Adjusting the Manifesto

The lack of a majority has confirmed a rethink on some of the Conservative party’s Manifesto policies. That would have happened anyway, as many Conservative candidates in the election disliked the policies themselves, or came to dislike them when they heard the pubic reaction. I did not want to remove the triple lock or leave many pensioners fearing the loss of the winter fuel allowance. I certainly did not welcome the social care proposals. That was why I did not include any of these in my personal election address, and did treat these policies as consultations, encouraging people to write in with their views.

There is no mention of legislating for changes to social care or winter fuel payments or the triple lock on pensions in the Queen’s speech. The Conservative party in Parliament assumes these have been dropped and is happier for their disappearance. It was strange during the election that our cries for more information and for sensible changes to these policies went unheeded. Many of us said if they insisted on removing the winter fuel allowance from some, would they please tell us what the income cut off would be to put the minds at rest of the many who would presumably still receive it. Some thought it should be removed from higher rate taxpayers, others thought it should be made taxable. I was in favour of no change. We also urged them to tell us what the cap on social care costs would be, an important part of their draft policy. Again there was no figure given, leaving many worried about how much they would have to pay.

I spent considerable time during the election explaining by email and in conversation to electors in Wokingham what the current social care system entails. Many did not know that if an elderly person has to move into a care home then the home they are leaving is taken into account in their assets. If they have money then they have to pay themselves for the care home. There was also some confusion over the need to pay social care costs if you carry on living in your own home. The boundary between healthcare, delivered free, and social care that you pay for is a difficult one to define. The public tends to the view that social care is healthcare.

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The DUP : No deal is better than a bad deal

It is proving difficult to explain to some politicians how negotiations work. If you want to buy someone’s house you do not say you want to buy it whatever the price, and then pay up when they take advantage of your folly. If they ask double the market value you refuse.

So it has to be with political deals. A Supply and confidence agreement with the DUP would be helpful. People would know in advance that the government has a majority to get through spending plans and to see off any No Confidence motion. If we do not have a formal agreement it is still very likely the DUP will vote with the Conservatives, given their views on Brexit and Mr Corbyn. There is a lot of common ground on the EU, the Union and the economy.

The main issue that has held up an Agreement seems to be money. How much extra can we afford for Northern Ireland, and what will be the reaction of the rest of us representing English or Welsh or Scottish constituencies?

I am relaxed with or without a deal. I think the government will have a majority to pilot the main legislation through, even allowing for the likelihood that Labour will be difficult and seek to undermine the very Brexit they proposed in their Manifesto.

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The rich and their responsibilities.

 

To Labour anyone earning more than £70,000 a year is rich.  Many people on such an income  do not see themselves as rich.  It seems as if having savings and assets is also a crime to some in Labour. Yet many people save hard for their retirement pension, and struggle to repay the mortgage on their homes. They do not see themselves as rich either. They also like it if something remains to pass on to their children. Today we are witness to a big debate about who is rich, and what contribution should they be expected to make to the wider society. In the recent UK election Mr Corbyn claimed that the rich as he defined them  should pay more tax to help those on lower pay and pensions.

 

There is no agreed definition of who is rich. People’s idea of what rich looks like is heavily influenced by how much wealth and income they have. If you have nothing someone on £40,000 a year is well off. If you own no assets someone with a £200,000 house  is well heeled. Someone living in a £200,000 house with a large mortgage, family commitments and an income of £40,000 may not have anything over at the end of the month and may feel a bit squeezed. They do not think they are rich.

 

A better description of rich is probably one based on lifestyle than on any particular figure for assets or income. Let’s consider two widows, as I have done before on this site. One lives on her own on a State Pension and top up benefits  in her one bedroom flat in prime London. It is worth £1.2m but she has no other assets and finds it difficult to afford the living costs .All the time she lives there she is hard up.  Another lives in a £200,000 larger  property  200 miles from London and has £1 million in financial assets to augment her State Pension. She can afford a decent lifestyle.  Are either of these millionaires rich? Or does a rich person  need to be someone with a £1 million plus home of their  own, and several millions in investments so they do not need to work but can live on their investment income?   Or is true rich a senior Director or executive of a large corporation, or a footballer, with a telephone number salary and plenty of assets from past earnings? How much more of these people’s earnings should the state take?

 

In the end these are political judgements which have to be translated into tax law. All parties in UK government believe in income redistribution, taxing the better off more highly to provide support for others. Governments also impose some taxes on capital, usually when assets are  bought and sold. These questions  are also attitudes of mind which affect how people live together in society. If you try to tax at too high a rate rich people leave the country or find legal ways to arrange their affairs that thwarts the aim of the tax rise. 

