Where the Hell are we now?

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18 mins. to read
Where the Hell are we now?

May’s deal, no-deal, Norway or Bremain? The vote on the Withdrawal Agreement did not take place on Tuesday. Instead, there was a putsch by Tory Ultras – which Mrs May survived. So, Mrs May will steer us through Brexit. But which Brexit?

Crisis at Christmas

If a general knows he will lose a battle, he should not fight it. (Sun Tzu, The Art of War (China, 5th century BC)).

Vidi, veni, vinci. She saw, she came – and then she avoided defeat. The debate on the meaningful vote was already in its fourth day when it vote was pulled. This is what Mrs May told the House of Commons in a statement on Monday afternoon (10 December):

I have listened very carefully to what has been said, in this chamber and out of it, by members from all sides. From listening to those views it is clear that while there is broad support for many of the key aspects of the deal, on one issue – the Northern Ireland backstop – there remains widespread and deep concern. As a result, if we went ahead and held the vote tomorrow the deal would be rejected by a significant margin.

Now it is true that a large majority of the 100 plus prospective Tory dissenters – not to mention the 10 DUP members – are very exercised by what is effectively an EU veto on the UK ever leaving the Customs Union unless it effectively cedes sovereignty over Northern Ireland to the EU. That sticks in many a craw. But the backstop (horrible word) is by no means the only reason why to ratify this deal would be an act of cringing supplication.

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For a start, there would have been no possibility of making trade deals which gave third states preferential treatment over the EU itself. I could go on: but let me just say that – not for the first time – Mrs May was economical with the truth. There is not broad support for the deal either inside the House or in the country at large.

Moreover, Labour was not going to vote the deal down because of the backstop – but rather because of the exotic confection that they could get a better deal. I mean, who could seriously doubt amongst my distinguished readers, that 24 hours after Mr Corbyn had kissed Her Majesty’s hands, Sir Starmer, despatched to Brussels accompanied by the verbose Ms Long-Bailey and the ever-empathetic Ms Abbott, would make mincemeat of Monsieur Barnier? Surely, they would return the next day to London on the Eurostar with a piece of paper: peace in our time. Job done.

So the notion that all Mrs May might have to do next was to get assurances about the backstop from her fellow heads of government in Europe was (to put it mildly) far-fetched. There would have to be a substantive review of the mechanism by which it is triggered – or not. Many fine minds have been working on this in the background. A distinguished lawyer of my acquaintance was up all night re-drafting the relevant clauses of the Withdrawal Agreement in collaboration with Tory MPs. They emailed the draft to Monsieur Barnier. Came there no reply, of course.

What about the assurances? Frau Merkel listened politely and then trotted out the tired formula that Brexit negotiations were a matter for Monsieur Barnier and his team, and that individual heads of government (even the Bundeskanzler), could do nothing to interfere. So Mrs May’s trip to Berlin on Tuesday was a waste of RAF kerosene. As we all knew it would be. Similarly, Mrs May’s appeal for help to the assembled EU leaders on Thursday night fell on deaf ears.

Whatever many of my Leave-inclined readers might think of the EU negotiating machine – Michel Barnier, Martin Selmayr, Sabine Weyand – Federalists to a man and woman and lawyers all – it has been consistent, and single-minded. There was never any way that the EU was going to say: OK, England, we admit you’re special, so we’ve decided to give you everything you want with no price to pay…No, they sat down and asked back in summer 2016: OK, what are England’s greatest weaknesses? Let’s work on those

And they came up with the trope of the Irish border – and how outrageously invidious it would be if Old Farmer Kelly, driving a consignment of potcheen from County Monaghan to County Armagh, might have to fill out a customs declaration online. (Even though he already has to file a VAT return.) Surely, the machine argued, that would be in flagrant violation of the Good Friday/Belfast Agreement (1998), a sacred treaty between the United Kingdom and the Republic of Ireland; and that, by that fact alone, the masked men in green berets might think themselves justified in resuming the armed struggle.


The noble Irish people, who proudly fly the EU flag above their public buildings, would have to be protected from the English imperialist madness that is Brexit by their 26 now tricolour-clad, Guinness-swilling and Blarney Stone-kissing European friends.

