Speaking for England

Today the government’s extended consultation on Freeport’s closes. It is time to press on with this excellent idea to boost investment growth and trade.

The old idea of a Freeport was a limited land area around a seaport where planning controls were relaxed to encourage and allow value added processing of imports for their re export as finished goods. There could also be tax incentives to boost activity further.

Today we should be thinking of the virtual Freeport spreading out further from a seaport or airport to create an economic zone or area dedicated to manufacturing and adding value added through services to foster exports tax free. The free port zone could also be a place to manufacture or add value to goods and services for the home market, where any tax and regulatory compliance took place at the time of completion and transport to market.

I would like these wider zones to offer a five year business rates holiday, entrepreneur’s relief from CGT, no Stamp duties and of course no VAT or tariffs on anything for re export. We need these industrial development zones in all parts of the country, so let’s press ahead with 10 straight away with good geographical coverage.

To some the full relaxations of rules imposed to fight Covid 19 cannot come soon enough. I have varied complaints from people who strongly object to what they call house arrest. They think it would be better to isolate people with the disease, and offer support to allow people most vulnerable to the disease to limit social contacts, rather than asking most of the population to stay at home. To them freedom is the freedom for the many to have a social life of their choosing, to travel as they wish, and to run their  businesses as they see fit. They argue if we do not get back to this soon there will be unacceptable economic damage.

To others freedom is the  discovery that they can work from home, draw their full salary, and avoid the 3 hour return commute each day. They say their lives have improved. They are no longer dependent on the erratic goodwill and competence of the train companies, and  no longer have to push themselves into a crowded tube train or onto a bus to complete a city centre journey to work. They can mind their house, receive deliveries, see more of their children and still do their job using on line facilities. They say there can be compromise between fighting the virus and getting the economy moving. They want new working  practices which can pay the bills and keep people safe.

To some the idea that their every move may be tracked, and they may be subject to a tracing system requiring them to self isolate because of a chance encounter with someone who had the disease is an unacceptable intrusion into their lives. They are suspicious of how likely you are to catch it from casual contact.  To others a proper track and trace system is essential to give them more chance of escaping the virus. They wish to be free from disease.

So where does freedom lie? Have the anti Covid 19 measures simply taken freedoms away, leaving us with arguments about how successful this is in controlling the virus? Or are there some compensating freedoms some have gained? What should the new world of work look like?

Some universities are said to be in financial trouble. It has arisen because they have expanded, offering many places to overseas students, only to find that model  poses difficulties at a time of retrenchment for international travel and exchange. Over reliance on Chinese students could be especially difficult. The deteriorating relations between the West and China over civil rights in mainland China,  the new Hong Kong law and the intellectual property issues may put some Chinese students off coming . It would be good to hear from the university representative bodies what they think about the extent of China links, and how they respond to the current Chinese policies on human rights and intellectual property.

Universities have also entered the academic end of the leisure and entertainment business, offering informative conferences during the breaks  between terms. These have stood empty for months with a substantial loss of income. They have invested in student accommodation, which has also been without tenants during the lock down period, leading to further income shortfalls.

The university establishments receive substantial research grants from governments, and some from companies for research that their sponsors wish them to carry out. The system of peer reviewing is said to be a strength, where research is assessed by other experts in the field who have the power to publish and recognise it or to mark it down and keep it out of the respected journals. Having a quality control in one sense is a good idea. There is however the danger that it encourages me too thinking, where a younger academic has to proceed around the work of a better established academic, without challenging the foundations of what the elder was doing. It can create groups of like minded people training up a new generation to think the same.

It also knocks on to governments procuring research. The senior academics are likely to influence the grant awarding and commissioning bodies in the public sector, pointing them in the way of research that bears a family resemblance to what they have already done. It can just be a case of the academies corralling around their fashionable theme or theory, seeking to prove it and extend it, whilst keeping out any serious challenge to it.

Government should look carefully at what research it is commissioning. There is no need to commission more research to extend or prove things academics claim to know. There is more need for research which pushes the boundaries and challenges some of the tired assumptions of current thinking.

I have no problem with the idea that a quoted company can be bid for by potential new owners who value it more or who might run it better than the existing owners. I do have a problem with the U.K. offering this freedom to countries and companies who do not accept the same discipline. I particularly oppose the idea that nationalised industries or foreign states should be able to buy up U.K. based businesses.

