Lib Dem U-turn, number 774

Vince Cable says he WILL vote for tuition fee rise.

Obviously I have a duty as a minister to vote for my own policy – and that is what will happen.

* Vince Cable speaking to his local paper yesterday

We want to support each other, we try to agree these things as a group as other parties do. But as I say, my position is somewhat different, but I'm willing to go along with my colleagues.

* Vince Cable speaking on BBC Radio 5 Live on Wednesday

UPDATE:

Cable's confusion over his position on tuition fees is worse than I thought. The Telegraph notes:

He then later rowed back from his comments when asked about them in an interview with a student radio station.

Challenged over his newspaper interview, the Business Secretary said: "I didn't announce anything. I think there might have been some slight misunderstanding.

"What I did try to explain was that the Liberal Democrats as a parliamentary party will be deciding as a group how they will vote on Thursday and I would imagine that in the next few days there will be clarity on that issue."

Yes, Vince, some "clarity" would be great. I bumped into a Lib Dem minister the other night who told me: "We've made up our minds on how we're going to vote [on tuition fees]. We're just not going to tell you."

Peter Hoskin over at the Spectator's Coffee House blog writes:

To my mind, the most likely outcome – and one mooted in the papers today – is a three-way split. That is: Lib Dem ministers voting for the government's policy; most Lib Dem backbenchers abstaining as per the coalition agreement; and a handful of disgruntled Charles Kennedy types voting against it.

On Cable, he points out: "From proposing a graduate tax to backing down from it, from abstaining on tuition fees to voting for them, the Business Secretary has hardly been a model of consistency."

On a related note, Left Foot Forward has the classic video, from Thursday night's Question Time, of the Lib Dem Chief Secretary to the Treasury, Danny Alexander, squirming over the tuition fees issue and evading, again and again, the question of how he plans to vote.

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

Getty
Show Hide image

What is the EU customs union and will Brexit make us leave?

International trade secretary Liam Fox's job makes more sense if we leave the customs union. 

Brexiteers and Remoaners alike have spent the winter months talking of leaving the "customs union", and how this should be weighed up against the benefits of controlling immigration. But what does it actually mean, and how is it different from the EU single market?

Imagine a medieval town, with a busy marketplace where traders are buying and selling wares. Now imagine that the town is also protected by a city wall, with guards ready to slap charges on any outside traders who want to come in. That's how the customs union works.  

In essence, a customs union is an agreement between countries not to impose tariffs on imports from within the club, and at the same time impose common tariffs on goods coming in from outsiders. In other words, the countries decide to trade collectively with each other, and bargain collectively with everyone else. 

The EU isn't the only customs union, or even the first in Europe. In the 19th century, German-speaking states organised the Zollverein, or German Customs Union, which in turn paved the way for the unification of Germany. Other customs unions today include the Eurasian Economic Union of central Asian states and Russia. The EU also has a customs union with Turkey.

What is special about the EU customs union is the level of co-operation, with member states sharing commercial policies, and the size. So how would leaving it affect the UK post-Brexit?

The EU customs union in practice

The EU, acting on behalf of the UK and other member states, has negotiated trade deals with countries around the world which take years to complete. The EU is still mired in talks to try to pull off the controversial Transatlantic Trade and Investment Partnership (TTIP) with the US, and a similar EU-Japan trade deal. These two deals alone would cover a third of all EU trade.

The point of these deals is to make it easier for the EU's exporters to sell abroad, keep imports relatively cheap and at the same time protect the member states' own businesses and consumers as much as possible. 

The rules of the customs union require member states to let the EU negotiate on their behalf, rather than trying to cut their own deals. In theory, if the UK walks away from the customs union, we walk away from all these trade deals, but we also get a chance to strike our own. 

What are the UK's options?

The UK could perhaps come to an agreement with the EU where it continues to remain inside the customs union. But some analysts believe that door has already shut. 

One of Theresa May’s first acts as Prime Minister was to appoint Liam Fox, the Brexiteer, as the secretary of state for international trade. Why would she appoint him, so the logic goes, if there were no international trade deals to talk about? And Fox can only do this if the UK is outside the customs union. 

(Conversely, former Lib Dem leader Nick Clegg argues May will realise the customs union is too valuable and Fox will be gone within two years).

Fox has himself said the UK should leave the customs union but later seemed to backtrack, saying it is "important to have continuity in trade".

If the UK does leave the customs union, it will have the freedom to negotiate, but will it fare better or worse than the EU bloc?

On the one hand, the UK, as a single voice, can make speedy decisions, whereas the EU has a lengthy consultative process (the Belgian region of Wallonia recently blocked the entire EU-Canada trade deal). Incoming US President Donald Trump has already said he will try to come to a deal quickly

On the other, the UK economy is far smaller, and trade negotiators may discover they have far less leverage acting alone. 

Unintended consequences

There is also the question of the UK’s membership of the World Trade Organisation, which is currently governed by its membership of the customs union. According to the Institute for Government: “Many countries will want to be clear about the UK’s membership of the WTO before they open negotiations.”

And then there is the question of policing trade outside of the customs union. For example, if it was significantly cheaper to import goods from China into Ireland, a customs union member, than Northern Ireland, a smuggling network might emerge.

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.