But that is not even the half of it. The Withdrawal Agreement that Mrs May is still so anxious to ratify is specifically designed to prevent the UK from ever achieving any competitive advantage over the EU. Leavers such as this writer always regarded Brexit, not as a Rubik Cube to be solved, but as a once in several generations’ opportunity to reshape the UK economy into a global winner. Not so Mrs May – who was, after all, a nominal, though unenthusiastic, Remainer. She believes first that Brexit is an unfortunate exercise in damage limitation; and second that the EU elite is inherently reasonable and that we have no choice but to comply with their judicious demands.

She has been negotiating almost entirely alone, assisted only by the Whitehall mandarinate. As far as we can tell she has treated her cabinet like the proverbial mushroom farmer: they are kept in the dark but every so often she opens the door and hurls a bucket of ordure over them…There should have been a Leaver in charge from the moment Captain Cameron abandoned ship…And she has come up with a deal which would leave us with less sovereignty than we had inside the EU…You can see why many Tories, who were already hopping mad on Monday, completely lost it on Tuesday…

We knew that Mrs May was a bloody difficult woman (something we rather admired). What we didn’t get is that, politically speaking, she is so far along the autistic spectrum that she is a head-banging self-harmer. But she is our head-banger: for she is the person who will see us through Brexit.

The Norway Option

The chattering classes have been talking about a pivot towards the Norway Option, even as a temporary arrangement, as a way of getting out without a cliff-edge Brexit.

There have been a number of distinguished minds consistently advocating membership of the European Free Trade Area (EFTA) since 2016 – amongst them Dan Hannan MEP and Cristopher Booker of the Sunday Telegraph. The oft-repeated argument is that we could join EFTA automatically since we were a member of the trade bloc from its inception in 1960 to the moment we joined the EEC (as it was then) on 01 January 1973.

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The EFTA countries[i]– Norway, Iceland, Switzerland and tiny Liechtenstein – are members of the EU Single Market and of the Schengen Area, but they are not in the EU Customs Union. That means that they have to harmonise their commercial regulations with those of the EU, on which they are consulted, though they have no direct input into their design. They enjoy border-free travel to Schengen states (unlike the UK and Ireland) and they are committed to the four freedoms, including freedom of movement. However, there is a mechanism – a kind of emergency break so desired by Mr Cameron – according to which they can limit migration from EU states in certain circumstances. Most importantly, since they are not subject to the tariffs agreed under EU trade treaties, they are able to make free trade agreements (FTAs) with third-party states.

Norway is neither in the Common Agricultural Policy (CAP) nor the Common Fisheries Policy (CFP). Norway had two referendums on whether to join the EEC/EU – one in 1972 and another in 1994. In both referendums the metropolitan areas voted for EU membership but the coastal communities – Norway has one of the largest fishing industries in Europe – were opposed. Norway jealously preserves its fish-rich territorial waters for Norwegian fishermen alone. There are many British fishermen, not least in Scotland, who envy that.

The Daily Telegraph reported on 01 December that eight cabinet ministers – including Chancellor Hammond – had discussed a “Norway Plan B” given the nil chance of the May-Barnier Withdrawal Agreement passing through the House of Commons. According to the report, these cabinet ministers believe that a Norway model could win the support of 70 Labour MPs, the DUP and even some SNP MPs.


The Norway-plus idea advanced by Nick Bowles MP is that we would be out of the political institutions of the EU and no longer bound by the mantra of ever-closer-union. We would not be subject to the ECJ. We would have to make financial contributions – as Norway does – but they would be relatively modest. Under the EEA agreement Britain could suspend free movement if it causes “serious economic or societal difficulties”. Supposedly, Liechtenstein has invoked this cause for the last 22 years.

It seems that the EFTA members would have no objection to our membership. However, the EU would oppose it as it would erect a supposed “hard border” in Ireland. (The Republic would be in the Customs Union but Northern Ireland outside.). Once again, the wretched trope of the Irish border trumps all.

There are arguments against the Norway option on both sides. The Bank of England (a bastion of Remain) thinks that the City could be disadvantaged since we would be a rule-taker (as indeed under Mrs May’s deal). Brexiteers, like Steve Hilton, argue that not even Norway likes Norway.

