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How Spending More on Defence Can Cost the UK Less

by John Brian Shannon

On June 23, 2016 the United Kingdom held an historic referendum so that voters could decide whether they wanted to leave the European Union governance architecture and over 52% of UK voters elected to “Leave” the EU.

Subsequent divorce negotiations between the two sides have been sporadic with short bursts of progress.

In recent days, UK Prime Minister Theresa May suggested to EU negotiators that a figure of £40 billion would be an appropriate amount for the UK to pay the European Union as a sort of “divorce fee” to allow the UK to leave while still gaining a favorable post-Brexit trade deal with the European Union.

However, the day after PM May suggested the £40 billion divorce payment, her government tabled an autumn budget with massive budget reductions for the already cash-strapped British military, one assumes to be able to afford the unprecedented divorce bill that the UK must now pay before March 29, 2018.

This blog post discusses the pros and cons of UK Ministry of Defence cuts and suggests a better way to afford the Brexit divorce bill.


The Responsibility of Government

The Number One responsibility of every government in the world is the protection of the country’s citizens and the sovereignty of the national borders. Everything else by definition, must be of lower importance. That’s how countries work.

Yes, even the UK’s cherished and highly ranked National Health Service (NHS) funding must fall to second place behind the safety and security of the country — as the NHS could (if worst came to worst) access significant billions in funding via corporate sponsorship — an option not open to the military.


How to Determine Military Funding

The size, composition and funding of the UK military MUST be determined by its overall mission — not arbitrary decisions by bureaucrats. Full stop.

(NOTE 1) Long-term stable defence funding is far better than generous amounts one year, followed by low funding the next (due to arbitrary budgetary decisions not based on actual military need) and then, who knows what funding they might get the year after? It’s the absolute worst way to fund a military. Pencil-pushing bureaucrats might as well be working for the enemy at that point.

(NOTE 2) This blog post isn’t “for” or “against” Theresa May or Philip Hammond, it’s a general statement on how to best fund any military, anywhere.

(NOTE 3) This blog post is based solely on the opinion of its author, although any military officer in the world would agree were they to view it from the UK perspective.


So, what is the mission – in order of priority?

  1. Absolutely 100% protection of the land, sea and airspace around the UK.
  2. NATO commitment.
  3. Commonwealth mutual aid.
  4. United States mutual aid.
  5. Potential Commonwealth member mutual aid.
  6. Only UN Security Council approved missions (and never any unapproved foreign missions)
  7. Creation of a HUGE civil engineering department, on par with the U.S. Army Corps of Engineers which build many of America’s roads, bridges, dikes, levees, ports and other infrastructure too important to be left to corporations where profit makes the final decisions. Oh, by the way, the U.S. Army Corps of Engineers saves the American taxpayer more money than it costs when compared to having U.S. infrastructure projects built by corporations. The UK has missed “windows of opportunities bigger than the sky” by not building critical national infrastructure using the UK military under a USACE-style system, and it has cost multi-billions more that it should.
  8. Humanitarian assistance delivered to any natural disaster zone or human-caused crisis anywhere in the world.

Conclusion

Military forces perform better when their mission is clearly defined, when they have stable funding (and once the amounts have been promised by the government, untouchable) and have very clearly defined powers.

Tampering with this age-old formula for success is the surest way to help any military fail in its appointed role, and will work to demoralize the troops and cost the taxpayers much more than by using universally accepted practice.


  • To watch a segment from LBC’s The Nigel Farage Show on the topic, click here.
  • To read a related Westmonster.com blog, click here.

 

The Brexit Team: Swiss Watch or Contraption?

by John Brian Shannon

One of the most credible economic stewards to serve Britain in a long time is the inscrutable Philip Hammond who has done nothing but improve the UK economy since the day he was sworn in to the post. Which was merely an extension of him having been born for the job, it seems.

It’s not only that; Mr. Hammond’s word carries a lot of weight in foreign capitals, and in the EU his word is his bond. Soft-spoken, adroit and adept, Hammond is one of the darlings of financial capitals everywhere and it’s a great thing to see him in his element.

