Author: johnredwood

Sometimes important things are hidden in plain sight. The contentious requirements of getting the Uk budget deficit down below 3%, and getting state debt to fall as a percentage of GDP which have guided policy since the crash under Labour, Coalition and Conservative governments were made in Brussels. I supported the Labour and Coalition governments from 2009 saying annual borrowing was too high and needed curbing to avoid a crisis of confidence in the UK as a borrower, but have not agreed in recent years with the anti growth stance that the Maastricht state debt rules has encouraged in much Establishment thinking. These rules have been the background to low and no growth in several countries on the continent and to mass unemployment in much of the south and west of the Euro area. In the Euro area countries are threatened with fines if they do not comply.

Once a year the UK has a Parliamentary debate around a Treasury Statement on how we have got on in complying with the Masastricht rules. In the last three years the government has been able to report they are below the annual deficit ceiling, but have not until recently started the bigger task of getting state debt down to 60% of GDP. It is this latter rule which encouraged first Mr Osborne then Mr Hammond to resist tax cuts and spending increases that could have boosted the growth rate and improved our investment in transport or improved performance in education and training . Mr Osborne said he wanted to go further and faster than the outgoing Labour government in meeting the Maastricht requirements from 2010 onwards, inheriting big cuts in spending and tax rises from Labour who were also wedded to the policy. In practice he ended up by 2015 in achieving the extent of deficit reduction Labour were planning. He wisely alleviated the extreme cuts on capital spending Labour put into their forward budgets.

As we leave the EU it is time to rethink our economic guidelines. Of course we need to control annual deficits, but we should be less concerned about the debt as percentage of GDP at current levels, and less concerned about borrowing to invest where the public sector has genuinely worthwhile projects that can earn a decent return. As proof that our economic policy has been dominated by Maastricht, I reproduce below a few sentences from the ONS who have set out at length our dependence on the EU rules and our efforts to meet them.

ONS :
“•General government gross debt was £1,821.3 billion at the end of the financial year ending March 2019, equivalent to 85.2% of gross domestic product (GDP) and 25.2 percentage points above the reference value of 60% set out in the Protocol on the Excessive Deficit Procedure.

•General government gross debt first exceeded the 60% Maastricht reference value at the end of the financial year ending March 2010, when it was 69.6% of GDP.

•General government deficit (or net borrowing) was £25.5 billion in the financial year ending March 2019, equivalent to 1.2% of GDP and 1.8 percentage points below the reference value of 3.0% set out in the Protocol on the Excessive Deficit Procedure.

•This is the third consecutive financial year in which general government deficit has been below the 3.0% Maastricht reference value.  

The EU government debt and deficit statistical bulletin is published quarterly in January, April, July and October each year. This is to coincide with when the UK and other EU member states are required to report on their deficit (or net borrowing) and debt to the European Commission.

Article 126 of the Treaty on the Functioning of the EU obliges member states to avoid excessive budgetary deficits. The Protocol on the Excessive Deficit Procedure, annexed to the Maastricht Treaty, defines two criteria and reference values with which member states’ governments should comply. “

We are promised a Statement on Wednesday, and now know some of its contents from pledges made by the Prime Minister and Chancellor. We know that they will ensure every secondary school receives a minimum of £5000 per pupil per year of grant, and every primary school £4000. I have been pressing for this for some time as Wokingham and West Berkshire schools are at the bottom end of the English spending league tables, and need more cash. This was apparent in an unflattering tv account of a Wokingham School this week. The government will increase money for all schools, but see that the lowest funded get a larger increase to take them up to the new higher minimum. This is only fair, as it does not cost less to employ a teacher or buy some books in Wokingham than in a large city.

We know that the government will pay for an extra 20,000 police to be recruited and employed, and will increase money for Further Education Colleges. It has also announced an additional £1.8bn for the NHS, targeted particularly on 20 different hospitals in need of extra investment and revenue.

I assume this will be a prelude to an early budget this autumn which needs also to cut taxes. The UK economy is slowing too much, in line with the slowdowns in the Euro area but more than in the USA. The US economy has enjoyed faster growth thanks to big tax cuts, a spending boost and an easier money policy. The UK needs the same treatment, at a time of Euro slowdown. Most forecasters expect the UK to grow a bit faster than Germany or Italy, but we need to do better than current forecasts and that requires policy stimulus.

