Better pay, lower taxes and rising living standards

 

Many of us in politics came into public life to make things better. There is a lot of agreement between the three main parties, and probably UKIP as well, that the overarching aim should be to promote higher living standards and better lives for the many as a result of government action  or inaction.

Very often the main issue in dispute in a General election is which team would manage the economy better? Which team would provide a financial offer that could help you as a voter to a more comfortable lifestyle?

Yesterday Mr Cameron adopted a couple of tax policies that would help. Taking more people out of income tax altogether at the lower end of the income tax scale makes it more worthwhile working. Better that we let people keep more of what they earn than we tax them more to pay them more in benefits. If you insist on people on low income paying tax you then have a handling charge and have to return some of the tax money to them in the form of benefits. Its a dear and complex way of doing it.

Raising the 40p tax threshold is a policy I have campaigned for. Many of the people now dragged into the 40p tax rate are far from rich. 40p is a very high rate of tax. It is a crippling charge on many individuals and families trying to pay their own bills and take responsibility for their own lives. I am glad the Prime Minister has adopted this as his own.

Labour have said they will raise the Minimum wage. The amount they offer over the lifetime of the next Parliament is similar to the rate of increase this Parliament. I doubt they are offering much if any extra compared to what will happen anyway. Their Minimum wage scheme was based on an independent quango weighing up the issues around what is the correct rate. Set it too low and it has no beneficial effect. Set it too high and it destroys jobs. It is difficult to see Labour’s policy  as an effective way of delivering more pay to more people, given the likely cross party agreement to the likely recommended increases  anyway.

The best way of promoting higher living standards is for more people to have jobs that were out of work, and for more people in work to be promoted into jobs that pay more. Some of the average figures for pay and real incomes have been dragged lower by success in creating many more lower paid jobs which give people on benefits their chance of employment. For them the  lower pay of these jobs should still be an improvement on benefits. The next step for them  is to get promoted, train within the firm or move to another company that pays more. Some people are in jobs where the firm has not been able to afford a rise. As the economy improves so should the capacity of employers to reward their staff.

I want to see many more better paid jobs. The way to do that is to have a great climate for new companies to start up, to offer proper support for training and qualifications, and to work away at raising educational standards more. It is also important that once in a job you do not get taxed too heavily for it. All parties say they want more people to work and agree a job is the way to prosperity. Why then tax it so highly?

The best way to get a good job is to do well at a not so good job. The best way to rising living standards is to improve your skills and show your worth to employers.

 

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English votes for English issues

 

The Prime Minister confirmed today that there will be justice for England to the same timetable as Scotland if the Conservatives win the General Election, with devolution for them both (and for Wales and Northern Ireland as they wish). The Chief Whip confirmed that talks are underway to see if English votes for English issues can be introduced this Parliament. I will keep you posted of progress.

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Where are we on dealing with the deficit?

 

If we take the wider definition of our public borrowings which includes the state owned banks, Network Rail and the rest, it is down just a little since 2010. It currently stands at £2800 billion. (This does not include the future costs of the state pension as we have often discussed before!) It rose rapidly from £743 billion in 2007-8 to £2870 bn in 2009-10, Labour’s last year in office.

Under the Coalition the level of state bank indebtedness has been curbed substantially. This has been almost entirely offset by continuing increases in state borrowings to pay for public spending. On the narrower definition of state borrowing excluding banks the total has risen from £956bn in March 2010 to £1432 bn in August 2014, an increase of £476 bn. This puts the idea of public sector austerity into perspective. The Coalition has continued borrowing at a similar rate to Labour’s increases, though the Coalition is gradually bringing down the rate of increase in the borrowing.

This August  spending is up  by 3.3% on the previous year. Current spending is up by a little over 1%, and capital spending is up by more than fifth. Revenues are up by 3.2%, thanks to a strong performance from VAT, Stamp duties and Corporation tax. Income tax is not very buoyant owing to the substantial increase in Income Tax thresholds. Austerity originally designed for the public sector has become a term to describe the squeeze on living standards which started with a large fall towards the end of Labour’s period in office and has continued at a slower pace since 2010. The original plan to eliminate the deficit this Parliament has been delayed by less progress in increasing tax receipts than planned. The spending reductions were always going to be more towards the end of the adjustment process, and many of these have now been  delayed until the next Parliament.

