Author: johnredwood

TRADE

Outside the EU the UK will have more scope to sell to the rest of the world, will be able to draw up its own free trade agreements with other countries, and will see its balance of payments deficit cut by the ending of EU contribution n payments.

The £10 billion the UK contributes to the EU every year which it does not get back is on fifth of the forecast balance of payments deficit for next year.Stopping those payments would be a great boost to our overseas account.

The UK needs free trade agreements with China, India and the USA, but has been prevented from having them through EU membership.

The UK will be able out of the EU to influence standards and rules governing goods and service sector trade, by regaining seats on international bodies the EU took from us.

The decision to leave will send a clear signal that the UK is dedicated to the wide world, not just relying on its adjacent continent.

We will be able to rebuild stronger trade and investment links with the Commonwealth and the English speaking world.

OUR OPPONENTS WILL CLAIM TRADE WILL BE DAMAGED AND THE UK WILL BE LIKE NORWAY

Our trade is not at risk. The German government has made clear they do not want to impose new tariffs or other barriers to trade if the UK leaves. After all, they sell us twice as much as we sell them, so new restraints would be damaging to Germany.

Our leading car makers Nissan, Toyota and Jaguar Land Rover have all said they will invest in new models and remain committed to the UK whether we are in or out.

The UK will not do a deal like Norway. When you run as large a deficit as we do with the rest of the EU there is no need to pay anything into the EU to keep the trade going.

Nor will the UK be on the wrong end of fax rules and regulations. The UK will return to making our own rules and regulations, and to having more influence on world standards.

£10 billion is a lot of money each year. That’s the sum we send to the EU and do not get back. That’s around £300 a household every year going to subsidise relatively rich countries on the continent.

One of the main questions in the referendum is how should we spend this Brexit bonus?

The cautious will say let’s reduce the deficit by not spending it.

The adventurous who want more growth will say let’s all have a Brexit tax cut, so we individually get to spend it because we pay less Income tax .

Those worried about the costs of health, schools and social services will say let’s boost our caring and educational services with some more spending.

The important thing is to open this debate. It’s good for morale to be discussing a better financial picture than the current one. It will remind all in the debate of a very positive large gain from exit.

We also need to ask the Stay in campaign what they think is going to happen to our contributions if they win.

Recent years has shown remorseless pressure and changes of the rules and methods of calculation to get more money out of us. How much more are they going to demand?

How does the UK stay out of meeting some of the costs of economic failure in parts of the Eurozone? Wont we be expected to contribute to economic regeneration and recovery plans for the countries plunged into long term austerity by the Euro?

We can of course spend the £10 billion and still give exactly the same amounts to farmers, universities etc the the EU currently gives them as well.

OUR OPPONENTS WILL CLAIM WE WILL HAVE TO PAY SOMETHING OUTSIDE THE CLUB

We need to remind them that most of the world trades quite successfully with the EU without paying a penny or a cent into EU funds.

There is no need for the UK to pay anything for the privilege of importing so much from Germany.

Starting this morning I am going to write a series of summaries of why we should leave the EU, taking a topic at a time.

The UK today can decide how many people to allow in to work and live from outside the EU, if they come directly.
The UK cannot control how many people come to live and work here from EU countries, and cannot control all those coming from outside the EU who come via another EU country.

Most people in the UK want controlled immigration.

Outside the EU the UK could have a fair system, placing identical limitations on people coming from the EU as from the rest of the world.
The UK seeks to limit non EU immigration. We favour students, people with skills our economy needs, people with money and ideas to invest, and people with sufficient money to pay their own way.
These limitations are designed to keep the extra costs of public service under control, and to allow in a manageable number of people.

In recent years the UK has experienced very high levels of inward migration. This has required providing many more homes, school places, NHS capacity, transport capacity and other public facilities. It has helped fuel high rises in property prices in the most popular areas of the country. It has provided a plentiful supply of labour, with an impact on wages and on people already settled here getting out of unemployment. For these reasons the current government was elected on a pledge to cut net migration to tens of thousands.

To keep its promise the government will need full control over policy. It will need to impose new restrictions on EU migration which are not legal under the current Treaties. Nothing in the renegotiation will make it legal to do what is necessary.

