Author: johnredwood

Rt Hon Sir John Redwood (Wokingham) (Con): The Home Secretary has a lot of support on the Government Benches for the compassionate and sensible way in which she is going about this. Will she confirm that she is listening both to what the refugees want, which is often not a long-term settlement a long way from Ukraine, and with regard to the security issues that this all poses?

Priti Patel, The Secretary of State for the Home Department: My right hon. Friend is absolutely right. I must emphasise that every single crisis requires a bespoke and unique response. There are two very big calls coming from the region and from our counterparts. First and foremost, they are asking for help on security measures right now; that consistent theme is coming over. That comes down to checks—they are undertaking checks—but they are also very concerned about wider security issues, some of which I simply cannot discuss in this House, for clear reasons. The second point—even the Ukrainian ambassador made this point to me yesterday and I hear it every single day from my counterparts—is that there is a call to keep people in region. There is a big demand for that, and that is where the wider aid effort has to focus, in addition to the work that we are doing on humanitarianism.

 

 

The government will be a big winner from the sky high oil and gas prices. The profits of the U.K. producers will be swollen . The U.K. charges a windfall rate of Corporation tax on these profits at twice the normal rate.

Then there is the big surge in petrol and diesel prices. Over half the pump price is tax, so that will be another big win for the Treasury.

With General inflation heading for 7% all those items that attract VAT will also be chipping in more tax .

If the government gets around to substituting U.K. gas for Russian and Qatari imports that will also be a big boost to the receipts.

Indeed if you added all these up you would probably be close to another £12bn of tax raids on voters, enough to cancel the National Insurance rise.

The Chancellor must change his mind on  the big tax raid in April when real incomes will be badly hit by energy prices. He is more than £ 50 bn better off than budget this year already, and now has the further windfall.

He should accept he is overtaxing and start to do something to cut the burdens. Otherwise he will go down in history  as architect of one of the worst hits real incomes we have seen.

The Business Secretary needs to think again. Industry runs on gas. You need lots of gas to make steel, fertiliser, ceramics, cement, bricks, tiles and many other materials and products. In due course there will be ways of using more electricity from renewable sources, but todays factories run on gas. U.K. factories face heavy losses and closure at current gas prices, made higher by the UKs high carbon tax surcharge. He should come up with action to ease the squeeze on industry.

He should also understand that plenty of gas trades at contract prices, not at current spot global market prices. US gas prices are much lower than current U.K. prices thanks to policies that have promoted domestic gas production. Most of the US gas has to be sold to domestic users, delivered by pipe. The US lacks capacity to convert it all to LNG and export it in tankers, so domestic demand is the main determinant of prices.

He also needs to refresh his memory that increasing the supply of something does lower prices if other things stay the same.

The U.K. needs to produce all the gas it can to help Europe cut its dependence on Russian gas. The U.K. should buy no Russian gas itself, and should also stop buying imported LNG from  elsewhere as soon as we are producing the gas we need. Delivering it by pipe to ourselves is cheaper and produces much less CO2 than bringing it in on ship after compression.

 

 

Please see below the slides from my lecture at All Souls College, Oxford, titled ‘There is no Independent Central Bank’:

Slide 1 – Three common propositions

The main Central Banks are independent.

They are staffed and led by experts in economies and markets which means they will get it right.

Were the politicians and government departments to have more of a role in the conduct of monetary policy it would be badly run.

The last 30 years experience demonstrates all three of these propositions are false.

Slide 2 –  Policy changes affecting the Bank of England

1997 – The Bank of England is said to be made independent. It loses control of regulation of individual major banks to the FCA. It ceases to issue UK government debt which is given to the Treasury.

1998 – new Bank of England Act to confirm changes and keep Bank of England under Parliamentary control and supervision.

2003 – Chancellor of the Exchequer changes target for inflation from RPI at 2.5% to CPI at 2%, a looser target.

2008 – Chancellor of Exchequer overrides Bank of England interest rate setting, ordering a reduction in rates as part of a concerted G7 action to rescue collapsing markets.

2012 – New government legislates again through the Financial Service Act, confirming Treasury powers of direction over the Bank in Part 4.

Chancellor signs off successive programmes of Quantitative easing which are under joint control.

Treasury guarantees Bank of England balance sheet risks in bond portfolio.

Slide 3

The government plays politics with the Bank and the Bank plays politics for the government.

The government exercises its right to select a new Governor of the Bank when needed and uses the appointment process to employ someone compatible with their aims.

The Bank usually keeps its economic forecasts close to those of the Office of Budget Responsibility and Treasury, despite these often being wrong.

The Bank backed Remain heavily in the referendum campaign, producing forecasts that were so one sided it lost a lot of support from the majority Leave side.

Slide 4 

The Fed has a dual mandate to support employment and keep inflation below target.

