Author: johnredwood

It’s been a fascinating few weeks e Labour conference and the start of Parliament with Labour’s new leader. It has been a struggle for some of the MPs to adjust, as they discover just how out of touch with their members their policy positions and statements had become.  It is also a reminder that political leaderships do need to lead. They do have to explain to passionate followers what is possible , and to remind  them they are there to serve the wider public and not just the believers in their causes.

Labour  now say they are against austerity. This is the party which first spent all the money, then announced the need for major cutbacks to get the budget deficit under control. This is the party that slashed capital spending especially heavily prior to 2010 as their downpayment on getting the accounts into shape.

They need to discover this truth. Any sensible politician or party is against austerity. I want prosperity for the many, and an economic policy which delivers it. Labour delivered massive austerity to voters through the great  recession in 2008-9. The issue in politics is not between proponents of austerity or prosperity. One of the central issues is how do you best create prosperity for the many?

Labour seems to think you create prosperity by raising taxes on business and successful business people. It thinks you create prosperity by spending more on benefits. It wants to legislate its way to prosperity with more laws and regulations. History tells us this is the opposite of how you bring prosperity about. You do not make the poor rich by seeking to make the rich poor.

Labour also hopes you can create growth by more public spending and more public  borrowing. As our economy recovers the danger of such a route is you might end up with more inflation, and far too high a debt interest burden. Labour is wrong to say the Conservatives are balancing the books at the expense of the poor. Conservative tax cuts take people on low incomes out of tax altogether. Conservative economic policies promotes more jobs and better paid jobs. The best way out of poverty is to have a job, and to move on to a better job.

The tsunami of closures and sackings which the Euro has unleashed on the southern economies of the zone has now washed up as a wave of closures of heavy plant here in the UK. We do not suffer the intense misery of the fixed exchange rates and EU managed budgets afflicting Greece, Spain and Portugal, but we are suffering from the dear energy policy and from the lack of EU action over fair trade in steel.

I have often warned of the threat of EU policy to energy intensive business in the UK. Our aluminium industry has already been dealt bad blows, and our petrochemical and chemical industry is struggling. Today the threats to steel are large. Redcar has been closed. Llanwern and Scunthorpe are under review.

The steel industry has made three requests of the government at its Steel Summit this week. The first is to get our energy prices down. Under EU rules this is difficult or illegal. However, Germany subsidises her heavy industry to combat this problem. All the time we remain in this job destroying body we may need to do the same. The subsidies are needed to offset the high costs of energy built into the energy policies. The longer term solution is to have our own cheaper energy policy based on more modern gas fired power stations and based on the extraction and creation of more of our own energy.

The second is business rate relief. This too would be a possibly legal way of assisting our industry at a time of cut throat competition from abroad threatening to destroy our domestic capacity. Taking a smaller percentage in tax now would be better than attempting to sustain a higher percentage of nothing once the plants have closed.

The third is anti dumping cases where foreign suppliers are dumping. Proving that is never easy , but as the custodians of our trade policy the EU could at least try to do that to help.

The UK is going to need a lot of steel to build cars in our successful motor industry, to modernise and expand the railway, to add to the stock of taller offices and flats in our main cities, to sustain our oil, gas and petrochemical industry and for many other uses. This is worth fighting for. It once again highlights just how much damage to jobs and living standards some EU policies do.

Hard on the heels of Mrs Merkel’s generous invitation to too all Syrians to go to Germany as migrants came her U turn telling them not to with demands to spread refuges and economic migrants around the rest of the EU.

This time Mrs Merkel is doing a deal with Turkey. In return for promises that Turkey will do more to restrain migrants from going through Turkey into the EU, Mrs Merkel has promised in the name of the EU that the EU will make more rapid progress to letting Turks into the Schengen common borders area and will allow relaxation of travel and visa restrictions for Turks. How does she think this will help? By whose authority does she do this? Will the rest of the EU and the Schengen area go along with this? The EU we are told has agreed to give Turkey Euro 500 million of aid in an attempt to restrain more migrants passing through Turkey. Mrs merkel is talking about Euro 3 billion. Where does this leave the agreed policy that the UK pushed for a lower EU budget?

Mrs Merkel is coming in for more criticism in Germany for her ill thought through migrant policy. This will not restore her popularity. It is another reason why the UK needs to control its own borders. It is a reminder that the EU is a German driven and led Europe. This is not what most UK people want, especially when the leader of Germany is so head strong and unsure of touch.

It is not a good idea to offer Mr Erdogan of Turkey these advantages just before an election.Many in the EU are concerned by the drift of Turkish policy on many matters including the Kurds, and do not wish to see Mr Erdogan buttressed by visits and deals just before an important election.

Devolving power is often a good idea. I think it is best done by devolving more power to individuals, families, charities and companies to make their own decisions. It is a good idea to leave them enough of their own money to spend so more can be self reliant. I regard lower taxes, greater prosperity, and more jobs as policies which empower people and devolve power from government of all levels. Often the best way to implement true devolution is to abolish governing quangoes and layers of government. Conservative abolition of regional government in England was just such an excellent move. In successive votes people in various parts of England had made clear their hostility to extra government at regional level.

