Month: July 2008

More economic gloom

July 2, 2008 8 Comments

On both sides of the Atlantic the news is of slowdown and decline. US car output has been badly hit, UK housebuilders and construction companies are struggling and UK house prices are now falling in the way expected. There is deteriorating news from retailers. The leading indicators for UK manufacturing look bad.

People in the UK housebuilding and housing related areas are reporting a worse crunch than in previous downturns. This is the result of the badly managed credit and money policies of the last few years, and the result of the run on the Rock and its subsequent nationalisation. The most aggressive large lender of 2006 has been effectively withdrawn from the market by the need to get cash back for the government and because of the competition rules which rightly impede a nationalised subsidised concern making attractive offers to new borrowers.

In the House yesterday afternoon the government was still unable to tell us how it will compensate the 1.1 million remaining losers on lower incomes who have been hit by the abolition of the 10p tax band. The government declined to support a backbench Labour proposal to give them the money. Its promise to come forward with proposals at the time of the Pre Budget Report was sufficient to persuade the Labour rebels to back off. The longer it takes to solve the problem, the worse it is for consumer sentiment and spending power.

Today we turn our attention to Vehicle Excise Duty. Labour rebels are now concerned about the large hikes in VED planned for next year, which include increases on VED on older cars. The Opposition and these Labour MPs point out that hiking VED on them cannot affect behaviour over which cars people buy – if higher VED on high emission cars is a green policy it can only work by applying it to new vehicles.

Meanwhile the truckers will protest in London in an effort to tell the government that high diesel tax and other transport taxes here in the UK is another blow to the UK trucking industry. Far from maximising revenue, it encourages truckers to fill their tanks on the continent, and helps the foreign competitors to the UK businesses.

If the government feels the pain and wants to do something about it, it needs to bring the crazy increases in tax on fuel to a halt, and compensate those on lower incomes who have been clobbered by its tax changes. In this nasty squeeze every little relief would help.

The reign of King Coal

July 2, 2008 6 Comments

Yesterday I met leaders of the NUM, Unison and the carbon capture industry, to discuss the future of coal along with some other MPs.

They made a good case, urging that we expand production of domestic coal, both to substitute for the large quantities of imports currently coming into the country and to fuel a new generation of cleaner coal power stations.

They argued that there is a lot more coal for us to mine and quarry, that at present coal prices that production could be economic, and the government should accelerate the pace of development of clean coal technology and carbon capture.

Some looked back nostalgically to the age of the nationalised industry, without any great belief that the present Labour government would want to revisit that approach. It is curious how nationalisation still has a grip on their hearts, when the nationalised industry under governments of both parties so let down the mining communities. The 1970s Labour government was in the business of closing mines and sacking miners, just as the subsequent Conservative government was. Each of those governments did so on the advice and at the command of the nationalised industry, which systematically failed to make mining economic enough to sustain a decent sized industry in the UK.

The miners of Tower Colliery proved the Coal Board wrong when they took over their mine and worked it profitably when the Coal Board management had wanted to close it on the grounds that it was uneconomic. Why would we want to go back to management like that? Isn’t the future a more mechanised, safer industry where those who mine the coal share in the profits?

Wokingham Times

July 1, 2008 1 Comment

One of the many policies and aspirations of the present government that lies in tatters is its wish to see many more houses built in Britain. With an impeccable sense of timing and no sense of irony, the government chose the top of the housebuilding cycle to announce that it intended the building industry to step up from around 180,000 new homes a year to 240,000. With all the certainty of the old Communist regimes announcing their tractor production targets, Minister told us solemnly that another 3 million homes will be built by 2020. The policy was to be pushed through by the construction of numerous “eco” towns on greenfields, coupled with brownfield redevelopment, town cramming and back garden building. Doubtless Ministers would like to force too many new homes on us here in Wokingham, without making the money available to build the schools, roads and drainage systems they would need.

All of this looks absurd when you see the reality of the Credit Crunch. The first thing the government did to “help” implement its policy was to nationalise the most aggressive of the mortgage banks, and then stop it undertaking new lending! The Bank of England and the government failed to keep markets liquid enough, so credit dried up at many of the smaller lenders, and the larger banks all had to rein in their lending and raise new capital. As a result in the first quarter of this year only 32,000 new homes were started – an annual rate of a mere 130,000 if the first quarter’s activity levels can be sustained, or little more than half the government’s ambition.

At the same time the government decided it needed to speed up the granting of planning permissions for major projects. It has chosen to do so by legislating to set up a new quango to become involved in these decisions. In our recent debate on the subject Ministers were themselves unable to confirm it would be quicker to wait for the new quango if you want a major planning permission, whilst the Opposition pledged to abolish it and pointed out it was likely to delay matters with judicial review of decisions a distinct possibility.

Regional government – unelected, expensive and much disliked – is currently dividing up these top down government targets for more housebuilding. It is playing the part of a faithful retainer in this process of illusion – instructing Councils to make land and planning permissions available on a huge scale, as if the industry wanted to build all these homes, or people could borrow the money to buy them. I look forward to a Conservative manifesto pledging to abolish both these hated regional governments and the silly housing targets they generate. Planning applications should be considered on their merits by the local authority involved. If a company or a landowner wishes to gain a permission which greatly enhances the value of their land, they should make it worth while for the local community and the people who will be adversely affected by the development. They should not be able to rely on unelected regional officials, on Chief Executives of Councils keen to do the government’s bidding to advance their own careers, and on the idiotically optimistic government view of how many houses people can afford to build and buy.

