An answer to Michael Meacher

 

            Michael Meacher today claims there will be another financial crisis owing to the failure of John Vickers to recommend the splitting of investment and retail banks, and owing to the growth of exchange traded funds.

             I think he is looking in the wrong direction for future financial problems. Most informed commentators are concerned about the state of the public finances in a number of countries, and the impact on banks who own large quantities of government bonds  if some of those countries default or move to substantially higher interest rates under market pressures.

             The failure to split investment from retail banking is not going to bring the system down. Large retail banks need careful regulating even without investment banking arms. Northern Rock and Lehmans were segregated.  Most Exchange Traded Funds are owned by pension funds, charities and individuals who do not borrow to buy them, and most Exchange Traded Funds are ungeared portfolios of shares. Such ungeared investments did no damage to the system in 2007-9 and there is no reason why they should in the future.

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42 Comments

  1. Gary
    Posted April 26, 2011 at 9:17 am | Permalink

    Erecting chinese walls in an operation intentionally so opaque and complicated is an exercise in futility. The FSA certainly does not understand that labyrinth and I am sure that Meacher does not either. This is the problem with these socialists who believe that they can regulate their way to nirvana, they don’t even fully understand what they want to regulate. The problem is in the axiom the banks are built on, fractional reserve banking, no matter how you rearrange the structure built upon it , the problem remains.

    • Conrad Jones (Cheam)
      Posted April 29, 2011 at 12:42 pm | Permalink

      @Gary

      Your reference to Fractional Reserve Banking is very informed. Most people do not realise that the Banks do just lend out other peoples money but instead use it as a small capital reserve to allow a small number of their customers to remove their deposits.

      Michael Meacher has recognised the problem of Fractional Reserve Banking in his blog – he has written:

      “At present there are several enormous detriments to the existing banking system. One is that the banks create money out of thin air by repeatedly on-lending to different customers the same money secured by a small capital base, with the risk attached that any breakdown will be covered by taxpayers either through deposit insurance or through massive bailouts.”

  2. norman
    Posted April 26, 2011 at 9:21 am | Permalink

    We’ve had two financial crises in a hundred years. The first caused by meddling politicians, the second caused by, er, meddling politicians.

    The solution – more meddling!

    • Kenneth
      Posted April 26, 2011 at 5:45 pm | Permalink

      Agree. Excessive regulation in banking has led us to a near-cartel.

      • lifelogic
        Posted April 27, 2011 at 8:46 am | Permalink

        Agreed more competition is needed. Also the problem is the great incentive to create a piece of paper that can be certified by expert (and paid) credit rating agencies to have a value and then be dumped on some other bank who has not really understood the market. The profit motive drives the ongoing deception and all are happy until the music stops. Just as with Lloyds of London Underwriting in the past.

  3. startledcod
    Posted April 26, 2011 at 9:32 am | Permalink

    I think it fair to ignore almost eveything that Michael Meacher says. He invariably comes down on the wrong side of almost every argument borne of his champagne socialist mentality. He is Tony Benn lite without the intelligence or intellectual rigour.

    The banks should have been regulated not checked for compliance, simples.

    • lifelogic
      Posted April 28, 2011 at 9:29 pm | Permalink

      “Tony Benn lite without the intelligence or intellectual rigour”

      Perhaps he has some intellectual rigour but he fails completely to understand human nature and he wasted millions on the entirely uneconomic and financially mad concord when the treasury sensibly wanted to cancel it. No intellectual rigour needed to see it was tipping public cash down the drain just the back of an envelope and a few minutes.

      Still at least he sees the EU for what it is.

  4. Simon
    Posted April 26, 2011 at 9:40 am | Permalink

    Maybe Meacher is mistaken but why should the taxpayer have to guarantee deposits against losses due to proprietary trading of synthetic instruments ?

    Does anyone know the amount of money held in ETF’s which do not hold actual shares but merely replicate a selection of shares or an indice ?

    Should we just assume that it is a small percentage of the actual shares which exist ?

    I suspect Meacher is right that all this financial fancy footwork will precipitate another crisis . No prizes for guessing who will end up paying for these follies .

    A trend is developing here of image over substance :-
    – John Vickers produces a report which ensures the taxpayer continues to underwrite an essentially unreformed banking sector .
    – John Hutton rules out defined contributions schemes for the public sector and comes up with a plan that allows everything to continue as usual so that real reform of public sector pensions can be avoided for another 30 or 40 years .

