John Redwood's Diary
Incisive and topical campaigns and commentary on today's issues and tomorrow's problems. Promoted by John Redwood of 30 Rose Street, Wokingham RG40 1XU.

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A lot rests on the budget

I find it strange that for weeks we can all  read in the papers of a struggle between the Chancellor who wants to offer tax cuts, and the officials of the OBR and Treasury who do not want him to do that.

These arguments should take place in confidence. The Chancellor should make the judgement having heard all the arguments. Officials should co operate with the decisions made.

This better way of working has been  disrupted by creating a so called independent OBR and then doubling up by adopting a ludicrous control for policy based on their forecast of the debt and deficit in five years time. They themselves would agree that the only thing we can be sure about is their 5 year out forecast will be wrong. No one can give an accurate spot forecast for public borrowing that far distant. Their forecasts for the immediate year which could be more accurate have badly overstated borrowings in recent years.,

OBR forecasts are said to be independent but are formed in an iterative process with Treasury officials guiding them on government policy. If the forecast was genuinely independent there would be no need for the Chancellor to accept it or defend it. He might choose a different independent forecast from a reputable forecaster with a better track record. The insider’s forecast lures the Chancellor into acceptance or submission, however bad it might be.

This budget would be best based around how much government plans to spend next year and how much it might have to borrow in that year. That after all is meant to be the idea of an annual budget. Debt interest will tumble with lower inflation taking maybe £30 bn off peak levels of inflation linked cost. Public sector productivity should be prodded to remove some of the  £30 bn loss since 2019. Credit should be given for the planned cut of 300,000 in legal migration greatly reducing pressures on social housing and public service.

 

If the OBR insist on highlighting the 5 year debt figure then the Chancellor should cut back some of the unfunded spending increases pencilled in for that year.

The British Business Bank makes big losses

Last year the taxpayer owned British Business Bank lost us £147 million. Its auditors said it can carry on trading because taxpayers will send it enough money to pay the bills.

609 staff were paid £60 million between them. Senior staff accrued more long term incentive bonus. Nice job if you can get one.

The taxpayer did get a long report on how they comply with a wide range of requirements. It revealed their investments in a bookshop, a beauty business, an electric forklift business and various other fashionable areas.

The taxpayer now has put £3bn at risk in this outfit.If we had used that money this year to cut the state borrowing we could have saved £120 m of interest instead of losing £147 m.

There is no evidence the state sector is any good at this type of investment banking. There should be no wish to saddle taxpayers with more losses. Sell the whole thing off as soon as possible.

The Rochdale by election

The Rochdale by election was a most revealing event.

Labour did not campaign and announced no-one should vote for their candidate on the ballot paper as he was unsuitable. Most people expected Conservatives to poll poorly in line with other recent by elections. The current mood of the Conservative half of the electorate is to send a clear message to the PM to improve things, by abstaining or voting for a different candidate.

These then were the ideal conditions for Reform, or the Greens and the Lib Dems to mount a great campaign and show momentum. Labour the obvious party  to win here was not running.

The Greens with their extreme  approach to net zero demanding so many changes in lifestyle came in ninth with just 1.4% of the vote. The Lib Dems who also want to stop people using cars and speed green changes came in fifth with just 7% of the vote. There is no evidence here or in other elections that voters want more of the net zero policies.

This surely was ideal territory and background for Reform. There was speculation they could even emerge the winner. In the event they  limped in  in sixth place with 6.3%.

Instead the Conservatives were the only established party to get into double figures in third place. Rochdale voted decisively for two independent candidates who got 61% between them.

People want government to improve the economy, boost take home pay and control our borders. The sooner it is seen to do so the sooner voters around the country could get behind the government again. There is little appetite for Green/Lib Dem and Reform’s negative aim of destroying the Conservatives is not a big vote winner either as it does nothing to improve people’s lives.

My kind of green

I have always been a lover of the countryside. I admire the fields and woods of England. I have argued for less development of greenfields and for more kindness to animals.

