Author: johnredwood

The car industry has been damaged by government bad rules, fines and taxes on new car sales. The industry itself has gone along with the idea that people should be forced to buy battery cars they do not want, and blocked from buying petrol and diesel cars they prefer. Now they want government to bail them out with tax cuts and subsidies on the electric product.

The idea that more U.K. battery cars helps save the planet is crazy. Were I to buy a new battery car today the U.K. would need to burn more gas in a power station for me to recharge  it. World CO 2 output goes up as a lot of CO 2 is created to make the raw materials , the  battery and the rest of the vehicle.

So now the industry wants 5% VAT on recharges instead of standard 20%. It wants most of the VAT taken off a new battery car purchase. It wants battery cars to escape higher rate Vehicle Excise Duty. All this is on top of battery cars avoiding fuel duty. All this is unaffordable if battery car sales expand  as a result.

Instead of wanting freebies from freebie loving Ministers the  industry should campaign for an end to the savage fines on selling too many petrol cars and too few battery cars. Let consumers decide what they want. The government is killing the U.K. car industry with this mad policy.

PS All the time we had a Conservative government I posted plenty of criticisms of them. Now we have a Labour government I regard them as responsible and will not be posting criticisms of Conservatives for policies Labour can change now they have such a big majority.

The gift of the Chagos islands to Mauritius was in the worst tradition of the U.K. Foreign Office. They hear the demands of a foreign country. They see it would make life  for them in that country easier if they agreed with them. They tell the Foreign Secretary it shows great diplomacy and world influence to accept the other government’s view. They explain it in terms of international law or international politics or some version of history that suits their case.

The Foreign Secretary is then meant to tell them that as skilled diplomats they need to push back on the other country’s view. They need to construct a U.K. case based on our national interest and sense of history. They need to set this out, as he will to Parliament, and to seek other international support where necessary. In some cases he should tell the officials there is no need to negotiate on the issue at all as we like the status quo.

David Lammy clearly did not grasp this need in this crucial case. He should have known the importance to the U.K. and US of the base on Diego Garcia and kept the freehold of that island. He should have pushed back on the legal arguments as these are international law subject to balance of political argument.

This came to light when Parliament is not in session with no prior statement or debate warning Parliament of a possible adverse conclusion to negotiations. This is a disgrace. The Opposition must demand a Statement and demand that any draft Treaty needs Parliamentary approval.

So will  David Lammy now encourage the Prime Minister to give in in negotiations with the EU? Will he give in to Spain and allow Spanish/ EU officials to take over border control into Gibraltar?

Our country is not safe with this government. They want to give away territory and powers important to our national security. Both Chagos and Gibraltar are crucial  military bases we need to control and look after.

When I was Single market Minister the Foreign Office and EU secretariat were always pressing for the U.K. to compromise to get a deal. It was important to be firm in identifying the numerous powers they wanted the U.K. to sacrifice that would not increase our exports but would further impair our ability to govern ourselves and to be flexible for our trade with the rest of the world.

 

 

 

The PM says he wants to re set the U.K. relationship with the EU. He has a very woolly shopping list of what he wants. He wants more defence collaboration which will mean us making a bigger contribution to continental defence whilst undermining NATO. He wants improvements in trade terms, without specifying which and without acknowledging how much the U.K. was forced to give for the free trade deal we already have. He wants better co operation on stopping illegal migration though we are already paying France a fortune to secure that under an existing Agreement.

The EU will want to grasp more control over us and grab more of our money and assistance. They want freedom of movement, now disguised as a young people’s scheme for the under 30 s. As most migrants coming illegally are under 30 that is another way of saying we should take more of the migrants entering the EU. They want to bag more of our fish after the poor Transition terms fall away. Why on earth would we want them to carry on plundering our seas and impeding the rebuilding of a U.K. fishing fleet? They want us to buy more of our weapons and energy from them, epseekin* to make us more dependent.

