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Jacob-Rees Mogg MP, Chairman of the European Research Group, speaking at Leave Means Leave event in Central London on Tuesday, March 27, 2018
Thank you for that generous introduction Richard, it is a particular pleasure to be here with Leave Means Leave and I am grateful to you for coming today.
We are a year and two days from the witching hour, that moment when we will leave the European Union, at least legally, and will be fulfilling to some extent the promise to take back control. And that is what I am looking forward to discussing: how we do that, what comes next and how we got here.
I know that I am sometimes teased for being the ‘Honourable Member for the 18th Century’, but it is a badge I wear with pride because it was in the 18th Century that the seeds of our greatness, sown long before in our distinguished history, sown conceivably by Alfred the Great, began to grow and to flourish in a way that led to our extended period of good fortune and greatness. But in spite of this admiration and, indeed, love for our Nation’s history, today I want to be, and this may be an effort for me, the Honourable Member for the 21st Century – a century that will see our country regain its independence and stride out once more, into a new age of global trade and cooperation. It has taken us some time to rediscover the opportunities of a truly global Britain and a few cave dwellers still want to stop the process, but with 367 days to go the United Kingdom will be free.
I want to reflect on where we came from, but more importantly to look forward to the world of opportunity that awaits a freshly unbound United Kingdom, as we carry out the democratic will of our electorate. I want to consider how we got to this historic moment where 17.4 million people voted to leave the EU, what leaving the European Union’s restrictive supranational structures means for our Nation, and how we seize a real Brexit: one that is not shy or delivered begrudgingly, but one that seizes the economic and psychological benefits of departing from the fortress that is Europe.
How we came to join the European Union is an important part of understanding our Island story. We won the war and were full of optimism about our place in the World, but then came Suez. Suez was a time of realisation and acceptance that we were not the powerful nation that we had been before. That we were dependent upon the United States for our economic survival and that we could not carry out global plans because of fundamental weaknesses, which had been hidden by the success we had enjoyed with our allies in the Second World War, but were nonetheless there. And once that happened the Nation’s view of itself changed and the Establishment, the Elite, decided that its job was to manage decline, that the best they could do was to soften the blow of descending downwards, soften the effect on the Nation of being less successful than it had been in the past, and recognise that we would not be able to keep up with other countries.
This led to the notion that it was Europe or bust and it was so profound that when Harold Macmillan’s quest to join the Common Market in 1963 was vetoed by a nonchalant Gallic ‘non’ from General de Gaulle, who could have thought that the French would behave in such a way, the normally phlegmatic Macmillan wrote in his diary, ‘all our policies at home and abroad are in ruins’.
That is the true spirit of the post-Suez world and it was a spirit that infected the next Conservative Prime Minister but one, Edward Heath, who succeeded where Macmillan had failed and celebrated our entry into the European Economic Community in 1973, calling on the UK to fulfil our European destiny and take part in building a new and greater Europe. It is worth noting that he also said that it was unjustified and exaggerated to say that in going into Europe we shall in some way sacrifice independence and sovereignty – a judgement and political spin that has not stood the test of time. But in fact many people knew, even then, that it was not accurate. Once the European Communities Act was passed and EU law came in as supreme, Lord Denning, the highly eloquent Master of the Rolls, one of the most eminent Judges of the 20th Century, said it was like an incoming tide that flows into the estuaries and up the rivers and cannot be held back.
Nonetheless, there was hope that joining the Common Market would revive the economy which, as we were managing decline, we could not manage for ourselves. Britain was seen as the sick man of Europe, with our annual growth in GDP per head terms lagging behind that of France, Italy, even Ireland in the period of 1950-1973. We ran at 2.4%, Ireland at just over 3%, France at just over 4% and Italy, amazingly considering its more recent record, at just under 5%. And in our early years of membership, the economy did start to grow. Indeed, the per capita growth of the UK Economy from 1973 – 1995 was ahead of every major European economy, other than France and over the period of 1995 – 2007, though bear in mind that that is a period that encompasses the creation of the Euro, GDP per capita growth eclipsed every major economy in the EU, including France and Germany.