OUR OPPONENTS WILL CLAIM THAT THE REFORMS OFFERED SOLVE THE PROBLEM

Gaining more control over welfare benefits to limit these to new arrivals will not be sufficient to hit the government’s target on net migration. The main attraction of the UK to migrants from the rest of the EU is the availability of jobs. This will be enhanced by the introduction of the living wage, which is relatively attractive to migrants from the lower paid areas of the EU and from the areas of high unemployment.

Others on the Stay in side welcome unlimited migration. They see the plentiful supply of new labour as an advantage, rather than putting in the apprenticeships and starter jobs for UK citizens which we need.

I have received the enclosed letter from Sir Peter Hendy, Chairman of Network Rail:

Dear John,

Thank you for our recent meeting.

I was pleased to read your subsequent blog in which you call for the modernisation of the rail network with digital technology to release more capacity from the existing infrastructure. I agree wholeheartedly.

Other industries, from aviation, to roads and the London Underground, have already unlocked significant additional capacity through digital control systems. We are hitting the limit of analogue signalling faster than other countries in Europe because of our successful growth – over 40 per cent of the EU’s officially declared ‘congested railways’ are in Britain.

This is why our Chief Executive established a discreet digital railway programme 18 months ago to bring the required pace to modernising the network. We are currently building the business case for the digital railway that will demonstrate the business benefits for the country. In additional we are developing a rolling programme of digital modernisation of traditional command and control signalling.

This is a time of unprecedented growth on our railway. Beyond critical upgrades and projects now planned or underway, a national capacity strategy that is rooted in conventional enhancements would cost too much, disrupted for too long and would deliver too little.

Digital technology will change the way we operate and manage our network. It could create up to 40 per cent more capacity on the most congested urban networks, while making trains more reliable, safer and our network far more resilient to disruptions. This incremental capacity can be unlocked at significantly less cost and with massively less disruption, than building new railways in dense urban centres.

It is not a question of whether we transform our signalling technology, but when. Plans exist already, but they are small and will mean that Britain will not see the full benefits for many decades. Network Rail believes that the country cannot wait that long. We already have brought together parts of railway delivery and planning into an integrated Digital Railway programme, with the aim of bringing forward and maximising the benefits of digital capacity.

We are currently building the business case for the Digital Railway that will demonstrate the business benefits to Britain.

It is important that the Leave campaign stays focused on the big issues that matter. These are

1. We get our money back, bringing both the trade and current account deficits down by a fifth
2. We gain control of our borders.
3. We gain control of our own laws.
4. The UK regains places on the main world bodies it has lost to the EU, and becomes more influential in the world.
5. Our trade is not at risk, and we will be able to negotiate free trade deals where we wish.

The negative and unpleasant Stay in campaign wishes us instead to talk about

1. The Norwegian way – as if the UK had to pay loads of money to the rest of the EU once out for the right to buy all their exports!
2. Who leads the Leave campaign – to cover up for the poor media start of their campaign. We do not need a single leader, but a range of faces and voices.
3. Which senior figures sign up for the Stay in campaign – usually people who were wrong on the European Exchange Rate Mechanism and wrong on the Euro in the past.

We need to brush these nonsenses aside and concentrate on the big picture. The style of the Stay in campaign shows they have no belief in the structure and policies of the Euro driven EU, and wish to talk about anything apart from the centralising direction of their chosen international body. You rarely hear them saying anything positive about the Euro, about common borders, about political union, about business regulation and all other main features of the organisation they wish us to remain in.

The announcement of yet more job losses and closures in our steel industry is most worrying. The combined impact of low steel prices and high energy prices here in the UK is squeezing the owners, leaving them with big weekly bills to pay to keep works open. It is exactly what some of us feared as we campaigned against dear energy and warned that we faced industrial loss as a result. The collapse of world steel prices is accelerating the process.

The UK needs to buy substantial quantities of steel. We need them for railway lines and for vehicles, for buildings and for domestic appliances. The UK has a long tradition of making steel and of making high grade and specialist steels which command better prices. Traditionally an industrial country has a basic steel making capability as part of its investment.

So what can we do to stabilise the industry? How could we enjoy the march of the makers?