 

Many people with savings have thought it a good idea to buy an extra property or two and let it out. They like the rental income, and have usually benefited from rising capital values as well. It does mean the rich individual has a special relationship with his or her tenants. The wealth is on show, and there can be difficult relationships if the landlord is thought to be too hard or unreasonable. Modern tenancy law has tried to move the balance a bit in favour of the tenant. In a world where the leader of the Opposition says the homes of the rich if they are not being properly used should be requisitioned for those in need,  the  landlord has to be sensitive to the mood. The  individual who has bought a holiday home or spare property which they do not live in may be unpopular in the community where  the property usually stands empty.

 

In this climate of opinion those with higher incomes and assets have to be well on the right side of tax law. Tax evasion is a crime and  some see clever tax avoidance as equally unacceptable even though it is legal. Portfolio investments in bonds and limited liability companies have advantages over direct ownership of property or companies for the better off , as the investor is shielded from much of the responsibility of ownership by the professional managers employed. If a multinational treats its employees badly or causes deaths by lax safety management it will be the well paid Directors and executives, not the shareholders, in the dock. If you are the landlord and the tenant is put at risk, or if you own the company and the employee is badly treated, you will be in the dock.

 

Limited liability companies were a great breakthrough for everyone because they allowed people to put up money without putting the rest of their wealth at risk. It also now means the investor lays off the risk for misconduct on those who run the company for them, which in the current climate is also important in keeping people investing. It should  not be an excuse however for  no-one being to blame.  

Who do you think is rich, and what more should we expect of them? 

 

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Why won’t so many in the media ask questions of the EU?

For a year many in the media have recycled old tired materials from the referendum. They have invented something called soft and hard Brexit and have gone on and on trying to find weaknesses in the UK government position, and trying to shift the negotiating aims. They have failed to show impartiality by doing the same to the EU. Why aren’t they ringing round their contacts in other member states governments and business and finding out their differences on what the EU wants?  Why don’t they analyse all the different claims and protests the EU Commission has made, and set them against the views of individual countries? You could make a programme about all the varied claims for large sums of money which seem to have no legal basis whatsoever.

So far what has been fascinating about the rest of the EU debate is how unlike the UK media and Commission briefings it has been. I have not heard the Irish government say they think high tariffs on Irish agricultural products into the UK is a price worth paying to teach us a lesson. The Dutch government do not say they want their farmers to pay tariffs or stop supplying us with all that market garden produce and all those flowers. The German government has been noisier about how the UK must not gain from leaving, but has fallen short of saying a 10% tariff on cars is a good idea. Why don’t the media do more interviews to establish what are the economic and business interests of the rest of the EU? And why don’t they say the UK offer meets their needs far better than the Commission’s general idea of punishment for the UK which would mean more punishment for the rest of the EU given the balance of trade. In a world where the UK was forced by the EU to accept high tariffs on agricultural trade, the UK would gain the option of buying cheaper product elsewhere  by cutting tariffs or growing more at home where we are able to, which the EU under their own rules would not be able to do.

The UK right from the beginning said we wanted to reassure all EU citizens living in the UK they are welcome to stay. In turn we would need the same reassurance for UK citizens living in the rest of the EU. Why didn’t the media put more pressure on the EU to agree to just this decent and sensible approach? Why did the EU want to delay, and want to propose changes to a sensible arrangement? I have never thought the EU would end up forcing UK pensioners out of their homes on the Costa Brava, so why not say so immediately? I am glad that the EU now agrees this issue should be one of the first to be tackled. I hope they will not continue to make pawns of people living abroad, and look forward to the media directing their questions to the EU over this.

The UK also made clear in its Article 50 letter of withdrawal that it accepted the EU view that you cannot stay in the single market and Customs Union when you leave the EU. This letter and supporting policy was backed overwhelmingly by the Commons when it was debated and voted. It was also placed in the Manifestos of the Conservatives and Labour who went on to get 82% of the vote in the election. Maybe the media should recognise this.

In summary the people decided to leave the EU. The last Parliament voted overwhelmingly to leave the EU and sent the letter which means we are leaving the EU. The aims for the future relationship are straightforward and cross party. We seek continuing tariff free trade on a  similar basis to today, and many collaborations, joint investments, student exchanges, tourism and the rest as close neighbours should. This is not the UK begging favours. It is commonsense, in their interests as much as ours. What’s stopping them sorting out the detail to back this up?

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Let’s try negotiating with the EU rather than ourselves!

At last today the UK will start negotiating with the rest of the EU. Some in politics and the media have been making our country look stupid by persisting in having a negotiation amongst ourselves over how weak a negotiating stance we should adopt in Brussels. Some do this because they do want to wreck our negotiation proper. Others do so because they do not understand how a serious negotiation is best handled, and doubt the underlying strength and fairness of the UK position.