    What is the point of going through the pretence of commissioning these reports when the policy has already been decided ?

    • Simon
      Posted April 26, 2011 at 9:44 am | Permalink

      Another example of image over substance : “the cuts” when public expenditure is actually rising .

  5. FaustiesBlog
    Posted April 26, 2011 at 10:11 am | Permalink

    Michael Meacher is absolutely right.

    The next crash is probably a decade or less away and taxpayers will be on the hook again for bank losses. Banks will find ways around the recommendations in the Vickers report and politicians will be bought by them, as usual.

    Expect the public mood at that time to be 100 times more toxic than it is now; the people won’t put up with being raped again.

    • lola
      Posted April 26, 2011 at 12:38 pm | Permalink

      Nope. Meacher’s clueless. He’s blaming a sympton, not a cause. The banking problems stem directly from incompetent government policy (his government!) and state sanctioned special privilidges for banking. Plus epically unsound money provided by his goevrnment and other foreign governments. Sort out those – and make sure that competition in banking is easy to start – and the problems in banking will go away.

      • FaustiesBlog
        Posted April 26, 2011 at 1:01 pm | Permalink

        No, I don’t believe he’s blaming a symptom. The taxpayer being on the hook for bankers’ mistakes or reckless gambles injects moral hazard into the equation – it incentivises recklessness. The bankers can’t lose.

        While I’m no friend of Labour or collectivism, I admire Meacher’s integrity. He fought tooth and nail against the lunacies of his government (yes, even as a minister). He is one of the few principled politicians around.

        Take his stance on GM foods, for instance – his Forward in Jeffrey Smith’s acclaimed Seeds of Deception. I don’t recall many others knocking GM at the time – not even conservatives! Although, given Spelman’s love affair with GM, that’s hardly surprising.

        • lifelogic
          Posted April 26, 2011 at 5:03 pm | Permalink

          Being against GM kills people through starvation as being against nuclear kill people though use of more dangerous energy and through a lack of (or over expensive) energy.

          Why be against either it is irrational?

          • FaustiesBlog
            Posted April 27, 2011 at 10:20 am | Permalink

            Lifelogic, I normally agree with your posts, but clearly, you’ve not read the book, or researched the subject. (No offence intended).

            I urge you to do so. You will be as outraged as as I am. The country needs to wake up.

          • lifelogic
            Posted April 30, 2011 at 9:30 am | Permalink

            What do you mean by “the” book?

            Clearly not using all the technology we have available to us including GM would be daft. But I agree that care needs to be taken in how and where it is used and that it makes sense to use it in that situation.

            Genetics together (with the new computing power) will be one of the most powerful tools ever to deal with food production, heath care and even fuel production. We cannot at the very least investigate its huge potential fully. It would be mad.

        • Mike Stallard
          Posted April 26, 2011 at 5:35 pm | Permalink

          A green politician worried about the rape of the earth by humans, the man owns about 5 houses!

          • lifelogic
            Posted April 27, 2011 at 10:33 am | Permalink

            Are any of his homes near sea level I wonder. Also has Prince Charles done a CO2 emissions calculation for the wedding and all those round the world flights? Or are do his green beliefs just apply to others?

            Do any of these “greens” actually have consistent & genuine beliefs and a real understanding of the science? I have not found any yet.

    • David in Kent
      Posted April 26, 2011 at 9:01 pm | Permalink

      In 1953 JK Galbraith said that the risk of a new crash arises only when the people who participated in the previous one have been superseded.
      So we had one in 1929, 1953, 1973, 1981, 2000, 2008.
      If indeed the 2008 crash was the real thing or was actually aborted by government borrowing then we are safe for anoth 20 years. If not….

  6. lifelogic
    Posted April 26, 2011 at 11:00 am | Permalink

    I agree fully no need to separate investment and retail but clearly they need proper regulation to ensure the risks are properly managed. Especially if they are taking UK deposits. Also rules to ensure that people who win (by putting a lucky bet on red one year) are not rewarded for mere chance when they are just as likely to be unlucky next year.

    A system to enable proper control of bankers pay by shareholders who should be taking the real risks and rewards not the staff who risk little but their jobs is needed. Too often staff help themselves to shareholders cash while doing an appalling job for shareholders.

