Author: johnredwood

I do not predict UK election results where I am taking part. The SNP and Lib Dems do, and are predicting a hung Parliament.  I see the polls as others do, and read that there could still be a hung Parliament where post election deals would decide how we are governed.  I hope that is not the outcome, given the disastrous last months of the last Parliament where no-one had a majority.

Meanwhile some parties are telling us how they would behave if the electorate voted for another stalemate.  Nicola Sturgeon has set out her terms to allow a Labour minority government to take office. She wants an early second referendum on Scottish independence, the removal of Trident submarines from Scotland and more money for the NHS.  Jeremy Corbyn probably agrees with the second and third, and Labour would doubtless finesse the issue of another referendum in order to get Labour into government.

Jo Swinson seems to have abandoned her rhetoric of expecting a Lib Dem majority. Whilst playing hard to get she has made it crystal clear she would not want to help a minority Conservative government, so it only leaves one option of Labour into office . It might well not be a coalition, but just allowing them to win confidence votes would be sufficient for Labour to take over.

The push for a second Independence referendum in Scotland would be disruptive. It would establish the idea that governments only accept referendum decisions they like and make people vote and vote again to get a reversal. It would invite further uncertainty over Brexit, with the parties concerned wanting a second referendum on that as well. It would plunge the country into another two years or more of constitutional wrangling and confusion, undermine  business confidence and get in the way of the new Parliament doing thigs to improve public services, grow the economy and pursue an strong and consistent  foreign and trade policy.

Now is the time for a clear decision. We need a majority government  to move on from Brexit and to remind the SNP they had their referendum and promised to accept its result.

The Conservative Manifesto, echoing Vote Leave, promises to take back control of our money and our laws. Some are writing in to claim we will have to live with tax harmonisation or a level playing field with the EU after we have left thanks to the wIthdrawal Agreement.

I do not see it like that. It is most important we are free to set our own taxes. Today in the EU we have got away with setting a lower Corporation Tax rate than many other states, though there have been adverse judgements on other Corporation tax matters making us do as the ECJ decides. We are free to set our own Income tax rates, but are subject to strict controls on VAT which is partly an EU tax.

The government has made clear it will change the list of items subject to VAT once out. We need to assert our own authority over all taxes. The Bill to implement the Withdrawal Agreement contains a sovereignty clause. Once the Implementation period is over EU tax and other laws will no longer apply unless we choose to enact similar measures.

I do not think we will still have to raise or keep up taxes that we want to lower or abolish once out. Debate on the bill will be an important opportunity to clarify this matter. The likely decision to press on and take VAT off some items will be important proof that we have indeed taken back control of our taxes.

The government has already carried out two of the essential policy changes for us to be better off. The first is to switch the aim of policy to the promotion of prosperity and growth. The second is to make selective increases in public sector employment with teachers, police and doctors, and to expand worthwhile public investment.

The third must be to cut taxes in a Brexit budget. In a fast moving global economy capital and talent moves to the places with the more attractive tax rates. The UK government has been correct to lower our Corporation Tax rates at a time when the USA, India and others are doing the same. It is also necessary to have competitive personal Income Tax and transaction tax rates. The planned cuts in National Insurance will boost personal incomes and provide a stimulus to consumption.

The UK needs to lower Stamp Duties and CGT on property transactions.  Lower rates will also bring in more revenue by encouraging more capital into the UK and fostering more transactions.

The UK needs to reduce the top rate of Income Tax to the 40% that prevailed during most of Labour’s time in office. That would help resolve the issue of doctors’ pay.

The government should implement its planned cuts to tariffs on imports from non EU sources. All components needed for Uk manufacture should be tariff free. All foodstuffs that we are unable to grow for ourselves should also be tariff free.

The UK should expand its freeport strategy and ally them to enterprise zones where it is easy to get permissions and support to base a new or expanding business.

I have always believed and argued that we can be better off economically once we leave the EU. As long as we have the right budget and follow pro growth policies on exit, the UK economy can speed up a bit from its current levels.

Whenever I argue this case the Remain establishment point to past official forecasts saying we will grow more slowly when we leave and ask who am I to gainsay such work. Let me remind you that I have disagreed with official forecasts on three main occasions in the past, and in each case have been right.

The first was the UK joining the European Exchange Rate Mechanism. The official forecasts said it would deliver lower inflation and steady growth. They dared call it a “golden scenario”! I said it would be destabilising, causing boom and bust.  So it proved, bringing about a nasty recession.

The second was the banking crash. I with many others including the Opposition parties in Parliament warned against the excessive debts built up in both the private and public sectors in the UK under Labour from 2005-7. I went on to warn against the actions of government and Central Bank to tighten conditions too drastically in 2008-9 which were bound to undermine the banks and cause a recession. The official forecasts denied there would be a recession until its onset and said the banks had to be taught a lesson. We ended up with a big recession.

The third was during the UK referendum when the government  issued official short term forecasts for the impact of a vote to leave. These said that in the two years after a Leave vote there would be a recession.unemployment would go up sharply and house prices would tumble. I said none of these things would happen. None of them did happen. Employment continued to grow, house prices showed small gains and the economy continued to grow.

Tomorrow I will examine why and how I think we can speed up our growth a bit once we leave the EU. We will have the policy flexibility to promote growth by monetary and fiscal action.

The Remain financial establishment  led by Mr Hammond 2017-19 followed policies which have led to a slowdown in UK growth. It is true there has been a global slowdown led by manufacturing, but that easily forecastable fact should have made them change their policy even more in the direction of promoting growth.

Instead the Bank of England has refused to consider cutting rates or creating more liquidity to  facilitate more jobs and activity, whilst practically every other major Central Bank in the world has eased policy in several ways.  China, France, the USA, India and others have also cut taxes to promote growth.

The UK was right to rein in the excessive public deficits reached at the end of the last decade. A period of retrenchment was unfortunately necessary to avoid loss of confidence and enable a recovery to begin. In the last two years  I  have been pressing for some fiscal and monetary relaxation to prevent the slowdown we are now predictably experiencing. The government led by the new Prime Minister is now taking action to ease the fiscal squeeze , which should help growth in a year’s time when the benefits of the next budget start to flow through.

Brexit allows us to change various policies to allow a faster expansion. Of course it is right to keep in place controls on the debts and deficits to avoid excessive debt build up and loss of confidence that can bring. It is also right to allow enough money to circulate to accommodate growth and to allow people to keep enough of the money they earn so their spending can  fuel some growth.

Brexit also allows us to set out policies that improve the amount of food we grow and process at home, and to rebuild our fishing industry landing more of the catch for home processing and consumption. It allows us to take tariffs down on much needed raw materials, foods and components form non EU sources. Meanwhile according to the Political declaration we will be negotiating a Free Trade deal with the  EU at the same as with other important economies around the world.

Thea Conservative Manifesto sets out £3.195 bn of tax cuts for 2020-21, with an increase in the National Insurance threshold giving a tax cut to 31 million employees at a cost to the revenue of £2.17 billion. Business rate cuts and an enhanced Employment  Allowance make up most of the rest.