Never accept a deal with plenty of upside for the other party and only vague warm words for yourself. What exactly does the PM want to get? Why is it worth further sacrifice to the EU? Does he get how unpopular another fish grab and freedom of movement would be?

Mr Miliband is celebrating this week. He has signed off the closure of our last coal fired power station. He sees this as proud proof that the U.K. is leading the world in decarbonising. He and like minded  Greens are always telling us the U.K. needs to go further and faster in closing down power stations and whole industries that use fossil fuels as then the world will follow us . So here are some questions for Mr Miliband.

Now the U.K. has completed setting an example of doing without coal power stations when will China and India do the same?

Indeed, when will China and India, the 2 largest coal burners even stop building new coal power stations?

The loss of around  3% of our power capacity as the station closes leaves us more vulnerable to power cuts. What assessment did he make before allowing the closure?

He says renewable power will be cheaper than fossil fuel. So when will he replace  the lost coal capacity with wind or solar? How much does he think that would save?

 

If renewable power is so cheap and its quantities are clearly increasing why have you just put energy bills up by 10% instead of cutting them?

To reach his target of all “clean” electricity by 2030 how much more capacity does the Grid need to install over and above their £30 bn expansion by 2030 agreed under the previous government?

 

Yesterday I talked about why US national income per head is double that of the EU and why the U.K. is only 20% above the EU. Since 2000 the U.K. has allowed itself to waste too much money in the public sector, allowed public sector productivity to plunge since Covid, allowed a disastrous Bank of England to twice put us through boom/ bust money policies and adopted far to many laws, rules and high taxes.

If Conservatives/ Reform are going to oust this Labour government and get us back on the road to prosperity and freedom a lot has to change. One or other of the parties needs to carry most support or they need to do a deal. The agenda to win is easier to define than how to resolve the splits over the vote.

We need policies that make it easier to be self employed, to start and grow a small business, to save and vest at home, to exploit our own natural resources, to restore national self sufficiency in energy, to strengthen our defence and base national security on greater industrial capability at home, to help more people to buy a home of their own, to drastically reduce migration levels of people into low paid jobs and of illegals.

POPULAR CAPITALISM

 

I have been asked to speak at a meeting to discuss what Margaret Thatcher would have done today. I have also been asked to write an updated Introduction for a new edition of my book Popular Capitalism about the drive to wider ownership at the heart of the policy I took to Downing Street in the 1980s.  I reproduce some of this thinking below. 

          Popular Capitalism spread a long way from its  origins in 1980s UK. Much of the world is a wealthier place today , with more owners , higher living standards and amazing technological developments. Free enterprise capitalism has empowered people with the mobile phone and the internet, and transformed much business with the all conquering silicon chip, on line shopping, downloaded entertainment and new social media. Many countries transferred large industries from public ownership, backed privately financed infrastructure, encouraged wider ownership and helped  more owner occupiers with their own homes. The USA remained truer to free enterprise throughout and expanded its lead in many fields.

 

 

         

 

What is Popular Capitalism now?

 

           The idea that everyone should be owners remains a powerful positive driver of prosperity and success.  Many People want the freedom of owning their own home to be able to adapt, use and decorate it as they wish. It is so much better to reach retirement  with the mortgage paid off and no rent to pay from your pension. Many want to work for themselves and build their own small businesses, enjoying the fruits of their labours by pleasing the customers rather than a boss. Many want savings put by for life’s big events or for misfortunes. All want a decent income in retirement which is best assured by saving through a pension scheme. These impulses remain now as then, but in many places other government priorities have impeded their fulfilment for all too many people. High interest rates make home buying less affordable. High inflation erodes savings and living standards. Tax and regulation can deter people from working for themselves or from expanding a small business.