    Also I see that pension funds are perhaps to be attacked by the EU after Browns mugging. Best to move your pension fund and yourselves out of the EU now while rules still allow it I would suggest. The iron curtain can surely not be long now.

    The enterprise investment scheme gives far better tax relief than pensions and ties your money up only for 3 years. Just try to find on honest and sensible one or do one yourself with 3+ others.

    • Simon
      Posted April 26, 2011 at 1:03 pm | Permalink

      “The iron curtain can surely not be long now. ”

      Won’t be long before we need to apply for permission to convert Pounds or Euro’s into another currency or transfer money abroad .

      How soon before cash is phased out and replaced with plastic too ?

      • lifelogic
        Posted April 26, 2011 at 3:22 pm | Permalink

        And all pension fund have to be lent to the state to “invest”.

  7. acorn
    Posted April 26, 2011 at 11:31 am | Permalink

    JR, you have commented elsewhere about ETFs straying from there original concept. Some recent ETF offerings are geared and synthetic and, in my opinion, should not be called ETFs at all. Retail investors are going to get mugged by these recent products.

    I am still undecided as to splitting utility banks from proprietary trading, highly geared investment “banks”. I don’t know enough about how the two sides interact. Merv King is sympathetic to a modern version of Glass-Steagall, I think.

    If these “banks” are split, we need some new names to identify them. There used to be a difference between a merchant bank; an investment bank and a “high street” bank. Now they seem to have morphed into just banks. I can live with the state insuring a high street bank, but not the other two.

  8. Stuart Fairney
    Posted April 26, 2011 at 11:39 am | Permalink

    Bloomberg reported Greek 2-year bonds at 23% today (my credit card is cheaper), so it’s not really if a Sovereign country defaults but when. My bet is Greece will be the first but not the last.

    • Mike Stallard
      Posted April 26, 2011 at 5:35 pm | Permalink

      And then what?

      • Stuart Fairney
        Posted April 26, 2011 at 8:09 pm | Permalink

        Well in the case of Greece I think they will unilaterally partially default then start borrowing again if anyone is lending alternatively, they may demand a “stimulus package” from the ECB with printed money. If the Greeks do it, there will be politicians and people in Ireland, Portugal and elsewhere saying “If the Greeks can walk away from their debts so should we”

  9. Javelin
    Posted April 26, 2011 at 12:10 pm | Permalink

    In the UK small retail banks (like Northern Rock) became too dependent on liquidity in the money markets – and else where investment banks under estimated the risks on insuring mortgage backed credit default swaps. Both problems were caused by over enthusiasm to buy houses using cheap credit. House prices should be brought down to long term averages and kept there.

    • Javelin
      Posted April 26, 2011 at 12:50 pm | Permalink

      Of course it’s worth mentioning that the EU regulators did not have a sovereign default in their stress tests which means that we all have to guess the impact on the banks when Greece defaults. The EU regulators are hoping Germany will back another bail out for Greece as a restructuring will costs the Germans £50bn (at a guess), but I don’t think their appetite is there (again and again – best to take the pain now) – the cost of the defaults will be born by pension funds across Europe instead. Problems always happen where you don’t expect them.

    • Stuart Fairney
      Posted April 26, 2011 at 1:38 pm | Permalink

      “House prices should be brought down to long term averages and kept there”

      Yep, let’s have the government determine the price of everything, no problems there!

      • Conrad Jones (Cheam)
        Posted April 26, 2011 at 9:56 pm | Permalink

        House Prices should NOT be artificially brought down by the Government.

        Equally, the Government – for some reason – actively participated in allowing the Banks and Building Societies to pump credit into the Housing Market, massively increasing the private sector debt burden. They also created schemes such as “Shared Equity” and now “First Buy” which encouraged more money into the Housing Market – Why?

        The Free Market is what is needed to create price stability not subsidised Banks threatening Politicians with economic armagedden if they refuse to provide low interest money.

        Another crucial change that needs to be made is that the Government should be the only authority allowed to create the Nation’s money – not private businesse like Banks. If Rover could have created their products out of thin air and charged people for them, they’d still be around today. Banks refused to provide the captial that Rover needed to carry on producing vehicles. The quality of the cars they were producing was improving but that didn’t save them. With less debt based money in the money supply, the cash would have been available.

