Author: johnredwood

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.

A few write in here to express anger that older people are on average wealthier than young people.They demand higher taxes on the old so the state can spend their money instead. More write in to complain that the elderly are overtaxed, penalised for their prudence in saving when younger, or robbed for daring to be successful in business or as investors.

It is normal for older people to own more wealth than younger people. Most people go on a financial journey. As children we have no wealth and survive through our parents spending their money on our food and shelter. As young adults we start accumulating the tools and furnishings for a grown up life, and can start saving to buy a home of our own . Many save for retirement. In later years many benefit from earlier sacrifices, seeing their home rise in value, the mortgage paid off and the pension and other savings reach the point where a comfortable retirement is an option. Not all do this. Some are unable to and some choose not to, preferring to spend everything they earn as they earn it. The state helps those more who reach old age without owning a home and having private savings for whatever reason.It rightly helps those most who are disabled or ill, where incapacity has impeded or prevented paid work.

Most of us find ageism unacceptable. We live in a multi generational world of families, where many of the better off members of a family help the family members who are struggling. People in their fifties and sixties who may often have the most wealth and income in a family are usually helping both their parents and their children at the same time.The Bank of Mum and Dad is a great source of grants and loans for property deposits, education and training costs and those one off larger items young householders need but cannot afford. It may also be paying for one offs to improve the life of elderly Parents, or helping with care costs, or providing free board and lodging or a holiday for an elderly relative.

No-one can take their money with them when they die. None of us know how long we will live, so some overdo the acquisition of wealth and income and die before they have enjoyed it or spent enough if it. Others spend too much too soon and end up poor in very old age.All the money is given to others on death or is taken by the state to spend on others. Many people think it wrong of the state to take large sums on death. Others think that is the best time for the state to take it, disliking the way some get a large windfall from a dead relative when others belong to families with no money to inherit.Some rich people think their children are rich enough or do not like their children, so they give their money on death to good causes or to others who were good to them in life.

A lot of older people also give generously of their time to younger and older family members. Many grandparents give up paid work in order to offer free child care to their grandchildren, and many older people care for a very elderly relative instead of them entering a care home. The army of volunteer carers work for love, not money, losing opportunities to take paid employment.

The majority of you who responded by email or blog post to my piece on the four millionaires thought none of them was rich. A few of you thought they were and thought I should concentrate on more representative people from amongst my constituents.They should study modern Britain more closely. Most of my constituents own their own house. Many of them own homes worth £250,000 to £1 million. Many also have savings, especially through company or individual pension funds. If they have provided for a pension of £10,0000 that’s another £200,000 of assets. Many look forward to larger pensions than that.

It is true I am talking here mainly about the older half of my electors. I write regularly about education, training, acquiring a first home and then a family home, and the need for more better paid jobs, all very relevant to the younger half. People in the age range 18 to their early 50s tend to be acquiring homes, paying off mortgages and accumulating pensions, whilst people from their 50s onwards often own their own home, have repaid their loans and have savings. Younger people are also of course interested in wealth taxes as they may be involved in the finances of their parents in older age.

Let us now look at the taxes that impact people with homes, savings and pension pots. Two things emerge. The first is tax has a big impact on how people hold their wealth. The second is many feel they have been cheated by the state over the years as successive governments have changed the rules and broken previous government promises.

We were encouraged to save as young workers for our retirement through tax privileged pension funds.Instead of using our savings to invest in a business or improve our homes or to boost our living standards as younger people we duly put the money away. Years later government decided to change the rules, saying if you had saved too much ( a level never mentioned before)or been good at investing those savings they were going to tax it after all. Large sums are now locked up in pension funds people do not wish to use because of the big tax hit if they do.

George Osborne promised to exempt £1m of assets from Inheritance tax for each family. This was a surprisingly popular pledge, given how few people will be in the position of receiving such a large inheritance. He then failed to deliver, keeping the sum at £650,000 for a married couple with complicated rules about family homes as a top up in some cases. Many people go to great lengths to avoid any possibility of IHT through the many legal ways it can be avoided.

Elderly people who bought themselves good family homes, or built or improved a home, now find they are hit by sky high Stamp duties if they want to trade down to something smaller or wish to move closer to their children.Younger people are also clobbered as they try to move up the property ladder. Stamp Duty encourages immobility, poor use of the housing stock and is a direct tax on aspiration and personal happiness.

Capital Gains tax also immobilises a lot of wealth. People with second homes and or share portfolios are reluctant to sell these assets where they are sitting on taxable gains. They keep homes they would rather switch to a different location, or would like to switch into different assets altogether. Many share owners tell their investment managers not to take profits above the tax free allowance each year.

Our tax system over the years has favoured investment in your own home and in a pension portfolio of large company shares and bonds, limiting entrepreneurship and more interesting ways of saving. Because so many people responded to these tax reducing ways of saving governments then cheated people by finding ways of taxing them after all. We need fewer and lower taxes on changing assets around to encourage better use of capital.There are too many homes held by people who do not need them or want something more suited to their latest needs, and too many shareholdings only held because they sit on big gains when the money could be used for something the person needs more, or to reinvest in a better prospect.