We have heard siren voices tell us we need to pay large and maybe continuing sums of money into the EU. Of course not. There is no legal requirement to do so. The rest of the world trades happily with the EU without paying budget contributions or one off payments.

Some say we have to stay in the single market and or Customs Union. Of course not. Most countries that trade with the EU are in neither. We do need to leave both bodies, as the Manifesto of both Labour and Conservative made clear in the recent election, in order to negotiate better trade deals with the rest of the world. The rest of the EU stated categorically we cannot stay in the single market without accepting the laws, freedom of movement and budget contributions that go with it. In other words to be in the single market we would need to be in the EU.

Some say the UK cannot expect to get a free trade deal with the rest of the EU when we walk out. Why not? We have a comprehensive free trade deal with them at the moment, and the UK is happy to offer continued easy access to our market. The rest of the EU sells us so  much more than we sell them. Why would they want to lose some of that?

Some say you cannot negotiate a  free trade deal in 20 months. That is probably true, but we don’t need to negotiate one. We merely need to renew one that exists already.

Of course it is possible the rest of the EU will want to harm their trade with us. In that case the negotiations will take the form of the EU proposing barriers to their trade with us and ours with them, whilst we urge them not to. We will also of course be pointing out they cannot do so against WTO rules, which will greatly limit their scope to do damage. It will mainly come down to them imposing large tariffs on agriculture where WTO does allow such practises, and us retaliating. The UK can once out also remove tariffs on agricultural products from the rest of the world that we cannot produce for ourselves.

Tomorrow I will talk about a new range of stories the media could pursue on this topic, to get us away from the boring and repetitious “Lets water down and undermine the UK position” pieces that they all have been running for a year.

 

 

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Chancellor agrees with government policy on Brexit

As forecast here, the Chancellor does support the Lancaster House Speech and White Paper, approved by Parliament, which he helped compose.

The BBC, of course, cannot bring themselves to make that the headline, having forecast the opposite. So they are now trying to suggest the Chancellor disagrees that No deal is better than a bad deal. Yet he clearly stated that a punishment deal would be unacceptable and worse than no deal!

Come on BBC, accept you lost on this one.

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Blog postings

I am extremely busy this week-end as there is a lot going on that matters to Wokingham and the wider nation. If people persist in offering multiple postings and long postings it may  take time to moderate them. I am not slowing them down to censor them but slowing them down because I do not have the time to moderate them. The dreadful inferno at the flats needs proper attention. The Brexit talks tomorrow are an important and fast moving story.

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Surely the Chancellor does not want to mar Brexit?

I have been reading strange stories this week that the Chancellor is going on to the Marr show this morning to seek to change government policy on Brexit. I find this difficult to believe. The Chancellor is a senior member of the Cabinet and Brexit Committee, so he would have put his point of  view strongly when the Brexit policy was decided. The government deliberated long and hard, and then produced a White Paper, several statements to Parliament, and the Article 50 letter and Act. These all made it clear the UK would be leaving the EU and its single market and Customs Union, but would be negotiating for a business friendly comprehensive free trade agreement with the rest of the EU. This approach received overwhelming support from MPs in the last Parliament who voted through the Article 50 Act on that basis. The Chancellor was in full support.

I also find it difficult to believe the stories because the policy the unnamed briefers  say we need to change to is stupid. I would be surprised if the Chancellor wanted to sign up to such a policy. It is said we need to seek associate membership of the Customs Union, with an opt out of its strict rule that a member cannot negotiate free trade deals of its own for certain UK trade in services. How on earth could that  work? The main gains from negotiating free trade agreements with other countries will come from those where the present tariff barriers are highest. These are the lower income countries with a big export industry in farm products and basic industry. In order to get access for our services we will of course have to offer zero  tariffs and reduced barriers on things like tropical and  Mediterranean  agricultural products which currently are made dearer by EU impositions. If we cant negotiate on non service trade we have  no leverage.

It is also foolish because it creates the impression with the rest of the EU that the UK is constantly changing her mind and is too busy negotiating with herself to be able to negotiate seriously with them. Such a change at this late stage would send the wrong signal, and would not leave the government with the strong position accepted by Parliament that  we have at the moment. The General election saw 85% of the voters vote for parties that stated we  will leave the EU and the single market and negotiate our own trade deals. That is incompatible with any kind of membership of the Customs Union which would prevent us feeing our trade with others.

That’s why I think it unlikely the Chancellor will oppose government policy on the Marr show. Doubtless he will say he wants a  business friendly Brexit. On that I agree with him. That much is agreed by Labour and the Conservatives. The way to achieve it is through maximum access to the EU market, and through much better trade deals with the rest of the world.

