Author: johnredwood

The debate to extend military operations in the Middle East to allow UK bombing in Syria was an important Parliamentary occasion. The government’s motion was approved by a large majority.

I was against the Coalition government’s proposal to attack the Assad government in Syria in 2013, which Parliament blocked. I approached this latest proposal with concerns. I attended various briefings and meetings to understand more of the complex and fragile position in Syria. I had private discussions with senior Ministers and their advisers about their plans.

My first priority is to improve the security of our homeland. I have urged the government to spend more money and effort on policing our borders, and on intelligence gathering so we are aware of movements of people and weaponry that could be used against us here at home. I am pleased the government has now announced extra people and money for counter terrorism research, and is promising better action at our borders. I am still not fully satisfied about border control in view of the way terrorists were able to cross EU internal and external frontiers so easily for the French attacks, and will continue to press for better action in this crucial area.

My second priority was to stress the need for any bombing campaign in Syria to be linked to a ground campaign by forces capable of dislodging ISIS from their strongholds. This force also needs to be able to supply well informed intelligence to those commanding the Allied bombers, both prior to attacking a target and afterwards to report the damage done and whether it was a success. Precision bombing is essential, especially in civilian areas, but is only as good as the intelligence that drives it.
During the discussions I was not satisfied that the Syrian Free Army does represent a competent and available force to recapture Raqqa and to help direct our smart bombs and missiles to targets. The position is different from that in Iraq where we are acting at the request of the Iraqi government and with their ground forces in support. I am not in favour of bombing without a winning strategy that can make things better.

My third priority was to draw government attention to the crucial need for diplomatic and political work to pursue a peace process. I am pleased that the main regional powers, Russia and the USA are now in dialogue. I understand how difficult it is going to be to find a peaceful solution to the Syrian civil war and to find a way of governing Syria in a peaceful and democratic way as one country. The West needs to show understanding of the local and regional forces and needs, and to consider what might be the basis for restoring some law and order and functioning administration in these areas. The Kurds who have proved effective fighters against ISIS will of course want some independent government in the areas they are taking in Iraq and Syria.

The government’s motion was narrow reflecting the concerns many of us had. It limits their action to bombs against ISIS only in Syria, and “acknowledges the importance of seeking to avoid civilian casualties” and accepts that a political strategy is important. I decided however, that without further work on the issues of a political settlement and without credible ground forces to steer and monitor any aerial bombs I was unable to vote for the statement authorising airstrikes immediately, so I did not vote for the motion. I share their wish to pursue peace in Syria and to take action against terrorism and the ISIS threat and agree with the rest of the motion so I did not take the further step of voting against. I left the Commons after the vote with the determination to continue to press for a better political plan for Syria and above all for better control of UK borders at a time of trouble for the Schengen concept.

Current UK monetary policy is in transition. The present Governor of the Bank of England inherited a mess of a policy, and an institution which had presided over the biggest disaster in Central banking since the 1930s. The Bank of England allowed or even encouraged an unsustainable credit and property boom prior to 2007, with over expansion of commercial banks balance sheets. The competition authorities reinforced the Bank’s mistakes by allowing mega banking mergers to increase risks in the banking system. The Bank then switched in 2008-9 to too tough a stance, starving markets of liquidity and undermining the very banks they had allowed to grow and inflate.

Since 2008 the Bank has sought to drive the UK economy with one foot flat on the floor with the accelerator of money policy, and the other foot hard on the brake with banking regulation. At first the brake won and the economy made little progress. More recently there has been enough monetary effect to offset the brake, and the brake itself has relaxed a little as banks repair their balance sheets. Now it is time to ease the brake more, and to apply less accelerator, to return to more normal driving.

Let me explain the metaphor. Today the commercial banks have much more cash and capital than in the dark days of 2007-9. The Bank now appears to be changing the pace of its demands for more, and may allow sensible increases in loans again to finance economic recovery. The UK needs massive investment in energy, transport , tech and industrial capacity. More  of that needs conventional bank finance.

At the same time savers deserve a return on their longer term savings and the artificial bubble in bonds needs gently deflating. Longer term interest rates are too low, and the stock of QE held bonds  needs to be gradually brought down. Irregular monetary policy has produced gross distortions and inflation in certain asset prices. The bond bubble has occurred alongside property price rises making  homes and commercial property too dear for many UK taxpayers to afford.

We should not wish to continue with the past pattern of asset price inflation, very low interest rates, and banking inability to finance investment for recovery. The UK needs a major expansion in investment capital, with new power stations, roads, rail capacity, water capacity, better digital technology for public service provision, better broadband and  much else, as well as substantial  capacity increases in manufacturing. Savers need to be offered a decent return on their savings to attract capital into more productive uses, and to expand the asset base to control asset price inflation.

