Author: johnredwood

Rt Hon Sir John Redwood MP (Wokingham) (Con): Does the Minister agree that there is no reason why we should not produce 100% of the temperate food that we need? We lost a huge amount of market share when the common agricultural policy was introduced, and some of us want to get that back now that we are out of the CAP. Is it not better to cut the food miles and rely on local jobs and local production?

Victoria Prentis (The Minister of State, Department for Environment, Food and Rural Affairs): It is also a pleasure to talk to my right hon. Friend about these matters. I have also spoken to him many times, in this instance about his plan to boost horticulture, particularly fruit and vegetable production, in his constituency and, indeed, across the nation. Fruit production has fallen to 16% of what we consume nationally, and fruit is one of the very few foodstuffs whose price has risen in comparative terms over the last 10 years when the price of most other foodstuffs has fallen.

I do not think the present government is getting the best out of the Civil Service. The Prime Minister has a new opportunity to construct a Downing Street structure and appoint staff he trusts to help him deliver his vision.

The Levelling Up Secretary has just unveiled a wide ranging set of proposals to spread prosperity, better jobs and ownership more widely around the UK. He will need the help of the Prime Minister to mobilise the various Whitehall departments that have crucial roles to play. He needs many actions from Education and Transport, from Treasury and Health, from Trade and from Business and from several others.

Inspired by the good response to my article on how Downing Street worked under Margaret Thatcher, I think it might be helpful to set out how the Thatcher team worked with Whitehall to put through bold new policies that were designed to improve the prosperity and freedoms of citizens. We were able to make substantial and timely changes without major constitutional upheavals or Civil Service reform.

I was struck by a recent article by Daniel Hannan which was critical of the Civil Service. He pointed out that officials make many errors and design bad policies which Ministers get blamed for. He felt Ministers now cower before Civil Service political correctness, and are told much of what they want to do is impossible owing to the views of independent quangos, the body of law and the results of arranged polls and one-sided consultations. He argued that the Civil Service has specialised in improving its diversity of recruits, whilst ensuring there is no diversity of outlook or view.

He contrasted the successful pursuit of working vaccines by an individual brought in from outside to lead a specialist small unit to solve the problem, and the difficulties with the rest of the pandemic response that mainly relied on more traditional Civil Service people and procedures. He sees the Civil Service as internationalist, pining for Remain and in favour of a larger but not necessarily a more effective state. Ministers he concluded are there to take the blame and to be in the wrong, but often have insufficient engagement or leverage over the large staffs that work in their departments and quangos.

I know what he means, but I think many of the answers lie in the hands of good Ministers. Ministers with a large majority have the crucial power to change the law if the old laws get in their way. They can command huge resources of people, money and message. They can abolish quangos, appoint new Heads, issue clear new public instructions to them which Parliament may debate. They can ask their departments to do more of this and less of that. They have the power of the purse and of the pulpit.

When I helped Thatcher there was of course a Civil Service culture and a controlling set of ideas within the Civil Service machine that was not the same as the collective views of the government. The official Civil Service government was not proposing Union reform or privatisation or lower taxes. It would have preferred to live with a larger public sector and older comfortable ways. It seemed to find the wind of change we wanted as abrasive. Some probably wanted it to fail to be able to say quietly it had warned us of its imperfections. Aware of this I decided on a careful course of action to implement the big idea of wider ownership, of everyone an owner. It was a popular idea that embraced many of the actions and policies that the Civil Service and Unions found challenging.

I did not suggest to the PM that she held a Cabinet, flagged up the big policy aim and challenged the Civil Service to create and use the conventional architecture to deliver it. The last thing I wanted was an overarching Cabinet Committee for wider ownership. That would doubtless have slowed and diluted what we wanted to do. It would have given critics of the whole idea a forum to debate the philosophy and sow doubts. Cabinet Ministers would have been less willing to accept individual responsibility. Instead the PM and Cabinet colleagues introduced the main ideas split by department, with the PM discussing with each of the relevant colleagues how they could pursue the key parts as stand alone ideas within their areas.