        The 1844 Banking Act is in dire need of updating to enforce counterfeiting laws that reflect the World of computer generated credit.

        97% of our current money supply is created by Bank credit – therefore we are now addicted to debt. Without debt, we have no money supply.
        We owe interest on 97% of our money supply to a Bank somewhere. Why is this allowed? We have far more debt than even Libya. Libya – up until recently; does not rely on deficit spending. We are more in debt than a so called “Rogue” Nation.

        This power that Private Banks have to create additional money on the back of small reserves of cash held at the Bank of England is the direct cause of our current financial austerity cuts.

        It would be interesting to do a survey on current MPs in the House of Commons and ask them where our money comes from. I would bet that not many of them have even heard the term “Fractional Reserve System”. There is no wonder that there is a financial crisis with so much ignorance of what money is and who creates it, in the very place that passes the Laws that are supposed to protect us. They are Lambs to the slaughter in the hands of the Banking Lobbyists, and we pay the price.

        The small minority of MPs who have taken the interest to study the financial system are not enough to rid our financial system of these Banking parasites, sucking wealth away from enterprise and business for the sake of a quick easy profit. We desperately need more MPs – such as Mr Redwood and Mr Meacher.

        A full reserve system with debt free money created by our Nation is needed not a continuation of International Banker created debt, draining away the life blood of a Nation like an open wound. Bankers do not have any loyalty to our Country – as; if they did; they would not threaten to move their headquarters to another Country. Would they really move to Russia or China? I don’t think so.

  10. Alte Fritz
    Posted April 26, 2011 at 4:23 pm | Permalink

    The left’s myth is that our woes were caused by the bankers. The right seems to have its own myth judging by some comments on this post.

    The government and the City were a hellish duo, governemnt, in particular, buying into the notion that they could spend and tax on the back of an ever expanding bubble.

    It defies common sense to assert that you can regulate away the risks of a government guaranteed retail bank sitting in the same group as an investment banking section which has forgotten nothing and learnt nothing.

    Investment banking is not banking in any commonly understood sense. Since it was allowed to sit with retail banking we have had a series of crises leading to the Krakatoa like explosion in 2008. All we need do now is wait, for another one will come.

  11. Conrad Jones (Cheam)
    Posted April 26, 2011 at 4:52 pm | Permalink

    I think what Michael Meacher is saying is that if Normal Banking – current accounts and loans to home buyers, Businesses etc – is segragated from the Risky Derivatives Gambling carried out by the Investment arm of a Bank, then if / when, the derivatives betting goes bad – it won’t drag down the whole Banking System with it.

    Surely you can see the logic behind this?

    • Simon
      Posted April 26, 2011 at 7:35 pm | Permalink

      I can see the logic behind it .

      Politicians do not have the right to co-opt us in to underwriting risky betting activities .

    • sm
      Posted April 27, 2011 at 12:14 pm | Permalink

      I agree legal separation is simpler and probably better i bet even lawyers would agree.

      Even then that may not be enough if they are systemically too big to fail and party political factors come into play around election times.

      In my opinion blowing up debt bubbles does not go unnoticed by the political elite and or the banks. They probably just try and work it to their advantage as best they can. You’d rather not be holding the parcel around when the music stops.

      Mr Redwood holds out too examples of failed institutions , being separate did not cause the crisis.

      However it did present and allow a better choice of actions to governments.

      One was ”saved” (saving bondholders was probably a mistake?), the other was not saved and didn’t involve government. I wonder which business assets have been re deployed and are up and running again more efficiently.

      Back to control of credit and the money supply -and sound money- im with Conrad. If you control credit creation you control the banks at the macro level and the economy.

      Perhaps we need more personal liability attached to individuals in HMG government, bank of england, and systemic too large to fail institutions.
      Limited liability for banking boards and key personal should be reviewed.

      More import substitution is required and labour intensive industry paying a living wage – read reduce taxes on manufacturing labour. Consider tariffs because thats where we are heading or further currency depreciation.

      Find a way to let Greece and others restructure and default if they are unable to pay.Preferably with its own currency or gold or a softer currency with a suitable name with others

      We are still in the extend and pretend phase- particularly in the insulated highly paid parts of the public sector and the provision of universal benefits without any immigration border control .

