Author: johnredwood

The government is we are told working up an agenda to show how levelling up will take place. Under Secretary Gove all the main departments are being harnessed to the task.

They should begin with the Treasury. The anti enterprise policies of IR35, higher National Insurance and higher corporation tax have to change. The temporary super deduction from Corporation Tax for investment is not sufficient given the longer term big hike in rate. The treasury should take Corporation tax down to 15% and cut taxes for the self employed and small business.

Mr Gove’s own department should come up with a planning policy which encourages more house building in parts of the countries  with cheaper land and a shortage of new homes to buy. Now many more people are home working for at least part of the week there is less need to overbuild close to London.

The Business department should take more positive steps to encourage import substitution and more made in the U.K. It should revitalise domestic oil an£ gas to displace imports, and put in more reliable electricity capacity. An industrial revival needs more affordable anD reliable energy.

The Environment department needs to reboot its subsidies and regulations to foster more home food production, in place of its current model of wilding the U.K. and importing food.

I will look in another blog at training  and education, to help more people on a personal journey to job and business success.

Yesterday I drew attention to some of the many areas where carbon counting is the main driver of U.K. policy. As a few of you point out, it does not seem to drive the one policy where some of you want it most. One of the most obvious ways to cut the UK’s carbon footprint would be to cut inward migration. Every additional person clearly adds substantially to CO 2 output as a direct result  of their personal output and all the output needed to supply them with food, heating and transport. Indeed additional people are in the first years more carbon intensive as we need to build additional homes, surgeries, schools and utility capacity to accommodate them . Their very way of transport to get here is also carbon intensive.

The anger of people about the migration is increased when they hear leaders tell us the U.K. must do more to control CO2. The more people we invite in the more we need to throttle back to compensate for the extra CO 2 from an expanding population. The Home Secretary says she intend  to close down the people smuggling and trafficking. So when? When will the new legislation go through? How will she make it less attractive for people to come  here illegally? When will border enforcement crack these smuggling rings and arrest the boat owners and people runners?

The UK has been the most successful larger country at cutting its carbon dioxide output since 1990. Some of this was a gain for our economy and society a well as a win for the world, where new investment substituted more efficient fuel saving ways of making and growing things or generating power. Some of it was not a gain for us or the world where it entailed ceasing doing something at home and importing from somewhere else, often in ways which increased the amount of carbon dioxide produced in making and transporting them.

The world system for counting and managing carbon dioxide output is understandably based around the national production of carbon dioxide. As the policies to cut the output of CO2 are decided and implemented by national governments ( or the EU)and companies acting under national laws, that makes sense as a means of management. It does not, however, make global sense if countries decide to cease making or growing things that produce a lot of CO2 in order to import them and shift the CO2 onto another country’s budget. It is positively harmful both to the country ceasing production and to the wider world if as a result the addition of CO2 from long distance transport and or from more carbon intensive ways of production in the exporting country actually increases the total world output of CO2.

In the UK it appears that many officials and some Ministers regard national decarbonisation as the  main or only imperative in thinking through policies. In the energy department there has been a mad dash to close down coal power stations, to block new gas combined cycle stations and greatly increase reliance on imported electricity through interconnectors. If we end up importing power which comes from Russian gas or German coal that is  not a win. The same department has been keen to plan the run down of existing gas and oil fields in the North Sea and to prevent new connections to untapped reserves that are discovered. Instead they prefer we rely on increasing volumes of imported oil and gas during the “transition”. The agriculture department seems worried by methane from cows for  milk and beef cattle, so it offers grants to wild our land and to make us ever more dependent on imported meat and dairy products. It allows us to mainly import salads, flowers and other items needing greenhouse heating from the Netherlands instead of helping the UK create more jobs and cut the food miles with more home production.  The Business Department watches as the UK retreats from aluminium, steel, ceramics and other energy intensive manufactures, only to rely more on imports.

In each case departments need to give greater weightings to the need for more better paid jobs and more successful businesses in the UK, and the need to increase national resilience at a time of disrupted world trade and global shortages. They need to also see that even given their main preoccupation, CO2 output, there is a case for doing more at home to cut the food miles and to improve the fuel efficiency of processes in industry.

Some of you wish to post items based on Labour’s latest campaign about the conduct of Conservative MPs. Others wish to counter post, examining cases involving Labour MPs and their conduct. This site has no wish to do this and is not equipped to investigate the truth or falsehood of the various charges being made. Both sides need to understand that both sides will have their posts binned to be consistent and fair. Writing and  publishing an untrue attack on anyone could be a libel.

