Author: johnredwood

I  have received the enclosed letter from the Immigration Minister about the situation in Calais and the Mediterranean:

Dear John

………………..

Security of the UK border is our priority. Basing UK controls in France enables Border Force to stop illegal migrants before they reach our shores. Since 2010, this Government has invested millions of pounds in strengthening the security of our border in Calais and other key ports. The Home Secretary and French Interior Minister Bernard Cazeneuve set out a number of commitments in a joint declaration which was published on 20 September (I think he means 20 th August this year ed) to tackle problems at the port of Calais, including £12 million from the UK Government towards bolstering security and infrastructure.

Border Force uses an array of search techniques including sniffer dogs, carbon dioxide detectors, heartbeat monitors and scanners – as well as visual searches – to find well-hidden stowaways. Additionally, we have installed Passive Millimetric Wave (PMMW) scanner detention technology at Zeebrugge, to enable the port authorities to scan freight lorries for clandestine illegal entrants. When migrants are detected at our juxtaposed controls, they are passed to the French authorities for further action, which may include enforced return to their home country.

Additionally, through increased joint intelligence work with the French, we continue to target the organised crime gangs behind smuggling and people trafficking. A multi-agency UK Task Force was launched in February 2014, working with European and international colleagues to share intelligence and co-ordinate activity to tackle organised immigration crime groups.

There is also good collaboration, on the ground, between Border Force and the French Police aux Frontieres. Together, we are working on an action plan for:

• strengthening security further at the juxtaposed controls in Calais;
• active operational work against organised crime;
• stronger action within the EU, and during Italy’s EU Presidency for which migration is a central theme (this was I believe in 2014 ed);
• strengthening the Southern Mediterranean border; and
• how the UK and partners can tackle illegal migration upstream, particularly from the Horn of Africa and Maghreb.

The Immigration Act will also have a major impact on the Home Office’s work to secure our borders, enforce our immigration laws and continue to attract the brightest and the best to the UK. The Act puts the law firmly on the side of those who respect it, not those who break it, by:

• stopping migrants using public services to which they are not entitled;
• reducing the pull factors which encourage people to come to the UK for the wrong reasons; and
• making it easier to remove people who should not be here.

The wave of migrants crossing the Mediterranean is not just a problem for Southern European countries; it is an issue that affects us all. Many of those trying to cross the Channel from Calais arrived in Europe across the Mediterranean. So we need to work together in Europe on a comprehensive plan that will tackle the root causes of this issue and stem the flow.

The UK is playing a leading role in pushing for action through the EU and the UN to tackle the causes of illegal immigration and the organised trafficking gangs behind it, as well as increasing support and protection for those who need it. It is action of this kind which offers the best hope of an effective response to the numbers of attempted crossings to Europe and the tragic loss of lives.

The UK sent HMS Bulwalk,(Bulwark ed) with helicopters and border patrol ships, as part of the international rescue effort. Since then tens of thousands of lives have been saved, around 5,000 by UK assets alone. HMS Bulwalk was withdrawn on 3 July for planned maintenance but the UK contribution will remain through HMS Enterprise, a Merlin helicopter and border patrol vessels.

We need to treat the causes of this problem, not just deal with its consequences. Tackling this issue in the long term can only be done with a comprehensive solution. That means helping the countries where these people come from to reduce the push factors; build stability and create livelihoods; and to go after the criminal gangs and trafficking networks profiting from this human misery.

We are establishing a dedicated law enforcement team to tackle the threat posed by illegal immigration from North Africa, in light of the surge in numbers crossing the Mediterranean. The 90-strong team will bring together officers from the National Crime Agency, Border Force, Immigration Enforcement and the CPS with the task of relentlessly pursuing and disrupting organised crime groups profiting from the people smuggling trade.

With a handful of Europol cells in Sicily and The Hague and the rest on standby in the UK to deploy to different areas in the region as required, they will exploit every opportunity at source, in transit countries and in Europe to bring the gangs’ criminal operations to an end. The UK is also a leading member of the ‘core group’ of EU Member States and African partners developing the EU’s ‘Khartoum Process’, focused on concrete actions to combat people smuggling and human trafficking in the Horn of Africa.