    • Frances Coppola
      Posted May 6, 2011 at 11:33 pm | Permalink

      Would be good if it were true, but it isn’t.

      Northern Rock, Bradford & Bingley and HBOS were all brought down by excessively risky mortgage lending on the back of ridiculously low reserves and serious liquidity shortage. HBOS and RBS also lost significant amounts on high-risk corporate lending – leveraged buyouts and the like. None of this was “investment” banking as such. RBS was exposed to CDOs and also had significant losses from corporate lending, but the major factor that brought it down was the disastrous acquisition of ABN AMRO. Lloyds TSB was primarily brought down by the disastrous acquisition of HBOS, forced by the Brown government. In short, not a single bank in the UK was brought down by derivatives trading. In fact both Northern Rock and HBOS would have collapsed sooner if they hadn’t been able to fund their mortgage obligations on the overnight money markets. It was the freezing of these markets following the collapse of Bear Stearns and Lehman that forced Northern Rock to seek emergency funding from the BoE, which panicked deposit holders and caused a run on the bank.

      Creating a Glass-Steagall type separation solves precisely nothing and may make retail banks less resilient to liquidity shortages. The real need is to eliminate taxpayer support for all forms of risk activity by banks, including retail and corporate lending. I believe we should distinguish not between traditional “retail” and “investment” banking, but between “transaction” banking (current accounts and payments systems, which are the lifeblood of our economy) and “risk” banking. Taxpayers should support “transaction” banking, because really it amounts to a public service. Current account balances should be distinguished from other retail deposits and held off balance sheet so that they do not form part of bank reserves – they have not been “lent” to the bank but are held in effect in safe deposit. All other banking – retail and corporate lending, interest-bearing deposit accounts, and investment banking activities – should be at the mercy of the market, and should be separated from transaction banking in such a way that no indirect government support is possible.

      Much of this is also recommended in a paper from Positive Money, but they also wish to end the fractional reserve banking system, which is unnecessary if the aim is simply to avoid bailouts. However, there are good economic reasons for considering a move to full reserve banking and it deserves a fair hearing from government.

      And if you want to see just how risky retail lending can be and how much it can cost the taxpayer, take a look at Ireland. Lending to failed construction projects and high-risk mortgage lending brought down the entire banking industry and wrecked the Irish economy. The UK is flourishing by comparison.

  12. forthurst
    Posted April 26, 2011 at 5:00 pm | Permalink

    The fact that there are other issues (central banks, particularly the private secret FED, holding down interest rates to enable their financial spiv chums to leverage up cheaply to engage in various speculative activities, or socialist governments spending money they don’t have to reward their constituencies of scroungers and official meddlers, or retail bankers who don’t understand the inadvisibility of borrowing very short and lending very long without collateral, does not obviate the need to ensure that taxpayers are not again called on to prop up the entire banking sector as a result of speculation in mortgage-based derivative or anything else.

    Since the advent of fast computer systems and networks, the volume of transactions and their complexity, especially, requires the recognition that flows of money and risk might overwhelm an institution as a result of miscalculation whilst hedging assuming the continuing solvency of counterparties may provide no respite.

    What is required is an environment in which proprietory trading cannot of itself bring down a bank which is licensed to take retail deposits. Such risk should be taken by investors only.

  13. zorro
    Posted April 26, 2011 at 7:03 pm | Permalink

    John,
    I’m afraid that the ETF world (and what they consist of or not) is a very murky place. I am convinced that when the Americans got rid of Glass Steagall and there was a ‘liberalisation’ in the City and UK banking, there was insufficient supervision that this situation got worse.
    I think that a Glass Steagall solution is the only one possible. Not that I think it is necessarily the best, but I am absolutely sure that we will never be able to regulate or police the financial industry effectively. They are too clever at coming up with financial instruments to obfuscate and hide real profits and losses.
    We need a proper moral hazard in investment banking to regulate their activities. If they lose, they lose and not the taxpayer. At this time, they can only win. I don’t even think holding increased ‘capital’ at the bank will work. It depends on the supervisory authorities…..
    Separate retail from investment banking and I don’t care what people do with their money as long as they don’t try and rob me of my future. It’s not my debt.
    I don’t think the solution you propose or proposed by John Vickers will stop any more public bailouts. Glass Steagall wouldn’t prevent investment banks from failing but so what. They fail because they make bad investments or take high risks, but at least it wouldn’t screw up the system like the recent crash did. That’s life….

    zorro

    Reply THe worst event in the last banking crisis was the failure of Lehmans, a pure investment bank

    • forthurst
      Posted April 27, 2011 at 9:15 am | Permalink

      …because the others were all too big to fail. If the consequence of the burdening of taxpayers with enormous debt, arising from TARP and copious QE, is the precipitation of a global flight from Treasury bonds, then the activities of (some in the 2008-9 crisis -ed)will become a footnote.