I have campaigned for lower migration as I cannot see how and where we will build  three cities the size of Southampton each year to provide homes, shops and roads for 750,000 extra people. I look forward to this government tightening the rules further to cut the numbers more.

Reducing growth in population is essential to bring housing supply and demand into better balance. It is crucial to bringing UK CO 2 output down. If you want net zero emissions net zero migration would be a good start. It is central to keeping more balance between town and countryside. It is crucial to improving our local food production as we need to keep the farms we have.

I favour planting more trees. Time was when we grew our own timber. Now we  import vast quantities from places where softwoods grow more slowly and use large amounts of energy to be brought here. Our new mixed woodlands should be for timber as well as enhancements for our countryside.

I favour more reservoirs. A few extra lakes can enhance the landscape and offer recreation . We are short of water if we get longer hot dry spells. We have not expanded water stores as the population  has grown.

I favour much more investment in modern agriculture. Fruit and vegetables can be grown in bigger quantities with modern protection against the weather and good control of water and fertiliser.

 

Net zero

Some people writing in want me to challenge the idea behind net zero policies. They believe the climate is not warming, or they believe it is but this is not brought about by manmade CO 2. They query the climate models, pointing out past times when the models have not forecast correctly. They ask why the models are based on one main variable, manmade CO 2, and do not seem to encompass solar intensity, cloud cover and water vapour, earth seismic activity , natural CO 2,and other possible influences sufficiently. They wish to dispute with the scientific establishment who claim the science is settled and that only a major reduction of man made CO 2 can change things for the better.

I have¬† no intention of doing this. I accept CO 2 is a greenhouse gas and accept the climate changes. Those who want to challenge the establishment scientists need to find other sites and other authors. I intend instead to concentrate on the areas I know best. My challenge to established governments’ thinking is to the idea that the current range of policy proposals to drop world CO 2 will deliver their exacting targets any time soon. They very clearly will not, and in some¬† cases the proposed remedies land the world with more CO 2 than without them. I challenge the practicality and desirability of ¬†international government policies on this matter.

The main things I will continue to question are

 

  1. The accounting system which says if the UK cuts its CO 2 production by importing energy and energy intensive products instead of extracting and making its own, this is helpful. It clearly increases world CO 2 by at least the amount of the extra transport. If you import LNG instead of producing your own piped gas it is a big increase in CO 2.
  2. The fact that whatever the UK does to its small amount of world CO 2 the targets will  be met or missed by the actions of China, India, the US and the other large CO 2 emitters. China and India plan to increase emissions this decade, and India well into the next decade making it very unlikely world targets will be hit by 2030. Those most worried about this need to turn their protests to China and India.
  3. Electric cars are very CO 2 intensive for their manufacture and for the extraction of the raw materials and the production of their batteries. They need to be driven many miles before there are CO 2 savings compared to keeping your old ICE vehicle. If you recharge an EV drawing power from fossil fuel power generators as many do there is clearly no gain.
  4. Heat pumps are  very expensive. They require a lot of disruptive and CO 2 intensive work to remodel and insulate a home before installation. They may not give a good result. They too do not help if the country has too little renewable power available to fire them.
  5. The world is embarking on a wide range of different technologies – carbon capture, hydrogen, electrical drive, battery storage, pump storage, synthetic fuels other than hydrogen. There will only be a swifter transition when a few of these are scaled up and become cheaper, leading to wider adoption. The big array puts many people off early adoption, waiting to see what will attract the most subsidy to start and what will become more economic as it is grows.
  6. The green issues need to be balanced with security of supply , affordability and practicality of product. Many green products for transport and home are a work in progress which is why they are not selling in huge  numbers. More work is needed to produce great value products that people want.

 

In summary for this revolution to take off most people need to change the way they travel, heat their homes, their diet and the products they buy. This will only happen when there are better green products on offer that people  want to buy.