The Fed Chairman has to report regularly to Congress and is therefore under pressure to respond to their priorities.

The Administration appoints the Board members, subject to ratification by Congress.

The Biden Administration is busily appointing Board members that reflect Democrat priorities.

President Trump took the Fed on in  public and forced a change of policy from monetary tightening to promotion of growth.

Slide 5

The ECB does not have a single country sovereign to report to, which could make it more independent.

However in practice it is very conscious that it is a major driver of European Union and therefore has to be  very political to assist integration.

ECB President Draghi’s ‘’Do whatever it takes’’ saved the Euro and Eurozone.

The ECB’s development of the Target 2 balances system has allowed the big cash transfers needed within the Eurozone without them going through a much bigger EU budget.

Slide 6

The Bank of Japan works closely with the Japanese government.

Its long standing QE programme and low rates has been part of the government’s 3 arrows policy to boost the economy.

It has continuously failed to get inflation up to 2%.

Slide 7

The Peoples Bank of China makes clear in all its policy statements it is an arm of government

It openly supports the thought and policies of President Xi

It takes direction from  the Communist party representative on its Board and fits into the successive government Plans.

Slide 8

Slide 9 – Current inflation rate against 2% target

USA  – 7.5%

Eurozone – 5.8%

UK – 5.5%

Japan – 0.5%

Slide 10 – Three major economic disasters inspired by Central Bank advice and thinking 1990-2021

a) The Exchange Rate Mechanism collapse 1992

b) The Great Depression and banking collapse 2007-9

c) The Euro crises 2011-14

And now the Big inflation 2021-3

Slide 11

The consequences of political intervention have been mixed. Clearly Turkish override of the Central Bank and changes of Head have led directly to currency collapse and rapid inflation. Governments have debauched currencies in countries like Venezuela, Argentina, Zimbabwe where central Banks have not been able to exert more control.

In western societies the political intervention in the 2008 banking crash turned round the disastrous situation the Central Banks had created by deflating their bubble too quickly

President Trump was probably right that Quantitative tightening was too tough when he talked the Fed into a more neutral policy

Governments were right to encourage Central Banks to be very accommodative as an offset to lockdowns during the intense period of the pandemic

It is clearly true that governments are more likely to intervene helpfully when Central Banks are being too tough than when they are being too easy and risking too much inflation.

Slide 12 – Why do Central Banks often get it wrong?

The Western Banks base their work on a model of output and capacity. These concepts are flawed and difficult to measure in a complex globalised economy.

The Banks are too influenced by the consensus. The consensus rarely spots turning points.

The people on Bank Committees rarely have superior insights into markets.

Seeking judgements by Committees rarely gets it right, as Committees tend to an average or blended view. Often in markets you need to choose between two more extreme options to get it right.

Dear Constituent

Many of you will be sharing my horror at events in Ukraine. The daily scenes of death and destruction, of mass movements of people fleeing the violence are harrowing. They are a constant reminder of why war is wrong. They are what happens when politics and negotiation fail.

Some of you write wanting the U.K. to enforce a no fly zone over Ukraine to stop aerial bombing. This  would mean declaring war on Russia, as a no fly zone would require contesting Ukrainian air  space with the Russians. Escalating the war in this way would be full of hazards. Nuclear powers  taking each other on requires restraint by both sides over first use of nuclear weapons. NATO could of course defeat Russia at likely great cost to life and property but the U.K. alone would be stretched. Our allies led by the USA  do not want to take  NATO to war with Russia over Ukraine. A successful No fly zone after a bruising set of air battles would not end the ground artillery and missiles raining down on Ukraine unless a victorious NATO airforce went on to bomb Russian forces in difficult urban locations with likely deaths of the very people we wish to help.

Some of you wish to see more rich Russians in the U.K. sanctioned, with confiscation of assets. Ministers  are keen to do this to all cronies of Putin who might still have some influence  over him, and to those who came by their wealth through crime.  They do need to proceed according to the rule of law. Many rich Russians living peacefully in the U.K. are neither Putin supporters nor criminals. The government should sanction those where they have a good legal case against them. This can take time to research and establish.

Some of you want a generous offer to those fleeing the violence. The government is expediting entry to the U.K. to those with family here who wish to come to stay. The needs and wishes of the hundreds of thousands crossing into Poland and Romania is to be housed and fed  near to Ukraine with a view to returning to their homes as soon as possible. Many are women and children temporarily separated from their menfolk who have stayed at home to fight. The U.K. is offering substantial financial and practical aid to assist with the temporary camps. The U.K. will keep its support under review as the situation develops as needs and wishes may change.