  14. Simon
    Posted April 26, 2011 at 7:26 pm | Permalink

    “The failure to split investment from retail banking is not going to bring the system down. ”

    If these functions had been separate in 2008 the banking system would not have failed .

    What is to stop losses on synthetic derivatives or other zero-sum betting activities precipitating another collapse when :-
    – banks still too big to fail , no banks split up , insufficient penalty for failure
    – no new competition
    – no seperation of functions

    Reply: The system was n ot brought down by the combination of investment and retail bank in the same insitution in 2008.

  15. waramess
    Posted April 27, 2011 at 9:42 am | Permalink

    I can see where Meacher is coming from. Nobody knows with certainty what caused the last crash. Nothing like this had happened for many years and people are still looking to see what we were doing differently that might have caused the crash.

    Personally I am persuaded by the notion that the massive expansion of credit followed by the sudden contraction in the money supply caused the liquidity and the solvency problems however, all of this might have easily happened twenty years earlier, whilst the merger of the investment banking and retail banking businesses is a much more recent happening.

    It might not suit the banks to demerge the two businesses and they can be expected to squeal but, if the British taxpayer is expected to foot the bill when it all goes wrong next time, and it appears they will, then everything should be on the table including a large dollop of increased competition

    • Simon
      Posted April 27, 2011 at 10:45 am | Permalink

      “people are still looking to see what we were doing differently that might have caused the crash.”

      People typically look for a difference to explain an event .

      They prematurely discount the possibility that the activity was in itself inherently risky – an accident waiting to happen .

      Simmilarly humans look for patterns and see them even when there are none there (random noise) .

      These are two common categories of mistakes which the more intelligent are
      particularly susceptible to .

      Completely agree with you regarding separation of functions – if we are the ones expected to pick up the tab if it goes tits up then it should be our say .

      The whole situation provides a perfect example of the way that Govt’s report to banks and big business and not the electorate they are supposed to represent .

  16. Lindsay McDougall
    Posted April 28, 2011 at 8:22 am | Permalink

    The real banking scandal is that we are still subsidising the state owned banks – those failed institutions – to the tune of £5 billion per annum. Mr Redwood, when is the government going to put an end to this situation?

    • Conrad Jones (Cheam)
      Posted May 1, 2011 at 1:18 am | Permalink

      @Lindsay McDougall

      The Government cannot put an end to this situation as our money supply is created by Banks. If the Banks fail, this will trigger a collapse to the money supply which will create a collapse of the economy. The Government has only created 3% of the current money supply.

      The Banks – who incidently are motivated to create as much money as they can as they collect interest payments on that debt – have currently created 97% of our money supply by creating loans, most of them being mortgage loans.

      What is also required of a system that only creates the Principal of a loan and not the Interest – to be paid back – is that our Financial System is insolvent. There is a scrample to get the money to pay back the interest payments but as there is not enough money in the system, someone has to default on their loan and fall into Bankruptcy.

      An alternative to this would be for the Government to create the money – debt free – and extinguish money (as Banks currently do now when they receive payments of the principal) through receiving taxes – thereby maintaining a stable money supply without runaway inflation.

      The debt based money supply is the reason why we need continual Growth as it is the only way to create the additional money required to pay the Interest Payments on most of the Loans.

      There is more debt than there is money to pay off the debt – just enough money to service the debt. Inorder to service the debt, we need to create more debt as debt is the biggest way the Government allows money to be created – by Private or Nationalised Banks.

      Both Labour and the Conservatives have done little to change this situation. Both Parties have close relationships with Banks and that is not going to change anytime soon. Gordon Brown even created the “Debt Management Office” when he became Chancellor which did little to reduce our debt.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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