The first thing is to buy more of our own steel. The government orders many railway projects and other civil engineering structures. It buys vehicles and appliances. It needs to ensure a sufficiently high UK content in what it buys, including the steel. Other EU countries manage this for their own domestic industries, so all the time we remain in the EU we have to find similar ways to show sensible priority within the rules.

In exchanges in the Commons on Monday I pressed the government on the impact of EU procurement directives on buying UK steel. The Minister said they have been relaxed, but was unable to confirm that the UK state sector can simply require its purchasing officers to buy UK steel for all needs paid for out of tax revenue. There is still enough potential UK competition to allow sensible prices whilst specifying UK steel.

The second thing we need to do is to slash our energy bills. I have written and spoken regularly about how we can and should so this.

The third thing government needs to do is to look at its range of taxes and impositions on the industry to see if it can alleviate the burden of rates and other levies.

John Redwood (Wokingham) (Con): With oil at $28 a barrel, the North sea and its supporting investments face a very damaging threat. None of us can know whether in the near future OPEC might change its policy and suddenly reduce capacity to put the price up; and none of us can know exactly when enough capacity will be closed elsewhere in the world where there are exposed investments and very high costs to get supply back into line with demand and to get the oil price higher. All we can do at the moment is try to manage what we have. Today, we have a very low oil price by recent historical standards, and it has completely undermined the business model and the investment case for many parts of the industry.

I am delighted that the Secretary of State has pledged strongly that she sees the North sea as a fundamental part of Britain’s energy requirements in the future and a fundamental part of our whole industrial base, as indeed it is. The North sea has not just spawned substantial energy reserves and large tax revenues for us, but enabled the growth of a large number of highly skilled and technical jobs, with talented people working in a large number of companies.

The Scottish Nationalists are saying, “Let us review oil taxation again and have lower rates going forward”. At the moment, as there is no revenue coming into the Treasury from North sea taxes because the oil price is so low and the investments so damaged, I am quite relaxed about that advice, and I am sure that my right hon. Friend the Chancellor will be thinking very carefully about how he can support my right hon. Friend the Secretary of State for Energy and Climate Change going forward with more investment. I have to warn Members that even if he were exceedingly generous about future rates of North sea taxation, it is not going to be enough to make a difference against the background of oil costing $28 a barrel.

What we are now battling for is not the revenues we used to get from North sea oil taxes. What we are now battling for is the very substantial income tax revenues that we have been getting, as the United Kingdom and as Scotland, from the very highly paid jobs in the Aberdeen area and the other supporting areas for the North sea. If we are not careful, $28 a barrel oil will lose a large number of those jobs—some have already gone—and flatten the incomes of many others. It will mean a very big hole in the Scottish income tax revenues on top of the damage done to the United Kingdom/Scottish revenues from the oil itself. That is why I hope that the Treasury and my right hon. Friend the Secretary of State will work with the industry to come up with any kind of scheme to give us a chance of reinvesting. We need to use the best extraction techniques and the best modern technologies. Of course we need the industry to work on its cost base, but that will require something very major.

My right hon. Friend the Secretary of State is also right that security of supply must be her single most important consideration. She is trying to balance security with costs and green issues, but I think she is right to regard security as fundamental. If there are tensions, the Government must surely put security of supply before all other considerations.

I notice that we are beginning to rely rather more in our policy on interconnectors. Let me provide a word of warning: they may provide a short-term solution, but to interconnect our supply to the continent of Europe— a continent very short of its own indigenous energy resources—does not necessarily make us more secure. Bearing in mind the importance of Russian gas throughout our continent, particularly the further east we go, I do not wish my country to be geared in the long term to an energy-short continent dependent on Russian good will. I think our security of supply must rest on indigenous UK energy resources—renewable and carbon-based in the right balance, but above all coming from generation sources that provide continuous and flexible supply.

I fully support the Bill in its wind provisions. I am a long-standing critic of wind, which I think is far too expensive. The main reason for it being far too expensive—let us be clear on the Conservative Benches, if not elsewhere in the House—is that we cannot rely on wind, requiring the building of two lots of power generation in order to be secure. There is the wind, which works sometimes, but 100% cover is necessary in many cases via other types of generation in case the wind does not blow. Given that the wind has a habit of not blowing when it is really cold and when industry might need quite a lot of energy, it is important to have that further back-up.

