Author: johnredwood

I do not think a company should be able to make employees declare they are self employed whilst they work more or less full time for a single employer. Such a device is just a way of avoiding some National Insurance, and cutting out sickness and holiday pay, pensions and other employee benefits. Nor do I like zero hours contracts which require someone to be always available when the employer chooses but not to have flexibility about when they choose to work. I do not like cheap skate employers nor employers who are only flexible for themselves when it comes to hours.

It is important, however, to recognise that there are plenty of flexible employment relationships that work well for both employer and employee.It is important as governments seek to regulate to prevent poor treatment of genuine employees they do not stifle innovation and flexibility in employment models that are  fine for both sides. I have recent cases and recent encounters with people working in flexible ways that reminds me some of these models are good in many ways. I have several complaints about the Inland Revenue trying to make people into employees when they are sure they are independent contractors.

Let’s take a couple of examples. A taxi driver told me he had recently qualified  in  digital technology whilst driving limited hours to pay his bills whilst studying. He wants to continue driving when it suits him, as he is now setting up his own tech business. He wants to be free to meet potential clients when they wish, and to develop the business when he needs to, whilst relying on the driving for a bit longer to pay the domestic bills. He is happy to be a self employed contractor, even if he often gets his taxi passengers from the same source. He does not want to be an employee for fear that then he would have to work when the employer told him to which could conflict with  his new business needs.  

A delivery rider for a pizza firm or food delivery business also wants to be self employed. He may usually get jobs from the same source, but wants to be free to ride for someone else if they have more to offer when he is available or if the rates change. He is paid by the deliveries effected, and does not have to turn up on days or at times when he has something better to do. This is another way people can  study, set up a business, undertake training or develop some new interest whilst being able to pay the bills. No-one makes them do this, and they have the choice to become  full time employees of a firm in a similar line of business.

Many of these models are success stories. Those running them have to negotiate with the Revenue over how far they can go in supporting and backing the drivers or riders before they are said to be their employer. The individuals concerned have to  be careful to take work from more than one, or to keep flexing the hours to show they are not in effect employees. What do you think the rules should say? How can we keep the flexibility this type of work allows, without  it becoming exploitative of relatively low paid people? Where it is a voluntary choice and other options are available,  why should the government try and stop it?

My forecasts show that if the UK has a budget soon which confirms the spending increases announced for next year and offers around £12bn of tax cuts, the economy should grow faster next year than this, assuming we leave on 31 October 2019 without signing the Withdrawal Agreement.  As readers have seen, I allowed for some loss of export volume on agricultural exports affected by EU  tariffs, some favourable import substitution on agricultural imports from the EU affected by our tariffs, maintained farm incomes from UK assistance to farms replacing EU, a boost from tax cuts and spending increases to domestic demand and  savings of £12bn on public spending and the  balance of payments  from no more net EU contributions. Overall we could see up to an additional  1% gain of GDP  on the growth rate depending on how far the fiscal reflation goes and depending on whether monetary policy would also be made supportive . Money policy is currently too tight and out of step with relaxations elsewhere in the Euro area, US, China and Japan.

The Treasury and OBR  may want to paint a different picture. I read that they wish to suddenly introduce a £12bn non cash charge as an item of public spending to allow for student loans that may not be repaid. The Student loans scheme was first introduced in 1999 for tuition fees, was beefed up in 2004 when Labour trebled the tuition charge, and increased substantially again when the Coalition after 2010 put through a further trebling  in tuition fees. All the time we have been in the EU seeking to get debt and deficit down in accordance with EU Maastricht criteria the Treasury has not thought it necessary to make early provision for possible loan losses. All of a sudden to coincide with the PM’s stated exit date from the EU they decide they need to introduce an extra spending line item at exactly £12bn, roughly the amount of our net budget contributions to the EU.  If was as if they wanted to say to Leave voters who want to spend that money on our priorities, we will make it vanish away even though  nothing real changes for the student loan scheme the day we leave the EU.

Worse still, the OBR may want to issue economy forecasts that are  pessimistic about growth if we just leave without the Withdrawal Agreement. This would be in line with wildly inaccurate short term Treasury forecasts made during the referendum saying the UK would enter recession in the first few months after voting to leave. Such forecasts would presumably suggest a bigger deficit, claiming that revenue will be down owing to less activity, and benefit spending up owing to more unemployment. Even under  revised deficit control rules it would probably be used as an excuse to argue against the economic boost the economy clearly needs with or without Brexit.

The government needs to argue back. It needs to say that the OBR as an independent forecaster can of course forecast as it wishes, but the government does  not have to rely on a forecast as unreliable as the Treasury 2016 pre referendum forecasts and can point to how wrong they have been in the past. The government should also make the good point that were any OBR pessimistic forecast to be in the right direction it would strengthen the case even more for a stimulus to offset the feared downturn.