Many in politics think devolution of power is about shuffling power down from higher authorities to lower or more local authorities, but still keeping it with government. Quite often this policy ends up taking more power away from people and business, and giving more power to government in total. It can lead to higher tax rates, more public spending, larger bureaucracies, more elected officials, more laws, more regulations and more public projects restricting the individual. It is all too easy for a new regional or local government to wish to tax spend and regulate by more than the national government sheds when power passes. Often indeed no power does pass, but local and regional is granted new and additional powers to tax and regulate people on top of existing government demands and decisions.

So what are we to make of this government’s devolution proposals? They have promised us English votes for English issues, which would be a welcome shift in who makes decisions. This does not mean more laws and spending as these decisions are already being made by the Union Parliament. They are encouraging clusters of local authorities to form new more powerful devolved local government, sometimes with elected Mayors. We will need to see if these locally driven schemes pass my true devolution test. Do they reduce central power by enough to ensure people do not end up more highly taxed and regulated? There will be substantial differentiation of these schemes depending on local wishes.

Some object to the development of more of a postcode lottery in our local government arrangements, as different parts of England want different answers. Surely postcode lottery is proof that local decision making has a more important place? If all local areas wanted the same structure and the same policies what would be the point of local decision making? Labour argues a contradictory position. They say they want more local devolution than the government (or indeed than their last government) offers, yet they also say they want a one size fits all solution! That would need to be imposed from above, the very opposite of true devolution.

Yesterday we had an important debate on removing the deficit that has dogged UK public finances for more than a decade. Labour switched sides again, opposing the idea that in normal times there should be no deficit.

The present government plans to cut the deficit from around £70 billion this year to £6bn in 2018-19, and to move into surplus in each of the two subsequent years. This will end a long period of huge build up in public sector debt, which will exceed £1.6tn by 2017-18 (excluding the capitalised value of future unfunded liabilities and without imputing a value to future tax receipts to pay for them). Net debt as a percentage of GDP hit a high of 80.8% of GDP last year and is planned to fall this year and over the next five years, down to 68.5% by 2020-21.

The government assumes the economy will be operating at full capacity by the end of this decade, so the cyclically adjusted borrowing or repayment is the same as the actual one planned. The reduction in deficit comes about through a large increase in tax revenue. The plan is to raise £210 billion a year more in 2020-21 than last financial year. This will both remove the deficit and allow an increase of £109 billion a year in total public spending over the same time period.

It is curious that Labour have decided to ignore the deficit again and to argue for more borrowing. As the debt and deficit fall later this decade so the interest burden reduces, giving more scope to spend on public sector services with less going on interest charges.

UK state debt was £380 bn in 2001-2. It soared to £1080bn by the time Labour left office, and has risen to around £1600 bn since. It is currently falling as a proportion of GDP but still rising in cash terms.

Yesterday the House gave a second reading to the Immigration Bill. This bill strengthens the powers of the authorities to remove illegal migrants. It introduces a deport first appeal later policy to prevent an individual deemed illegal using appeal rights to remain in the UK. It requires all public sector workers dealing with the public to speak fluent English. It makes it a crime for an illegal migrant to open a bank account, obtain a driving licence, rent a home or take a job.

The new law will help the authorities in detecting illegal migrants who have got through the border controls. Many illegals enter the country legally as visitors or students, only to outstay their visa. Anyone offering a job, renting a property, handling a bank account for an illegal migrant will be assisting a crime. Illegal migrants may be located and apprehended if they try to carry out any of the usual tasks of daily life requiring them to drive, to use a bank account or live in a house or flat. Some will object to private landlords and banks having a role in enforcing our border controls, whilst others will welcome this use of intelligence from the community. Immigration officers will gain additional powers to help them require illegal migrants to leave the country.

I made the point to Mrs May in the debate that it is best if illegals are detected at the port of attempted entry and not allowed in. She agreed, but reminded me of the numbers who enter legally only to become illegal later.

There will be a new Director of labour market enforcement. Exploitation of illegal migrants by bad employers is already against the law. The new regime will make it more likely employers of illegal labour will be found and prosecuted. The employment of illegal labour often leads to other abuses, with low pay, long hours, and lack of many of the normal terms of an employment contract.

Marrying the needs of a free society with the wish to control illegal migration is not easy. We want students to come to study at UK universities, investors to come and set up businesses here, visitors to come and enjoy our facilities and friends and family from abroad to be able to visit their contacts in the UK. We want these normal exchanges and movements to happen freely and as easily as possible. At the same time we wish to stop illegal migrants coming here, or visitors turning into illegal migrants, as there needs to be a control on how many additional permanent residents and workers the economy can absorb.

Mr Burnham for Labour showed some evolution in their thinking. They did not oppose all parts of the Bill, and he did say he wishes to place limits on the free movement of labour from the rest of the EU. Labour now recognises that large scale migration can depress wages and place undue strains on public services in places receiving substantial numbers of new residents.