 

           Popular capitalism has also suffered some reversals in  business and the wider economy. The manifesto for popular capitalism is based on competitive free enterprise delivering energy, water and most transport. Many of these industries have been denationalised in a variety of countries but in recent years there has been a return to more regulation, direct clumsy interventions in service, price and  investment plans and in some cases renationalisation.  The old lessons that nationalisation all too often meant big losses for taxpayers, poor working terms for employees and bad service for customers are being forgotten. Monopolies normally serve you badly at too high a price. The world has seen peak tariff free barrier free trade, with the main blocs and leading countries now developing strategies based on tariffs, price controls, bans, subsidies and government directions. The world has turned again to excessive debt build up, when equity is a preferred way of financing to spread ownership.

 

       Europe and the UK have gone too far in regulating and centrally directing. Productivity growth has stalled despite the huge advances that US digital technology makes possible. Government favours the large corporation and  imposes taxes and rules that make it more difficult for challenger companies. They  drag more markets towards state capitalism or heavily regulated limited competition in a hollowed out private sector. The pursuit of net zero has led carbon reduction to replace greater prosperity as the main aim of many policies. Government and international conferences visit upon the world their view of what consumers want, only to find they are at variance with what the public wishes to do and buy. In order to travel the road to net zero there has to b e consumer buy in on a grand scale, which requires more innovation, choice and competition, not more prescription, subsidies and rules.

 

     Too few young people think they can afford a home of their own any time soon. Too few see working for themselves as a liberating opportunity. Too few hear or read the messages that freedom , enterprise and democracy are interlinked and mutually support each other. The tyrannies of Russia, Iran and North Korea to a lesser or greater extent tell people what to think, what to do, and what to buy. They erode or remove human rights, limit consumer choice and thwart democratic disagreements. They create poorer societies in every way.

 

 

      State monopolies hold back countries and frustrate employees and consumers. The  more people who own, who actively run businesses, who save and invest, the richer the society. The world needs another dose of free enterprise. There are too many state inspired wars, too many high taxes and state rules. That way poverty beckons. Excessive debts build up til taxpayers are overburdened with interest charges.  Governments are tempted to inflation to try to conceal their failures, only to make it worse. Everyone an owner democratises capital. More capital is needed to provide all the facilities and services we need for a good life.

 

 

I will attend the Conservative conference tomorrow.

At 11 am I will give a speech on what conservatism is all about at the Lyttelton Theatre , Birmingham Institute, 9 Margaret Street outside security. All are welcome. Mark Francois as Chairman of the European Research Group  and Sir William Cash will also speak.

At 5.30 I am on a CPS panel in the Conference centre  ( ICC Hall 4 Level 5) to discuss What would Margaret Thatcher do? I will concentrate on the pursuit of prosperity through wider ownership and lower taxes.

It is time to change the OBR driven control system. It is said to control the build up of debt and to keep the U.K.  state solvent. Strange then that over their years of influence state debt has grown massively, huge sums of money have been printed, we have lived through a nasty inflation, and debt interest costs as they report them have leapt up. To make it worse U.K. growth has been almost as bad as the EU’s, falling way behind the USA.

The central OBR control is absurd. Government has to set out tax and spending proposals to give a falling state debt relative to GDP five years out. So budgets revolve around an OBR forecast of a deficit in five years time. The figure is bound to be wrong as no one can forecast that figure reliably. OBR forecasts of nearer term deficits are regularly out by large margins. The five year target is a moving target, shifting out another year as each year passes, so the accuracy of the original target forecast is irrelevant. It does however lead to a permanent bias in official advice against any so called unfunded tax cut. There is no similar pressure against many unfunded spending increases. There is no pressure of any kind to get the Bank of England to lose less, and no effective power to cut the losses of nationalised rail or the Post Office.

We need a new system that controls current year and next year spending and borrowing better. The new government saying current spending and current revenue should balance is a start. Their wish to be allowed to borrow more to invest only makes sense if what they invest in goes on to make returns. Borrowing to do more HS2 or Horizon computer type projects is a very bad idea. Leaving utilities investment to the private sector is a better idea than effectively nationalising them and discovering the state  cannot afford the investment and are no good at running them.

