Economics Spokesman Mark Reckless - Conference Speech

Published Sep 25, 2015

mark_conf.jpgIt has been an eventful year.

One change for me from last year is that this time you have been kind enough to advertise me in the programme.

As our new Economy Spokesman, I would first like to thank Patrick O’Flynn for the solid base of work he has left me, as well as for his hard work on the general election campaign.

Second I would like to thank Nigel for all the support he has given me both before and since the general election. I could not have asked for more, from him or from you.


Would Britain be better off outside the European Union?

Trade deals
For the first time in forty years we would be able to negotiate our own trade deals, rejoin the World Trade Organisation, and sit on the global bodies which set product regulations.

We could press for trade deals which would open up new markets for the business and financial services at which this country excels. In return we could offer the free trade in food and agriculture which the EU sets itself against.

We could reach deals with the big emerging economies, like India and China, with which eight million Swiss have a free trade agreement. Yet the EU blocks us from trading freely with China, so every British woman pays an EU tax every time she buys a bra.

UKIP wants to end those EU tariffs to cut costs for consumers.

We also want trade deals with the United States and Canada. But we would seek free trade deals, based on eliminating tariffs and mutual recognition of standards.

That could not be more different from Cameron and Corbyn’s TTIP. Their Transatlantic Trade and Investment Partnership will in reality be a corporatist’s charter constructed behind closed doors to shield incumbent companies from competition.
Now that Jeremy Corbyn has gone back on his word and handed David Cameron a blank cheque on Europe, it is UKIP and UKIP alone that can fight TTIP.

Paying our way in world
Ever since we joined we have run a large trade deficit with the European Union. In good years we have paid for it with a surplus on our trade outside the European Union.

Despite having no authority over trade, where the EU is in charge, David Cameron promised to double UK exports under what George Osborne termed a “march of the makers”.

The reality within the EU has been anything but. We now have, along with Turkey, the largest overseas deficit of any advanced country globally, between 5 and 6% of GDP.

The problem is three fold and all relate in significant degree to the EU.

First, the UK trade balance in goods and services has been running about 2% of GDP in deficit. More than all of this is with the EU.
Second, we now run a similar deficit on investment income, largely due to a deteriorating balance with the EU and Osbrown more than doubling our national debt.

Third, and most easily dealt with, if only we were to restore our independence, we transfer a net 1-2% of everything we earn overseas every year. In other words we give it away.

It is one thing to give money away in overseas transfers if, like say Germany, you run an enormous trade surplus with which to pay for it. It is quite another when, like the UK, you run a 2% of GDP trade deficit and another near 2% deficit on investment income.

Yet on top of that 4% deficit David Cameron’s Conservatives transfer overseas a further 1-2% of GDP leaving us with a current account deficit of 5-6% of GDP, or £100 billion per year.

What that means is that every year we have to borrow from or sell to foreigners the equivalent value of British assets.
So when people complain to me, including some people in the hall today, about all that fancy London property being sold to foreigners, and not our own young people, I say don’t blame them, or think you can somehow solve our problems by restricting those purchases.   

The emptying out of prime central London property to overseas owners is a symptom, not a cause of our problems. If foreigners didn’t buy our most expensive property, we would have to sell them something else, or pay them more to lend to us, adding yet more to our deficit.

We must instead tackle the problem at source. That means improving our trade balance. We must shift the focus of our trade from the EU, where we run a massive deficit, to outside the EU, where we run a surplus.

The need to cut overseas transfers
We must also stop giving away money we do not have. That means cutting the enormous overseas transfers we are making.
Fifty years ago it was Britain’s huge overseas defence burden which drained resources from the UK. So the call went out to end commitments East of Suez, because our chronic balance of payments couldn’t support them.

Today our massive overseas transfers do not reflect defence spending, but EU membership, overseas aid, and likely now migrant transfers.