Meanwhile the monetary madness remains the popular orthodoxy on the continent, with the European Central Bank likely to hit savers again and to carry on creating more money.

Yesterday the Commons completed its work on the new Immigration Bill. This Bill amongst other matters makes provision for the faster removal of illegal migrants from the UK. It strengthens the provisions against rogue landlords who rent out property to illegal migrants. It also makes clear to the courts and others that anyone who claims asylum and is refused needs to leave the country promptly.

One of the main points I have made in public and private to the government concerning Syria and terrorism is the need for stronger and more effective border checks and controls on potential terrorist seeking entry or seeking to return to our country after undergoing training in violence and radical extremism. The events in Paris have made many people ask are we safe enough? What more can be done to secure our borders and find the terrorists within our own society before they do us harm?

The government assures me the extra money,staff and intelligence they plan will be used to good effect. The aim must be to have better intelligence about those who do go to extremist training grounds or who go off to fight in Middle East civil wars, and to make sure they cannot come back here to harm us. If we and our allies are prepared to kill them by aerial bombardment in Iraq and Syria we must be prepared to take strong peaceful enforcement against them if they seek to enter our country. The border force needs to question and if necessary detain whilst making further enquiries those who arouse suspicions.

The government has now published its motion on the action they wish to take in Syria. It is very circumscribed, following the strong opposition in Parliament to a US/UK led war along the lines of Iraq and Afghanistan. The motion rules out troops on the ground in combat operations. It “acknowledges the importance of seeking to avoid civilian casualties”. The government will be under further pressure today to spell out the nature of the land forces available locally to undertake effective operations against ISIL, and to say how it can gather intelligence, locate targets and put sufficient pressure on ISIL.

There is a write in campaign at the moment urging MPs to support a sugar tax. Apparently a modest increase in the price of sugary drinks will abolish child obesity. If only things were that easy.

I find the demonization of certain foodstuffs a strange characteristic of modern political debate. Some spend their time denouncing fats. Others now spend their energy condemning sugar. Some dislike carbohydrates, others see the demons in alcoholic drinks. Whichever they attack, the answer is to tax it more. This route has been tried for many years with alcohol, yet there are still too many sad cases of people who become dependent on too many alcoholic drinks. I accept that taxing alcohol is necessary as part of the means to raise money for public services.

To me sugar, fat and carbohydrate all have a role to play in a healthy diet. You need to eat something, otherwise you end up with malnutrition. There is nothing intrinsically evil about the bag of sugar or the tub of fat on the supermarket shelves. A little of it each day is fine. Excess in any foodstuff can cause illness or harm. The balanced diet needs balancing too with the amount of energy you burn, which depends on how active a lifestyle you live and how well your home is heated. As a child I liked sweets, cake, chocolate, fizzy drinks and chips. My parents ensured these were treats, served in appropriate quantities when the occasion warranted and their budget allowed. More dependable foods were the normal servings for mealtime.

The case for taxing fizzy drinks with sugar includes the proposal that fizzy drinks sweetened some other way would be tax free. This invites experimentation with other sweeteners. Who is to say these will all be better or good for us? It still leaves open the point that trying to cut consumption by tax means fewer drinks for low income families but little constraint on high income homes.

I cannot see the merit of a tax on sugar or on drinks containing sugar. There are many ways of getting fat. Some are the person’s metabolism, others are the combination of diet and exercise, which is more complex than a few colas.

I was asked to write a response to the Autumn Statement by a leading national newspaper. I dropped everything on Friday morning and wrote the required number of words to their deadline, but they did not publish it, so I am now sharing it with you:

I like a bit of Robin Hood magic. One of the main tasks of modern government is to take from the rich to give to the poor. All the main parties buy into that ever popular idea from the UK’s favourite outlaw.

The Autumn Statement does a lot of it. Many of us had asked for some relief to the planned cuts to tax credits. The Chancellor stopped them. This was made possible because the Office of Budget Responsibility decided there was going to be much more tax revenue coming in. The Chancellor was free to play Father Christmas early this year as a result. We need to ask, how reliable are the forecasts of revenue? Will tax income be a massive £177 billion more in 2019-2 compared to last year? That’s each adult paying on average £3,500 more.

The task of redistribution is made easier if there are enough rich people living in our society, and if they are made to pay more of the taxes we seek to impose. Rich people have more financial options than the rest of us who depend on a UK wage. They can choose where to live, choose whether to work, where and when to invest and how much income and capital gains to take in any given year. Taxing them successfully requires keeping an eye on where else they can go and what else they can do to avoid paying taxes in our country.