However, before you think I have been brainwashed by the Europhiles it is important to gauge this relative economic success with some caution. First it takes no account of Lady Thatcher’s domestic revolution in the 1980s, which transformed the British Economy, making it into a world beater rather than a world loser. I do not think anybody dared to suggest to Lady Thatcher that she was in the business of managing decline. Second, as eminent academics, including Professor Graham Gudgin from the Centre for Business Research at the University of Cambridge, have said, further analysis does not support the frequently repeated claim that membership of the EEC/EU has been good for economic growth in the UK. This is because growth in UK per capita GDP has been slower since the UK joined the EEC/EU than it was in previous decades: so averages from 1950-1973 of 2.4%, 1973-1995 of 1.76%, 1995-2007 of 2.55%, 2007-2014 of 0%.
The fact that the UK’s growth appeared to improve relative to the major EU economies was wholly caused by the dramatic slowdown of growth in these EU economies. So it was not just about managing our decline, it was part of managing the decline of the whole of the European Union by putting a fortress around it – hence our experience as a Member State is that we did relatively better compared with a part of the world that was itself practically mummified.
Now if we have come to the conclusion that the economic benefits were not that great, it is worth looking at some of the other effects of belonging to the European Union. In the past few days there has been a great furore over fishing rights and we know well the effect on fishing communities that came from joining the European Union, as our waters were declared a common resource in a disgraceful stitch up organised just before we joined. But other effects have taken place too, particularly affecting, harming the least well off in our Society. So when it comes to the unlimited flow of unskilled labour from the EU, analysis that has been undertaken is absolutely clear. Those on low wages pay little tax and are most likely net recipients from HMRC via tax credits, which they often send back to their country of origin, and they receive many benefits in kind that are of a higher level than those available in their home country so there is a major subsidy in encouraging people to come to compete with our indigenous communities.
This is quantifiable in several different ways – specifically on welfare. Recent estimates have found that EU migrants are claiming £4 billion a year in benefits, newcomers in work claim more than £2 billion, whilst those out of work claim around £1.1 billion in tax credits and other benefits. A further £740 million in child benefits was also claimed. This becomes, through the tax credits system, effectively a 20% wage subsidy, so each unskilled EU immigrant costs the taxpayer around £3,500 a year. And this has had an effect, of course, on the poorest in our society, who have found that their jobs have been taken by migrants from the EU. It would be wrong to criticise these migrants, who are individually extremely admirable people and we should never forget that, particularly those of us who are Conservative. To move half way across a continent to a country where you do not speak the language, to work hard to provide for yourself and a better standard of living for your family is a really noble thing to do, and we should not forget the individuals in this story. But the effect has been to lower wages for the least well off in our own Society.
So the Economy has not really grown, communities have been hit and the least well off in the Country have been harmed by the free flow of labour.
Now we need to look at what the Referendum meant. What were people doing when they voted to leave, because there has been much talk about that? Some of the great panjandrums of our time have told us that we were all very stupid and that we did not know what we were doing and that we did not realise that we were voting to leave the Customs Union and the Single market, and that it was all done by uneducated people who ought to have listened to their betters. In truth, the vote was by people who believed in democracy. They recognised that the system that they were used to, where sending a Member of Parliament to Westminster, who would determine their laws and seek redress of grievance, was under threat because once it was EU Law it was impossible. They voted to take back control and, yes, they had specific concerns and some of these were over immigration and some of them were over agriculture and some over fishing and some over regulation but the fundamental underlying point was about democracy and can you change your Government? But they also saw that other countries, whether it be large ones such as America, Canada, India and Australia or smaller countries such as Singapore, governed themselves without recourse to a bureaucracy that provided their new laws, a foreign court or regulations imposed by people they had never met or often never heard of. Many felt they had nothing to lose by turning their backs on Brussels. The dire warnings of Project Fear amplified by self-righteous groups very often funded, like the CBI, by the EU itself fell on deaf ears in many parts of the Country, especially the less well-off ones, because they never felt that these organisations cared about them in the first place.
