David Laws: Cameron's true-blue wingman

The Lib Dem will say things even David Cameron won’t.

David Cameron has continued his efforts to open up some “clear blue water” between his own party and their Liberal Democrat coalition partners. In an interview with the Mail on Sunday, he trails a plan to scrap housing benefit for under-25s. He says:

A couple will say, “We are engaged, we are both living with our parents, we are trying to save before we get married and have children and be good parents. But how does it make us feel, Mr Cameron, when we see someone who goes ahead, has the child, gets the council home, gets the help that isn’t available to us?”’

‘One is trapped in a welfare system that discourages them from working, the other is doing the right thing and getting no help.
It’s a measure guaranteed to be unpopular with Liberal Democrats, but also seemed tailor-made to discourage anyone under the age of 25 from voting Conservative.

For a glimpse into what this cut could mean for many young people, you can't do better than to read Petra Davis' piece on it from earlier this year.

There are also hints that plans to limit child benefit to a couples first three children are back on the table, although the MoS states that he won’t be doint that “unless he wins public support, and even then it won’t be until after the next election.”

However, David Cameron receives help from an unexpected quarter this morning in his efforts to assert his diehard Tory-ness. David Laws has given an interview to the Sunday Telegraph in which he discusses the need for deeper tax and spending cuts. Only health, education and pension spending should be protected, he argues:

We are going to have to see a shrinking of the state share of the economy until it is back into kilter with the amount of tax people are prepared to be pay… Future UK governments should consider a further substantial rise in the personal tax allowance, along with lower marginal tax rates of tax at all income levels.

Whenever Laws makes an intervention like this (which he has done periodically since leaving the Cabinet in 2010), the likes of Paul Goodman at ConservativeHome call for his return to the top ranks of government, although quite who Laws could practically replace is far from clear.

I’m not so sure Laws is headed back to a ministerial position, though. He seems to be doing an excellent job of being David Cameron’s true-blue wingman, saying the truly Tory things that a Conservative PM fearful of his chances of ever securing a majority shies a way from. Laws blurs the lines between the coalition partners. If he comes back inside the Cabinet room, the differences and disagreements will suddenly look a lot starker.

David Laws during the coalition negotiations in 2010. Photograph: Getty Images

Caroline Crampton is assistant editor of the New Statesman. She writes a weekly podcast column.

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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.