The Treasury was to lead on privatisation with John Moore, a Minister, to work bilaterally with the other sponsor departments on the relevant industries. The Treasury would mastermind the timetable and offer central resource on the preparation and sale process. The Social Security department was to lead on pensions reform, introducing personal portable pensions for the first time so people could control their own retirement savings more directly. They did so via a general welfare review to gauge demand, to seek outside views, and to reform other features of what they were doing. Norman Fowler did a great job, with no leaks as he prepared the ground for radical changes.

The Business department led on making it easier for people to set up and grow their own businesses and worked with the Treasury on tax incentives. The energy department worked on radical proposals to get more cheaper energy to fuel our businesses, introducing pro competitive policies, as well as preparing gas and electricity for privatisation. The Housing department was to hone and improve the Right to buy policies to give more people a chance to own, and to develop homesteading, shared ownership and sales of redundant public sector land to boost wider home ownership at affordable prices. The Transport department offered National Freight for sale to its employees in an exciting experiment with employee ownership as well as selling BA and bringing in more private capital to buses.

It was only when I was confident that each Cabinet member had found policies they liked and were willing to see through, and was sure the Departments would assist them, that I proposed to the PM she set out the overarching vision and tied it all together. As there was already buy in by the main departments the vision then helped. The Civil Service ensured each major privatisation we did needed individual legislation, resisting enabling powers. I decided not to fight this as we needed a measured pace of privatisations and Parliamentary process allowed a public debate and consideration of all the detail in each major case.

Today there needs to be similar commitment to levelling up department by department. Education will doubtless take responsibility for challenging targets for literacy, numeracy and qualifications. Health will need to think through how it achieves the bold aims on eradicating health inequalities by region. Transport has a major task to clear the jams and improve the trains in many places. Business and the Treasury need to give more thought to improving the UK’s competitiveness so more businesses start up and more investment is attracted.

The Government’s enthusiasm for more devolved power to Mayors and Councils will cut across some of the national targets and programmes and will provide a complication more than an impetus, save in the minority of places that find and back a Mayor or Council that does know how to do it and how to work with central government.

The new structures at 10 Downing Street risk being top heavy.  They will need the Chief of Staff to work well with the Cabinet Secretary, the Permanent Secretary of the Cabinet Office and the Permanent Secretary of Downing Street. This weeks failure of the government machine to deliver an NHS plan in time for the PM and Secretary of State to announce it on Monday is a sign of how things need to be improved sharply.

On Friday 4^th March Rt Hon Sir John Redwood D.Phil FCSI will give a lecture in the Old Library, All Souls College Oxford on the topic of “Is there any  independent Central Bank?”.

 

The lecture will consider the cases of the Federal Reserve Board, the European Central Bank, the Bank of Japan, the Bank of England and the People’s Bank of China. It will examine the patchy record of the western Banks in controlling inflation and avoiding major downturns. It will consider political involvement through choice of Governors, intervention over interest rate changes, revision of inflation targets and supervision of Quantitative easing. It will examine influence over Central bankers by Parliaments, the media and public opinion, and the occasions when a Governor seems to be pursuing a political agenda through Central bank policy.

To register your attendance, please visit the following weblink: https://www.asc.ox.ac.uk/event/there-no-independent-central-bank

For those attending virtually, Microsoft Teams meeting links will be sent out 1 hour beforehand.

Rt Hon Sir John Redwood MP (Wokingham) (Con): If the Treasury was not holding up the plan, can we be told what was holding it up? When will we get the plan?

Edward Argar (Minister of State at the Department of Health and Social Care: I am grateful, I think, to my right hon. Friend for his question. As I set out, it is important that this is the right plan and that it does the job for which it is intended. We are working closely with other Departments to make sure the plan, when it is published, does the job for which it is intended, and I look forward to its imminent publication.

Enthusiasts for the economic, monetary and political union of Europe will celebrate the anniversary of Maastricht. After the founding Treaty of Rome this Treaty represented the single largest step forward towards the union of Europe they seek. Some Eurosceptics can also celebrate it at this distant time, as it was the sheer ambition of Maastricht that alerted many more people to the fact that the Common market they voted for in 1975 in the UK was morphing into the ever closer union of the Rome Treaty that had been played down in the UK debate.