Yet, in spite of the clarity of the result – 52% to 48%, there are still many people who do not accept it as final. You can see this with the debates going in the House of Lords; you see this with leaked comments from a civil servant saying that it was going to be a KitKat departure. A pretty second rate analogy but nonetheless indicative of an establishment view that we should not really leave. We have seen it with two recent Select Committee reports – the Exiting the European Union Select Committee, on which I serve and where I was part of a minority report that rejects the conclusion that we should extend Article 50 and that we should increase the transition period; and the Home Affairs Select Committee saying also that we could not sort out Home Affairs in time. What this is about is softening people up to extend the transition, delay, frustrate and potentially deny. It is noticeable that on my own committee every single MP who voted for the report had voted for remain in the Referendum. It seemed to me quite clear that they were voting to reverse the result of the Referendum and that that was implicit in the report’s recommendations.
What would that mean for this Nation? If we were not to leave, if we were to find a transition bound us back in? Well it would be Suez all over again. It would be the most almighty smash to the national psyche that could be imagined. It would be an admission of abject failure, a view of our politicians, of our leaders, of our Establishment that we were not fit, that we were too craven, that we were too weak to be able to govern ourselves and that therefore we had to go crawling back to the mighty bastion of power that is Brussels. Suez affected the Nation’s view of itself until Margaret Thatcher became Prime Minister. It infused throughout the body politic the view that the best we could do was to manage decline. Margaret Thatcher tried to break away from that, but it was such a strong feeling that once she had gone it seeped back again. It is still there and the Remainers are part of that group, who do not feel that we are able to do things for ourselves. Although countries across the Globe can govern themselves, poor little Blighty cannot. Poor little Blighty must shelter itself from the winds of global competition by hiding behind the protective, albeit crumbling, walls of Fortress Europe. We would be saying, if we reversed this decision, particularly if we did so by subterfuge, by prestidigitation, by legerdemain, – we would be saying that once again not only can we not govern ourselves but we are so frightened of our electorate that we dare not tell them that that is what we believe. As with the disaster of Suez it would end up being a national humiliation based on lies.
So this is where we have got to: Brave British people have said we can do it for ourselves and some managers of decline still deny it.
This means we need to reiterate the arguments around why we ought to be leaving and what the benefits are. Well part of this case is made for us by the European Union because of the way that it behaves in the negotiations. Anyone who had any doubts about the niceness, the kindliness, the friendliness of the European Union need only look at its approach, its bullying approach, to us in the negotiations: have they entered into the negotiations in the spirit of wishing everyone good will? No, not at all. They have entered it in the spirit of they know best and we must do as we are told. No wonder two thirds of British people in an opinion poll say the EU’s behaviour is bullying.
According to the EU, despite the fact that we have provided the defence of Europe, along with the Americans, since the Second World War, have far and away the best intelligence agencies, and have been responsible for being the main safeguarders of the Continent’s security, we apparently suffer from the problem, problem no less, of listening exclusively to our National opinion, something which we like to call in this country ‘democracy’, and we have been told that the time will come when Britain regrets Brexit.
We ought to leave in a way that is absolutely clear, and here I am in complete agreement with the Prime Minister, Theresa May. She has been explicit that Brexit means Brexit and has reiterated this at Lancaster House, Florence, and the Mansion House: we voted to leave the Single Market, to take control over our borders, for our immigration, and those matters must be decided in our own Parliament.
We have voted to leave the Customs Union, to gain control over our trade policy for the first time in decades and to allow the UK to pursue trade deals with the markets from where the majority of global growth will come in the next few years, predicted to be 90% in ensuing decades. This will do more to lower prices on everyday items to consumers by reducing the Common External Tariff which artificially raises prices. We have voted to leave the jurisdiction of the European Court, which will no longer have control over our laws and make sure that the United Kingdom Parliament and Supreme Court are the arbiters of our laws and justice. We voted to stop sending £10 billion net a year to the European Union and I think that money should be used on the National Health Service.
