Author: johnredwood

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.

Many are struggling over whether an independent UK would be stronger and more influential, or isolated and sidelined. Indeed, it is probably one of the pieces of disinformation that characterises the cynical and negative Stay in campaign.

It is important once again to dismiss their myths. The UK’s power will not be diminished one jot by exit. We will still have the same economic strength, the same income, the same armed forces the day after as the day before. We will, it is true, have more of our own money to spend, so that is a gain.

We will not be less secure. Our defences will still rest on our own armed forces, our own vigilance, and our partnership with NATO. The UK will still be a leading member of NATO out of the EU. We will still have the same intelligence sharing arrangements with our allies, and be the continuing beneficiaries of the NATO guarantees to our security.

Far from having less influence over trade and commerce, the UK will regain her rightful place at the top trade and regulation tables of the world. Instead of being represented – or misrepresented – by an EU official, the UK will again have her own seats on these global bodies. That will give us more influence.

Some claim the UK would be unable to negotiate trade deals with the USA, India and China, as we would be too small. This is absurd. The world’s fifth largest economy would of course be able to negotiate deals with other large economies on our own, as many smaller countries have done. The irony is as members of the EU for 43 years we have no trade deals with any of those there so far!

Far from cutting ourselves off from the rets of the world, leaving the EU means the UK can reconnect with the rest of the world in our own right. I also think we will be taken more seriously by Germany and France from outside, as they will no longer be able to sideline and outvote us as they can all the time we remain in but not properly committed to the European project.

I support the Union of the UK. I am happy for Scotland, Northern Ireland and Wales to stay with England as long as they wish. However, as a democrat I support a Union of willing people and accept that some parts of the old UK may not wish to remain part of the future Union. The Irish Free State, now the Republic of Ireland, made that decision early in the twentieth century. I also expect the Union to be constructed on fair principles, which becomes more difficult with the current fashion for lop sided devolution.

The first thing to understand about our Union is that is both very flexible, and that the full union lasted for just 121 years out of the last 1000. Only from 1800 to 1921 did all of Ireland, Scotland, Wales and England rest legally in the same country with the same Parliament. During the last 1000 years the most common configuration has been a united England and Wales without Scotland and Ireland. The second most common state has been an independent England.

Several attempts were made to unite the three crowns and the four countries over the centuries, often involving unpleasant wars or civil insurrections. The most brutal was probably that under Cromwell, who united the four countries under the power of the New Model Army and imposed a general Commonwealth. Today I am glad we have no wish to exercise a Union by force.

England has always been an independently minded country, with democratic and self governing leanings that have marked its history out from many on the continent and elsewhere in these islands. Though in name a monarchy throughout the last 1000 years, England has regarded the holder of the Crown as in some ways an elected monarch who has to continue to please the people and powers in the land to retain the orb and sceptre. 12 monarchs have been deposed, murdered or otherwise removed from office since 1066. In other words a monarch had around a one in three chance of premature loss of the crown.This trend continued well into the twentieth century with the deposition of Edward VIII. King John was not deposed but had to sign a charter limiting his power. Charles II had to sign up to substantial limitations on royal power to regain the throne for the House of Stuart. William and Mary accepted further limitations on royal power when they took the throne over from the dismissed James II. George III had to accept a Regency owing to his mental condition. During the Wars of the Roses there were frequent changes of monarch as the rival houses and factions fought to secure the crown.

This flexible approach to the rights and choice of Kings enabled a stronger Parliament to emerge. Even powerful monarchs like Henry VIII turned to Parliament to lend authority to his change of Queen and to the Reformation removal of the powers of the Roman Church and Pope. Most monarchs needed the support of Parliament to secure the money they wanted for their wars and government. Today we fight over these issues with words and Parliamentary motions. The issues raised by devolution are similar to those that lay behind the wars over the Union in the past.

Deposed or assassinated: (29% of the total)

William II, Matilda, Edward II, Richard II, Henry VI, Edward IV, Edward V, Richard III, (Jane Grey), Charles I, James II, Edward VIII

Accepted Regent in his place

George III

Accepted substantial limitations on power

John, Charles II, William and Mary,all later monarchs

It no longer surprises me that whenever I write of railways enthusiasts rush to defend every last feature of current or past railway operations. They go on to assume I do not know how railways currently work, and allege that railways can never be improved but have to be run according to current or past methods. It makes for a depressing debate.

