Construction, growth and our environment

One of the oddest things about  some Green Party interviewees is their apparent disinterest in the impact of more and more development of homes and commercial space on our environment. They seem unwilling to discuss the issue of growth in population, though growth in population is one of the main drivers of more carbon dioxide output,more use of the planet’s resources, more factory output of kinds they often do  not like.

For an individual country like the UK accepting tough targets for carbon reduction are made much worse if the country is experiencing a strong flow of migrants into it. The international targets are not adjusted to take account of more people. If an individual country wants to hit the targets a tough migration policy would be a good help.

For the many voters who love the English countryside, better control of migration would be very helpful. We do need to build many homes if we continue to invite in so many additional people. Environmentally it makes little sense to build many new homes on greenfields in England in order to leave an equivalent number of homes empty on the continent as people leave their own country and come to live here. It means more natural resources and energy are needed to build the homes here, and adds to the misery in the country losing the people with empty homes disfiguring urban environments and reducing incomes in those communities.

You would have thought true greens would wish to help in the task of creating more jobs and wealth in continental countries, so we have to use fewer greenfields for new building. If only. Part of the left’s problem is they will never criticise the EU/Euromodel, or criticise the dear energy policies which destroy jobs and keep people in fuel poverty. They just want to criticise England and complain that it is all our fault.

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EU asylum and the sad deaths at sea

The spate of deaths by drowning this spring has been harrowing. More must be done to prevent the problem arising, and more to rescue those where a disaster does occur . The policing,patrolling and life saving where needed has to be done by those EU countries  and North African countries with ports nearest to the problem, as they have the vessels able to deploy quickly.

The countries and authorities who could do most to stop this problem are the North African states whose ports the ships leave. The ships should be properly checked for seaworthiness and to prevent overloading before departures.

There is a common EU asylum policy. Broadly the policy has to be applied at the first EU country an asylum seeker reaches. They should be permitted entry if they are fleeing persecution and in need of asylum, but not if they are economic migrants. The EU’s borders are as good- or as weak- as the weakest link in them in all the member states. That is one reason why many in the UK would rather have complete national control of our borders, and make our own judgements about asylum without EU law.

The EU itself has been asked to help Italy, currently facing a large part of the present  problem.The Italian authorities, assisted by the EU, need to do more to track down the criminals who take people’s money to risk them in unsafe boats. This vile trade which has led to so many deaths needs a strong police response, and may well need co-operation between EU member states and the countries allowing the people to travel in these dangerous boats. All member states who are part of the common border need to discuss the EU contribution to the policy costs.

The EU needs to stress there is a fair and safer way for people to be assessed for asylum status, than trying to turn up on unsuitable vessels.

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More talking, less warring

War breaks out when politics fails. All too often in recent years in the Middle East and on the eastern fringe of the European Union politics has failed, governments have lost authority or have lacked the power to resist powerful enemies. The UK has tried military interventions in the Middle East with our allies, and has wisely avoided military intervention in Eastern Europe. Neither course of action or inaction has brought peace and democracy to those areas. So what in future should we do?

I want the next Parliament to rebuild the UK’s diplomatic strength. The last five years have seen some strengthening of the Foreign office’s capability to understand foreign countries and represent us more widely abroad. By 2010 the FCO lacked the language skills and intelligence staff needed to have a thorough understanding of the Middle East and Russia. Policy analysis and the presentation of our viewpoint was made more difficult by the shortage of skills. The Defence Select Committee has reported on this.

Armed with better information and advice, our diplomats and senior military staff will be in a better position to work with allies and with any democratic governments in the specified areas who are worthy of support. The Middle East needs more talking, and Eastern Europe needs more talking. This is not some vague hope of peace through asking people to be nicer to each other. I am far from naive about the magnitude of the problem faced in these troubled areas. I am also very conscious that we have tried military solutions in the Middle East, and the Ukrainian government is seeking a military solution in its unhappy territory, with no obvious signs that this route creates a stable peace and good democratic practice.

It takes many years or decades even for a country to establish democratic practices that are reasonable. It takes even longer for democracy to become a reflex reaction, to be part of the social and political fabric. It is only when people assume governments can be dismissed by voters, recognise that minorities have rights and protections, understand the power of the state cannot be used for party political purposes, and realise everyone is beneath the same law administered by independent judges,do you have the makings of a democratic state. The UK’s unique contribution in future could be to do more to build confidence in democracy,to explain to more people how democracy works, and above all to show it is an attitude of mind and an approach that has to be shared by government and opposition alike.


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Lots of jobs


The employment figures have been goods news for many months. Yesterday’s figures mean that 2million new jobs have now been added since 2010. The UK economy is in marked contrast to southern and western Euroland, where high unemployment remains entrenched and where there are precious few new jobs being created.

Yesterday also saw praise for the UK from the IMF boss. The IMF themselves are not immune to making poor forecasts or for giving bad advice on what to do next . This time they gave a sensible comment on what has happened. They noted that the UK has been much more successful at achieving growth than the rest of Europe, and agreed that the UK had made some good calls on the pace of deficit reduction and how to reduce it.