The Chancellor is seeking £25 bn of additional spending reductions compared to current plans for the next Parliament. He has stated that “12bn will come from welfare changes, and £13 bn from general departmental spending including overhead costs. The Shadow Chancellor has said he merely wants to eliminate the current deficit, but would carry on borrowing for all capital spending, which means he needs fewer cuts to present plans. Total borrowing in the next Parliament could be reduced substantially by selling all the remaining shares in banks. This would be a good idea for a variety of reasons and would be the single biggest way of reducing the loan mountain. I invite your thoughts on the pace of deficit reduction and  the desirability or other wise of spending cuts.

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Business and politics

 

I awoke this morning to a garbled version of my views on the BBC  on why big business should stay out of referendum debates . They did not phone me to check my views, nor invite me on to explain them. Readers of this site will remember my advice to big business to keep out of the Scottish referendum campaign, where I was on the same side as most of the businesses. Let me have another go at explaining it.

I have been the chairman of a large quoted industrial company. When in that post I never once associated the business with my own political views. I knew that I had shareholders, customers and employees who did not agree with my political stance on various issues. My job as Chairman was  to represent the company and the best interests of its stakeholders, not to pursue my own or my party’s political agenda through the company.

One issue came up which was going to have a substantial impact on the business – joining the Exchange Rate Mechanism. Even though I was sure such a policy would slash jobs, profits and output for the economy as a whole, I still not feel it would be wise to associate the company’s name with my judgement on that issue. Some other companies and business organisations, including the CBI, campaigned for membership of the Exchange Rate Mechanism, only to discover how much damage it did when their wishes were granted. I set out my own views on the ERM and watched in disbelief as big business as a whole got it comprehensively wrong.

I am told that in Scotland it is difficult calming things down after the intense and heated debates of the Scottish referendum. Those companies that did take a very public stance now have to deal with shareholders, employees and customers who are unhappy that their company spoke against their political wishes. If the CEO has just a small proportion of the shares, how can he or she speak for all the shareholders when pushing a partisan view on a very emotive issue? What does he say to those in the company or who part own the company who disagree with him?

Most senior business people know that expressing a corporate political view can be damaging to the company’s interests. We do not usually see large multinationals telling shareholders and employees how to vote in General Elections. We do not have lists of big companies declaring for Labour or Conservative. They do not do so for the reasons I have set out above. We therefore need to ask them why they think a referendum about people’s very identity and about who should govern them is cause for breaking  this simple unwritten rule of chairing or leading a great company.

As some large businesses will doubtless still wish to tell the UK whether to stay in  the EU or nor, we do need to examine the bad record of these large companies who have spoken out in the past on these big issues. They spoke for the Exchange Rate Mechanism. That dreadful scheme led to a recession which destroyed people’s jobs and  company trading success in the UK. These same political companies then decided to recommend that we surrender the pound and join the Euro. They had clearly learned nothing from  the ERM experience.

I have not heard them apologising for the damage their advice on the Exchange Rate Mechanism did. I have not heard most of them confess they got the Euro wrong. We were told that the City of London would be badly damaged if we did not join. Instead it flourished. We were told some industrial companies would pull out and go to a Euro area country. I do not recall any major investor in the UK doing that.

So please, big business, recognise you have not been good at judging the best interests of the UK. More importantly it is your job to keep all your shareholders, employees and customers happy. Why not try doing that by keeping out of the next referendum?

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Speaking for England at party conference

Today I take my Speak for England campaign to Birmingham.

Mr Hague, acting for Mr Cameron, knows most Conservative MPs want him to find a way of delivering English votes for English issues this Parliament.

I have been overwhelmed by emails and messages of support, with very few against. The small number who disagree seek to pursue the joint Labour line of delay and splitting England into regions. The fact that Scotland is about to get the power to settle its own Income tax shows that we cannot delay justice for England beyond the changes for Scotland, and reminds us that we need an answer for the whole of England. Surely even Labour do not want different Income tax rates in Manchester from Leeds.