That brings me to the second most important proposition that my right hon. Friend has to handle, which is cost. We all witnessed an extremely sad announcement earlier today—one of a series of sad announcements about our steel industry. The Minister chided me when she said that if I believed in markets why would I want British investment projects to be buying British steel? Let me reassure Ministers that I always buy a British-made car because I live in this country. My salary here is paid from the taxes paid by people who go to work in my country, so I think it only courteous to buy some of its more expensive products when I have the money to be able to afford a car. Similarly, I like to holiday in England because it adds to the jollity of nations and provides circulation of the salary I am paid here.

I have always been someone who believes that if we live in a society or a political community, we should accept mutual obligations. I thus strongly believe that when we are voting on huge sums of money to go into very large investment programmes that have a large steel component, we should go to the next stage and say, “By the way, we want competitive British steel to be at the core”. We should be able to lay that down as a requirement. There would still be competition between the different British producers to keep them honest, but we should surely want to use our public money in that way.

Our problem on cost is that because we have so much wind in the system and we have to provide alternatives and back-up on top, the cost of our energy has become very high, which is undermining the industrial policy that my right hon. Friend the Chancellor set out in the previous Parliament seeking the march of the makers. We will get the march of the makers on the scale we want only if we offer cheap energy. Our energy needs to be cheaper than Germany’s, not dearer. It needs to be competitive with that in China and the United States of America, whereas it is far from competitive at the moment.

Modern industry is very energy intensive. It is not just the so-called energy-intensive industries that might attract some subsidy; the general process industry is energy intensive as well because it is highly automated and the grunt is now provided by electricity-driven machinery, not by human hands and arms. We need to understand that one of the core elements of any successful industrial policy must be cheap energy, so I wish my right hon. Friend every success in trying to bring together those three different components of her policy to put more emphasis on cheaper energy. To do that, we need to end these large onshore wind subsidies. To do that, we need a new generation of electricity plant that has cost as one of its main considerations. That may well be gas plant, but it will have to operate for considerable lengths of time in order to get the proper economies of scale.

The danger of the system we have inherited is that it makes sure that we pay as much as possible for energy at any given time. If very dear energy is available as wind energy, we have to run with that, which makes the cheaper energy dearer, because the base-load cannot be run any more, so the costs of switching on and off become rather large.

Three cheers for the Bill; I fully support it. Three cheers for the Secretary of State, but for goodness’ sake let us not rely on foreign supply and let us not rely on wind. Let us have some decent reliable base-load electricity at a price industry can afford.

The issue of who pays the tax is central to discussions on a new formula for Scotland’s finances within the Union. As Scotland takes over responsibility for income tax and others, so there needs to be a new grant formula to reflect the revenues she retains for herself.

Scotland’s share of overall revenues in 2014-15 was 7.8% (splitting oil revenues on a population basis). Within this Scotland collected a smaller share of capital and enterprise taxes like IHT, Stamp Duty and CGT, at around 5% of the total, but a higher proportion than her average of spending taxes like VAT, Spirits duty and tobacco tax. Scotland supplied 7.3% of the Income tax receipts, a little below her receipts average.

The SNP have argued in the past that most of the oil revenues should be attributed to Scotland as much of the oil is landed in Scotland. This is currently an irrelevance as the oil revenues have all disappeared thanks to the collapse of the oil price.

The Scottish government pointed out that in 2011-12 when more oil was being produced from the North Sea at much higher prices oil revenues ran as high as 16% of total attributed revenues, at a similar sum to Income tax or VAT. Unfortunately the natural decline of the North Sea reservoirs, alongside cancelled investment in exploration and new production at current oil prices, means those revenue sums are not going to be seen again anytime soon.

Worse still for the Scottish economy, we are now witnessing too many job cuts and pay cuts in the once lucrative North oil and oil service sectors. The Aberdeen area in particular is an area with many highly paid jobs generating substantial Income tax revenues for the UK state. Just at the point where this revenue passes to the Scottish government , it is in sharp decline.

I am asking questions to find out how the Scottish and UK government propose to handle this natural fluctuation or decline in Scottish income tax receipts. It is very relevant to how the Union’s finances will look in the new devolved model.