Author: johnredwood

Listening again to the tired and repetitious high level arguments of the Opposition MPs advocating faster progress to net zero whatever the cost, I am reminded of the years of their lectures on the dangers of Brexit . On both topics they are sure they are right. They despise anyone who questions their beliefs or suggests amendments to their position. They arrogantly dismiss opponents as too stupid to have a worthwhile view, or too badly informed to take seriously.They do not even want  to hear an alternative way of meeting their high level aim which presumably is  a better quality of life for the many, whilst tackling flood or drought risk proportionately.

They proceed by making a series of very gloomy forecasts for us all unless their policy is followed.They refuse to analyse why their forecasts have often been wrong in the past, and ignore or explain away repeated errors in their forecasts as new data emerges. Above all they ignore the views of many voters. When challenged on the gap between what they think and what a lot of voters think, they say the political elite has a duty to act and needs to teach the public to accept the actions.

They get plenty of help from traditional media. There is an accepted framework to the green debate. The  science is settled. Global warming of more than 2 degrees is coming unless   we adopt early net zero. That will Flood low lying cities, cause water  shortages and forest fires and melt the poles. CO 2 aided  by methane rather than water vapour is the main culprit. Pricing carbon is part of the answer. People must be taxed, priced or regulated out of plane travel, off meat and dairy, out of diesel and petrol cars and away from fossil fuel heating.

One of the reasons a lot of voters say they broadly agree with  this yet do nothing to change their own lifestyles is the perception of double standards.If the great powers actually thought this was a life and death matter wouldn’t China and Germany  be closing their coal power stations now? Wouldn’t the EU cancel the Nord stream 2 Pipeline and fund  a green alternative to Russian gas? Wouldn’t all the experts behind the COP 26 climate  conference ban all those jet flights to it and go virtual?

Above all they fail to deal with the fundamental dilemma faced by China and emerging economies. They need fossil fuels to achieve higher living standards, but their incremental demand tips the world over the top on these carbon accounts. Does the advanced world have the right to stop fossil fuel growth in large populated developing countries? Is there anyway the advanced countries can help them leapfrog to low carbon economies? So far the use of oil, gas and coal in countries like China and India is rising remorselessly up for billions of people.

I have had a couple of emails from Remain voters asking what benefits we have seen from our exit from the EU, as they are still unhappy about the decision taken in a referendum and reinforced by two General elections.  After five and a half  months it is still early days but so far it looks as if we will have a good first year out.

The main benefit of Brexit is we are now a self governing country that can make our own decisions, change our own laws, and run our own budgets. If in the future government did badly we can rid of it at the next election and change the laws and policies which were wrong. A General election here could not change a single EU law, tax or budget decision when we were members.

We have already seen early evidence of the advantage in our decision not to join the EU vaccine policy but to pioneer a new vaccine here in the UK with government support and orders to back it.  This resulted in an earlier roll out of vaccinations for all here and the offer of a crucial low cost treatment to the rest of the world. We are busily creating a new and enlarged vaccine production capability in the UK.  Spending on the NHS has gone up by more than £350 m a week.  We will now start to save larger sums on EU levies  as we are no longer liable for new contributions to the EU growing budgets.

The UK has as promised rolled over the trade agreements we shared with the EU with a  number of other countries, and is now well advanced on a new round of trade deals with countries that do not have such arrangements with the EU. This year will be our first outside the EU and its single market. According to international bodies the UK should see its fastest growth rate for many years at 7%, ahead of the EU average. Contrary to Remain predictions sterling has been strengthening since we left, house prices have been rising and employment is still at high levels despite the pandemic damage. It is a matter of regret that the EU wishes to damage its exports to us by placing barriers in the way of trade. Fortunately many other countries see this as an opportunity and are keen to sell to us and understand that means they should also be willing to buy more from us. One of the big gains from Brexit will be growing and making more for ourselves, to cut the food miles and create more better paid jobs at home.The latest trade figures show a welcome cut in our trade deficit with the EU thanks to a fall in imports to the UK. We are buying home produced or cheaper and better from the rest of the world.

We live in an age of governments wishing to pursue national resilience. The USA has awoken to the way China has used free access to western markets whilst continuing to protect and control its own to gain a stronghold over crucial technologies, essential raw materials and important manufactures. The USA has embarked on a crash course of regaining the initiative in technology, onshoring more production and securing its position in a range of things from rare earths to semiconductors and from batteries to 5G communications. The UK too can now do something similar. Our industrial and agricultural  base in many crucial areas like steel, electricity production, shipbuilding and temperate foodstuffs was hollowed out by EU competition. In control of our own state aids, public procurement and competition policies we can now set about rebuilding.