We have made clear in the discussions and consultations so far that we regard the Mackay proposals as completely unsatisfactory. Mr Hague started with some sympathy for this poor compromise, but now understands that most Conservative MPs including Mr Cameron do not think this is nearly good enough. This would only have given English MPs the sole right to sit on English Bill committees, leaving the full Commons the tasks of 2nd and 3rd Reading and Report stage and all the main votes. In other words it would not give English MPs control of their own affairs where these are devolved elsewhere in the UK.

We have made clear to Mr Hague that we want him to find out quickly if Mr Clegg will support a government motion to amend Standing Orders. Mr Cash has drafted a good motion, but it needs to include Northern Ireland and Wales appropriately to ensure that MPs only vote on issues which affect their part of the UK and not on issues where their part of the UK is exempted from the UK Parliament’s writ by virtue of devolved powers. I have suggested a tweak to Mr Cash’s motion to achieve this.

If Mr Clegg agrees we can do it quite soon after Parliament returns.

If Mr Clegg does not agree, then we wish the Conservative leadership to help us table a motion which despite not being a government or official opposition motion the Commons has to consider. The fact that all Conservative MPs would wish to vote for it and would be whipped to vote for it should help secure it a place in the Parliamentary timetable. It would be a travesty of Parliamentary procedure if there was no route to allow 305 MPs to debate and vote on a matter of such importance, and we think there is a route to allow us to do so. We may have a majority in such a vote, as it is quite likely some Nationalists and Labour MPs will abstain or vote with us.

Once we have established the procedure for English votes, it will be clear that Ministers handling business which is devolved elsewhere in the UK will need to have a majority of English MPs in support of their proposals. This may entail Ministers in English departments of a different party from the government of the UK, who would not have to be in the UK government, in those rare elections which produce a different majority in England from the UK.

I cannot understand why people think this would create two classes of MP. We currently have four classes of MP, with Scottish MPs the most wide ranging and powerful, and English MPs the least. A Scottish MP can vote on all English matters, and an English MP can vote on no devolved Scottish matter. We need to address that unfairness at the heart of Labour’s one sided devolution.

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Recent speeches

Over the last week I gave a series of speeches, anticipating no Parliamentary business to attend to. It proved to be a very busy week with 2 unexpected trips to London and one to Chequers to pursue my Speak for England campaign and to attend the debate on the 3rd Iraqi war to fit in as well as the travel for the pre arranged speeches.

During the week I gave a speech to the British Legion entitled “Do we fight too many wars?”, a lecture to a Wiltshire School entitled “Speak for England” and a lecture on Saturday in Jersey at the new Jersey Institute entitled “The politics of identity”. I am expecting a video of the Jersey lecture and a transcript of the British Legion lecture which I will post as soon as they are available.

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John Redwood at Conservative Conference

Tomorrow I will be speaking at various meetings at Conference.

For those without Security passes I will be speaking at

12.45 The Freedom Zone, The Birmingham Repertory Theatre, Broad Street B1 2EP on “Setting the UK economy free – an agenda for a majority Conservative government”

2pm The Freedom Zone Birmingham Repertory Theatre, Broad Street B1 2EP
“What next for Scotland and the UK? Speak for England”

For those with Security passes I will be also speak at

9.30 am IEA Marquee Convention Centre inside security
“Britain outside the EU? – economic risks and opportunities”

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English votes for English issues

I have been exceptionally busy this week, and I had to divert attention on this site to war and peace and to Labour given the run of events and news. I also see that yesterday’s post which I tried to publish on the main site and local pages at the same time only appeared on local pages. I have had to switch it to the main site to give it greater prominence. Yesterday I gave a new lecture on the politics of identity, looking at the Middle East, Ukraine and devolution within the UK which I will post as soon as I get the video.

Let me catch up with progress so far on my speaking for England campaign.

The Chequers meeting confirmed that the Conservative party is united in wanting an early solution to the English problem. All agreed that English votes for English issues has long been our policy, and all agreed that with more devolution for Scotland it now has to be progressed.