In the real world business strives for constant improvement. Innovators review every feature of how cars or phones or computers work and seek improvements to steal a competitive march, to lower costs, embellish specifications, enhance performance and wow customers. Railways in the eyes of their UK enthusiasts are usually stuck in a twentieth century time warp, with many wanting to go back to nationalised British Rail and some still in love with steam traction. The railway industry need not be immune to the same insistence on change and improvement that we see in most competitive business sectors.

The industry is moving on more than some enthusiasts realise.The heads of the industry understand that they control fabulous straight routes right into the centre of our main cities, and appreciate they need to use these routes more to help us move the rising numbers of people wanting to travel. The industry accepts that improvements are possible. These include lighter trains that accelerate and brake more quickly; better signals that allow more trains to use track safely; better timetabling to reduce conflict between fast and slow trains; more passing points and platforms to allow more use of track by more trains; and removal of bottlenecks, as recently undertaken at Reading station.

Competition is the main driver of progress. We allow limited competition in train provision through the franchise auction process. More importantly we now allow some contestability of the franchise, which can create new routes and services as challengers to the incumbents. As the government reviews the present structure of the railways it needs to examine how reuniting track and trains in single companies might assist, and how such regional monopolies could be kept honest by allowing challenge from other companies to offer competing services.

The car I currently drive has so many more better features that the car I drove twenty years ago. It is much more fuel efficient, safer, with new on board navigation technology, better tyre life, longer service intervals and with an initial price no higher than I paid in the last century to buy an equivalent car. It shows what competition can do. I do not think it is perfect and I urge the industry to improve as they can on what they have sold me. Why not the same optimism from railway buffs? Why do they think their current railway could be perfected by making it a state monopoly again?

I have received some answers to Parliamentary Questions concerning floods and the Environment Agency’s work and response.

The Agency is responsible for 22,600 miles of main river. In the year 2014/15 they dredged just 120 miles of this estate, or 0.5% of the rivers.

They spent a combined total of £45 million on cleaning, weeding and dredging rivers and river banks, out of their total budget of over £1 billion. That is under 5% of the budget.

The Environment Agency is responsible for 347 fixed pumping stations, including the Foss one in York which was deemed to be overwhelmed and led to the decision to flood parts of the city. The Agency did not put in additional mobile pumps, on the grounds that they judged there was too much water to shift using such devices.

The Agency itself has 245 mobile pumps. Along with other emergency services there were 425 mobile pumps available in December 2015 to deal with floods. 42 of these pumps were sent to the north of England to assist with the additional rainfall and river flows there.

The picture which emerges is of an Agency reluctant to undertake conventional maintenance and cleansing of rivers. There are also questions to be asked about the availability and the use of pumps, and how they co-ordinate with other emergency and public protection services to fly pumps in at short notice to places under stress.

On Tuesday England took a step towards justice. In the Commons English MPs were asked to give consent to parts of the Housing and PLanning Bill, and English and Welsh MPs to other parts, in accordance with the new procedures. It means England does now have a veto over laws that only apply to us. It also means that Parliament has to acknowledge England’s interest and to mention England’s name. We are still well short of Scotland’s freedom to propose what she wants for herself.

The response of the two other main parties in the House was predictably disappointing. Few Labour MPs attended at all. Their front bench spokesman declined the offer to reply to the Minister, though was shamed into the debate later. The SNP complained bitterly that this modest step created two classes of MP, which is simply wrong. I asked the SNP spokesman why it was acceptable to deny MPs from English constituencies any voice or vote on Scotland’s health or education or local government, but unacceptable to give English MPs a veto on what the Union Parliament might wish to do on these matters for England? There was no sensible answer provided.

England expects some devolution for us to mirror the extensive devolution in other parts of the UK. There are two large outstanding issues.

The first is the money. As we move to a world where Scotland will retain her own Income Tax receipts as well as having other Scottish tax revenues, there needs to be a new deal on how much grant Scotland receives from the UK Treasury and how this is calculated. The principle is no detriment to either side. That is the easy bit. How you calculate it is altogether more difficult. Scotland should clearly benefit from raising more money or have to cut spending if it decides to raise less. To what extent should the Union underwrite a drop in income tax revenues because of job losses in the Scottish economy? We are currently living through a difficult period for the oil industry where well paid Scottish jobs will be lost. How do you attribute changes in revenue to tax rate changes and to economic changes?