If you don’t want to have to borrow an extra £55 million a day from overseas, that you will later have to pay back with interest, then don’t give the EU the £55 million a day you then need to borrow.

If you don’t want to sell £13 billion more London property to absentee overseas investors, then don’t run an overseas aid programme that requires the UK to finance £13 billion of overseas spending.

You can’t spend money overseas unless you borrow or sell something overseas to pay for it.

And just as we should never blame overseas investors for buying something we need to sell, we should never blame people who come here from overseas for trying to do the best for themselves and their families.

That will often mean sending wages which they earn here back to their family who are still overseas. So we need to increase UK exports to pay for those overseas remittances. If we don’t, and they continue, then we will add to our already record current account deficit.

The Brexit dividend
Cutting overseas aid and ending our EU contributions will cut our current account deficit. It will also give us more money to spend at home.

Patrick and Suzanne set out how we might spend our Brexit dividend in a superb manifesto fully costed and independently verified. Leaving the EU would yield enough to finance widespread tax cuts as well as billions more for the NHS.
That exceptionally well received manifesto will remain the baseline for policy development which I now undertake, and there is just one change I will announce today.

Our manifesto was so good that we have already seen the government adopt a number of our ideas. One area where we can now come close to declaring victory is inheritance tax.

It is now eight years since George Osborne promised to raise the inheritance tax threshold to a million pounds, and until this summer it was eight long years of inaction.

There are three aspects of the changes he now proposes where I would like us to be able to go further, and which we may seek to address in our next general election manifesto.

First, I would prefer a threshold of a million pounds per person, as George Osborne first promised, and not a million pounds per couple. Second I would not further distort the market by restricting the new allowance to housing for descendants. Third, I would not add yet more complexity to the system by clawing back the extra allowance from larger estates.

However, making those changes is not the priority for our Breixt dividend. That lies somewhere else.
Public sector pay

As an MP in the last Parliament I voted for severe restraint in public sector pay.

I thought there was no choice if we were to cut the record deficit. I also thought it was fair after several years of relatively more generous public pay settlements and then a sharp fall in real private pay in the recession.

Public and private pay are now in better kilter.

Despite that, the Conservatives now propose to continue their assault on public sector pay for another five years, while private sector pay accelerates.

The government said in the Summer Budget that it would only fund 1% pay increases on average across the public sector.
Last Monday Greg Hands, the Treasury minister and Conservative MP for Chelsea and Fulham, went further and stated on the parliamentary record that their policy was one “of a one per cent cap on public sector pay increases”.
And what have we heard from Labour? On Budget day their Acting Leader declared they supported the Conservative policy. And under Corbyn, nothing. A Treasury minister just hardened a 1% pay norm to a 1% pay cap and the Labour front bench didn’t even notice.    

If public sector pay rises at that 1% a year, or barely 5% over the Parliament, then the Office for Budget Responsibility forecast implies that private sector pay will increase by 25% over the same period.

5% v 25%. How can that be fair? How could we recruit and retain the quality staff we need for our public services? Why do the Conservatives so dislike people who work in the public sector? And who will defend those public servants when Labour is riven by extremism and division?

UKIP will. It is not just people in the private sector who deserve a pay rise but public servants too.
And unlike the other parties, UKIP can find the money to pay for fairer treatment of public sector workers, from the £55 million a day we give the EU.

So I have an announcement.
Instead of using £5 billion of the Brexit dividend to abolish remaining inheritance tax, UKIP would use that £5 billion to give public sector workers a pay rise.

We would end the government’s 1% pay cap in the public sector, except for those at the top end who already earn more than £50,000. The extra £5 billion could fund 2% rises every year, or one 5% pay rise above the government’s policy.
We give the EU up to £55 million a day. If Britain votes for Brexit next year then that money will be available for the NHS, it will be available for tax cuts, and it will be available to give people in the public sector a long overdue pay rise.
When we vote to leave the EU we will not only be more than a star on someone else’s flag. We will be prosperous, democratic and free.

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