a series of deregulatory moves, not least in land planning.
Sickeningly high levels of stamp duty are discouraging people from buying and selling homes, and, as a result, revenues from that absurd levy are down 9.9 per cent this year. Hammond should halve the tax immediately, and cut capital gains tax on all assets to 18 per cent, the level at which it was until Osborne increased it in 2010. This would further help housing market liquidity, encouraging some buy-to-let investors to sell up.
There is much more that Hammond should do, of course, including spending more on no-deal preparations, devising schemes to help those most hurt by the EU’S protectionist barriers and explaining how free trade will keep prices down and the shops filled after we leave. Brexit Britain is crying out for an emergency, mould-breaking Budget.