Author: johnredwood

I asked an Urgent Question in the Commons yesterday  just after Prime Minister’s Questions. I pointed out that the government’s statement that we will not be part of the agreement to waive all Turkish visas is not what the EU Statement of Heads of State and Government says. The government was unable to deny the text from the Heads of State and government, or to explain it. I proposed that they either get it amended or negotiate a UK opt out. The government after all wishes the UK to rely on just an agreement between member states for its new deal with the EU, so these EU documents are meant to be accurate and important. See yesterday’s blog for the detail.

I agree with Lord Rose of the Britain stronger in Europe campaign. He has in the past told us the UK can do well outside the EU. More recently he has confirmed that if we stay in the EU there will continue to be substantial migration, which will keep down wages at the lower end of the jobs markets.

I disagree with Lord Rose when he says that rising wages are “not necessarily a good thing”. If someone has been well paid for much of his life, he should be careful recommending much lower pay for everyone else, and particularly careful about entering politics to preach the joys of sacrifice, low wages and a plentiful supply of cheap labour for others.

The government rightly wishes to see wages rise. It has put in its new policy of a living wage, requiring wages to be higher by law. Leaving the EU would be a quicker and easier way of achieving this goal. Now we know 630,000 EU migrants last year were granted National Insurance numbers, we can see just how big the downwards pressure on UK wages must be from new arrivals. It is a strange policy combination to require people by law to pay more money when open borders means queues of people willing to take less just to get a job. Out of the UK we could impose sensible controls on inward migration to take low paid jobs.

I was never a fan of the policy of enlargement of the EU. The UK’s official stance was to foster enlargement, with some people thinking that would slow down progress to political union and to so called deepening, or more EU government. The opposite happened, as some of us feared at the time. Instead of enlargement leading to loosening, it led the established member states to want to tighten controls and have more centrally determined policies. It also encouraged them to have more majority voting so smaller poorer countries could not hold up their wishes for more EU laws.

What it also did was encouraged large numbers of people in low wage countries to use their rights under freedom of movement to go to the UK and Germany where there were jobs available with much better wages. This prolonged domestic unemployment in the richer countries, and stripped the poorer countries of some of their most talented and enterprising people. Well skilled Eastern Europeans were prepared to do unskilled jobs in the UK because the wages were so much better,.

The UK owes it to Europe to leave, so we can have higher wages and employ more of our own people, and more of the talented and energetic people of eastern Europe can stay in their own countries to get them richer faster.

Mr Carney gave unfortunate testimony to the Treasury Committee yesterday, which has been spun as helpful to the Better Stay in Europe campaign because he did not set out the pluses of leaving as well as he could.

Mr Carney of course now has a UK track record of making inaccurate or unhelpful forecasts. Throughout his time as Governor he has not used his main power, the power with the MPC to shift interest rates. When he first arrived he introduced forward guidance. He told us interest rates would not go up before unemployment fell below 7% but implied they might after that.

When unemployment fell below 7% he gave different guidance on raising rates. He said he would look instead at wages, spare capacity and productivity to decide when to put up rates. Unemployment was clearly no longer a guide to capacity or inflationary pressures.

When real wages and productivity started rising and more growth occurred, he then said in the summer of 2015 the decision on raising rates would “would come into sharper relief” at the turn of 2016.

When 2016 turned there was another change of tack. We were told that growth was lower so there would be no rate rise.

Markets, who had expected interest rates to be at 2% by 2017, have adjusted to rates still being at 0.5% in March 2016, with no immediate impulse from the Bank to raise them.

I set this all out now because it serves to remind us how Mr Carney has so far been unable to issue decisive guidance or to estimate the likely path of inflation, growth and money accurately. It should lead all to ask why then should we think his views on Brexit any better informed?

The Bank he represents has a long history of catastrophic misjudgement on the UK economy prior to his arrival. This is the Bank that recommended entry into the European Exchange Rate Mechanism, which first created a bad inflation, and then a nasty recession. This is the Bank that presided over the credit crunch and did not use its facilities to keep solvent banks sufficiently liquid at the height of the crisis. In both cases the Bank ignored advice from those of us who thought the ERM would do damage, and who thought the Bank should lend short term to commercial banks in need whilst at the same time working behind the scenes as one of their regulators to get them to strengthen their balance sheets.

The Turkey refugee facility to be paid to Turkey by the EU which stood at Euro 3bn prior to the latest meeting will be paid for out of a mixture of EU and member states budgets. One third comes from the EU, and two thirds from EU states proportionately to their Gross National Income. The direct UK share of the 2bn of this facility will be £250 million, which will come out of the UK overseas aid budget. Presumably any expansion of the money to Turkey which has been discussed in the latest meeting will also be a further charge on the UK budget.

The Agreement does not look well crafted or helpful to the EU. The EU has offered visa free access for all Turks from June this year, and has agreed to take a Syrian for every Syrian returned to Turkey under the new more aggressive policing of the EU’s external frontier. Illegal migrants from other countries will simply be returned with no commitment to take anyone in their place.

It is difficult to see how this system is going to work. Who is going to return the illegal migrants? How will the take up of Syrians from Turkey be organised and shared out between the EU member states? Why will any of this deter more people from coming to the EU? Won’t it encourage more migrants to destroy their passports and documents and claim they are from Syria?