If the U.K. thought it should send both the Prime Minister and the Speaker to represent it at the G7 the other states would object that  the U.K. was over represented. If the mighty USA sent both the President and the Majority  leader of the Senate that too would have seemed silly or unfair. Yet if you look  at the photos of the meeting of the G7 you see nine people present. Sure enough the EU had sent not one but two Presidents, the President of the Council and the President of  the Commission.

This absurdity famously spilled over into a row between these same two Presidents in recent negotiations between the EU and Turkey. The President of the Council who I think is technically the senior bagged the one large official chair for the EU rep, only for there to be very public complaints from the President of the Commission. The EU needs to get its act together and decide in each meeting or negotiation which of its 5 Presidents leads the delegation and sits in the one chair they should be awarded like the countries present.

There is at the G7 a more serious and worrying issue. The EU has five of the nine seats, sending three member state Heads and two Presidents. On an issue like vaccines which is a crucial issue at this summit the EU has run the policy for its member states, so on that issue just one EU rep should engage with four independent countries. If these intimate gatherings of a few leaders of powerful countries are to be valuable they should not be slowed down by the EU giving five versions of what they will do on vaccines.

On  issues where member states have some powers but have to work under the legal and policy framework of the EU as in green matters and economic policy it would be helpful if they settled in advance who was in the lead and who could speak for them. There will inevitably be much groupthink and common policy between all 5 so it does not need all 5 present and talking to represent that one viewpoint. Decisions of the  G7are usually by consensus, not vote, but having a majority of the voices could distort the debate and give the EU view an unjustified numerical advantage over the US or U.K. view.

Yesterday I launched a pamphlet through Politeia on the ever topical green revolution. In it I asked one central question that governments seem reluctant to ask. When will government and the private sector produce the products and services that they regard as green which fly off the shelves and figure on people’s wish lists?

Today practically all of us accept carbon dioxide is a greenhouse gas which will heat the planet if more is produced and  nothing else changes. We also accept that advanced country  governments intend to take people on their railway track to net zero as soon as they can. The track will be signalled and  the trains powered by subsidy, carbon taxes, rules and laws.

Whilst most people tell pollsters they do think the world is warming and something should be done about it, most people do not plan to do anything very much about their own lifestyles anytime soon despite government urging. Most people have no plans to rip out the gas boiler and put in an expensive heat pump. Few want to pay up to get a new electric car, or have done the sums and cannot afford one. Many people still want to fly abroad for a holiday as soon as covid rules allow. Most family diets continue to include dairy  and meat products despite the carbon footprint they create.

Three other panellists had their say. They all spoke only about government policy and large companies. None of them would engage with my simple and crucial question about consumer behaviour. One of them told me the policy answer is a much higher carbon price, presumably to price the lower paid out of  carbon based goods and services. One proposed a big subsidy for electric cars to get more people to buy them. They all seemed to think the prime duty for the revolution rests with governments, and governments just need to keep sharpening the regulatory controls and fiddling with the taxes and subsidies until carbon based activity is taxed out of the system.

They did not wish to pursue the issue of why Germany, a keen green advocate, plans to continue with coal based electricity generation well into the next decade. They did not comment on the way large quoted companies, told to get out of coal, simply sell their coal assets onto someone less exposed to criticism.  They  seemed to think banning all new diesel and petrol cars as early as 2030 would work fine.  So I ask again, where are the iconic must have products of the Green revolution? Where is the  new domestic heating system, the new diet, the new personal transport that has the pulling power of the smartphone, the ipad and the Amazon Prime and Netflix  subscription? For this revolution to take off governments need to engage with the public, not just talk to the elites.

I have no problem with the postgraduate students at Magdalen College Oxford choosing what pictures to place on their wall. Rotating your pictures or finding one you like better is an enjoyable luxury to have.

The problem came with the way the MCR decided to make or allow this to become a political issue and a matter of national debate. Their explanation of why a picture of the Queen was not suitable gained the approval of some and the condemnation of others. A student common room  which needs to allow all its members of whatever view or background to feel valued and respected ended up dividing opinion by being too free with its explanations. Had they said if anyone had bothered to ask they just wanted a change or a different decorative effect there would have been no story. Now monarchists there may feel on edge.