As we near a final text from COP 26 it appears the main producers of CO2 in the world are wedded to their fossil fuel economies and most plan to produce more CO2 over the next few years. China is planning more coal power stations, Germany is keen to keep hers at least for this decade, India thinks she needs to burn more fossil fuels to grow her way to  better prosperity. There will be no new Treaty out of Glasgow. The idea was to flesh out the Paris Agreement with detailed national plans and targets, and to move towards more global enforcement of action through sharing information and applying moral pressure to countries that are falling short. There was never any plan to have an EU like structure with enforcement in court and with sanctions against non compliance.

Meanwhile the rich and powerful of the world turn to carbon offsets to allow themselves to enjoy private jets, air conditioned hotels, grand meat meals and the rest. Faced with charges of hypocrisy when they lecture the rest of us on stopping travel by passenger jet or diesel car, and criticising our reliance on gas boilers and meat from the supermarket, they tell us they have offset their more extravagant carbon based lives by buying pardons. They identify an investment in trees or windfarms or solar panels somewhere and claim that part investment as an offset for their carbon generation. The offset market can grow massively, as there is a plentiful supply of potential projects that some agency will rate as suitable as an offset.

The EU has also established a system of carbon permits. If a company wishes to burn fossil fuels to make steel or cement, it needs to buy or be granted carbon permits to allow it to burn the necessary fossil fuels in the process. There is much discussion about what the price of the carbon permits should be. The market in them has recently driven the price up to Euros 60 a tonne of carbon. This is now a substantial added cost on industrial activities that require a substantial fossil fuel input.

I would be interested in your reactions to this activity. There is a need to avoid scams and greenwashing. There has to  be an understanding that this will make things dearer as the cost of carbon taxation enters the industrial calculations.

I was talking to a London taxi driver yesterday about the new electric cabs. He pointed out that they also contain a 1.5 l petrol engine which can be turned on to keep the battery charged. Apparently to get the range for a day’s work the petrol engines are much used. Such developments need to be taken fully into account when trying to work out how to decarbonise transport.

The UK’s national income per head is higher than France, Italy and Spain,  but a bit lower than Germany. All are massively lower than Ireland’s. The Republic of Ireland has a per capita income more than twice the UK’s and three times Spain’s. The main reason is Ireland has held its company tax rates down to 12.5%, far lower than the other larger European countries. As a result large US and other overseas companies have wanted to set up in Ireland and book more of their activities through Ireland to take advantage of the lower tax rate. Far from collecting less company tax through lower rates, Ireland collects far more company tax as a percentage of the economy than the countries setting higher rates.

President Biden’s success in getting leading countries to approve his idea of a minimum level of corporation tax worldwide will mean Ireland will lose a little of its advantage, being persuaded to put its rate up to 15%. This will still leave it below most of the other larger European countries.

The UK should use this opportunity to increase its company tax receipts by lowering the rates. The UK could now match Ireland with a 15% rate. This would doubtless be a good draw for large companies to locate more to the UK, and  would remove the big competitive advantage Ireland gives herself by her current very low rate. Why don’t the Treasury want to increase the tax take from companies and boost National Income? How much more evidence do they want that lower rates are successful?

Figures in US $ from World Bank Per capita GDP

France   39,030

Germany   46,208

Ireland  85,267

Italy  31,676

Japan   39,538

Spain 27,063

UK    40,284

USA     63,543

The EU has as it would say “broken the law”. They have reneged on the UK Agreement.

Article 1 of the Northern Ireland Protocol states

 

“This Protocol is without prejudice to the provisions of the 1998 Agreement in respect of the constitutional status of Northern Ireland and the principle of consent which provides that any change in the status can only be made with the consent of the people”

The loyalist community sees that  the Protocol has cut them off from important parts of the UK state and placed them under EU rules and controls. They are losing their right to import from GB and to have the same laws as GB without their consent.

The Article affirms that “This Protocol respects the essential state functions and territorial integrity of the UK”. Not the way the EU is interpreting it.

 

Article 6 of the Protocol states

“having regard to Northern Ireland’s integral place in the UK the Union and the UK shall use their best endeavours to facilitate trade between Northern Ireland and other parts of the UK”

Instead the EU has gone out of its way to disrupt GB to NI trade and to divert trade to NI/EU.

 

The opening to the Protocol sets out the overarching aims for help in interpreting the text. These include:

 

Having regard to the importance of maintaining the integral place of BI in the UK’s internal market

Recalling that NI is part of the customs territory of the UK

Determined it should impact as little as possible on the everyday life of communities in both Ireland and NI…

 

All of these have been violated badly by the EU

 

Article 16 allows the UK or the EU to  take unilateral action to remedy issues where there are “serious economic, social or environmental difficulties” or where trade is diverted. These tests are clearly met.

The EU would be wise to apologise for breaking the Agreement, and should take action to correct the difficulties it has created for NI and the UK single market.

 

The Brexit vote was above all a vote to take back control from an unaccountable international body. People were fed up with rules and taxes that we had little influence over, that were then imposed against our wishes and enforced through a foreign political court.