In addition to this we have been consistently clear that no deal is better than a bad deal and it is worth reiterating this point, because there has been a lot of talk about how we are not prepared. We have not built car parks at Dover and we have not got new EU immigration lines at Heathrow. Yet we are more prepared than the European Union for this very simple reason – when we leave, if we were to have no deal, how goods come into this Country will be a decision for us. We will be able to say that goods from Europe, whose standards we are quite happy with, because until the day before they were the same standards as ours, can carry on coming in freely and that we will carry on checking goods coming through Dover for illegal drugs, for armaments and for people smugglers, but that we will not check them for tariffs because we will not apply any tariffs. That will be under our control.
It is worth asking what preparations has the EU made for no deal because if the EU is faced with no deal it is insolvent? The EU has no legal ability to borrow, it has to raise its money it seeks to spend from the Member States. If it does not have that money, it cannot spent it. What plans has the EU made to cut expenditure in Romania, in Poland, in the Czech Republic? Or what plans has it made to ask the Dutch and the Germans and the French for more money to fund those projects? The answer is none. Its commitments are still there but it would not have the funding to pay for them. Oh, and it will be a quarter of the way through a financial year anyway so it would be a sudden hit for the EU if we left without a deal, without paying any money.
So we have great strength in this position, no deal is better than a bad deal for us, but it is a disaster for our Continental friends. And that is before you get onto the issue of tariffs, though personally I think it would be idiotic to put tariffs on European goods, which would merely hurt UK consumers.
So, our red lines can remain, we must ensure that we do not give in to the naysayers. But we must then look to the broad sunlit uplands of Brexit. What is it that will really give us the benefits of having left? And this falls, to my mind, into a number of categories.
The first advantage is economic and I set much of this out in the talk I gave alongside Economists for Free Trade, with particularly Professor Patrick Minford, that a real Brexit can offer our Government a post-Brexit dividend of £135 billion between 2020 and 2025 and a further £40 billion per annum from 2025 onwards. These benefits will only be realised by a combination of global free trade for Britain outside the Single Market and the Customs Union plus opening up the UK Economy to the positive effects of entrepreneurial dynamism. That Europe is near the bottom of the class when it comes to the number of business start-ups tells you all you need to know about its attitudes to enterprise. The most obvious benefit from Brexit for families will be our ability to leave the EU’s protectionist prison of a Customs Union, which puts up barriers to Global Trade and keeps prices of non-EU products at an artificially high level. Since on average 21% of people’s income is spent on food, clothing and footwear the prices of these three commodities are vitally important to the families of people across the Country. Let us not forget that this percentage, this 21%, will be even higher for the least well off. The Customs Union though has no mercy for the least well off, with these three items being the highest tariffed sectors in the Customs Union. 26% on food, 11.8% on clothing and 11.4% on footwear on average, and, in addition, food is obstructed by many non-tariffed barriers to make it almost impossible to import.
As it is expected that 90% of global growth is going to come from outside the EU in coming decades, this talk is not just theoretical, it makes economic sense to be opening up to nations that are growing and who will want to trade with us. It will also boost the living standards of the least well off when we leave the Single Market and gain control over our borders.
The 20% wage subsidy that is provided to unskilled EU migrants from tax payers costs approximately £3500 per worker. This is something that hits the least well off most. Getting the level of unskilled EU migration under control, and that means reducing it, could help see the living standards of the least well off rise by 15% when we leave the constraints of the Single Market. We need to ensure that we are focused on those who need our help most and that is why we can have a very open regime to high skilled labour which does not present the same economic problems as low-skilled.
More intriguingly there is the economic advantage from the ending of the ‘colonial effect’. The Economist Intelligence Unit produces long-term forecasts for developed and developing economies in its Country Forecast reports. Its model looks at the main determinants of long-term growth, including quality of institutions, demography, human capital, trade, regulatory environment and so on. Interestingly, the model includes a variable on independent statehood. The colonial effect depresses annual long-term growth in GDP per head by about one percentage point. As Laza Kekic, who developed the model, has written, the ‘colonial effect’ in the model is strong and extraordinarily robust in all specifications. Moreover, it is persistent over time, even after the end of colonial rule.
Although EU membership is, of course, not literally the same as being a colony, the factor does capture the importance of self-rule, or ‘taking back control’. The long-term growth model suggests a maximum positive impact from these two [the other being the shake up effect] growth sources of some 1.2 percentage points per year. But applying just half of this potential would increase annual average growth by 2050 to 2.8%, or 2.4% in per capita terms—a similar rate achieved by the UK economy during the 1950-73 and 1995 and 2007.