I raise this to frame a wider debate. It is most important our universities themselves are strictly independent of political opinion or intellectual bias. There should not be a collective student view formed by a majority on the role of the Queen and what she symbolises. There should  be no College or university view of which democratic parties are worthy of support.  There can and should be many different student views of politics, with individuals and issue based societies seeking to make converts and expressing their views as they see fit within the law. The university, the College, or the debating society needs to offer platforms for the main strands of thought and democratic politics so young people can hear for themselves and dispute with believers. The danger is universities become too narrow in a collective view, and no platform people who represent legitimate and often popular positions.

Today there is a feeling amongst populists who favour national democracies and more individual freedoms that universities are hostile to them and unwilling to hear their case. As someone who is not a voter for AFD, Lega, the US  Republicans or National Rally, who does not support all their views  and who keeps out of expressing individual views on foreign elections, I  nonetheless am uneasy if UK universities think representatives of these parties and  viewpoints should be excluded from the global debate. A majority of students may well have disliked President Trump and disapproved of some of his views, but they should be willing to hear the case of  the supporters of someone who commanded millions of votes in the world’s most powerful democracy. Currently in the EU some anti EU parties are front runners in opinion polls. University people  need to understand why and to hear the arguments, even if they do stay resolutely in favour of the EU project.

Democracy thrives on lively exchanges of varied viewpoints and on free votes to determine who has made the most successful popular appeal. In an age of scepticism about a ruling elite of rich business people, powerful officials and a gilded group of establishment politicians Universities need to understand both their aims and why so many people disagree with their consensus.

       With Brexit behind us and Covid calmed by a comprehensive vaccination programme  which most people welcomed, the U.K. economy is set to grow quickly from here. The U.K. is forecast by international bodies to grow faster this year than the EU. Sterling has risen against the dollar, the Euro and the yen following our exit from the EU.

        The U.K. authorities have provided a much smaller monetary and fiscal stimulus than the USA relative to the size of the economy. Money growth has been running at half the US level. The Treasury in the U.K. is planning big cuts in the deficit in future years whilst the US President is planning two more $2trillion packages of extra  spending. The Congress may water that down, as some are becoming alarmed by the scale and duration of the planned debt build up and by the inflationary forces unleashed by  the twin stimuli.

In the U.K. the Bank of England needs to avoid premature tightening before recovery is well set. The Treasury needs to speed up ending the special expenditures on companies to cushion the blows of anti pandemic policy, whilst getting us back to work promptly from June 21. Furlough needs to end. Many of the jobs will be there again. Where jobs are lost there will be plenty of new job opportunities as the whole economy opens up and employers seek people to get things done and the orders dispatched.

There are already too many shortages needing more recruitment and more investment. We are short of cement and semiconductors, of HGV drivers and of chefs, of electricity capacity and of home grown fruit and vegetables. I have been asking Ministers to work with business to tackle these shortages urgently, to cut inflationary pressures and create more better paid jobs.

There are plenty of opportunities for business creation and expansion as the U.K. embarks on its most rapid and substantial recovery ever recorded. Government needs to make sure the public sector responds by cutting tax rates, granting necessary permissions, negotiating good trade deals and spending its budgets wisely using U.K. suppliers wherever possible.

The G7 Finance Ministers and Central Bankers claimed a breakthrough in moving to a world based system of company taxation. President Biden wanted to set a minimum tax rate of 21% worldwide, and find a way of preventing some global companies booking too much income to low tax countries. He settled for a a 15% proposed minimum rate, and a complex outline over the allocation of profit. The Communique offers “market countries awarded taxing rights on at least 20% of profit exceeding a 10% margin for the largest and most profitable enterprises”.

These so called twin pillars of policy were important to get all the G7 on board. The USA seeks the abolition of the recently imposed digital turnover taxes in the UK, France and elsewhere as a trade off for the promise of some transfer of profit to tax in countries where the digital giants trade substantially. Either way the USA will be one of the major beneficiaries. Many of the large global digital giants are US corporations who have in the past kept substantial business offshore in lower taxed jurisdictions. President Trump offered favourable terms to get some of the cash repatriated. The final agreement was a much watered down version of the original US proposal.

It needed to be watered down as countries understandably value independence in seeking to tax companies. There is no world government with democratic accountability or authority that can set a world tax rate for business and distribute the revenues between countries to a formula. The EU has been trying to get there by small steps, but has found it is much easier to invent a new specialist environmental EU tax that applies to all than to reform a tax like corporation tax so that it becomes a uniform levy. The EU has decided to allow Ireland to be a tax haven with a 12.5% corporation tax rate, even though many EU member states are unhappy about that status.