The current deficit is under good control. The state can afford to spend the savings on EU contributions and a bit  more. Some of the tax cuts will actually raise more revenue, as some taxes are above the revenue maximising rate.   

We share our lease on the planet with the rest of mankind during our lives. We should all want to pass it on in better environmental shape when we die. Each one of us can play our part and help use the planet’s natural gifts in a sustainable and good neighbourly way.

Some constituents want to know what I am doing , so let me remind my readers.

I support planting many more trees. I have planted new trees in my constituency in public areas . I support the government’s initiative to have more national forest, and local Council initiatives to have more trees and shrubs  as a counter weight to more development.

I support local planning policies that protect more of our countryside, and wish to see slower rates of development in the next Plan.

I have cut food miles when buying from local shops. I now buy all my temperate foods from local or British sources to cut down lorry, ferry and airfreight transport.

When in London I now walk or use the tube for practically all journeys.

I usually take my holidays in the UK  to avoid jet travel.

I avoid all single use plastic bags.

I use the Wokingham Council recycling facilities. I encourage better control of waste to prevent litter.

I have improved the thermal insulation, heating and heating controls at my home to cut energy use and improve thermal efficiency.

The government states its wish to be the greenest government ever. It should want to do more to extend out forests and areas of natural  beauty, to protect our coast and fishing grounds, to control waste and to promote clean water and air. It should also do more to save energy, improve thermal efficiency and raise environmental   standards  throughout the public sector.

Let us now turn to wealth held by a few younger people. Let’s consider the limited number of cases of someone who comes into a substantial sum by inheritance, or gift from a rich relative, or from a lottery win or some such. I am not going to consider in this article the profits of successful entrepreneurship by the young person.

Let’s say they receive £500,000. Let’s suppose they have no professional qualifications but did get a first degree in humanities or were educated to A level and now have an office job. Should they

Buy a good quality home with all the money?

Buy a home with part of the money and do something else with the rest?

Should they invest some or all of the cash in developing their own business?

Should they invest the money in shares and build a portfolio? Should they put some of the money into a pension fund?

Should they spend some of the money on training/education?

Tax may play a role in the decision. Putting as much money as possible into an ISA for share investing would provide freedom from income tax and CGT on the investment. Putting money into a pension fund also offers full tax shelter, but it locks the money up for years and a future government might change the rules against you before you can reclaim the cash. Investing in your own business can get you entrepreneurs relief from CGT. Buying a home exposes you to Stamp Duty but frees you from CGT.

The way to increase the young person’s financial position the most would probably be to invest in a successful business for themselves. Given the risks what do you think would be the best course of action? How big a distortion is tax? What kind of a society do we want to be – more lawyers, more landlords or more entrepreneurs? Part of the purpose of these articles is as background to the budget, which presents a good opportunity to change the UK tax system in ways which reward effort, enterprise and saving, and drive faster growth as a result.

Our constitutional settlement combines the executive with the legislature. Government Ministers have to be Members of Parliament or peers in the Lords. The government executive puts proposals for laws, budgets and treaties to Parliament, and needs to secure a majority for each measure.

The role of Her Majesty’s Opposition in Parliament is to expose government proposals to criticism, seeking to amend and improve them or seeking to vote them down if they are thought to be unacceptable. A wise Opposition also puts forward a constructive alternative, to appear as a government in waiting, a group of politicians capable of governing after an election.

Oppositions usually accept the government’s right to govern, and its right  to secure its major Manifesto proposals approved by the electorate in the last election. Her Majesty’s loyal Opposition does not usually do deals with opponents of our nation, does not undermine the government in an international organisation and does not bad mouth the UK when representing us abroad.

It is particularly important that governments have the power to negotiate treaties and international agreements. It is not something Parliament can do. There are too many different views. Foreign countries would be reluctant to accept an envoy from Parliament other than the government, concerned about the extent to which they could claim to speak for the UK.

It is always the case that Parliament has the ultimate power to vote down a Treaty or international agreement it dislikes. This does not usually arise because the government  normally has a majority it can rely on, or has taken sufficient  soundings to know it speaks for a majority.

It is particularly important when negotiating with the EU that Parliament does not undermine the government’s negotiation. Ruling out leaving without signing the Withdrawal Agreement does undermine the government position, and is particularly bizarre given Parliament’s justified dislike of the Withdrawal Agreement as drafted.