No-one wants to renege on promises to Scotland. Most agree that we make progress on both the Scottish and the English question at the same time. Indeed, they go together, and should result in identical powers for England as for Scotland. There is considerable enthusiasm in the Conservative party for fiscal devolution. Devolved governments should be more responsible for raising the money they spend.

Giving English votes for English issues to English MPs can be done by a simple change to the Standing Orders of the Commons. The first task for Mr Hague must be to see if the Liberal democrats will agree to a government motion to do just this. If they do it can be done quickly. If they refuse England justice, then we will look at other routes to bring this matter to a vote in the House as soon as possible.

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Speech to the Burghfield branch of the British legion

On Tuesday night I spoke in Burghfield on the topic of “Do we fight too many wars?” When I chose the subject some months ago I thought it might be topical. It turned out to be a particularly hot topic.

I began by stressing our debt of gratitude to all the service personnel who have fought for our country in many conflicts. They have offered brave and loyal service, and have often performed great feats of arms. Sometimes they have been placed in mortal danger by poorly thought through strategy or political direction. Sometimes they have been placed in winning positions and have delivered.

Over the long sweep of English and British history there can be no finer sign of how good our armed forces are than the simple fact that our island country has not been successfully invaded by a hostile force since 1066. (in 1485, 1688 etc the invaders were invited or local). Our forces saw off the threat of Spain when she was the world’s superpower, culminating in the defeat of the Armada. Our services dealt with the continuous threats from France during her period of military dominance, ending with the great victories of Trafalgar and Waterloo that freed the smaller countries of Europe from French threat. In the twentieth century the UK with her allies twice fought murderous wars to prevent German domination.

I am no pacifist, and believe we need to have good defence forces to keep our island safe and to undertake international expeditions where the cause is just or where we need to contribute to the international community and the UN.

I also think we have fought too many wars in recent years. Our interventions in the Middle East have often not resulted in a political and diplomatic strategy to settle democratic countries after our armed forces have helped achieve regime change.

I raised the question of why we have in the past committed ourselves to wars before we had the proper forces to win them. Our small skilled expeditionary force in 1914 soon had heavy casualties and had been beaten back to near Paris. It would take the recruitment of a mass citizen army and substantial rearmament to give us the forces needed to hold and eventually defeat the Germans. In 1939-41 we did the same thing. We sent too small an army to Belgium, put it in harms way and almost lost it, leading to the remarkable evacuation at Dunkirk.

Plan before you fight. Be realistic about what your armed forces can achieve. Do not run down your defences too far if you might need them.

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Going to war?

Today Parliament will debate military action in the Middle East. I set out my thoughts on this in the House and to the Foreign Secretary recently (and posted my views as a blog).

During the consultations prior to today’s debate I made clear I would vote against any military action in Syria. The legality of any such intervention is not straightforward, and the efficacy of intervening in such a trouble country in a way which might also help Mr Assad does not persuade me to support such action. I am pleased to learn from informed sources that we will not be asked today to approve bombing in Syria. I could see many ways in which bombing Syria could make things worse. The lack of clarity over the West’s current attitude to Assad’s role in the country, and the lack of an effective democratic opposition on the ground is bad enough.

The case of Iraq is different, as the Iraqi government has asked for our help. It is a democratic government and it clearly has serious problems trying to regain authority over its people and territory. I will listen carefully to the case made. The government will need to explain what can be achieved by bombardment from the air. More importantly it will need to explain how the war will be won on the ground, how innocent civilians caught up in the conflict will be protected as best they can, and what the political strategy will be. I find it difficult to believe UK military intervention can make much difference to all this, making it difficult for me to vote for the proposal. War is only worth fighting – if your own country is not under direct invasion- if you can see how you can win and how you can then win the peace to create a better future.

Mr Cameron is right that we should not be frozen by past failures. We also need to learn the lessons of our past interventions. Could arming the Kurds lead to an independent Kurdish state? How will the Shia interests accommodate the Sunni population’s legitimate demands? Did the last Iraq war destabilise the country too much?

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  • About John Redwood

    John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
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