I think tax competition has a lot to recommend it so there is some countervailing force to the remorseless pressure to tax more based on the theory that higher rates produces more revenue. In the case of business taxes a lower rate often raises the amount of money collected, acting as an incentive to invest, raising the prospective returns and leaving more cash in the business to pay for it. Lower rates can produce more income for shareholders and governments.

This proposal looks difficult to enforce. The 15% minimum is not too damaging, and is still below the UK rate so it does not currently constrain us. There will need to be some good drafting to decide how turnover and profit allocation will work within a multinational profitable company. So far the general language allows various interpretations.

Assuming the G7 leaders endorse this recommendation, it then needs to be worked up further and sold to the G20. China and Russia may have other ideas. If they can be accommodated then it needs the support of the whole OECD. The proposal is vulnerable to some countries seeing an opportunity to set a low corporation tax rate or to accept the minimum rate but offer lots of offsets and concessions to try to remain or gain status as a good tax location for substantial booking of business.

The UK has welcomed a large number of migrants in recent years. When considering our overseas aid budget, people should also put into the balance the large numbers of people from dangerous and low income countries we help by supporting them on arrival and then granting them rights to stay and to work. I have always thought the costs of housing and setting up the facilities for migrants should be properly attributed to the overseas aid budget. The international definition of official development assistance allows a country to include some money spent in the donor country helping people from a recipient country.
The EU once estimated that a migrant into the EU received the equivalent of 250,000 Euros in capital as they received a home, access to health care, education, transport and all the other public services provided free at the point of use for them or subsidised. There is no reason to suppose the UK current offer is below this indicative figure. Many migrants are housed in London and other locations where housing is dear. Whilst establishing their right to remain and to work the migrant receives board as well as lodging from the state. Once in work they receive top up benefits if their employment is at least in the first instance lower paid.
Given the number of people coming to the UK as refugees or migrants to live and work, there is a direct cash cost on the state to provide many more social homes, and additional school places and healthcare capacity.

I am glad the UK spends money on ships and equipment that go to assist countries facing flood and tempest. I am in admiration of our medics and armed forces when they sometimes go to help treat and contain dangerous infectious diseases abroad. I am pleased the UK as one of the leading and richest countries of the world helps alleviate and tackle poverty in the developing nations.

The UK should set out what it can do and what it is good at, and should be generous where need arises and where we have the means to help. I want to see reform of our budgets and our activities in these areas so we achieve more with better value for taxpayers.

I went along with the Conservative leaderships’ support for hitting the 0.7% target of GDP, though I have misgivings about such targets. I do not think we should commit to spend a certain proportion of a fluctuating and usually growing number. We should decide on spending on a case by case basis and against our general budget background. We do not pledge to spend a fixed proportion of GDP on health or education or policing, but look at those budgets in the light of needs and costs.

Labour will doubtless oppose such a change. They averaged under 0.4% of GDP on overseas aid in their period in government 1997-2010, despite pretending to support the international commitment to spend around twice as much as they usually managed. Others will join them in opposition. I would suggest it would be best to lobby the EU and its members, who consistently spend well below our spend levels and well below the international target, and will still do so next year. What matters more to me is what each country achieves and how ready it is to go the help of those in immediate need, where the UK rightly excels.

Last year the UK again spent 0.7% or £15bn on overseas aid. £10bn of this was spent on projects and activities we chose along with the recipient country in so called bilateral aid. The balance of £5bn was spent by our giving the money to the EU and other multinational bodies to spend as they saw fit in so called multilateral aid. As we leave the EU it is a good time to bring our overseas aid spending back in house and decide on how we can best help those in need. We should also look at the full support we give, which goes wider than the items allowed under international conventions to be called Overseas Aid. Some of our Defence expenditure is aid, being used to help bring peace to strife torn countries and providing assets to tackle disasters.

I want us to identify the areas where we have most expertise and can do most to help. Maybe the UK should specialise in a few large areas like the provision of clean water to each home, the provision of primary education to all girls as well as boys in poor countries and the roll out of programmes to tackle infectious diseases.

We should follow certain guidelines. The money should for preference be spent in the country we are trying to help, using as much local labour and skills as possible. Where we need advanced country inputs these should usually come from people and companies based in the UK. We should work on the principle that it is better to teach a hungry person to fish and farm for themselves rather than sending them food parcels. The aim is to get countries out of poverty, not into dependence. More trade is often of more help than more aid.

It will be great to see us achieve more by concentrating our efforts in areas where we have most to offer, harnessing public and private sectors together, and taking control with more programmes we run for the benefit of the poorer countries.