Author: johnredwood

When I studied history I specialised in economic history and the related history of science and technology. I had to study general UK and European history. I was very happy studying UK history as it is my country. Understanding its roots, achievements and mistakes was useful. It was also easier as the buildings, books , paintings and archaeology were  all around me making understanding easier.

I did not find European history so enriching. I thought it odd the University required European but not American or Asian, given the trends in world economics and politics. The course has since been reformed to tackle this.  In order to handle the course I concentrated most on France, Spain and Italy as I could read some of those languages and had visited a range of places in those countries which gave me a bit more feel for the societies and their past.

Mainly I grew interested in the impact European countries had on the British story. The more I read the more I realised the UK’s involvement with the continent had plenty of downsides. The UK – or England – was successfully invaded by both the Romans and the Normans, with lands stolen  and people enslaved. In the sixteenth century England had to fight off a major amphibious invasion by Spain, the super power of the day rich with colonial silver. In the centuries that followed Great Britain spent much treasure and spilled much blood fighting against French attempts to dominate the continent by force of arms. In the twentieth century twice the UK suffered terribly from standing up to German attempts  at military domination of the continent.

Many of these wars brought death , destruction and loss with no obvious wins for our country. We would often have been better off leaving it to the continental countries to have their own wars. Standing  out and for a time alone against the  Germans in 1939-45 was a crucial sacrifice for the benefit of us and the wider world.

It was always difficult trading with the continent as they tended to grow similar things and make similar things to us. We were much more enriched by the legitimate distant trades with hotter  climates and different cultures in Asia and the Americas. The Dutch became such intense trade rivals it led to naval wars over commerce.

I read of a continent with strong tendencies to autocratic governments, to bullying super powers and to ceaseless dissatisfaction with borders. It made me sceptical of the UK plunging into legal and treaty based versions of continental control and disputes. For that I am grateful to the course designers who probably thought it would have the opposite impact. For every civilised painter or architect they liked there were  several despots and needless wars in the story.

President Trump has taken powers to tackle the lawlessness and social problems of his nation’s capital. It will be interesting to see what impact he makes.

His diagnosis is shared by many voters, here as well as there. People fear the streets, seeing to much petty crime and serious violence. Neighbourhoods are damaged by criminal gangs, too much drug pushing and taking, too many people left to live and sleep on the streets and in the parks. Local shops and centres are disfigured by rubbish and waste, by shoplifting and graffiti.

He plans a tough blitz on crime including on gangs and drugs. He plans to offer the homeless something better somewhere else, which will often entail helping them off a life of drugs and crime.He plans a zero tolerance policy, coming down hard on petty crime as well as more robust treating of serious crime. He wishes to deport illegals and lock up more criminals.

The UK government is beginning to say it wants to do more for UK cities but so far there is no focus, no helpful law changes, no single  purpose drive from the top against the shocking state of some city centres . It is going to take a Trump like insistence at the very least as we watch to see if Trump tactics do work or need amending.

I agree it would be good to have fewer foreign prisoners in our jails.They are expensive and have in recent years added to the overcrowding.

The first thing government needs to do to cut numbers is to get proper control of our borders. Stopping the current big flow of new arrivals would  stop the expansion of migrants and so reduce numbers which include some future criminals. Better border control backed by intelligence could  also do a better job stopping people  with a criminal record coming here.

The government says it now plans to send people found guilty of a crime back to their home country. As Robert Jenrick has pointed out their home country might not want them .The UK should withdraw aid money and visas from any country not cooperating with returns.

That leaves the issue of what if the receiving  country lets  them off any time in prison? The government should get agreement from the main countries involved that where a returnee is guilty of something that’s a crime in their country as well there will be punishment.

There also needs to be better border  checks to ensure no criminal sent abroad is given entry to the UK if they return.None of this is possible without much better records of who comes in how long, with proper follow up when visas expire.

A wealth tax is usually targeted at people with substantial assets. In the UK there is discussion of charging people with total assets of more than £10 m an annual levy of say 2% of the assets. This is a kind of income tax surcharge. If someone is managing to earn the current 4% return you could get on a bond it is effectively a  50% income tax on top of the 45% tax the rich are already paying. It means lower risk investing ceases to produce any return for a well off saver. How long before that saver goes somewhere else or at least stops  financing the spendthrift UK government.