No-deal

New terminology has evolved in recent weeks to describe various no-deal scenarios. Accidental no-deal means that we muddle through the late winter and spring and then wake up on 30 March to find that trucks cannot cross from Dover to Calais because they do not have the right paperwork – and no one on either side of the Channel knows what the correct paperwork looks like. Mitigated or planed no-deal means that, come the day, truck drivers will be equipped with all the necessary documentation and that customs checks on both sides would be conducted by officials expeditiously.

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I explained three weeks ago how, in principle, the UK could take up its seat at the WTO in Geneva on Monday, 01 April 2019. From that day onwards the UK would endeavour to negotiate a free trade agreement with the EU (which is the stated intention of the Political Declaration) as a WTO state, dealing directly with the world’s largest trading bloc. Since both sides would start from a position of enjoying identical regulatory regimes (and the UK would not seek to modify regulations for its own sake) that task should be completed much more swiftly than, for example, the EU-Canada FTA which was signed in 2016 after seven years of wrangling.

All this begs the question of whether a Withdrawal Agreement is necessary at all. When the British Empire was dismantled in a kind of closing-down sale during the 1950s and ‘60s, there were no withdrawal agreements – just treaties that recorded the change of jurisdiction and the transfer of state assets from the British Crown to the newly independent states. Of course Britain should meet any outstanding obligations, as should the EU; and, of course, the framework agreements regarding, for example, cooperation in scientific research should be perpetuated wherever possible. I note, however, that it is Europe that is kicking the UK out of the Galileo Programme – much against its will – not Britain flouncing out.

It is true that even the best mitigated no-deal would cause dislocation in supply chains for the first 3-6 months or so: but that is not necessarily an excessive price to pay for the greater prize – the ability to reshape our trading relations in a way that maximises opportunities for us. The Japanese should not fret: tariffs are not really the problem at all as these are generally modest and can be easily budgeted for. The impact of tariffs on the export of Nissan cars will be much inferior to the competitive advantage conferred by the depreciation of the pound since 2016.

Bremain

On Tuesday (11 December) Sir John Major (PM 1990-97) declared that Article 50 should be revoked forthwith. On Monday the European Court of Justice (ECJ) had ruled that the UK could unilaterally rescind Article 50 without the agreement of the EU-27 – but only if it intended to return to the fold and not to stall for time in further tedious negotiations. There is very probably a majority of MPs who would like to do this – just as there is a majority of the population who would like the horrible nightmare to go away.

Remainers dream of reversing Brexit; but that would only come at the price of undermining public confidence in parliament itself – the social contract between ruled and rulers. To be sure, they can – and probably will – delay Brexit. But it cannot be avoided.


Those who argue in favour of a second referendum – a so-called People’s Vote (as if the first one was not a people’s vote) – do so because they believe that there is a fighting chance that the 52-48 outcome might flip back to Remain. There is very little evidence, however, that public opinion has shifted on this – as Professor Curtice of the University of Strathclyde recently reminded us. Personally, I have encountered many people who voted Remain who are appalled by European arrogance during these negotiations. True, many of us underestimated how difficult it would be to unpick the thousands of agreements that bind the UK to Europe in every domain – but that, in itself, has shed light on the extent to which governments from the 1980s (including Mrs Thatcher’s) transferred powers to Brussels without adequate national debate.

For those who advocate the People’s Vote there are three main questions.

First: on what basis would a second vote be a more legitimate expression of public opinion than the first? Why not hold a third if the desired result is not achieved? We know that this has been a tactic used by the EU elite – for example in Ireland and Denmark. When the French rejected the European Constitution in 2005 the EU just re-packaged it as the Treaty of

Lisbon and drove that through anyway.

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Second: what would the question be? If it is another binary choice between Mrs May’s deal (which Labour opposes) and Remain, then that would surely be unacceptable to Leavers who oppose Mrs May’s deal. If it were a three-way choice between No-deal, May-Barnier and Remain, then what merry Hell would be released if the British people, in their infinite sagacity, accorded 33 percent for each option? I contend that there is no question format which could achieve consensus. The outcome would therefore be more confusion and recrimination.