The truth is this Treaty was important. It both greatly accelerated progress to European Union for the majority of countries that welcomed it, whilst splitting Europe more decisively for those that did not. Denmark and the UK immediately demanded and got opt outs from joining the single currency and stayed out. Sweden has spent the last  years refusing to implement its commitment to join the Euro. The EU has lived with non compliance with the Treaty. Switzerland and Norway took it as confirmation of the growing centralisation of the Union and confirmed their unwillingness to join the EU at all.

Maastricht was the last EU Treaty that the UK Conservative party whipped MPs to support. It split the Parliamentary party, with many more unhappy MPs than actually voted against. In Opposition the party became an opponent of more powers for the EU, and opposed the Treaties of Nice, Amsterdam and Lisbon. In the 2010 election the party was wanting to repatriate powers , but the advent of a coalition government with the Lib Dems meant nothing along those lines could be attempted as the Lib Dems vetoed any suggestion. The 2015 Conservative Manifesto adopted the proposal of a referendum on our continued membership as the best answer. This helped the Conservatives garner enough votes to win a majority.  By then many Conservative MPs felt it wrong to stay in the EU when we opposed joining the most important central project at its heart, economic and monetary union. There was always the danger of ending up paying more of the bills of a difficult currency union, and accepting more of their laws needed for currency participants but not for a more independent country with global ambitions.

Maastricht theory had already cost the UK dear. It was preparing for the single currency by demanding convergence of economies and currencies that visited upon us the Exchange Rate Mechanism. This cruel policy gave us a nasty boom and bust, leading to much unemployment, lost businesses and negative equity for some homeowners. This  bitter experience recruited more Conservative MPs and voters to oppose continued membership and certainly to oppose further transfers of powers.It threw the Conservatives out of power for 13 years as it destroyed the party’s reputation for economic competence. Winning again was only possible after Labour presided over the even worse banking collapse and great depression of 2008.

The post Maastricht EU survives on a massive programme of money printing and bond buying, continuing for all this year on current plans long after the USA and UK have stopped. It needs the continued mechanism of Germany and the other surplus countries depositing their cash in the ECNB at zero interest, to be lent on at zero to the deficit countries that need the money to avoid recession. Gradually the EU is exerting its controls over spending and taxes in each member state, as it needs to do to provide some discipline to its currency and banking system.

I look forward to seeing how the constitutional innovation of an MP becoming Head of the PM’s office instead of a career civil servant works out. It builds on the precedent set by the Nigel Adams appointment as a Cabinet Office Minister assisting the PM.  It should mean a political perspective is added on the PM’s role. It will need a strong Principal  Private secretary who is a career civil servant to ensure proper tie in to the official government machine, and will require Steve Barclay to work well with the Cabinet Secretary.

There is an immediate test of the new team. They have to move swiftly to change economic policy. They need to ease the squeeze on middle incomes that will hit in April. They need to require the Treasury to introduce a growth policy compatible with the levelling up agenda. They  need to stress you only get  levelling  up if you have strong private sector led growth. They need to insist on tax cuts to offset some of the Bank’s monetary crunch and the big hole created in real incomes by energy prices. They need to get the business department to reset energy policy, crucial to the survival of enough U.K. industry.

They should take the Bank’s gloomy forecasts for 2022-23 and 2023-4 seriously. The Chancellor should too. We need policies that head off those outcomes. It will take major policy change to rebuild prosperity and to avoid major unpopularity for both government and the Chancellor.

 

From  the first official forecasts of poor outcomes if we dared to vote Brexit to the continuing gloom of OBR and Bank predictions on growth, unemployment and tax revenues I have correctly argued they have been far too pessimistic.  This year again the deficit is £60 bn below their forecast, employment is strong and growth excellent.

So let me surprise you. This time I do not think the Bank and doubtless the OBR who usually are similar are too pessimistic about 22-3 or 23-4. I think now the savage attack on the economy by the Treasury with its big tax rises and the Bank with its severe monetary tightening will indeed deliver little growth, rising unemployment and less buoyant tax revenues in the next two years.