When opposition forces in Parliament say they do not trust the government to conduct the negotiation they do our country harm. Parliament has the power to remove the government if it really does lack confidence in it to negotiate well. It is a clear case of put up or shut up – either sack the government or allow it to conduct the negotiation as it wishes, with Parliament judging the results.

Mr Verhofstadt  (EU Liberal) warns us that the world is coalescing into empires. He thinks the UK has to join the EU empire as a counter to the Russian, Indian,  Chinese and US empires .

This is not a very liberal outlook. He does not specify why the USA or India is any kind of threat to us, nor why the EU will always get on fine with Russia or China. It leaves out of account the many smaller countries worldwide that do not belong to any of these blocs or major countries and seem to prosper. Australia, New Zealand, Canada, Singapore and many others seem to flourish outside the EU.

I also take issue with him over what is an empire. If empire is based on size and power, let us begin by comparing the UK with Russia. The UK’s economic size is about a third larger than Russia’s. If we look at naval power both countries have one aircraft carrier. Russia has 12 destroyers to the UK’s 6, but only 10 frigates to the UK’s 13. It is true Russia has many more submarines. The UK of course has her potential power greatly augmented by membership of NATO.

An empire is usually  supposed to be a common government system with a single foreign policy and armed forces. It controls a wide range of different territories and former countries or governing units with varying degrees of devolved or delegated authority.  There was the Roman empire covering much of southern and western Europe, the British empire with India at its heart, and the USSR empire stretching through much of eastern Europe and parts of Asia. The UK willingly renounced empire after the second world war, allowing the peaceful establishment of a number of independent nations. The USSR empire was troubled by internal revolts and too passed when the centre allowed free expression. The USA has always opposed the idea of conquest followed by occupation, though it has intervened militarily in support of regime change in various countries. India was created as a separate governing  area from Pakistan, Bangladesh and Sri Lanka on independence.

I find it worrying that a leading exponent of more European integration uses the word “Empire” to explain what they are trying to do. Most of us want no more empires. We believe in the free determination of peoples. Recent votes and campaigns tells us that if people want anything they want smaller governing units, as with the independence movement in Catalonia, the Brexit vote in the UK, the movements for separation in many parts of the world.

In the 1980s the West rejoiced at helping pull down the Berlin Wall. That wall which divided a German city was constructed by the USSR to keep people in. Knowing how far their living standards and freedoms had fallen below the West, the USSR denied most of their people any access to western media or to the West itself. People were shot if they tried to cross into another part of their city.

It was the visible evidence of the lengths communists went to to detain their citizens that turned me against communism in my youth. My first political and economic writings were about the failures of the communist system, and the cruelties communist states imposed on people.

In recent years countries on both sides of the Atlantic have put up walls and fences to keep people out. Mr Trump’s wall added to Mr Clinton’s. The Anglo French fence in Calais is a small example of border fences that are common along the miles of EU border, especially to the south and east. The aim is to deter illegal migrants, drawn by the relative prosperity, the freedoms, jobs and benefits of living in an advanced western society.

There are signs of a cyber curtain coming down across the world. As the USA challenges China over alleged theft of Intellectual property, and seeks reassurances that its own systems will be safe from cyber attack, the world moves towards two systems and two alliance patterns. Countries are having to answer the US question, are you with us or against us? It will prove increasingly difficult to mix Chinese and US components and services within technology products and services.

The Remain case for staying in the EU is always based on the unproven economic advantages. These are said to be important and are often argued around alleged problems which would hit us if we dared to leave. One of the ironies is those who claim to hold the highest regard for the EU usually suggest the EU will behave particularly badly if we just leave, ignoring the EU Treaties which require friendly pro trade relations with neighbours.

When we first entered the EEC the sudden shock of removing all tariff protection for our industry helped weaken key sectors badly. In the first ten years of our membership car output halved. The steel industry suffered bad declines, leading to closures of large modern plants. Textiles also suffered closures and bad job losses. There was no offsetting liberalisation of services where the UK was a strong competitor.

In the second decade of our membership the UK accepted the need to enter the European Exchange Rate Mechanism. This policy had the predictable effect of ending in a major recession for the UK, with huge losses on enforced foreign exchange trading. This accelerated damaging decline in UK industry.

In the fourth decade of our membership the UK suffered from the western banking crisis, making similar policy errors to the ECB and Fed. On the EU side of the Atlantic recovery was much slower thanks to the Maastricht debt and deficit guidelines which the UK included in policy as well as the Eurozone and to other features of shared economic and business policy. Our greater involvement with the poorly performing Eurozone also slowed our recovery.

The UK has run a large trade deficit with the EU for most of our time in it. Meanwhile we have a good surplus with the rest of the world, in spite of EU tariffs and by trading with no free trade agreements with the main countries.