Third: what does Remain mean? Is it to go back to the balmy days of the status quo ante bellum? It is by no means clear that the British rebate and exemption from the euro and the Schengen Agreement would still be available. On one reading of the Maastricht Treaty (1993) Britain’s opt-out from the euro will expire in 2023 (though there is some contention about this). And what about Mr Cameron’s emergency break of February 2016? Is that still on the table? Even more contentious: will we have to sign up to President Macron’s European Ministry of Finance with its tax harmonisation agenda? And will the European Army be able to deploy British regiments in conflicts, or to summon Europe’s largest aircraft carrier, HMS Queen Elizabeth, at whim?

A second referendum is a very bad idea – and talk of Remain-after-all is simple-minded. Even if you believe we have jumped out of the frying pan into the fire, that is not an argument for jumping back into the frying pan.

No confidence?

On Tuesday Ms Sturgeon called on Mr Corbyn, as Leader of the Opposition, to table a motion of no-confidence in HM Government. Mr Corbyn declined, saying that it was important to wait until “the appropriate time”. So, having attacked Mrs May for delaying a vote that she feared she would lose, Mr Corbyn delayed a no-confidence vote because he was not sure he could win it.

In the event, the coup came, not from Labour, but from the Tory Ultras on her own side. Just after 07:30 hours on Wednesday we learnt that the Chairman of the 1922 Committee, Sir Graham Brady, had received at least 48 letters from Tory backbenchers expressing dissatisfaction in Mrs May’s leadership – and that, consequently a vote would be held that very evening.


The irony is that if Mrs May had gone ahead with the vote of the Withdrawal Agreement on Tuesday, and even had it been conclusively defeated, there would have been no challenge to her leadership. That would have been an outcome – of a kind. It would have been clear that the deal required substantial amendment to get the support of the House. As it is, she merely offered the prospect of prolonging the agony.

As we know, Mrs May survived, though by an underwhelming majority. As a result, under Conservative Party rules, she will not be open to a further challenge for 12 months – so she will continue to steer the ship of state through the momentous year of 2019. Because she pledged that she would not lead the Tories into a 2022 election, her authority is irreparably damaged, and the fissures that run through the body of the Tory Party are more evident than ever.

How bad is it?

The British, especially the English – who tend to apologise if someone steps on their foot – have had another bout of embarrassment. What must all this look like in Paris, Berlin, Tokyo or Washington, they ask?

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Actually, the French have been pre-occupied this week by a periodic national uprising; the Germans (who think the Brits are stupid, anyway) are distracted by the new leader of the CDU (when will mini-Merkel take the reins from Frau Angela?); the Japanese are more interested in Carlos Ghosn’s tax affairs; and our American friends are distracted by the trial of Michael Cohen.

Meanwhile, the Legatum Institute ranked Britain as the seventh best country in the world to live in, taking into consideration not just GDP but personal wellbeing. This year we overtook the Netherlands, Canada and Australia. Germany was in 14th place; the USA was at number 17 and Japan at 23.

I see no riots in the street; Waitrose is still pullulating with foodies; West End theatres are full; at the National Gallery the Mantegna-Bellini exhibition is a must-see triumph. More significantly, on Tuesday, the ONS revealed that wages are rising at their fastest rate for over a decade. Many ordinary people are back in the black. Given the talk of crisis – and the mainstream media’s obsession that it is entirely the fault of “the Tories” – the opinion polls have been remarkably forgiving.

This is not a national crisis, as most victims of misfortune across the world understand the awful reality of that word. It is a crisis of leadership: though a temporary one.

How will it all end?

If the postponement of the vote smacked of panic, the whistle-stop tour of Europe stank of desperation and the leadership vote reeked of bathos. Despite her pyrrhic victory, this was the week that opinion hardened against Mrs May – both inside the Tory Party and in the country at large. As Nick Timothy wrote in the Telegraph on Thursday, she may have survived, but her deal is dead. Anything short of a legally binding ability to exit the backstop will not be supported by the 117 who voted against her.

Right now, it seems to me, the best outcome is also the most likely one: mitigated no-deal. The third act of the Brexit drama – the denouement – will be even more dramatic than the second.


In the third act the leading lady will leave the stage. I have a track record of correctly predicting the next prime minister. In early November 2015 I foresaw in these pages that Mr Cameron would lose the EU referendum and would swiftly be succeeded by Mrs May. (In my satirical piece about Mr Putin’s birthday party.) Next week, in my last Friday column of 2018, I shall reveal precisely who will be the UK Prime Minister at Christmas 2019 – and why his tenure will be a much happier one than Mrs May’s.