My Intervention on the Post Office Horizon Ministerial Statement

John Redwood (Wokingham) (Con):

Will the Minister take UK Government Investments out of its role of controlling and supervising the Post Office? It has allowed these gross injustices to go on for too long, allowed the Post Office senior managers to rack up huge losses of £1,391 million to last March, with more to come this year, and given the executives bonuses for losing us that much money. It has left the Government with a great financial black hole. Would it not be better to change the Post Office management, to have it report directly to the Minister, and to make its No. 1 task giving justice to the sub-postmasters?

Kevin Hollinrake:

I thank my right hon. Friend for his question. He and I have had serious conversations about the future of the Post Office, which I am keen to continue to engage on. The current UKGI representative who sits on the Post Office board is Lorna Gratton, for whom I have a great deal of time and respect. Clearly it is important that the inquiry does its work to determine who did what in the past. As we look to the future, there are different opinions on how the Post Office should be governed. I am happy to keep those discussions ongoing with my right hon. Friend.

My Interventions in the Northern Ireland address – 2

I wanted to reaffirm that the  Uk now has control over VAT for NI as well as for the rest of the UK. Some have been using the NI Protocol as an argument against cutting VAT.

 

Mr Baker:

If my right hon. Friend will agree, I would like to have a meeting with him, because I am very clear that the scope of law that can apply in Northern Ireland is that which is necessary to ensure the smooth flow of goods.

I have said before at this Dispatch Box that we were always going to have special arrangements for Northern Ireland. When I resigned from the then Government in 2018, the issue that I forced among our colleagues in the European Research Group was that of Northern Ireland. We wrote a paper that said that there would need to be alternative administrative and technical arrangements so that there could be an open border with the Republic of Ireland. We understood that there would be special arrangements. There was never going to be an open border with no arrangements to deal with it, and there was never going to be a hard border; it was always going to be necessary to do something unique and special in Northern Ireland.

As I have also said at this Dispatch Box, had this country gone forward with one united voice in accepting the referendum result, and had this country enjoyed the good quality of relations with Ireland and the EU that we enjoy today, we might have done better than leaving in place some EU law in Northern Ireland. I wish we had, but after all we have been through and the eight years it has taken to do it, I think that this settlement taken overall‚ÄĒthe Windsor framework plus the Command Paper, including the Humble Address we are debating today‚ÄĒrepresents the moment to bank what I regard as a win and move forward constructively in the best interests of all the people of the UK, but also the people of the Republic of Ireland.

John Redwood:

Let me reassure the Minister that the Secretary of State gave me a very clear assurance in this House that we can legislate for VAT for Northern Ireland ‚ÄĒso I am not quite sure why he was querying that.

My Interventions on the Norther Ireland address – VAT

John Redwood (Wokingham) (Con):

When I last asked him in the House, the Secretary of State assured us that this House can now legislate for VAT in Northern Ireland, which was a very welcome assurance. Can the Minister explain how far the EU can go in legislating for Northern Ireland if we in the Unionist community are not very happy with that?

Mr Baker:

I refer my right hon. Friend to the table on page 4 of the Command Paper, which answers his question somewhat more broadly. That table compares Northern Ireland to Ireland as an illustrative member state and Norway as a European economic area state, and goes through the ways in which the status of Northern Ireland, EU membership and EEA membership differ. Anyone looking at that table can see that Northern Ireland is in a completely different place.

When it comes to the specific issue of the extent to which Northern Ireland can be legislated for by the EU, I refer my right hon. Friend to the democratic consent mechanism for the overall arrangement‚ÄĒthe first vote on which will take place later in the year‚ÄĒand also to the Stormont brake, to which we could return but which we have covered in previous debates. I have known my right hon. Friend very well for a number of years; I have followed his thoughts on this issue since some years before I was a Member, and I am reluctant to give him a very specific answer on the issue of VAT. I know he will have followed the details, and the last thing I want to do is give him an incorrect answer.