The task ahead is to generate still more jobs. It is to generate better paid jobs. It is to raise the skill level, and to resume productivity growth. It is to create a climate for more industrial growth as well as service sector growth

The singe most important change to speed that process has to be a major change to our energy policy. The UK needs to distance itself from the job destroying dear energy policies of the EU, and have a UK policy based on the pursuit of greater self sufficiency in energy provision.

The position in the Euro area is weaker in many ways. Their overdependence on wind energy will become a particular problem, burdening them with much dearer energy than their leading competitors. Japan and China are putting in large quantities of coal based  electricity production, which is presently much cheaper. As if the disaster of the Euro was not enough, the EU has hit upon another way of destroying jobs and giving the advantage to the competitors.

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Last night’s debate


Last night was a wake up call to the reality. On current polls the SNP will be clearly the third largest party in the next House of Commons. They will make all sorts of demands on England designed to undermine the Union.

Labour has no answer to this problem. We clearly need justice for England, which only the Conservatives are willing to talk about and address. Labour and the Lib Dems remain silent on how England’s Income Tax should be settled once Scotland decides her own. The winner last night was the Conservative party.

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China’s strategy

Whilst people in the UK are preoccupied by our election debates, the IMF and World Bank meeting with Finance Ministers  is happening  in momentous times.

The most significant thing that is happening is the rise of China. China has a plan. They are in transition from relying on exports and investment to grow quickly, to depend more on consumer spending at home. After years of making good value goods to sell to foreigners, to build up a large reserve of foreign exchange, China is now making more to sell to her own citizens. Her  economy is also in transition to higher tech and to delivering more service output.

China is liberalising its financial system. It now has more two way investment into and out of mainland China to Hong Kong. It is putting its currency, the renminbi, forward as one of the world’s great trading currencies. It is seeking the entry of the renminbi into the Special Drawing Right basket of the IMF alongside the dollar, yen, sterling and the Euro. It has set up the Asian Investment Bank to extend credit across Asia and the Middle East.

The most dramatic plan is China’s proposal of a new Silk Road and silk maritime road. The idea is new and improved sea and land transport links from China through Central Asia to Russia and Europe. China has in mind a new large economic zone with joint investment projects in transport, communications and  energy, with more common trading and co-ordination of economic and development policies.

China is working with the City of London, recognising UK excellence in finance and valuing London’s ability to make markets in the renminbi. We need to make the right diplomatic response to China’s developing wish to play a bigger role in the world, and to use some of her great industrial and financial muscle to extend her influence. The UK government was right to back China’s Investment Bank initiative.

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You don’t rule well by trying to divide a society

There’s a lot of class war rhetoric around in this election. There are some who seem to think you can make the poor rich by making the rich poor. There are certainly many who speak divisively about society, seeking to set poor against the better off, as if their interests were incompatible.

I have spoken and written before against austerity. I want greater prosperity for all. I want tax cuts for all to help bring it about. I want people at all income levels to keep more of the money they earn, and to pay more tax when they earn more money. Cutting tax rates, and lifting some people out of income tax and some capital taxes altogether is one of the best ways of stimulating more enterprise, more activity and more prosperity.

The Conservatives are not the party of the rich as endlessly stated in Labour and Lib Dem caricatures. We want the rich to pay more tax, and think the best way to bring that about is to set rates that mean they will stay and pay, and rates which encourage them to venture more with their money, employ more people, contribute more to our economy. We want everyone who can work to have the chance of a job. We want everyone in a job to have opportunity for promotion, training, higher pay.

You do not rule well by seeking to divide society, and by thinking that differences of income are of all consuming importance. You rule well by enforcing a fair law equally on everyone. You rule well by ensuring the many can aspire to better jobs, higher incomes, better homes, and by looking after those who cannot manage.

The danger is we spend too much time arguing how to divide the cake up, and far too little time and effort thinking how to bake a larger cake. Some want to break the country up, setting rich parts against less well off parts. Some want people to depend more on the public sector. I want to see policies which promote better training and education, more people setting up their own business and working for themselves, more small businesses expanding, more people owning property and other assets.

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You could get a lot of public service for £742 billion.


£742 billion is a lot of money. It is £11,600 for every man, woman and child in the country. It is what the UK state will spend this year whoever wins the election. It is time to ask a few more questions about how this money should be spent.

I agree with Conservative policy that we need a further period of restraint in public spending to help get the deficit under control. I think the cash near standstill for a couple of years is just what is needed as per the present Red Book plans. I do not think this need be difficult for the public sector, as there are some relatively easy ways of achieving it. Having zero inflation helps.

There is considerable scope for better buying, more quality driven systems of management, getting more  right first time and more reduction of error and waste in many parts of the pubic sector. There is considerable scope to reduce the benefits bill for the best of reasons, by helping more people into better paid jobs or into any kind of job.

I disagree with the official party line over HS2. I would cancel this project tomorrow,and did vote against it in the last Parliament. There is no capacity problem from London to the north. There is a commuter capacity problem into the main cities which could be more easily and cheaply solved by improvements to current lines.