But there are bigger things going on even than Brexit. I will also share next week why I now believe that the outlook for the markets in 2019 is fraught with risk. Clue: go easy on the drastic plastic this Christmas – there’s far too much debt sloshing around the global economy…


[i]The European Economic Area (EEA) is EFTA minus Switzerland.

Comments (15)

  • Sohail Butt says:

    Mr Hill I am surprised you are predicting
    A no deal.
    A The financial markets do not appear to be predicting this.
    B It must almost certain that Mrs May willl be gone in 2019.

    Whatever her faults she has led when others either resigned having created the mess or have not been able to offer an alternative that will get through.

  • Andrew Dawber says:

    At last a voice of reason amongst the madness.

    Why can’t the BBC have commentators like this? Because they are biased remainers who refuse to admit to being so.

  • GN says:

    I am confused. The DUP campaigned for Brexit (admittedly with a large mystery donation) and now is the party that is torpedoing the present Brexit mainly on the basis of not having an actual border between Northern & Southern Ireland. Logically any Country that exits the EU must have a border with the EU – why should they be any different to the border the UK will have between Dover and Calais? Aha! The Good Friday Agreement. So effectively if I threaten to get out my Armalite and my Semtex then the UK Government will increase my State Pension or other selfish dream I may have? Or say the City of London voted to Remain whilst the rest of the Country voted to Brexit. That’s OK City of London we can arrange that, no border for you. Madness – live in the real world.

  • Tony A says:

    I am a Remain voter who has changed to Leave, and I too feel that a managed No Deal departure has become the most attractive option, given the problems inherent in all the alternatives. The ‘harder’ Brexiteers must increasingly be thinking that if they can just keep the Government blocked long enough, we will reach 30 March 2019 and be forced to leave on WTO terms, plus whatever short-term measures can be agreed beforehand and in the following months to keep trade flowing. Parliament may bluster and vote all it likes, but only the Executive has the power to propose and remove actual legislation.

    In such a No Deal scenario, although everyone says they don’t want a hard NI border, the EU may end up forcing the Irish to put up customs posts and block roads – in which case, so be it: the tariffs are *their* imposition and restriction on free and fair trade, not the UK’s, and they should face the full force of criticism for hardening the border and endangering the Good Friday Agreement because of their protectionist Customs Union. After a few months and maybe a couple of regrettable bombs, sense will prevail and the tariffs and border checks will probably be reduced or even removed for intra-Irish trade, and a ‘technology’ solution like approved-trader status be found to work sufficiently well after all for faces to be saved.

    Of more concern is how under No Deal the EU’s tariffs will damage the car industry or agriculture with their punitive 30% tariffs on beef and lamb. Perhaps a few new tariffs of our own on key EU exports into the UK will help concentrate minds, or perhaps we can all be grown ups and rapidly negotiate some tariff amendments as a confidence-building measure before negotiations on a FTA begin properly. Ditto for touchstone measures like City of London ‘passporting’ within the EU and allowing the UK to remain fully withon.the Galileo project.

  • Chris G says:

    If the Brexit problem is REALLY only the Irish border, then I believe there is a simple solution……..but, which may cause outrage.
    Why can we not “give away” northern Ireland to the Irish Republic ?? – at a stroke, creating a united Ireland, that would be part of the EU; there would be no Irish border. Job done.
    Equally, it would solve so many other issues – such as the lack of an assembly in NI, and the ongoing huge amounts of cash that England, Scotland and Wales have to pay to prop up NI.
    Can anyone give a clear, rational reason why this is not a good idea ??

  • Sohail Butt says:

    For The best Coverage of Brexit watch Peston on itv. He asks sharp incisive questions which are answered by the politicians.BBC generates hours of coverage and we are none the wiser.

  • Trevor White says:

    Yes – let’s do that and then let us cede Gibraltar to Spain and The Falklands to Argentina, then all our problems are solved!

  • Jane Ripley says:

    I am quite happy with a no deal scenario on all but one issue, and that is the question of importing medication.
    Financially, I can tighten my belt and I can certainly manage with less food ( it might even help my lose a few lbs!) however my 18 yr old is an insulin dependent T1 diabetic and this is a very real concern to me.
    All insulin is imported, as are all of his insulin pump supplies and he would die within a few days without it.
    Am I panicking unnecessarily?