I agree the Bank needed to tighten a bit to correct the  excessive laxity of extended Quantitative easing or money printing. They needed to curb the inflation they had created. They were right to end all QE this year. They  should have done so last year as the recovery took hold.  It does not need, however, to rush to Qunatitative tightening. Neither the Fed nor the ECB plan to do that and they both have worse inflation than us.

My main complaint is aimed at Treasury policy. The fastest way to get the deficit down is growth. Their excessive tax rises strategy will slow the economy too much, impeding getting the deficit down. One simple message for them. Stop it.

The Bank correctly forecasts a hit to real incomes this year as the energy price rises and tax rises kick in April. They may have underdone  that forecast. This will slow the economy  markedly without needing a monetary jolt as well.

The government needs a growth strategy for its own sake and to cut the deficit.

The government is in  the early days of planning a new railway. Whitehall seems excited about the chances to recreate a nationalised railway with central control over the things that matter. Whitehall had more or less done this anyway before covid struck by taking back certain train franchises into public control, and so regulating and restricting the others that they might as well have been nationalised. The main costs of the railway, all the tracks, signals, land and stations were in  public sector hands already.

The pandemic and its aftermath has ripped up the old business  model of the railways. Their main passenger business was taking people in and out of business centres five days a week at peak hours. Commuters were made to pay most of the cost of their services whilst leisure travellers took advantage of huge discounts on many tickets as the railways tried to fill seats at off peak times. The costs of the railway were elevated by the need to provide so much peak capacity for four hours a day five days a week that was not  needed for the rest of the time.

It looks as if post lockdown many office workers are going to opt for a  hybrid working week where maybe they only travel in to the office centre two or three days,  not five, and maybe they travel at a wider range of times. Much of the reluctance to return to five day working is the revolt of the commuter, fed up with years of sky high prices, late and cancelled trains and too few seats at peak times. The railway needs to play a role in restoring more office working for those who might want or need it.

One idea I have been advancing is the rolling discount season ticket. Anyone registered for a given route could enjoy progressively cheaper tickets as the month wears on depending on their use. The ticketing should allow variable times of travel and pass on any price  benefits from choosing a less popular time within a flexi season ticket framework.

It seems likely even allowing for the greater popularity of Wednesday than Friday to travel that overall demand on an y given day at peak will be  down on pre pandemic, allowing a cost reduction. Flexi tickets need to smooth patterns of usage more by offering cheaper prices on low volume days. It would be good if some groups of companies made Monday or  Friday an  office day to take advantage of cheaper fares.

The government declined to answer some of these important questions about energy and industrial competitiveness. They failed to acknowledge how much cheaper US gas is at home thanks to a better energy policy there. They claim not to know much about petrochemicals. They do not explain why they failed to abate the high carbon price to offer some relief on energy costs.

The answers provided do remind us how much capacity and business we have lost through high energy prices in areas like steel. They imply there will be more electricity capacity added other than wind and solar, but that includes more imports from unreliable European sources. It is difficult reconciling these figures with the figures they supplied and I published showing no planned increase in electricity before 2025 and then slow progress up to 2030. I would  be more reassured with more information that was internally consistent.

 

Question:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what proportion of petrochemicals consumed in the UK are imported. (110222)

Tabled on: 24 January 2022

Answer:
Lee Rowley:

Consumption of imported petrochemicals cannot be estimated due to the lack of official data on imports, re-exports and consumption of these products.

The answer was submitted on 01 Feb 2022 at 16:56

 

Question:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what proportion of steel consumed in the UK is imported. (110221)

Tabled on: 24 January 2022

Answer:
Lee Rowley:

According to the latest world steel association data, in 2020 the UK consumed 9.0Mt of steel of which 5.0Mt (55%) was imported. In 2019 the UK consumed 10.2Mt of steel and imported 7.3Mt (72%).

The answer was submitted on 01 Feb 2022 at 16:57.

 

Question:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what estimate he has made of demand for electricity from the UK transport sector in 2030 compared to 2022. (110219)

Tabled on: 24 January 2022

Answer:
Greg Hands:

The figures below show the Department’s latest published projections of electricity consumption in the transport sector for the years 2022 and 2030 in thousands of tonnes of oil equivalent (ktoe).

