The Lib Dems' shift left could be more dangerous for the Tories than Labour

With the Tories his party's main electoral foe, Clegg is seeking to woo the One Nation voters alienated by the Conservatives' UKIP tendency.

Chris Huhne has ventured in Juncture magazine that any Labour/Lib Dem coalition after the next election is likely to be based upon common agreement in the policy areas of tax, the environment and housing. Which would be grand if he’s right, as Lib Dem members seem to think that these three areas (plus jobs) should form the four key pillars of the 2015 manifesto.

And indeed the received wisdom is that Nick has moved left (much to the chagrin of certain high profile MPs) - remember the long list of things we’ve stopped the Tories doing in government announced at conference, the free school meals announcement, the agreement to look again at secret courts post 2015, the apparent acceptance that the bedroom tax might not be the best idea since sliced bread...

The differentiation strategy is in full swing and it looks like Nick has heeded the advice of Tim Farron when he said of left-leaning Lib Dem voters from 2010: "The people who are most likely to vote for you next time are the people who voted for you last time...You don’t write people off, they’re there to be persuaded to come back, or rather stay with us". 

So, it’s all guns blazing on the swing to the left. Or is it? I wonder if there isn’t another thought in the minds of Great George Street folk.

We’ve already tacitly accepted that 2015 is going to be tough for the Lib Dems and we’re in defensive mode. The second place party in the majority of our seats is the Tories, not Labour (38 vs. 19). Of our top 50 target seats, the majority are Tory. Of the 13 seats we lost in 2010 – in theory, the easiest for us to win back – no less than 10 fell to Tories.

Which is why I suspect what’s going on is less a lurch to the left but a small veer, designed to appeal to One Nation Tories alienated by the UKIP tendency in the Conservatives that seems to be in the ascendency. The sort of person who cares about the environment, who bought into "vote blue, go green" and now feels a little let down. The sort of voter who benefits most from the rise in the income tax threshold. The sort of voter who cares quite a lot about house prices and home ownership. The sort of voter Nick Boles had in mind when he suggested it might be time for a revival of the National Liberal Party – before it was pointed out that there already is one…

The environment. Tax. Housing. It’s what we’ll be fighting the next election on. But I wonder if it’s an agenda that should give David Cameron more sleepless nights that Ed Miliband?

Richard Morris blogs at A View From Ham Common, which was named Best New Blog at the 2011 Lib Dem Conference

Nick Clegg speaks at the Lib Dem conference in Glasgow earlier this year. Photograph: Getty Images.

Richard Morris blogs at A View From Ham Common, which was named Best New Blog at the 2011 Lib Dem Conference

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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.