The second is England’s powers to make her own decisions in areas devolved in Scotland. The devolution settlement will be fairer if England can make her own decisions on how to spend what is in effect our block grant, just as Scotland has full budgetary freedom over her revenues and grant.As we saw on tuesday, the Department for Communities and local government is a department for England. So are Health and Education. These big areas now need to be led in England’s interest with England’s consent.

I spoke yesterday during the first meeting of the Legislative Grand Committee (England) following the passing of the English votes for English laws standing orders:

John Redwood (Wokingham) (Con): I rise to thank Ministers for taking England on its first step on the journey to justice and fairness for our country. Having participated in recent Parliaments and seen very large powers transferred to Scotland for self-government in accordance with the wishes of many Scottish people and their now vocal representatives from the SNP, I would have thought that on this day of all days it was time for Scotland to say, “We welcome some justice for England to create a happier Union, just as we have fought so strongly for so long for more independence for Scotland.” I hope that SNP Members will reconsider and understand that just as in a happy Union, where there are substantial devolved powers of self-government for Scotland that they have chosen to exercise through an independent Parliament, so there needs to be some independent right of voice, vote and judgment for the people of England, which we choose to do through the United Kingdom Parliament because we think we can do both jobs and do not wish to burden people with more expense and more bureaucracy.

On this day of all days, when Labour has been reduced to a party of England and Wales, having been almost eliminated from Scotland in this Parliament, I would have thought that the Front-Bench—[Interruption.] Our party is speaking for England. The point I am making is that now that the Labour party represents parts of England and Wales but has so little representation in Scotland, it behoves Labour Members to listen to their English voters and to understand that although they might not want justice for England, their voters do want it and are fully behind what this Government are doing.

Graham Stuart (Beverley and Holderness) (Con): I congratulate my right hon. Friend on the work that he has done for many years in championing the need for EVEL to be introduced. Does he agree that, given that they completely failed to persuade the Scottish people to end the Union, the greatest hope of the nationalists was that such would be the grievance and resentment in England that Scotland could be pushed out? Does he agree that this modest step is a way of alleviating that grievance, and that that is why the hon. Member for Perth and North Perthshire (Pete Wishart) was quite so angry?

John Redwood: I entirely agree. We need fairness for England, in respect of the new financial settlement as well as our legislative procedures, but the way to preserve and develop the Union is to show that it is fair to all parts. I am sure that that will mean greater powers of independence for Scotland than we will gain for England, but we cannot ignore England. England deserves a voice, England deserves its votes, and England deserves, at the very least, the right to veto proposals that do not suit England but only affect England. I think that we shall need fair finances as well, because otherwise the English people will not be as happy with their Union as we should like them to be.

I hope that today is a day on which to advance the cause of the Union rather than to damage it. I hope that it is a day on which other Scots will welcome this small step on the road to justice for England, and will see that it helps them as well as us. What is wrong with England having a voice, its own political views, and some of its own political decision-making, in a Union in which Scotland took a great deal of that following the general election? In that election, all the main parties fought on the united proposition that there should be more rights to self-government for Scotland, but my party wisely said that that meant that there had to be some justice for England too. This is a small step towards that justice, and I hope the House will welcome it and not oppose it.

The  November trade figures repeated the picture of our long years of membership of the EU. We remain in heavy deficit, thanks to a large deficit with the EU. Our trade with the rest  of the world is in surplus.

November saw new records for the level of our imports from Germany, Spain, Slovakia and the Czech Republic. Germany remains by far and away the largest exporter to the UK, selling us £5.3bn of imported goods  in the month. The USA remains our biggest trade partner for our exports, buying £3.8bn of our goods in November.

The reason I voted for Out of the EU in 1975 was I ran the numbers on the UK in the EU at the request of my then employer. It was quite clear that the EU was going for asymmetric trade freedom in ways which would help the manufacturers of Germany and France export to us whilst not helping the service providers of the UK export so much to them. I forecast a continuing run of large deficits, as happened. I also ran the numbers on UK contributions, which were large and rising, as that was prior to the Thatcher renegotiation which got the net contribution down usefully. Mr Blair then gave some of that away putting us back to almost as bad a position as the original bad deal.

The UK is made to pay far too much for the alleged privilege of importing from Germany and the others. We would trade quite easily with them without belonging to their expensive club. I am not out to transfer our deficit somewhere else, but stopping the club subs would cut the deficit substantially anyway.