So began Prime Minister Theresa May’s summer vacation, where she and her husband (also named Philip) went off to Switzerland to take the mountain air and hold long and meaningful conversations at full stride up the Matterhorn.

Leaving the country in the capable hands of Philip Hammond must be a comforting thought for Theresa May as she and hubby blow past the tourists struggling to get to the top for a selfie. My advice: Just get out of their way or you’ll get run over. Seriously.


The Exchequer comments on post-Brexit Immigration

However wonderful it is having a powerful Exchequer, there is the temptation for them to overstep their bounds and cross over into the areas of responsibility reserved for the Prime Minister.

And just as predictably as that; Before Theresa May had gotten her first alpine air, Hammond told reporters, “there should be no immediate changes to immigration or trading rules when Britain leaves the EU in March 2019.” (Sky News)

It’s forgivable, and probably wise for Conservatives to be seen voicing the concerns of voters on both sides of Brexit. However, Exchequers should stick to their primary interest (the economy!) and let others, whose direct responsibility it is, to hold forth on immigration issues.


With Theresa away, the Remainers will play

While Theresa May gets some mountain air, the Remainers in the Prime Minister’s cabinet are clearing the air by presenting their side of Brexit — and that’s fine. But let’s make certain that fair play rules are enforced; Which means that cabinet officers publicly comment only on their primary area of responsibility. Only the Prime Minister has the authority to publicly comment on all matters, otherwise it looks like a circus.

Every misstep is celebrated in foreign capitals. People in the EU who may be opposed to Brexit are incredibly strengthened by each implied criticism directed towards the Prime Minister by members of her cabinet.

The entire period of Brexit is a highly unique time, a time where all Britons must pull together and come to the realization that many in the EU are fighting for a ‘Win-Lose’ outcome, an outcome where Britain loses vis-à-vis the European Union.

Meanwhile, the best of the Brexiters are fighting for a ‘Win-Win’ outcome where both Britain and the EU win. And those are the people I’m putting my money on.


Clear Lines + Clear Thinking = Positive Results

There’s nothing wrong with MP’s on both sides of Brexit informing the public about how they would proceed on any matter — as a sort of trial balloon to gauge public mood. That can be useful moving forward by keeping those who voted Remain interested and engaged with Brexit, and there is every opportunity that Remainers may come up with excellent ideas related to soft Brexit implementation within their field of expertise.

But greater care must be taken to avoid strengthening the hand of anti-Brexit forces in the EU, now that Britain has finally! asserted her rights.

Government ministers must draw the distinction between legitimate discussions about how Remainers (read: Soft Brexiters) or vocal Brexiters (read: Hard Brexiters) would handle any Brexit issue — and how the wrong sort of discussions or even the wrong tone of discussions could work against Britain in foreign capitals. The wrong public discourse works against both versions of Brexit.

Let’s not be naive. Each misstep by anyone in the UK government is celebrated at the EU Parliament and certain EU capitals. Whatever is going on behind the scenes within the UK government, a unified face must be presented to the world in order to obtain the best Brexit result.


Controlling the Narrative: Job #1 for Every Prime Minister

UK government ministers, and possibly even the Prime Minister herself may not yet realize the extent to which the world now sees the United Kingdom as a completely different entity. The UK no longer exists as only one of 28 EU members, and what the UK will eventually become, is unfolding every day like an onion being unpeeled.

Is the UK destined to become a nation of cross-talkers, mixed messages and unreliable partners? Or is Britain starting with a clean sheet to become all that she can and should become in the 21st-century?

Only the Prime Minister knows, as she’s the one holding the pen. Let’s see what script she writes.

Theresa May’s secret weapon – the UK economy

by John Brian Shannon | November 29, 2016

Some things are expected, and some things sure aren’t. And one of the things that wasn’t expected even by the most vociferous Brexiteers prior to the June 23 referendum, was the strength of the UK economy.

Gross domestic product (GDP) in current prices of the United Kingdom (UK) from 2010 to 2020 (in billion U.S. dollars)

Britain’s GDP from 2010 to 2020. To view the interactive chart, visit Statista.com

In the run-up to the referendum, Bremainers used the fear of an economic crash in the UK to good effect, lowering support for Brexit from a high of almost 70% down to 52% in the final two weeks of the campaign.

