How Labour plans to exploit coalition divisions over childcare ratios

The party will table a Commons vote to enshrine the current ratios in law after confusion over the government's position.

Despite Nick Clegg declaring last week that plans for new childcare ratios were "dead in the water", the government has still refused to confirm that this is the case, merely stating that it will make its position clear "shortly". 

The reason for the confusion is that the Tories weren't expecting Clegg's intervention. While resigned to losing the reforms, they hoped to make a managed retreat. But the Deputy PM ended any hope of that when he said: "There is no real evidence that increasing ratios will reduce the cost of childcare for families. The argument that this will help families with their weekly childcare bill simply does not stack up. I cannot ask parents to accept such a controversial change with no real guarantee it will save them money - in fact it could cost them more."

Eyeing a political opportunity, Labour has announced that it will table a Commons vote today enshrining the current ratios in law. As in the case of the recent motion on a mansion tax, the aim is to highlight the coalition's frayed unity, while challenging Clegg to put his vote where his mouth is.

The Commons will debate the remaining stages of the Children and Families Bill today and Labour has tabled New Clauses 6 and 7, which would protect the current ratios by transferring them from statutory guidance to primary legislation. Children's minister Liz Truss has proposed changing the ratios from 1:3 to 1:4 for children under one and one-year-olds and from 1:4 to 1:6 for two-year-olds.

Shadow children and families minister Sharon Hodgson said: "Ministers have no credible plan to solve Cameron’s childcare crisis. The one plan they did have would have put quality and safety at risk, and there was no evidence it would have made childcare cheaper.

"We want to ensure that David Cameron and Michael Gove are prevented from making these potentially damaging changes, which they haven’t ruled out in spite of last week’s announcement from the Deputy Prime Minister.

"If Nick Clegg is serious about blocking Liz Truss’s reforms, he should lead his MPs in joining Labour in voting for measures to protect child safety. We need action not warm words."

While there's little chance of Clegg rising to Labour's bait, this is another example of how the party is fighting smart as the coalition begins to unravel. 

David Cameron and Nick Clegg visit the Wandsworth Day Nursery in London on March 19, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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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.