Wealth taxes elsewhere have led to the exit of rich people, as in France.They can lose the state more total tax revenue from departing  millionaires than they recoup from those who stay to pay.When Labour last squeezed the rich in the 1970 s with a 98% tax on savings income there was a big exit called the brain drain. The state ran out of other peoples money to spend and had to beg a loan from the IMF. They imposed some spending cuts.

Charging on total wealth is complex and expensive to enforce and complex and expensive for the taxpayer. Much wealth owned by the very rich is in the form of property assets which generate no income and impose substantial costs on the owner. Many have a large home which is expensive to maintain, heat and run. Annual revaluation could be expensive and would be a matter of judgement as these properties are usually one offs with no ready market. People who own art or other valuables get no income from them and have maintenance and insurance costs.  Some of the wealth is the consequence of someone now on a modest income or pension living in London house  which they bought years again when they were more affordable. A wealth tax could force them to sell their family home as they may well not have the income to pay the state 2% of the value of their property.  Enforcement will be difficult with smaller items of wealth like stamp and coin collections, gold, furniture  and smaller works of art.These would all become more popular with the rich if more measurable and visible  things were taxed, especially if they are left out of the wealth  tax demands.

Some of you tell me some things like water are too essential to leave to a competitive market. Bread – and food generally – must rank as crucial to life yet I am pleased to say no-one so far has told me food supply needs to be nationalised.

My last two shops for food at two Wokingham national food retailers where I belong to their loyalty schemes tell me just what a good job the competitive markets for food manufacture and retail do. There was great quality and range of choice, and plenty of attention to keeping prices down. They both  offered discounts and provided cheaper variants to the great brands for those who want them. The first store gave me a total discount of 30.6% on my bill from a combination of a voucher to get me to shop more and from  in  store promotions on products. The second store gave me a 20.3% reduction in my bill from similar sources. I was delighted with the choice and quality and thought both shops had worked hard on pricing. Food manufacturers have to battle to keep their places on the shelves, aware that they are being price compared the whole time in  the stores. The helpful shelf edge labels often show you the price per unit of liquid or solid to make comparison of value easy when comparing different sized packs and bottle. Customers can keep the food manufacturers honest through the retailer who is on their side when it comes to getting a good deal from the producer.

Compare that with our experiences of government and nationalised industries.  I get no discount on my tax bill for honest and timely reporting and paying. There is no choice over which nationalised industries I want to support or over which government follies I have to help pay for. Most of the government bodies you deal with threaten you with penalties and legal action  if you do not behave exactly as they demand. They often conspire to make life as complex and uncomfortable as possible as you strive to comply. There is no loyalty scheme, only the threat of prosecution.

It was a pleasure to be interviewed by Peter who was interested in my views and past actions and was willing to let me explain my thinking without wishing to debate trivia and caricature points.

I was able to set out why I have been a long standing critic of Treasury/Bank/OBR policies. I criticised Heath’s Competition and Credit Control boom/bust, Labour’s over spend and over borrow in  the mid 1970s, the Conservatives adoption of the official European Exchange Rate Mechanism boom/bust of the late 1980s, Labour’s banking excesses and then great recession policy of 2005-10, and the Bank’s excessive Quantitative easing then Quantitative tightening of 2020-25. It was easy to see each of these policies would generate a nasty boom/bust cycle that was both foreseeable and avoidable at the time.

You Tube Peter McCormack

The nationalised portfolio’s financial impact is dominated by the excessive losses of the Bank of England, which I have long commented on. All the time the Bank sticks with its OBR costed plan  to lose £257 bn running off its bonds  since 2022  the nationalised portfolio will be heavily loss making.The Bank split three ways over what to do with the stagflation it has helped the government create. It couldn’t even be bothered to comment on why it is selling all those bonds at a loss.

Labour is adding Scunthorpe Steel, Great British Rail, Great British Energy and British Nuclear to the lists.

HS 2 has always been nationalised. It will be a  big spender and borrower for the next few years. It is likely to be a loss maker when it does open for business, unless all  its capital is written off.

The Post Office has been making large trading losses in recent years. It is now sending a further large bill to taxpayers to compensate   all the staff it so badly mistreated. Where is the business plan to get into profit?

Great British Rail takes over the subsidies needed by currently nationalised Network Rail and will probably want additional subsidy for operating the trains from the old franchise companies.

Great British Energy will be a spender and borrower in its early years, backing higher risk higher cost projects

British Nuclear will spend a decade working up plans and pilots for smaller nuclear and building out Sizewell. It will be all cash out and more borrowing.