Some worry about the present level of state debt, and wish to follow the EU policy of cutting state debt from its current stated gross level of 85% to the 60% Maastricht target. The actual level of UK state debt is currently 65% of GDP, if you eliminate from the calculation the £435bn of gilts owned by the Bank of England who in turn are owned by the taxpayers. The annual deficit is now well under 2%, which in turn is well below the rate of investment by the state sector. These figures allow scope for some fiscal relaxation. A suitable new rule might be that we keep the idea of a ceiling of 3% on the budget deficit from the current rules, and aim to be at zero or below when the economy is growing at more than 2.5% with more risk of inflation. When the growth rate falls below 1% the government should go closer to a 3% deficit ceiling, with the deficit being borrowing to finance capital investment. This would be compatible with a normal current budget surplus, and with no current deficit in low growth periods. We can of course spend more and cut taxes more once we have stopped making large payments to the EU, which I wish to see from November.

The Brexit vote was based around the proposition that we the people need to take back control from Brussels of our laws, our borders and our money. Brexit voters wish to recreate a strong UK Parliament, answerable to voters, with sovereign powers. The MPs keep their jobs for as long it pleases the voters, who decide at election and by election time if their Parliament is exercising their sovereignty in the way they wish.

The Remain MPs just do not understand this central idea of people’s sovereignty. They have done all in their power over many years to remove power after power from the UK Parliament and therefore from UK voters by transfers to the EU through a series of Treaties and through acceptance of all ECJ rulings, Directives and Regulations the EU makes. They misled the country over the extent of the power grab by Brussels, sought to deny Parliament proper debates and votes about much of the law and decisions coming from the EU, and where debate was forced over EU laws rightly had to tell us it did not make any difference what Parliament thought or said as laws, decisions and judgements made by the EU could not be amended or set aside by our Parliament.

Now they are seeking to thwart popular sovereignty by appealing to our law courts. They ironically claim they are seeking to buttress Parliamentary sovereignty by asking judges to set the Parliamentary timetable, and to interfere in the legislative process. This achieves the very opposite. A sovereign Parliament (sovereign because it is derived from the sovereignty of the voters) sets its own timetable, decides what it will debate and legislate or how else it will make and communicate its decisions. If a majority in Parliament disagree strongly with government direction of the timetable then they have many options to overturn the decision or the government.

The Gina Miller judgement created a costly delay in our departure from the EU – around £7bn of extra EU net budget contribution for starters. It required Parliament to legislate a decision it had already taken, the decision to send the Article 50 letter. Parliament did so by a very large majority, showing the demand for a longer legislative means of expressing the decision made no difference to the will of Parliament then that we should leave. Mrs May was wrong not simply to legislate straight away to cut down the loss of time and head off the legal challenge. The legal challenge weakened Parliament by placing the Courts above Parliament in an important matter of political judgement.

It is to be hoped that the courts this coming week understand it is not their role to tell Parliament when to meet or what to debate. It is for government to lead this. If the Parliament has lost confidence in the government’s judgement in these matters then it is for a new Parliamentary majority to emerge to vote the government down. We do not elect the judges. We cannot sack them at an election if they cease to please. The decision on how and when to leave the EU is one that only Parliament can take. It has to take it in the knowledge that it promised to take us out of the EU following the vote. If MPs do not keep their word on this they should expect voters to show their strong disapproval when next they judge the performance of the members of this Parliament in an election. Either Parliament gets us out soon, or the sovereign people will demand a different Parliament.

The most common way to prosperity is to get a well paid job. One of ways to get a well paid job is to start with a less well paid job, do it well and work your way up the organisation. Today’s shelf stacker in the supermarket may be tomorrow’s section Head in the shop, and the store manager in due course. Another way is to do well in education and training, emerging with qualifications and skills employers need. That way you can enter higher up the pay scales when you begin. Some lack success in education, but have energy and an impulse to serve others which develops successful small businesses.

Many companies now do a good job helping their workforce to achieve more and earn more. Companies often have training programmes for those who did not get on well at school and did not leave with good relevant skills. Many companies recognise that they do not just need to attract talent, but they also need to nurture and create talent. Employers have to serve the local community in many ways, including helping people to help them as better employees. A good company appreciates it has an employer brand as well as a customer brand, and will attract better or more willing people if it has a good reputation as an employer.

Families, teachers family friends and other adults known to the young person are important and they can help. Grown up children will often get their first job whilst still living with their parents. Parental or other adult support and guidance over how to accept the disciplines of the workplace and how to make your way in the office or factory can make a difference to a person’s prospects. Just as an employee has a right to expect a caring and supportive employer, so an employer would like an employee who is keen to learn , who wishes to do well for the business and understands the importance of customer relations and customer satisfaction to the ability of the company to pay good wages.