Even so, Britons ‘knowing’ in their hearts there would be high economic costs to exit the EU (because famous Op/Ed journalists told them so) they still voted for more democracy, more sovereignty, and more control over immigration

The latest OECD report, informs us that GDP growth in the UK next year will be a healthy 2% — beating major Western and developing nation economies, and the following year is estimated to be in the 1.5% range. Not bad, considering the doom that was supposed to be upon us and considering that the OECD itself had earlier predicted UK growth to be at 1.5% and 1.2% (at best) over the same two-year period.

Sure, some things need to be carefully navigated. Raising the minimum wage for UK workers over age 25 (called The National Living Wage) could be an additional cost for some employers and could thereby increase the unemployment rate among workers. But it’s an overstatement to say that could happen in a growing economy however, if the economy begins to contract it becomes incrementally more serious.

Something else that bears watching is the fall in the value of the pound — which is seen as a desirable thing by economists as it increases exports in almost every country where currency devaluation has ever occurred — but if it doesn’t happen, a speedy remedy must be found. A falling currency with no appreciable increase in exports has no value at all, and only serves to make foreign goods and foreign travel for Britons, more expensive. Government intervention must therefore be instant and right on target in order to rectify the problem.

The UK economy is largely service based (due to the historical high valuation of the British pound) and with a falling pound manufacturing exports should rise in tandem with the falling currency (with plenty of lag time, as it isn’t an instant process) yet if it carries on for too many months, government must intervene to help exporters.

Help is not ‘help’ unless it is actually help.

Providing the right kind of assistance to British manufacturers is key here. There’s no use having the international trade office providing help to access foreign markets if transportation bottlenecks are the problem! Likewise, if limited access to rare-earth metals is the thing restricting manufacturers, lowering the corporate tax rate won’t help.

It’s about listening carefully to the needs of exporters

It’s about meeting every manufacturing CEO and giving them a full and fair hearing in regards to their corporate needs. And then, solving the problems surrounding their inability to export in huge volumes.

It’s doubtful that a one-size-fits-all solution is going to work in Britain’s case. It’s likely that a range of issues need to be addressed. Certainly, companies have a different challenges. For example, some have never exported railway steel (due to the historically high pound) while others that export designer clothing (the high pound just isn’t a factor in this particular market) but face competition from nations which allow ‘knock-offs’ of Britain’s famous clothing brands.

In previous decades, governments threw money at corporations or give them massive tax breaks to allow them to take care of the problems, themselves. But those days are past.

In our time, governments simply don’t have multi-billions to hand to industry as the massive economic growth that was a consequence of massive population increases (courtesy of the baby-boom generation) are long past — and massive corporate tax breaks just aren’t possible as the present corporate tax rates can only be termed ‘marginal’ compared to the ‘heavy’ corporate tax rates of the 1950’s – 1990’s.

All of this means that the British government must begin to see UK companies as ‘part of the solution’ to Britain’s economic future as opposed to ‘part of the problem’ — which is how the corporate world was viewed by government in the pre-2000 era.

High growth is a wonderful thing for senior executives, it’s a great thing for a sitting government, but it means the people in the bottom-three quintiles face ever-lower wages, more unemployment, resulting in a lowered standard of living for those citizens. And let’s not forget, lower standards of living directly and always equate to higher healthcare costs so there’s no savings anyway. At least, not for governments or families.

While the days of fixing everything with one silver bullet are over, there is still plenty the UK government can do to boost GDP; By assisting manufacturers to re-learn how to export and find new markets, helping industry to boost productivity by redirecting education towards the always changing needs of industry, by providing additional R&D tax breaks for companies — and to provide decent jobs for those left behind via massive and ongoing infrastructure spending programmes, rather than have them rely on eternal government support.

It’s clear that Building a Better Britain begins and ends with Building a Better Economy

Therefore, as important as every other matter before government is (including Brexit!) it’s all for naught if the economy begins to fail, because when the economy fails, so does industry, society, and governments, which tend to fall… hard. Just ask any former politician.

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