One of the unfairnesses of the single market was we offered up most of our large businesses for sale to France and Germany but they offered up very little of theirs in return. Cultural obstacles, different ownership structures, EU rules and Court judgements and different national government approaches meant during our time in the market many of our companies were acquired from the continent whilst U.K. companies made little or no progress with either acquisition or organic growth strategies in the leading EU countries.

Just look at what happened to our building materials industry for example. In the 1970s we had large advanced companies mining China clay, producing cement and ready mix concrete, making tiles, kitchen units, glass, plasterboard, bricks and tarmac. They did pioneering work on ready mix, concrete tiles, glass and other processes. These items make sense to produce locally as transport costs are high and the travel intrusive. They created many jobs in the U.K. and did not add to the import bill.

Redlands tiles was bought up by French Lafarge. Marley Tiles was bought by Belgian Etex. BPB plasterboard was acquired by French St Gobain. Blue Circle Cement was bought by French Lafarge. Ready Mix Concrete was purchased by Mexican Cemex. Hanson Trust with wide ranging building material interests including bricks was taken over by German Heidelberg Cement. Magnet Joinery’s kitchens and other wood products were snapped up by Swedish Nobia. Tarmac’s aggregates and road materials were bought by French Lafarge. English China Clays was acquired by French Imetal. That just left Pilkington Glass with world leading technology to go to the Japanese, and our main scaffolding business to go to the USA.

In the case of the USA Hanson had acquired various materials companies as that is an open market. There were practically no successful U.K. bids for European companies given the constraints, apart from Braas bought by Redland only to be sold back to the continent as part of the sale of the larger group.

As we develop our own free trade and overseas investment policies we need to make sure there is reciprocal access for bids. In areas like defence, data and communications we also need to be aware of the needs of national security. There are some basic competencies and essential areas where we need a domestic capability. The extraordinary story of how the U.K. sold out of practically all its leading building materials shows what can happen if our access is blocked. Once you lose control of the assets you can then be taken on a journey to much more dependence on imports, where you export the jobs elsewhere.

The Chancellor yesterday set out how he intends to wind down the furlough scheme whilst encouraging employers to keep those employees and to restore their work. He also made some proposals to boost tourism and hospitality business, and to assist more young people into the workforce. I will post my short speech in the House on the economy later this morning.

This is your opportunity to comment on the current state of the recovery and government plans to stimulate it.

June saw car showrooms re open and some sales take place. Some dealerships reported brisk trade and pent up demand. We now know the overall result. June sales were 35% down on June 2019, and year to date sales are now down by just under one half.

Some of you write in and point out many people cannot afford a new car. Others tell me it is silly to buy one, given the costs and the early depreciation. I continue to research and write about the car industry because it has figured prominently in UK debates about manufacturing, tariffs and trade. It is a modern political paradox or contradiction. The MPs who are keenest on green policies are also often those who worry about the state of our car industry, not seeing that it is green policies which have done most to undermine traditional car manufacturing.

There are several reasons for the collapse of car output and demand. Of course the main one is the lock down period and the impact of anti virus policies. There are however underlying trends and policies that were weakening car output well before covid 19 hit. The high VED put people off buying new. Tax and regulatory attacks on diesels cut buying interest in these cars., These were the vehicles the EU and UK governments had urged the industry to specialise in when they saw diesels as more environmentally friendly than petrol cars. The Bank of England under Mr Carney also tightened credit conditions for car loans. Readers of this blog read my forecasts of decline at the time of the new measures.

There is this central muddle in UK car industry policy. The government seems to want a major car industry, yet still dislikes its main products. It wants a very different car industry. The danger is its recourse to higher taxes and more regulations puts people off existing products without bringing them to buy the products the government wants to see. The industry is caught spending money closing down the old before its time, and spending even more money on the new before there is mass demand.The virus just got in the way and blew a crater in the sales figures.

Andy Haldane at the Bank of England is an optimist thinking we will experience a quick V shaped recovery. A V shaped recovery implies that the output and incomes we lost in the three months of downturn will be replaced in the following three months. One side of the V, the fall, should be balanced by the other, the recovery.

This requires very fast rates of growth in jobs, output and incomes. If we take the overall downturn as 20% then you need a 25% recovery to get back to where you were. For those badly affected sectors that suffered a halving of their turnover, they need 100% growth from the bottom to recover fully. With car sales down 99% at worst, they need to recover by 10,000% to get back to the start.