Scunthorpe Steel will present big bills for losses to keep open uneconomic furnaces, and then to sack people and out in new steel recycling facilities

With all these big spenders and heavy loss makers it is no wonder public spending and borrowing is running far too high.

Queen Mary College London conducted a large sample neutrally worded poll to find out if people want international lawyers, Agreements and institutions to play a bigger role or if they want a UK government  to be in charge. Asking about 20 big areas of decision the average score  was 60% wanting the UK to control things and just 7% wanting a UK government to  be bound by international rules and institutions. People could  also vote for a UK government deciding after seeking international agreement voluntarily, or for Don’t  Know.

In every area the most votes were cast for UK independent decision. In 17 out of 20 that commanded more than 50% with 83% thinking we should set our own VAT. AI Regulation was at 47% for independence but only saw 10% want it settled internationally. Trade  rules decided by the UK stood   at 44% compared  to 7% wanting it imposed, with some wanting it negotiated by agreement. Data Protection saw 46% want it set by UK with 16% favouring international.

All this goes to show people do not think Brexit was wrong. They are angry because Brexit has not been used by the UK government to control our borders or promote growth. The government is now  busy trying to lock us back into the EU.They are misreading the mood. The public wants UK government to be in charge of all 20 of these areas where the EU used to have important powers.

We want this because we want a better policy with better outcomes. EU trade policy gave us a huge  trade deficit with the EU and big barriers against rest of the world imports. It charged us a lot, insisted on VAT and Customs duties, allowed many migrants to enter the UK and stopped us doing trade deals with friendly  countries . The present government who wish to recreate much of this through an EU re set misunderstand the public’s wishes.

I am not letting you off the arguments about nationalisation, as they are central to getting out of the financial mess the government is in. Most of you agree government is spending and borrowing too much.  Many commentators openly worry about how the government goes  on borrowing so much, and official sources talk of more tax rises to come. I have talked before about migration control and benefit changes to  help curb spending.

Your wish to reduce spending and borrowing makes it odd  that many of you want more nationalisation. Nationalisation means more public spending and borrowing . Heavy loss makers like the Bank of England and the railways  send huge bills to government who have to borrow more  to pay  these bills. Profitable  nationalised industries usually need access to state borrowing to pay for their large investment programmes.

Privatisation cuts public spending and borrowing in two main ways. There is a capital receipt, accounted as negative public spending. There is the removal of all the costs of capital investment and any losses from public accounts.

I agreed with the current government selling the remaining Nat West shares. It was an obvious way to cut spending and borrowing I had long recommended. If there is no follow on asset or share sale this year the spend and borrowing level goes up to adjust for this on top of all the planned spending increases. Tomorrow I will look at the high costs and financial risks of the growing nationalised portfolio.

Border Force has a large day to day budget with more than 10,000 staff and capital investment this year of £154 m. It has a fleet of 11 vessels, 5 cutters and 6 coastal protection vessels.  Its prime tasks are to prevent illegal smuggling of people and goods across our borders.

At least 1 cutter and 2 coastal protection vessels are in continuous use to pick up people on overcrowded illegal small boats in the Channel, and 1 cutter is provided for the EU’s search and rescue missions in the  Med under Frontex. This leaves Border Force short of vessels for the 12,000  miles  of exposed UK coast not close to France and the small boat routes.

Border Force helps Customs enforce against goods smuggling as well as acting against illegal entrants to the UK. The difficult thing to understand is why they do not do more to smash the gangs and implement stated government policy to stop the small boats.

When the last government needed to stop lorries bringing illegals into the UK, often endangering their lives, it took strong action. Even if the lorry driver and truck owner knew nothing about the illegal person hiding themselves in or on some part of the truck, the driver/ company was accused of a crime and fined. When Border  Force or some other safe boat  service brings illegal migrants in they are not treated as helping the criminal gangs that offer a trip to the UK for profit.  The illegal migrant often relies on the pick up mid Channel and the profiteer probably tips them off on how to contact Border Force to give them a free ride.

This is a very unpopular way of spending taxpayer cash, and clearly a way to boost numbers of migrants, not a way to reduce them. The last government legislated  to make it impossible for an illegal migrant to be granted asylum, and to send people to Rwanda. This government scrapped those ideas. Its substitute of  spending  more on Border  Force is not working. To break the business model of the gangs, the governments  stated policy, it needs to change the operating guidance to Border Force.