When I listen to the PM and Chancellor I want to remind them they are trying to steer or improve a £2600 bn  economy. All we hear from them as they seek to find an alleged £22 bn is items involving £1 bn or £2 bn. These are scarcely rounding errors in the national accounts. If they want to make a difference they need to be moving and finding tens of billions as £26 bn is just 1% of the total.

The big idea to get faster growth bears a resemblance to the previous governments policy, with the injection of a faster pace and less realism. It is to generate green jobs through decarbonising energy in a hurry. This entails writing off much of our fossil fuel driven economy before it is worn out, making net growth difficult to achieve. The £3 bn a year of state investment through the National Wealth Fund and Great British Energy is tiny in relation to the total investment of well over £200 bn it would take to decarbonise electricity generation and to replace the nuclear power stations about to close through old age. It is not a lot more than the previous government was spending through U.K. Infrastructure Bank and the British Business Bank. It is an expensive  new pair of letterheads and brass plates and more management overheads.

They invented a £22 bn black hole as a political slogan to seek to bury a Conservative Party that had been badly wounded by a disastrous election defeat. They do not deny that £11 bn of it is their very own inflation busting no productivity gains awards to public sector employees. They do not set out how many underspends or over provisions they also inherited. Without the detail why should we believe them?

There is a rule emerging. Every spending cut or tax rise they want to make can disappear as it hits reality. Taking fuel payments away from most pensioners is meant to save a modest £1.3 bn. Now they are energetically trying to get more pensioners signed up for Pensioner  Credit. If 400,000 do so there is not net saving from the change.

They told us they could get £1 bn more from taxing Non Dom’s more. As the rich head for the exit it is quite likely there will be no net Non Dom  gains. Meanwhile a lot of money that would otherwise fund businesses, employ people and lead to shop and VAT revenues will have gone elsewhere. There could be an overall loss.

They look to VAT on school fees to bring in another £1.4 bn.   They now face a court case claiming VAT on school fees violates the  very Hunan Rights laws Labour normally reveres. They could lose the case. Meanwhile they need to offset against the extra tax the costs of more pupils taking state school places when their parents can’t afford the fees. Those parents who do dig deeper to pay may then not be paying so much VAT  on other things they would have bought if the school fees cost them less. The schools will of course be able to reclaim  the  VAT they pay on inputs which also reduces the gains  by a Treasury estimated one quarter.

The extra oil and gas windfall tax helps kill off extra investment and production from the North Sea. Aiming to raise maybe an extra £500 million it is along with the end of new licences likely to mean a fall in revenue. At a combined tax rate of 78% who is going to want to take the risks of anything new?

 

Mr Miliband spent years in Opposition preparing for the day when he could unleash his decarbonising zeal on what is left of U.K. industry. Once in office he announced a firm target of all electricity generated here being clean or carbon free by 2030. Only after this extremely expensive revolutionary pledge was made did he write to National Grid asking for urgent site of the plan to do this,and an estimate of the costs. What a disaster to have to admit he had no plan and settled for a target with no idea how much it would cost to hit it, or even whether it could be hit.

Yesterday his embarrassment should have got bigger. National Grid published a reply saying they do not have a plan either, but they will work hard to produce one. They will consult everyone who would need to do so much to bring it about and presumably include in consultation all those who would be expected to stump up the cash. To plunge the friendly knife further into Miliband’s side they said they would need from the government a definition of the grand target Mr Miliband has set. Ouch!

So there we have it. An impossible target to hit unless you redefine it to allow the burning of fossil fuels in stand by generators when wind and sun let us down. A huge and unspecified budget to end all our current nuclear and gas power stations and to build enough replacement power taking account of the variability of wind and solar.

One final thought. As Mr Miliband has admitted he does not know the costs of putting in all that renewable power, how can he offer us £300 off our bills were all the money to be found to build so many windfarms.