There will be fast rates of growth for the sectors coming out of lockdown. It is curious the so called PMIs, the surveys of orders and output undertaken month by month, are not stronger than they are. They are meant to measure the rate of change from the previous month, so where that was very depressed you would expect a very fast rate of growth to recover. Maybe people filling in the forms have allowed general mood to influence their replies,and have not allowed enough for recovery.

The problem is many of the worst affected sectors will not get back anytime soon to where they were, because social distancing and changed patterns of work and leisure behaviour means less business for them. Some entertainment and sports venues will remain closed to audiences for the rest of the year. Some shops will not re-open. Some bars and restaurants will have to accept far fewer customers to allow social distancing.

It is true some businesses will record growth taking them above the levels of January. On line everything will be doing more. Some things will benefit from a rush of sales as people catch up with delayed haircuts or postponed home and car buying. This is unlikely to be sufficient to make up for the weakened areas this year, so I fear we will end the year lower than we began. Full Recovery will take longer.

The car often gets a bad press. It is briefed against for not being green enough. The  bad side effects brought on by accidents are not welcome, but all transport brings it with it deaths and injuries when things go wrong.  Motorcycles and cycles bring risks, and there have been tragic public transport crashes.

The Covid 19 disaster has reminded us of the strengths of the car. You can travel in it without breathing over fellow passengers on a bus or train and without exposing yourself to infections from others. You can start near to your home and end near to your work or shop or other destination . The road network still offers considerable scope to get to where you want to go though it could be improved to cut accidents and ease flows through junctions.

The car offers individuals and families considerable travel freedom. It allows us to do a weekly shop and get the heavy goods home easily. It allows us to get to work and back, and to visit family and friends. Currently it allows us to reduce or remove our use of public transport as suggested by the guidance.

I am all in favour of  experiment with different fuels,  better exhausts, or higher safety standards. Each recent  model  generation of cars has improved safety features, better fuel efficiency and lower harmful exhaust waste. The important thing is to do this whilst keeping the popular characteristics of the car, the ability to go most places with a decent  range.

My car always waits for me and will go as soon as I want to go. That is an important flexibility. true green policies need us to avoid so much congestion through bad road design and insufficient parking.

Normally in these blogs I highlight areas where things have gone wrong or need improving. Today’s blog begins with thanks to the Speaker and his staff for something that went right. He got a virtual Parliament up and running smoothly and quickly when some of us thought Parliament needed to be working. It was  a time of big decisions on the extent of the  lock down and management of the NHS response to the virus.

The virtual Parliament allowed MPs to ask questions and make speeches from home via the Zoom link, and reminded Ministers that their blizzard of decisions needed to  be reported to MPs and subjected to questions and suggestions. There were remote divisions where an MP voted by computer once through the on line security.  It was a big step forward and answered the question of how could Parliament function whilst observing social distancing?

It did however have some limitations. No MP was allowed to intervene on a Minister or other speaker, preventing challenge and proper debate. There were no easy informal exchanges between MPs as a debate or the government’s business evolved. Everything had to be planned and timetabled in advance, so there could be no spontaneity.

The Leader of the House was keen that something more like the Commons was restored. Again the Speaker and  his team responded well, giving us the Mark 2 Covid Commons. Now we have regained the right to intervene. Most MPs need to attend the Commons to speak and vote, and so there is more scope for suitably socially distanced conversations with other MPs as needed. Voting in the lobbies has been restored with orderly and segregated progress to and through the lobby to vote, speeded a bit by the presence of card readers to accept your vote.

The issue is how can it evolve further? There could still usefully be more spontaneity were some speaking slots to be available unallocated in advance, and if some questions were not previously allocated. The chamber with only 50 people in it at any one time does not have the atmosphere it normally has, with most debates heard in silence. Outside the chamber the social distancing advice does not always remain observed, as MPs want to talk to each other. Democratic politics is about the  numbers that support a cause as much as it is about the justness of the cause. Daily life at Westminster is about running causes , building support and arguing for change.

The U.K. and Switzerland have signed a document to complete a financial services Agreement to make trade easier on our exit from EU controls. The U.K. is the largest net exporter of financial services and Switzerland the third in the world.