While economics is important it is not everything and there are other advantages to leaving the European Union, sometimes ones which are less easy to measure.
The restoration of our constitution may seem esoteric but it is of considerable importance.
It is not necessary to accept the Whig interpretation of history to see the advantages of our constitutional settlement and the benefits it has brought to us as a nation as it evolved. A democracy underpinned by the common law and the rights that come with that, responsive to the needs of the electorate and of changing times, flexible enough to alter when necessary but robust enough to stand up to the vicissitudes of political change.
The British constitution is an object of great beauty. It is entirely democratic, but has built in protections against raw populism. The power of Parliament to make laws is theoretically unlimited, but in fact is constrained both by the requirements of election and by the independence of the judiciary. It has the ability to act quickly in changing circumstances and respond to the demands of the electorate, but the process of legislation and the bicameral nature of the legislature mean that only the most ruthless prime minister with the largest majority can force through fundamental changes and such a person is likely to have widespread support for what is being done anyway.
It also has, through the constituency member of Parliament, a powerful link to individual voters, who may still seek the historic rights of ‘redress of grievance’ from their Member of Parliament. This is carried out weekly up and down the country as MPs hold constituency advice bureaux where they undertake to act as the champion for their constituents.
The common law fits in with this, as it is a human system based on precedent and historic understanding, and can only be changed by specific statute, this provides both continuity and flexibility. It avoids arbitrary or bureaucratic rule.
The European Union is based on a different approach to government and a separate understanding of how the state ought to work. This is not necessarily better or worse but it has always been hard to graft one on to the other.
Restoring our constitutional order should lead to better government. Politicians will no longer be able to evade the blame if things go wrong by saying it was decided elsewhere; they will have to take responsibility for their actions. Equally, it will not be possible to pretend that if it was not for a remote bureaucracy we would not make mistakes. Power and responsibility go hand-in-hand and will be reconnected once we have left the European Union.
Leaving will also restore our global standing. Partly this is technical. We will once again take up our own seats on international bodies where we have delegated our activities to the EU. In the World Trade Organisation, instead of being one 27th of a representative, we will have our own place. This will inevitably give us more influence because we will be there arguing our corner rather than leaving it to an EU representative to have to stand up for us.
Removing ourselves from the requirements of “sincere cooperation” will also restore our global standing. This legal requirement of the EU has meant that even where we have maintained our own individual representation, we are bound to put our interests beneath the collective requirements of the EU. This will end once we leave and will allow us to be more forthright in defending our own interests and pursuing our own policy.
This does not mean that we will not want to cooperate with our neighbours, but we will be able to do so from a position of strength and independence. It is striking that the Prime Minister’s robust response to Russia has occurred as we are leaving the European Union. Even the prospect of freedom has made us bolder and more forthright in the defence of our national interest. At the same time, our allies rallied to our cause because they respect strength rather than weakness.
With one year to go before the technical date of departure, this is the challenge to the decreasing number of Remainers who model themselves on Mr Hiroo Onoda, the Japanese soldier who finally surrendered in 1974 having previously refused to believe that the Second World War had ended.
There is a world of opportunity ahead of us. Economically, leaving the European Union by getting rid of unfair, anti-competitive tariffs and by controlling our borders will help the least well off in society the most. Constitutionally, we will be in charge of our own destiny protected by our own laws and with no more excuses for our politicians. In international affairs, we will be setting our own direction not hiding behind the skirts of the German Chancellor.
If we do not believe that we can do better by our own efforts, our own endeavours and our own choices, then we have become the managers of decline. Suez was forced upon us because of our precarious financial state after the war and the dishonesty of those who pursued the policy. The national humiliation was brought upon ourselves.
This time it would be worse. We would be admitting as a nation that we simply did not cut the mustard, we were not up to taking our place in the world, and we were so fearful, fretful of the future, that we had to allow somebody else to do it for us. It would be an unutterable failure of political will by the Establishment when the British people have shown the courage to take their destiny in their own hands.