It also leaves the UK government with some explaining to do. Why did they sign an agreement which apparently means the UK too has to accept visa free access for all Turks from June? Mr Cameron says we are outside Schengen and none of this applies to us, but maybe he was just referring to the EU agreement to share the task of accepting Syrians from Turkey. It does not seem to include Turkish visa free access, as the Agreement published by the EU sets this out for the whole EU. There needs to be urgent clarification of the visa free access issue. The Agreement says “visa liberalisation roadmap with all member states with a view to lifting the visa requirements for Turkish citizens at the latest by the end of June 2016”

People who want to stay in the EU wrongly think our trade is at risk. They then compound their error by telling people half our trade is with the EU.

They clearly have not read the balance of payments figures. Less than half our goods exports are to the rest of the EU, and well under half our service exports are to the rest of the EU. The total of our published export trade with the rest of the EU is 43.6% (latest figures available, Q3 2015).

You cannot get to half our trade even if you add in imports as well as exports. What the Remainians never point out is that we import so much more than we export to the rest of the EU, so the percentage of our imports from the EU is a lot higher than the percentage of our exports.

In Q3 2015 54% of our goods imports came from the rest of the EU, but the total imports were still below half when you add in services.

All these figures also have to be adjusted for the Rotterdam/Amsterdam effects. Quite a lot of our exports go first to a large continental port, and then are shipped onwards to a third country outside the EU. This is counted as trade with the EU. Taking this off means less than 40% of our exports are to the rest of the EU. The ONS assumes around half the published trade with the Netherlands is in practice trade with the rest of the world.

Most MPs concentrate on representing people who need the state for support and often see the state as an ally. I too represent my constituents when they need welfare, state help with housing, school places and care from the NHS. By definition most of an MP’s job is going to be helping those who need state assistance, and supervising or seeking improvement in the large free at the point of use state services.

I also seek to represent my many other constituents who do not see the state as helper, and have to spend their time complying with state dictats and paying all the bills. Parliament has been much less good at representing taxpayers and all the people who set up, manage and work in the private sector companies that supply much of our goods and services and provide most of the jobs and incomes.

It has also not been kind to many savers seeking to live on their past prudence. To many people who get up and go to work to pay the family bills and to keep our country civilised with plentiful supplies of what we need the state can come across as hostile and unhelpful. At times the state is the worst kind of chugger, extracting money in so many ways. The state as chugger of course is more worrying than a too persistent fund raiser elsewhere, as you have to comply with every demand the state makes.

One of the worst features of the modern state is the great complexity. They have so many ways of demanding your money that you have to devote considersable time to compliance. The state expects you to know when you have to pay and to get it right according to their process.

You park your car in a municipal car park and then have to be sure you get back within the stated ticket tine. It puts pressure on your meetings or shopping as you seek to conform. It means fewer impulse buys or leisurely cups of coffee at the weekend as you are time limited. You often are not allowed to buy as much time as you might need.

You drive to your next engagement. You need to be ever vigilant for the hours of operation of bus lanes, endless changes of speed limit, box junctions, cycle ways on the carriageway, left and right turn rules and the rest. One mistake that does no harm to anyone and you may well face a penalty fine.

You have to remember to pay the Council tax bill to be allowed to carry on living in your own home, whilst some Councils have now made it difficult to pay unless you are prepared to put in a direct debit.

Every payment that you receive needs to be recorded so you can explain if it was not income or pay tax on it if it was income.

If you save you may find the rules of those savings change after you have committed your money, as many have discovered with pensions savings over the years. The government can change the tax they levy on it even though you are locked in to a contract based on different tax rules.

Every time you have to deal with the state there are requirements to produce documents and reference numbers. Despite all the money spent on government computers there us still no single simple access and one ID per person to make your reporting to the state easy.

Whilst I agree we need rules and need to raise revenue, we could do so much better by making it easier for people to comply. The complexity means quite a lot of people do not bother to take on something extra or grow their business, for fear of the blizzard of state demands extra effort by them will bring forth.

Given the way that the state gets reports on people’s savings income and on employment income from companies that handle our savings and employs them, why can’t the state send a tax return request with the details they know already filled in? Why are people who wish to defer NI on other income because they are paying their full amount through their main employment made to fill in the same details each year on a new form?

I wish the next budget would be friendlier to taxpayers, would try to make their lives a bit easier, and would understand you raise more revenue if you set sensible taxes and allow people to profit sufficiently from their extra effort, investment and hard work.

In the light of the Scottish financial settlement I am offering these important maps taken from National Statistics. (ONS publications) The first  shows just how much more public spending per head Scotland and Northern Ireland receive compared to England, especially south east England. It  illustrates the extent of the regional transfers of money around the UK.

The second map shows just how much bigger London, the south east and East Anglia have become as a result of more rapid economic and population growth than the rest of the country. These three parts of the UK now represent almost one half of our economic output. This is displayed graphically by the redrawing of the map in line with economic output. As a result we see a very large London, and a large south east and East Anglia.

It appears that the latest financial settlement for Scotland gives the SNP all they asked for. The grant to Scotland has to be adjusted for the extra responsibilities the Scottish Parliament now has, and for the extra revenues they now control. The formula allows adjustments to be made for the likely slower growth of population in Scotland than the rest of the UK, the main thing the SNP insisted on.