I was pleased to hear Shadow Spokesmen sharing my view that top down targets, regional control and over optimistic plans are a bad idea. The planning system at the moment suits no-one. Developers think in better economic times they cannot get the planning permissions they want, whilst most people feel the system fails to take their views seriously and fails to protect communities against unwanted development or to provide the additional facilities needed to make a housing estate part of a thriving community.

So what should Councils about the pressures from the top to identify more greenfields to be bulldozed? They should argue, remonstrate and use every clause in the long manual to slow things down.It’s time for masterly inactivity. There is no need to identify new sites at the moment. This system cannot last. There is no need for more planning permissions this year, as the housebuilding industry is going through extremely difficult times. Land values are going to fall. There is too much land with planning permission around for current needs. Leading housebuilders need to sell land and finished houses to pay off some debt. The government is in a world of its own. The problem today is not a shortage of planning permissions, but a shortage of mortgages and people to buy the homes.

Today we mourn those who died on the Somme

July 1, 2008 42 Comments

Today we mourn the loss of 19,240 men who died on the first day of the Battle of the Somme. Following an eight day bombardment with 1.7 million shells, and seventeen mines exploded under the German front line, 750,000 troops set out across No Man’s Land at 7.30am on that fateful day. Their General, Sir Douglas Haig, was sure the bombardment would have destroyed the German front line and made the attack relatively easy. Casual observation would have shown him that the barbed wire and the concrete emplacements had withstood it. The British had air supremacy so they should have seen that. War on an industrial scale went to deadlines and plans laid well in advance. Commanders showed little flexibility. Wellington’s brilliance at husbanding his resources and avoiding heavy loss of manpower was replaced by a casual acceptance of massive losses for little territorial gain.

We all admire the heroism and stoicism of the many men who served in that army. My own two grandfathers fought in that long war. They were amongst the lucky ones, both surviving, and only one wounded. We should be more critical of the political and military leadership of the time. The Liberals in government presiding over mass slaughter would never recover as a governing force after the war. The decision to go to war over a dispute in the Balkans and over the neutrality of Belgium was questionable. We then fought the wrong kind of war for the UK. Our strength lay in our navy, kept substantially stronger than any rival, so we fought a static land war on the continent where we could not deploy our sea power to good effect. The men and money the war took damaged the UK’s subsequent position in the world and is part of its twentieth century relative decline. It reminds us how much blood and treasure in the past commitment to Europe has cost us, when the world’s oceans beckoned to a better future elsewhere for an island trading maritime nation.

A tale of two Presidents – and the EU

July 1, 2008 8 Comments

It was refreshing to hear that the President of Poland respects democracy and the popular vote sufficiently to say he will not sign the Lisbon treaty now that Ireland has vetoed it. Let’s hope he keeps this belief in listening to the people, as he will now doubtless be briefed against and pressurised by the Euro political class.

It was depressing to hear the President of France lecturing us all on how important it is to get Lisbon through despite the Irish vote. It shows he has not got it, and is a fully paid up member of the Euro elite intending to carry on with their power grab however unpopular it is. The French threaten us – we will not expand the EU further if you do not let us centralise – as if that were a threat to Eurosceptics. They demand that 26 of the 27 nations go ahead with ratifying anyway as if nothing had happened. They tell us wrongly that the EU cannot function without this ghastly new Treaty, and seek to find out how to buy off or sideline the Irish, refusing to take “No” for answer.

At the same time they dare to say they are out to create a “Europe” that helps its “citizens” and takes them seriously. If they really meant that they would seek to base their “Europe” on the wholehearted consent of its prisoner people, by offering referenda through out the nations of the EU and accepting the verdicts of the national votes. They would find that different nations want very different levels of integration and common policy, but in many cases like the UK we want the EU to do less, to legislate less, to spend less and to allow us to get on with our own lives without its constant niggling interference.

The French government openly wants European defence – a European army. It wants agricultural reform of a kind which will continue to cut out imports from poor countries elsewhere in the world and costs the taxpayer and food buyer a small fortune. It wants more laws and regulations in many areas of life, as if we did not already have far too many of both. It wants higher taxes throughout the Un ion, to avoid “tax competition”. It’s a recipe for less enterprise, lower incomes, and higher unemployment.

The British government claims to want to put constitutional change behind us, knowing it is very unpopular with the public. It knows it is so unpopular that they dare not match their promise of a referendum on Lisbon, and then wonder why people feel cheated. They state that the EU can make important contributions to tackling the big international issues once Lisbon is put to bed. When I asked the other day what they wanted to push through the EU legislative factory post Lisbon that they could not get through under the current arrangements, there was of course no answer. Most of the problems they think the EU can help solve (like climate change and food and energy prices) require global agreement anyway.

If the Euro elite wants to know why they keep losing referenda and why their project is so unpopular they do not need to look very far. It is unpopular because they either deny us a vote or ignore the results. It is unpopular because the EU serves the political class that draw their salaries from it, not those of us who have to pay the taxes to keep them in the style to which they are accustomed. It is unpopular because all its plans entail more laws, more rules, more taxes. Many of us want fewer of both. That’s why we despair of this power grabbing overcentralised EU, living in the past and unable to grasp the sheer competitive power and energy of Asia.