2022	2030
Transport (ktoe)	Electricity	564	1,614

The answer was submitted on 01 Feb 2022 at 17:50.

 

Question:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what increase in UK electricity generating capacity is planned by 2030 excluding wind and solar power energy. (110218)

Tabled on: 24 January 2022

Answer:
Greg Hands:

Our latest published Energy and Emissions Projections show 31 gigawatts (GW) of new non-renewable capacity are projected to be built between 2022 and 2030. Non-renewable capacity includes nuclear, fossil fuel, interconnector and storage capacity and excludes bioenergy, hydro, wind and solar.

The government are not targeting a specific capacity mix but will ensure a market framework to bring forward the necessary capacity whilst promoting effective competition to deliver an affordable, secure, and reliable system consistent with our decarbonisation objectives.

The answer was submitted on 01 Feb 2022 at 17:51.

 

Question:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what estimate he has made of electricity demand from domestic heating in 2030 compared to 2022. (110220)

Tabled on: 24 January 2022

Answer:
Greg Hands:

BEIS regularly publishes projections of energy demand and emissions, including projections of electricity demand in the residential sector. The most recent update (Net Zero Strategy baseline: partial interim update December 2021) was published on 7^th December 2021.

In this update, electricity demand in the domestic sector in 2030 is projected to be 116 TWh (terawatt-hours), compared to 101 TWh in 2022. Projections for the component of this demand that is due to domestic heating are not available. These projections only consider policies which have been classified as implemented, adopted, planned, or expired as of August 2019, as specified by international reporting guidelines.

These figures are based on central estimates of economic growth and fossil fuel prices and have been extracted from BEIS Energy and Emissions Projections: Net Zero Strategy baseline (partial interim update December 2021) Annex F: Final energy demand.

For additional detail on the recent update to energy demand and emissions projections, please see: https://www.gov.uk/government/publications/energy-and-emissions-projections-net-zero-strategy-baseline-partial-interim-update-december-2021

The answer was submitted on 01 Feb 2022 at 17:53.

 

Question:
To ask the Secretary of State for Business, Energy and Industrial Strategy, for what reason he has not abated the carbon price in response to changes in the level of carbon price. (110215)

Tabled on: 24 January 2022

Answer:
Greg Hands:

Following the triggering of the UK Emissions Trading Scheme’s Cost Containment Mechanism, the UK Emissions Trading Scheme Authority (made up of the UK Government, Scottish Government, Welsh Government and Northern Ireland Executive) considered the factors that may have affected allowance prices, and agreed that not intervening in the UK Emissions Trading Scheme was the right course of action in both December and January. The Authority issued a statement after both decisions, with its reasons, on gov.uk.

The answer was submitted on 01 Feb 2022 at 17:54.

 

Question:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what comparative estimate he has made of industrial gas prices in the (a) UK and (b) US. (110217)

Tabled on: 24 January 2022

Answer:
Greg Hands:

Gas prices have risen across the globe as a result of a number of international factors in supply and demand, with many markets across Europe and Asia experiencing highs. These have been caused by a number of factors, industries rapidly rebounding demand, as economies exit COVID-19 lockdowns, liquified natural gas demand in Asia, and supply outages over the summer.

The answer was submitted on 01 Feb 2022 at 17:57.

 

Question:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what estimate he has made of the potential loss of UK businesses in high energy using sectors as a result of the current high gas and carbon prices. (110216)

Tabled on: 24 January 2022

Answer:
Greg Hands:

I recognise this is a worrying time for businesses facing pressures due to the significant increases in global gas prices and its impact on electricity and carbon prices. I have met representatives of the UK’s high energy-using sectors to understand the impact on their business in the past months and extensive engagement with industry continues across government at both a ministerial and official level.

Many high energy-using businesses will have hedging strategies in place which help to shield them from exposure to the gas and electricity price rises, while some may be more reliant on current market prices.

The answer was submitted on 02 Feb 2022 at 07:22.