Brexit voters want to see the promise that our votes would be respected and implemented seen through. We still have not taken back control of our fishing grounds, nor of Northern Ireland trade and   NI market rules and laws. This is unfinished business that the government needs to get on with.

Meanwhile some parts of the UK establishment, the senior civil service, the courts and the big quangos seem to  thrive on the idea that they can still get the UK signed up to international Agreements or Treaties to bind future governments and where necessary to thwart the wishes of  UK voters.

It is untrue to say the 2018 Global Compact for Migration signed by Mrs May is another such binding Treaty, as it expressly says it is not legally  binding and claims to respect the sovereignty of nations over  border matters. It is however part of a wide patchwork of international Agreements and more importantly  human rights law which is used by some to make it difficult for the Home Secretary to implement the public wish to see lower migration. The Home Secretary needs to come up with a strengthening of UK migration law to allow us to have sustainable and fair immigration.

Some are  similarly seeking to sign us up to as many international agreements under COP 28 as possible. These could  then  be used to limit UK freedom in making policy in everything from agriculture through transport to energy and industry, despite the fact that the world’s largest CO2 producers like China, Russia and India have not similarly committed. The UK needs to ensure that all the actions we take to cut carbon dioxide output cut the global output at the same time. International Agreements must be signed by  those who produce most CO2 as well as by us.  Ending up importing more from countries that do not control CO2 in the same way damages our economy whilst failing to tackle the CO2 totals.

An independent country needs to limit the amount of autonomy it signs away. Getting out of the EU is a huge step in the right direction, but we need to watch out for steps back again from a clever world establishment which does not trust the people nor the politicians who want to represent  their views. Some in the global  Establishment prefer to deal with politicians that they call grown ups, which means politicians who will ignore the public will or mislead the public over what is actually going on and who is in charge.

The most serious sacrifice of sovereignty was to the EU, with its binding legal structure and its own supreme court. Other international Agreements are subject to independent arbitration where there are disputes, and are best where there is a provision to allow a country to leave should circumstances alter.

One of the official and Bank of England forecasts that might prove to be right is that people face a cost of living squeeze, predicted to be at its worst in April next year. People will face home heating cost rises, a  National Insurance tax hike and Council tax rises. General inflation is likely to reach its peak before subsiding around the same time. Supply shortages around the world including microprocessors, shipping containers and various manufactured goods add to the price pressures.

The government should take some action to ease the squeeze. On energy I have set out at some length how the U.K. could produce more of its own gas and electricity to start to reduce its dependence on dear and volatile imports and improve the contract costs of its longer term energy mix. On tax I still call for the NI increase to be scrapped. In a wide range of areas where supplies are short at home and abroad we need to be looking to put in more UK capacity to cut our import dependence. The higher spending Councils need to review their budgets to concentrate the spending on the essential services and to limit tax rises.

In some cases people will enjoy wages rises above inflation where there is a shortage of their skill. It is highly likely truck drivers, chefs, hotel staff and other constrained areas will see decent real wage growth. Many other people will be asked to accept wage rises that do not keep pace with the cost of living when tax and price rises are taken into account.

The UK market feels short of a wide range of services, There are good business opportunities for those willing and able to train to work in hospitality, leisure, care, building and a wide range of other areas. There is plenty of scope for people to set up their own businesses and to get orders from a public struggling to find the help they wish to buy in.

The UK government should do more to encourage self employment and the establishment of small business. Instead of taxing it too much and in too complex a way it needs to be easier to set up and get started, as we need the extra capacity. Many of the price rise are owing to shortages, so we do need more supply to solve the problems. The official machine is too ready to rely on imports.

I think the Bank was right not to raise interest rates this week pending more knowledge of the Labour market and wage rises now the furlough scheme has ended. I am against raising rates all the time the Bank is creating more money to buy bonds to keep rates down. It would be a contradictory policy.

I have called for an end to more money creation.The Bank has created quite enough. Savings are high, so many people could afford to spend more if they wish. Bank liquidity and capital is strong, so banks could lend more if people wanted to borrow more. There is no need to create more money. If people and companies did decide to spend much more of their cash and borrow more to increase their spending inflation would pick up more. No need to stoke the money fires further.

 

The task of money management is not easy. There is a slowdown underway which will be intensified by the squeeze on real incomes next spring from delayed energy price rises and the tax increase. There is also a steep and predictable rise in inflation which the Bank did not see coming earlier this year but is now forecasting .

I would stop the money increases and watch the Labour market. Only if there is clear evidence of wage settlements generally taking off to embed the temporary price rises will we need higher rates. So far the wage rises are a feature just of a limited number of activities in shortage.

The government is squeezing incomes too much in the year ahead.It should cancel the National Insurance rise planned for April.