Now we have much fuller employment that task of encouraging jobs for those still in long term unemployment is more difficult. Some find entering the job market difficult owing to a lack of role models in their families and possibly owing to drink or drugs or some mental health problem. That is why local and national government has many programmes to tackle addictions and afflictions and spends large amounts of time and money on trying to assist the most difficult to help.

Getting the better paid job is just part of the route out of poverty. It also opens up the opportunity to own assets, allowing people to establish some store of wealth for the future as well as income for the present. People make very different uses of this opportunity.

Shock horror, we are going to have the same 3 week break for party conferences we have always had. Bigger shock horror, we are going to end the longest Parliamentary session since the civil war, and have a new Queen’s speech as we used to do every year. Worse shock horror, the Remain forces who have dominated the Parliamentary agenda for three years complaining about the result of the referendum will not have many more days to repeat this. Most of the country will breathe a sigh of relief if the endless rows about Brexit are over and we can get on with a decent agenda for the UK.

The irony of Remain is they now dare to say it undemocratic to implement the referendum decision, undemocratic to have a new session of Parliament with a new agenda for a new government, and undemocratic if the majority get their way. It is they who launch the attack on democracy, by denying the result of the referendum and seeking to stop the transfer of powers of self government back to Parliament, which was the whole point of the Brexit vote.

So what should we want from the new Queen’s Speech? Certainly an end to the endless and pointless wrangling about what type of Brexit we want. We will now get the one sort available to us, Brexit without a Withdrawal Agreement. We need from the Queen’s speech a clear statement of how the powers and money we are getting back from the EU will be used to boost our economy and lift our public services. The new government has made clear its wish to spend more on schools, the NHS and the police. It needs to show how this money will be spent, so the money buys more capacity and better quality in these important areas.

The new government needs to set out its plans for better infrastructure. We know it wants to send fibre broadband and 5G to every corner of the country. Does it want a version of HS2 or will it come up with cheaper and faster plans to enhance rail capacity and service? What actions will it take to improve our road network, starved of investment for two decades?

Will it embark on a bold programme of tax reform, to raise more money by lowering rates and encouraging enterprise and investment? Will it remove VAT from green products and home energy, once we are free to do so? Will it free the homes market by cutting Stamp Duties?

There is so much a good positive post Brexit government can do. I want the government to launch all this in a Queen’s speech, so the opposition can debate and vote on it and the government can set out just how much better off we can be once Brexit is behind us.

Some people bandy around the label Marxism too easily, without recognising what Marxism is. It might help the debate to remind people what Marx himself recommended by way of public policy in his much circulated Communist Party Manifesto. It contained ten wide ranging policy proposals, to recast the citizen’s relation with the state and to give the state a much mightier role in the economy and society.

Just one of the ten proposals has gained widespread support today and been adopted throughout the advanced world. That was the last proposal, that the state should offer free education to all children, and child’s labour in factories should be made illegal. This is now common ground for all UK political parties.

Three proposals related mainly to property. One demanded the confiscation of all property of emigrants and rebels. One required the abolition of all rights of inheritance. A third was the most wide ranging, seeking the abolition of all rights to property in land, with the state owning all land and charging rents. It was this system which helped lead to famines and agricultural disasters in communist countries trying something like it. In the USSR output of food was much stronger from the limited number of independent farm owners that survived, only to led to brutal attacks upon them for being successful.

Three policies proposed a massive extension of nationalised ownership. All banks would be converted into a single state monopoly bank. Communications and transport would be nationalised. There would also be substantial state take overs of industry and factories. This system led the USSR to fall behind the west technically and in terms of productivity. The Soviet economy was heavily skewed towards weapons production and heavy industry at the expense of consumer goods, owing to the low levels of per capita national income achieved.

There would be a heavy and progressive income tax. This was a good way to drive out talent and create a closed impoverished economy by advanced world standards.

There would be a requirement on everyone to work, with “industrial and agricultural armies” established to enforce the employment duty.

The state would combine agriculture with industry, “gradually abolishing the distinction between town and country by a more equable distribution of the populace around the country.”

I spent my early years in politics exposing why nine of these ten proposals caused misery, low incomes and a lack of freedom. I recommended the alternative, the Popular capitalist manifesto, based around the promotion of ownership for all and greater personal freedoms. How much of a threat are Marxist ideas again today? What can we learn from Venezuela? Why do advocates of Marxism as a political programme always claim states that followed their ideas were not true Marxist states, because they usually create poverty and tyranny combined.