The first change I would make to the Autumn Statement proposals is to tax the rich more. To do so we need to look at what is happening to taxes that the rich mainly pay. Capital GainsTax receipts are forecast to fall by 6.5% compared to the March forecast, amidst the bonanza of rising revenues. 28% is a rate too high, so people simply don’t sell their assets sitting on large gains, and legally avoid the tax altogether. 20% would bring in more revenue.

The same is happening to Stamp duty revenues. Now there are very high duties on dearer homes, the forecasts have had to be cut because rich people are simply not prepared to sell and buy a new home at the new rates.

Government has to mainly tax the rich because they have the money. They should not wish to do so as some kind of moral punishment for success. It should do so out of necessity, and in ways which allow them to remain financially successful. We want them to invest here, create jobs here and spend money here.

Before the last election the government set out the need to control public spending in order to get the large amount of borrowing we do each year down to more sensible levels. Every pound we borrow as a nation means future interest charges, and the need to repay at some point in the future. We spend now for our children to pay the bills later. The Chancellor memorably said he needed to fix the roof when the sun is shining.

The sun is visibly out now if we believe these latest forecasts of more growth, more jobs and more tax revenue. The Conservative Manifesto said it would cut real spending by 1% in each of the first two years of a new government. This week the Chancellor decided that was no longer necessary. He has instead proposed a large cash increase in public spending over the lifetime of this Parliament. The total spending in 2019-20 will be £821 billion. That’s £24 billion higher than the March budget forecast, or an increase of 3%. Is it right to spend tax revenue increases we do not yet have?

During the election I spoke out for prosperity, not austerity. I wrote that I did not expect the government to make any overall cut in public spending this Parliament. They had, after all, not made any overall cut in public spending in the previous Parliament, despite all the press and opposition talk of cuts. So I am not surprised .

This means running a bit more risk. There is always the danger that the revenue forecasts will prove to be too optimistic. Taxes are very sensitive to employment levels and consumer confidence. These can be hit by external forces with weak world trade, a Chinese slowdown and a latin American recession already with us.

I would be happier if the government did take something off total public spending as they promised to do in the election. This would leave a bit more margin for error. My preference would be to remove the EU contribution we make each year. This has been going up all too quickly. £11 billion of what we send them is spent on rich EU countries on the continent. This seems to me to be far too high a price to pay for membership of this difficult club. If we vote to leave the will be an immediate boost of £11 billion to our finances each year.

The government is rightly looking at ways it can use the overseas aid money more productively and help keep total public spending down. The BBC Overseas service should properly be a cost to the overseas aid budget. So should the full cost of activities undertaken by our military to help in failed states or to intervene with public health and other humanitarian crises.

This should be the year of thorough reform of parts of the public sector that cost us a lot and deliver too little. For years Housing Associations have been getting large capital grants on top of making big profits out of the rents they charge which are largely financed from Housing benefit. It is time to ask them to do more or to pay them less. They are asset rich and cash rich. If they wish to be independent charities then we should leave well alone. If they want to continue with more public support they need to accept some government imposed financial discipline and help meet government targets.

The same is true of Network Rail. That badly run unaccountable body has been eating up the public cash in recent years. Network Rail has large amounts of land with development potential close to the centres of towns and cities. They could help modernise our towns and free some cash by developing more of it. They could raise their efficiency considerably by hitting the standards of the better continental railways. They need to discipline their financial management of their huge investment programme, where all too many projects overrun in cost or are allowed big upward changes to budgets. Maybe the best answer for them will be to re unite track and trains, introducing private capital with railway companies organised around particular routes and parts of the country.

This is the year to take action to control costs and to build in some leeway in case the tax surge does not materialise in the way the OBR now suggest. It is great news that there are so many more people in work, and great news that real wages are now rising.A lower tax UK will be a richer and more productive one. The right lower tax rates will bring in more revenue. Better revenue forecasts should not exempt inefficient parts of the public sector from reform.