  • jonno says:

    Great piece. I don’t agree May will see out 2019.
    I suggest she offered to step down in the 1922 Commitee Meeting in the event her deal implodes.

    Boris is right – unless we hold back the money, May will be met with intransigence from the EU.

  • J S Carr says:

    9. Mrs May should reinstall her backbone and tell our Nation that we will complete our preparations for a smooth’ no deal Brexit on the 29th of March o2019

  • David Jones says:

    When you wrote that Mrs May ‘is so far along the autistic spectrum that she is a self-harming headbanger’, did you not think that this might be offensive to autistic people and their families? Clearly not. Do you really expect to be taken seriously as a political analyst when you stoop so low as to use discriminatory language like that? Where are you on the political spectrum then? I know: very far along the right, close to fascists and Nazis who had a similar attitude towards people with a disability. Shame on you.

  • Sohail Butt says:

    If I set up a political party it would not get any votes. I would be honest ,people don’t want to hear the truth.They want to hear what they want to hear.

    The People voted by a small margin to leave.It is surely Parliaments role to deliver Brexit .

    Will a nightmare scenario unfold if we do not agree a deal with the eu.

    Will it be easy to negatotiate with The eu following a hard Brexit.

    The truth is surely that no one knows with certainty the answer to these questions.

    However what we do know as the people voted to leave.

  • Victor Hill says:

    Reply to Jane Ripley – Dear Jane – I totally get your concerns about medication (insulin) for your son – I have similar concerns in my family. Just pause for a moment: Do you really want to be subject to the will of this bunch of bullies for your family’s medication? As it happens all of Novo Nordisk’s insulin output could be substituted within days by supplies from Eli Lilly in the USA under WTO rules…And how come we don’t produce enough insulin in this country when we have more diabetics than any other country in Europe…? Hold tight and we will get through the pathetic blockade that they will wage upon us come April – your son will benefit from that long-term. Sorry to worry you but we all have to keep faith. God bless, Victor

  • John Davis says:

    Dear me Mr Hill, are you really that ignorant about the Single Market requirements as opposed to Customs problems or are you simply having another Brexiteer rant? Do you not understand about the lack of available truck permits, or would you rather not know? Under existing international treaties there are between 103 and 1,224 permits a year available to deal with more than 300,000 journeys by 75,000 British trucks. It’s not just paperwork is it, these are the maximum available permits, around 5% of what’s needed. So no ferry problems as there will be few UK trucks crossing, or bringing back food and medicine. And no spare EU driver capacity to fill the gap. The government is already planning to keep Dover clear by limiting exports – apparently they don’t get it either but then the level of wilfull ignorance by Leaver MPs has been truly awe-inspiring.

    I have met many Leavers who have been appalled at the insulting, disengenuous and lazy way the UK papers and politicians have approached the EU. Of course a second referendum is a bad idea – for Leavers. The polls show quite clearly that the public now favour remaining and anyway, as any Leaver will tell you, any further act of democracy would be un-democratic wouldn’t it.

    So let me ask a question – if leaving on WTO rules is a good idea why are we so keen to make free trade deals? Either WTO rules are a very bad idea, in which case we should not be leaving, or they are a good thing in which case we don’t need free trade deals do we.

  • Victor Hill says:

    Reply to David Jones – David, you missed two key words out in your quotation from my piece. I wrote: “Mrs May is so far along the autistic spectrum politically speaking….”. It was an image, not a medical diagnosis which I am not qualified to offer. We should be allowed to use language figuratively. If I say that “the Government is crippled” – would that cause offence to people and their families with mobility issues…? Moreover, the last three sentences of your comment are inappropriate and – if I may say so – offensive. I have known a number of friends with children diagnosed on the autistic spectrum and I have watched in affectionate support how they have coped with these issues and raised fine young people. I would be surprised if they were offended by my calling a politician “a head-banger”…By the way, if you are a regular reader you will know that I am very sceptical of what is “normal”. Normality is a lazy approximation of our experience. Indeed, I suspect that most of us are somewhere on the autistic spectrum – though, fortunately, most of us do not self-harm. You are entitled to disagree with my analysis but you are not entitled effectively to call anyone with whom you disagree a fascist and impugn their character.

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