The U.K. did lead a stronger response from NATO with deliveries of weapons to help defend Ukraine before others and by working with US Intelligence to reveal the true nature of Putin’s plans to encourage preparation against the onslaught. The U.K. is striving to do all it can as a good ally short of declaring war to pressurise Russia to end the violence and helping brave Ukrainian defenders hold off the attacks.

 

Yours sincerely

John Redwood

It is wrong that the U.K. is importing Russian Gas by LNG carrier. It means more CO 2 is generated than burning home  produced gas. It means Russia gets huge tax revenues that the U.K. would reap on home gas. It means we miss out on more better paid jobs. It means we finance Russia’s thug wars.

It is wrong that the U.K. continues to import wood from North America to burn in the Drax biomass power station. We should growing more of our own timber to stoke the fires at Drax.

It is wrong  that we are importing electricity from a European continent short  of energy and dependent on Russian gas and coal for some of its generation.  We should generate our own using U.K. fuels or renewables.

So why are we undermining our national resilience? Why are we making U.K. consumers pay even higher prices to cover the  extreme  costs of imports at current spot prices? Why are we creating more global CO2 with this import based system?

Part of the answer seems to be the civil service and some Ministers’ passion to get the U.K. count of CO 2 produced down. The  way they count it if we import fossil fuel or products made with fossil fuel is the  CO 2 generated counts against the  exporting  country and does not add to our total. Yet the world ends up with more CO 2. Time to account for all the CO 2 to weight decisions back in favour of domestic energy and production.

Rt Hon Sir John Redwood (Wokingham) (Con): To ask the Secretary of State for Health and Social Care, what proportion of covid-19 test kits are imported.

Maggie Throup, Parliamentary Under Secretary of State for the Department of Health and Social Care: Currently 90% of lateral flow device tests are imported although we expect this to decrease to approximately 70 to 80%.

Rt Hon Sir John Redwood MP (Wokingham) (Con): To ask the Secretary of State for Health and Social Care, what progress he is making on improving air extraction, air filtration and UV cleaning in NHS properties.

Edward Argar, Minister of State at Department of Health and Social Care: The ‘Health Technical memorandum – Specialised ventilation for healthcare buildings (HTM 03-01)’ was issued on 22 June 2021, which includes updates guidance on ventilation to manage infection risks and the technology available. The guidance is available at the following link:

https://www.england.nhs.uk/publication/specialised-ventilation-for-healthcare-buildings/

All trusts must have an Authorising Engineer (Ventilation) designated by the trust management to provide independent auditing and advice on ventilation systems, to review documentation on verification and validation and witness the process as necessary.

In April 2021, updated guidance on the cleaning of National Health Service facilities was provided in ‘National standards of healthcare cleanliness 2021’, which is available at the following link:

https://www.england.nhs.uk/wp-content/uploads/2021/04/B0271-national-standards-of-healthcare-cleanliness-2021.pdf

While ultraviolet (UV) cleaning has been considered, it does not replace the need to physically clean the environment and therefore it has not been recommended instead of physical cleaning. In addition, it cannot be used in occupied rooms, therefore its applicability in an operational healthcare environment is challenging. However, we understand that some NHS trusts deploy UV cleaning based on local cleaning needs. As new research and technology becomes available, the NHS will update existing or provide additional guidance.

The valiant resistance of Ukraine to the invading Russian army means  Putin cannot have his way. It looks as if he expected little Ukrainian resistance, a drive into Kiev for his tanks and troops, followed by the rapid departure of Ukraine’s elected President. Putin probably thought he could then have settled terms with the Ukrainians over their future government. He probably wanted them to rule out any future NATO membership and to recognise Russian leadership and trade patterns as some kind of friendly satellite. He may well have assumed he would rapidly consolidate a land bridge from Crimea to the eastern rebel provinces of Donetsk and Luhansk and may have wanted to create a split Ukraine with some under direct Russian rule . Instead six days on he has made far less progress militarily and is being forced into using far more force for far less effect than planned.

Putin is currently exploring a negotiated peace at the same time as pressing his ugly invasion. Maybe the talks are cynical. Maybe they are an attempt to find a less embarrassing and less damaging way out from the violent mess he has created. How should Ukraine respond, given the unprovoked aggression from Russia, the lack of any climb down so far by Putin, but also the wish to avoid more violence if that is possible?

Putin probably expects still to get more control of Ukrainian territory by military means. He has vast firepower compared to the defenders. He should however weigh the shortage of Russian troops to seize and occupy a country and population as large as Ukraine’s, now that most people people there are hostile to him and willing to fight for freedom. He needs to remember that wholesale destruction of cities and mass deaths of civilians will be seen by the West as war crimes, confirming his and Russia’s pariah status. What would be the point of prosecuting the war with widespread death and damage, creating lasting hostility from those Ukrainians who survived and making it impossible for Russia to govern it in any acceptable modern way without the use of permanent large scale intrusive force?