The large subsidies being pushed into Network Rail, a nationalised industry, have not bought us cheaper peak hour fares, but have bought us gross inefficiencies. I would seek a new management plan to do more and better for less on the railways. Our railway performance is way below that of comparable European railways.

I would spend money on overseas aid in relation to the need of countries for help and in relation to the priorities of UK foreign policy. I would charge all the costs of the military in the ebola mission and similar activities to the aid budget. I would also charge all treatments offered free in the NHS to visitors from abroad to the aid  budget. I would do more to ensure the NHS recharges all treatments for visitors from the rest of the EU through the EU recharge system to the relevant member state governments, and expect most overseas visitors  to have insurance or cash  to pay for any non emergency treatment whilst here, if not covered by the EU arrangements.  The government has been taking action to remind the NHS of the need to charge people from abroad who are not eligible for free treatment.

I would also expect a major reduction in our dues to the EU. Either we will negotiate a new relationship based on trade and political co-operation, which should include lower charges, or the UK electorate will vote to leave. Either way there should be large savings.



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Labour now say they want to cut the deficit

According to the Labour Manifesto they now buy into a policy they criticised as being a policy of austerity . They seem to wish to cut the deficit from £90 billion to £30 billion by 2019-20. Their tax increases are modest in terms of how much revenue they will raise, even on their own figures. Some of their tax proposals may end up losing the Exchequer revenue if Labour won and implemented them. It must mean they are planning a lot of what they used to call “spending cuts” to achieve their goal.

The single main message of their Manifesto is that the last government was right – the UK government  did need to get the deficit down, and we do need to finish the job of getting it down. Labour leave it to the Greens and the SNP to make the case for bigger spending and more borrowing. Labour give us the headline that they will get rid of the deficit, and suggest the debt will be reducing. If you examine the numbers more carefully you see that in practice they will push up borrowing by considerably more than the Conservative plans, and will not be cutting the stock of debt by 2019-20. They will carry on borrowing to finance investment.  Debt  may be falling as a percentage of GDP, depending on how much growth is left. The detail does not back up the headline.

Some of the high level rhetoric of their Manifesto is often inoffensive or sensible. They want “hard work to be rewarded” – who doesn’t. They want more “high skill high wage jobs” – who doesn’t. They want more new homes. The problem is the policies to bring them about may be counter productive.

They now mention immigration.  They wish to curb EU migrants from getting any benefits for the first two years here, compared to the Conservative four years. They think all public service workers should be able to speak English.

Perhaps the dearest ( and entirely uncosted)pledge in the whole document  is their wish to remove all carbon (dioxide?) from electricity production by 2030 and to set more demanding whole economy targets for carbon. They offer little to England, with no English votes for English issues in the Commons, and no detail on how the finance would be negotiated once Scotland has more of her own tax raising powers.

The Manifesto is full of proposals to intervene and regulate business more. Their proposals on energy are especially complex,  and could be dangerous given the overriding need for more investment in more capacity as soon as possible to keep the lights on.


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Unfunded promises and hypothecation – let’s talk about some big numbers

The election debate has got tangled up in discussion of a few billion extra spending, rather than a sensible analysis of the  £742bn of total spending this year.

Worse still Labour and some in the media seem to think if you wish to propose any additional spending you need to show hypothecated new revenue to pay for the item.  They rarely propose offsetting economies in public spending and never discuss the overall  balance of the budget and the rate of increase in tax revenues. Uk government does not of course work on the basis of hypothecation.  Most revenues are aggregated in the Treasury and used to pay for whatever bill comes up next in the general public spending budget. Thus NI contributions, Road licence fees, Vat, Stamp duty and the rest are just part of the general pot.

Conservatives say they will increase Health spending by £8Billion a year by 2019-20. It will be paid for out of the general rise in tax receipts likely over the next five years and already in the Treasury budget figures from economic gr0wth. The Conservatives point out that health spending is up £7bn in real terms over the last five years, paid for out of rising revenues,so the deficit was still able to fall. Over the next four years the Treasury forecasts an increase of £124 billion a year in tax revenues on present tax rates.

Labour say they will increase health spending by £2.5bn a year paid for out of specific new taxes. In practice anyone running the government will end up spending  more than an extra £2.5bn a year for the NHS.

There are two important  issues  to discuss. How quickly can tax revenues rise? With more growth and lower tax rates there should be faster growth in total tax revenues, which will help. That is why the main deate should be about how to sustain the current good gr0wth rate of the UK economy. Higher taxes as in France will not do that.Labour knew that in office but has forgotten it in opposition. How can total spending be brought under control and how can we secure more value for the large sums now being spent and promised?

Debating the odd  additional billion is debating the rounding errors or ralatively small changes in total public spending. There is too much sound and fury over a few billion of “new” money and far too little debate about how to spend the bulk of the money wisely. I will deal with these issues in future posts.


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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.

    Published and promoted by Thomas Puddy for John Redwood, both of 30 Rose Street Wokingham RG40 1XU

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