IT has been another very poor week from Boris Johnson’s Government.
Up until recently, it might have been difficult to imagine a jump in the pound after a Supreme Court judgment that a decision by a prime minister was unlawful.
However, that was the currency’s reaction on Tuesday morning when the UK’s highest court ruled on Mr Johnson’s move to suspend Parliament for around five weeks ahead of Brexit (a departure that he sadly remains determined to deliver by October 31, whatever the consequences apparently).
The Supreme Court ruled the suspension was “void and of no effect” and Parliament was therefore not prorogued after all. Delivering the judgment, Lady Hale said: “No justification for taking action with such an extreme effect has been put before the court...
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“The court is bound to conclude, therefore, that the decision to advise Her Majesty to prorogue Parliament was unlawful because it had the effect of frustrating or preventing the ability of Parliament to carry out its constitutional functions without reasonable justification.”
The pound rose in the immediate wake of the judgment, as hopes of avoiding the economic nightmare of a no-deal Brexit were lifted.
Mr Johnson has seemed keen this week to make plenty of noise about other things as his Leave desire continues to be frustrated. He may well not be trying intentionally to divert attention from his woes but people could be forgiven for forming an impression that he is.
Specifically, Mr Johnson has appeared at pains to lambast directors of collapsed package-holiday and airline group Thomas Cook over pay and bonuses, following the UK Government’s dismal decision to refuse to provide a bail-out. It would be laughable if it were a less-serious situation. After all, Tories have helped facilitate high executive pay in stock market-listed companies, and more generally in the private sector, over decades.
Thomas Cook was looking for around £150 million from the UK Government to bridge a funding gap.
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Interestingly, Thomas Cook’s banker, Royal Bank of Scotland, was bailed out by the UK taxpayer to the tune of tens of billions of pounds in late 2008 and early 2009.
Mr Johnson said of Thomas Cook: “It is perfectly true that a request was made to the Government for a subvention of about £150m. Clearly, that is a lot of taxpayers’ money and sets up, as people will appreciate, a moral hazard in the case of future such commercial difficulties that companies face.”
This argument that such bail-outs create a lack of incentive to guard against risk because of ultimate protection from the consequences is well-worn. But it is inconsistently applied by governments.
Royal Bank’s bail-out, and that of Bank of Scotland parent Lloyds Banking Group, also at the height of the global financial crisis more than a decade ago, were managed adeptly by the former Labour government under Gordon Brown. This prevented a collapse of the broader UK financial system, and was accompanied by astute wider measures.
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In the US, investment bank Bear Stearns was bailed out ahead of the global financial crisis getting under way in earnest. Lehman Brothers was not bailed out and it was this decision by the US authorities which turned a major festering problem into a full-blown emergency, and ushered in grim recession in economies around the world. The US authorities bailed out insurer AIG just days after Lehman collapsed. This stopped the crisis getting even worse but the moral hazard argument, seemingly favoured in the Lehman case, was nowhere to be seen.
The £150m being sought by Thomas Cook, which Mr Johnson considers to be “a lot” of taxpayers’ money, pales into insignificance relative to the extra £2.1 billion set aside by Mr Johnson’s Government in the summer for no-deal Brexit preparations. That £2.1bn is the real waste of money. After all, there should be no need to be preparing for a no-deal Brexit. It is only Mr Johnson’s determination for an October 31 departure, “do or die”, and his unhelpful attitude towards our long-suffering European neighbours that have created a need to stockpile medicines and take other emergency measures.
Among the things money is being splurged on are those giant adverts which feature Mr Johnson’s favoured Hallowe’en Brexit date and declare: “Keep your trip to the EU on track.”
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It then suggests you visit a website to check the new requirements for travel. If there was no Brexit, or even if the UK just remained in the single market, there would be no problem with keeping trips on track. The UK public would not have to deal with hassles created by their Government.
Of course, such hassles would be a small thing compared with the huge damage to the economy, living standards and society that would be created by a no-deal or otherwise still very damaging hard Brexit, which took the UK out of the single market.
On the subject of travel, and Thomas Cook, some arch-Brexiters’ seeming delight over staycations might have meant a rescue of this long-established company would not have been popular with them, even if it is a British institution. Surely, if they thought it through, even some arch-Brexiters would lament a UK Government decision which has led to thousands of job losses and incurred a massive cost for repatriation of people stranded abroad by Thomas Cook’s collapse.
Some Brexiters might prefer to holiday in Leave-minded Clacton-on-Sea, buy a Kiss Me Quick hat to boost the economy and eat a fish supper out of newspaper to feel more British. But the crucial thing here is that everyone should have a choice. Sadly, sterling's post-Brexit-vote plunge and Thomas Cook's collapse have narrowed the options for many.
While Mr Johnson’s humiliation this week by the Supreme Court judgment has rightly been the point of focus, we should not lose sight of his Government’s poor decision over Thomas Cook. Thousands of job losses, tens of thousands of people flown home on alternative flights at a huge cost, holiday plans ruined, and competition reduced with the removal of a major, long-established player that has helped make myriad happy memories for millions.
Then again, you would not bet big money on many right-wing Tories being particularly aware of the package-holiday market. They are in any case too obsessed with their ideological Brexit to be particularly interested in Thomas Cook.
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