Many readers will know that I wanted quicker fixes of the main banks balance sheets and capacity to lend, rather than Quantitative easing. I wanted the illiquid or damaged banks to have to sell off assets and raise additional capital so they were stronger sooner. The advocates of QE are now able to claim that there has been no great general inflation so far as a result of their money printing, because credit was badly damaged by the crash and remained very tight owing to the tough regulation of the banks thereafter. At the same time as the crash there has a general glut of food and commodity supply worldwide and highly competitive prices for many manufactured goods. There has been, however, a major inflation in the prices of assets, led by bonds but including London home prices. This brings with it social and financial consequences.
House and flat prices are now so high in central London that no normal person on a good UK salary can afford to buy one without other capital. Let us compare two different people, and ask if either or both of them can be said to be rich.
The first is a retired woman living on her own in a one bedroom flat in central London. She owns her flat outright, and it is now worth £1.5 million. She was on average London wages for her working life, has no employer pension, and lives on the State retirement pension and top up benefits and pensioner concessions. She always spent her modest income in full and has no savings. She and her husband bought the flat years ago in an unfashionable district at that time, and paid off the mortgage before his death. She finds it extremely difficult to pay the service charge on her flat which has gone up a lot, and to pay all her daily bills. She wishes to carry on living in her flat close to all her friends and the activities she does to keep herself interested.
The state treats her as poor. The income and financial assets tests show she has very little to live on and she does need help with her Council tax and daily living costs. She has no money left over for treats or travel.
Some would say she is very rich. Having £1.5m in assets puts her well into the top bracket of the wealthy in capital terms. In one sense she is rich. If she chose to sell her flat, she could buy a good detached home in most parts of the UK, and would have £1 million left over in her bank. She could draw down say £50,000 tax free for more than 20 years as the money stayed on deposit and on that could live well. The state says it has no wish to make her move, so she is poor. She can scarcely afford to live where she lives even with state help. I am not myself saying I think she should be made to move, as that is certainly not my view.
In contrast is the successful young man working near her flat in the centre of London. At the age of 29 he is already on an income of £70,000 a year plus an employer pension contribution, putting him well into the higher tax paying category. He has saved £150,000 so far in a pension plan for his eventual retirement, and has £45,000 accumulated in ISA savings. He rents a very small flat for £20,000 a year. After tax and rent he can still afford a reasonable lifestyle. He would like to buy a one bedroom flat near his work. The cheapest acceptable one for him is over £1 million. With only £45,000 available as deposit he does not even have the minimum deposit needed. His income of £70,000 gets him nowhere near a large enough mortgage to buy the one bedroom flat near his place of work.
Some would say he is well off. They would point out he could afford to buy a perfectly nice property 30 miles out of London and commute in as many do. He does have financial assets of £200,000 already, though he is years off getting access to most of them. Others would say he is part of suffering Generation Rent, consigned to small and expensive accommodation all the time he wants to be in London. At 29 he is still a long way off owning a flat in the area he wants to live in.
So I ask two questions for you today, recognising that many of you will want to answer some other! The first is are either or both of these people rich? The second is what if anything could and should be done about the impact of high London home prices on people’s lifestyles, income and wealth?
For those who like even more difficult moral and political teasers, what would the answer be if the young man was the woman’s nephew and due to inherit her flat? Would that change your mind as to his riches if a) his aunt died suddenly and prematurely and he found the ones to pay the IHT and moved into her flat and b) if she lived for another 30 years so her flat made no different during most of his working life?

Last night Jeremy Hunt was the principal guest at the Wokingham Conservative Association annual dinner.

Mr Hunt explained what he is trying to do with NHS England. Backed by substantial extra money, he is seeking to raise the quality of work, reduce waiting times and move the NHS onto a 7 day a week service pattern.

The NHS of course has always had to work Saturdays and Sundays. Babies are born at the week-end, people have accidents at the week-end, serious illnesses can flare up at the week-end, so there has always been cover. We are all grateful to many dedicated health professionals who have worked long hours and been prepared to work at week-ends to provide care and cover.

It is also the unfortunate case that there is less cover and professional expertise available at week-ends. Results of medical and surgical interventions are often worse at week-ends. It is this issue which Mr Hunt is seeking to tackle by agreement with the professions. He is offering shorter hours for many doctors in return for more of those hours being at a week-end. He is offering pay rises for most from his new proposed contracts.

Mr Hunt regularly says that the airline industry got better at curbing and preventing accidents when it adopted the procedure of complete transparency, reporting anything that had gone wrong even where no damage was done and disaster was averted. The industry then analyses every incident to see how it can design out any future threat of a repeat which might occur with worse consequences happening. The NHS is adopting such an approach under Mr Hunt’s leadership. Every time a procedure goes wrong, the wrong procedure is applied or the results are poorer than expected the NHS needs to investigate and learn from the experience. The aim is not to have witch hunt against the nurses and doctors concerned, but to learn collectively from the incident.

I wish Mr Hunt every success in pioneering much stronger quality based reporting and analysis in our NHS.I hope the doctors will now talk through their disagreements with management over the new contract, understanding that it is not some crude attempt to cut costs or insist on work patterns that are unacceptable to talented professionals. In turn professionals do have to recognise that with the privilege of higher pay and status in our community comes the obligation to pursue quality at all times, and to be available through a system of proper cover when need arises.