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The Grenfell Tower inferno

As feared all too many people died in the fire. The government has rightly set up an Inquiry. We need to know what caused the fire, why the fire spread so fiercely and rapidly, and what differences in the building could have prevented it or lessened the impact. We need to know if people were given the right advice on what to do on that fateful night. It is harrowing to hear of what happened and to learn that even now we do not know who died and where they died. Relatives live with dreadful uncertainty and are now warned that if their loved ones have died they may not be able to identify the bodies. We all are grieving for those lost and are  appalled by the extent of the losses.

A full independent Judge Inquiry is needed and has been agreed between government and Opposition. However, these take time and do not satisfy the immediate need for some answers and urgent action elsewhere if other blocks are at risk. We will need statements from the government, Councils and housing management companies about the safety of all the blocks in the country. The government needs to advise Parliament if it wants to change fire regulations or issue any new guidance to Councils. Individual Councils need to review their housing and debate  the matter in each locality. They are the main owners and purchasers of social housing with planning and building control functions that go to heart of this matter.  Management organisations need to talk to tenants and review their homes, so they can either reassure or improve their safety.

I am glad the government has said it is now reviewing urgently all tower blocks and will report back. It has said it will make sure all those who have lost their homes from the fire will be housed by the government. It has made emergency money available to the local Council and has helped set up a local co-ordinating committee to deal with all problems. It has made money and other assistance available to those who have lost their homes.

Many say  the new cladding put in to improve thermal insulation, cut tenant heating bills and improve the appearance of the block for residents and the wider neighbourhood may have speeded the progress of the fire. If this is so it follows that other buildings with the same system need safety improvements, and future improvement schemes need reviewing.  It looks as if fire alarms and response systems were not good enough or did not exist. It would be prudent for all other public sector landlords to review their estates – and private sector ones as well for that matter.

Ensuring the safety of tenants or leaseholders should the overriding priority. Local and national government needs to work hard and swiftly with that in mind.

 

 

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A business friendly Brexit

I have good news for you all. Despite all the noise and disagreement, most people and political parties want the same things from Brexit. No-one wants it to damage business or lose us jobs. Most in the debate think more free trade rather than less free trade is a good idea. The Labour Manifesto spent time setting out the kind of free trade deals they would like a UK outside the single market and customs union to be able to negotiate.

Business has some legitimate questions of government that need answering. Where we currently receive grants and subsidies from the EU budget, business needs to know what the UK government will do back in control of the contribution money which currently funds those payments. This is particularly important to farming businesses where government payments and subsidies are an important part of farm incomes. IT is also important to those parts of the UK that qualify for extra grants for economic development. I look forward to more detail from the Treasury.

Business would like to know how and when the UK can expand its free trade agreements with non EU countries. The Department for International Trade is working away with options for early trade deals with a number of countries. The sooner we can make progress with these the better, bearing in mind we cannot sign the deals until we leave.

Business also of course wants to know what will be the basis of future trade with the rest of the EU. The UK is offering a continuation of current free trade with no new barriers. It is also saying it will translate into UK law all the present rules and regulations to allow continuity. The UK Parliament will in future be able to improve or repeal individual measures, but would not of course seek to block business being EU compliant for all their exports to the continent, which they are currently. Parliament will take into account the EU business needs when legislating in future, but may wish to allow different arrangements  for non EU and domestic business.

The sooner we discuss the future relationship with the EU the sooner we will be able to clarify these matters. Whilst there will be more tough talk and posturing from some EU officials, many in the other member states will want easy access to the UK market and will see that has to be reciprocal.

Some say there is not time to negotiate a free trade agreement with the EU. That would be true if we had lots of barriers to remove and discuss. Instead we already have free trade with the EU, so it is simple to confirm it if there is the will on both sides to do so. If the EU really does want to impose barreirs on their trade with us they will need to set out what these are, and we can then consider what barriers we would need to place in return. All of course would have to be complaint with WTO rules, which limits the ability of the EU to do damage. The main sector which could end up with high tariffs is agriculture, where they sell us twice as much as we sell them. We also have the option on that scenario of sourcing much more food cheaper from outside the EU, where we could lower tariffs where it suited us, or produce more at home where we can.

 

I note that after a media barrage about staying in the Customs Union the government has  not changed the policy set out in the White Paper and approved overwhelmingly by the Commons to send the lettter. I also note the Chancellor still supports government policy despite press briefings to the contrary. We will leave the single market and the Customs Union when we leave the EU, as the rest of the EU also intends and as the Conservative and Labour Manifestos made clear.

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  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. 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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