We also need a Government in Libya that we can work with to address this problem as the majority of people are travelling through that country. The UK is working with EU partners on what more can be done, but we are clear that it is essential that any measures taken do not increase the pull to the EU. As the Prime Minister has repeatedly said, we need to break the link between embarking in unseaworthy boats from North Africa and entering and remaining in the EU illegally. This form of illegal migrant funds organised crime and undermines fair access to our countries. That is why we welcome the decision of the EU Foreign Affairs Council on 22 June to launch a military operation in the southern Mediterranean. The operation will seize smugglers’ vessels on the high seas and will disrupt smuggling networks and prevent further human tragedy.

More widely, to have a credible EU migrant policy and to free up resource to help those genuinely in need of our protection, we must remove the perception that getting on a boat will lead to automatic settlement in the EU. Until we do that numbers will continue to grow, criminals will get richer and public confidence will be damaged irreparably.

Wherever possible we should return the boats immediately whence they came. But if we cannot do that we must ensure that when they arrive on EU shores we stop, fingerprint, and screen migrants to control their movement and to distinguish between genuine refugees and economic migrants.

We must ensure that they cannot travel further than their point of arrival and must return them without delay to their country of origin. That means investing real effort in infrastructure and expertise at the most exposed borders. But is also requires the determination to make it happen, not least from those countries most affected.

It is also clear that we need to enhance efforts to help stabilise the countries from which migrants are travelling. This includes stepping up efforts to address conflict and instability as key drivers of migration, including in Syria. The UK is at the forefront of the international response to the crisis in Syria, committing £900 million in humanitarian assistance. Our support has reached hundreds of thousands of people across Syria, Jordan, Lebanon, Turkey, Iraq and Egypt.

We also support the EU’s proposals for sustainable protection in North and East Africa under EU Regional Development and Protection Programmes (RDPPs). RDPPs aim to improve the conditions for refugees seeking protection in their region of origin until they are able to return to their homes, and to help support their host communities. We are already participating in the Middle East RDPP, which is supporting a sustainable approach to protection for those who have fled to neighbouring countries to escape the Syrian crisis, and we have pledged €500,000 to that Programme. We support the proposals for new RDPPs in North Africa and the Horn of Africa. Enhanced, safer and more sustainable regional protection is key to protecting those in genuine need of refuge, and preventing further dangerous journeys to Europe.

We will continue to work with our EU, Mediterranean, and African partners more broadly to develop and implement actions in the region in order to reduce the number of those placing their lives in the hands of criminal facilitators and the resulting loss of life.

Yours ever

Rt Hon James Brokenshire

Last year our equity value of Network Rail fell from £8.18 billion to just £6.39 billion. It is a very small sum for all that land, all those buildings, all that track and signal investment. Worse still, our equity value went down despite the railway spending another £6.47 bn on investment that year. I say our because of course Network Rail is owned by all of us, the taxpayers of the UK.

Let’s just look again at those numbers. Network Rail invested more in 2014-15 than its complete equity value at the end of the year. Despite investing so much, its equity value went down.

It takes a special management genius to be able to spend so much and to have so little equity at the end of it to show for it. It is true a lot of the investment was paid for by borrowings, but surely the idea is to add value, not to subtract it if you borrow to invest. When adding new investment to a well established investment and property, it is normal to show a profit on the investment when you put it in. Furthermore, Network Rail continued to enjoy high levels of subsidy/train operating company revenue from a rail system which remains heavily subsidised.

Overall last year it reported an after tax loss of £376 million. It did not have to pay large amounts of tax, but decided to write off tax losses it held as an asset, on the grounds that it was unlikely any time soon to be making sufficient profits to be able to use up the tax losses! However, if you turn to another of the financial statements that says the “total comprehensive(expense) for the year was (£1791 million)”,  that is a large negative sum.

So the owner of the some of the best property routes into the hearts of our cities and across our countryside, with a monopoly over them, is a big loss maker that invests in a way which reduces the equity value of its business. Network Rail is putting very large sums of capital into the railway, but seems to lack discipline over how much to spend and how to control the costs of individual projects. I was all in favour of a new Reading station and associated works, but did it really need to take a rumoured £900 million to do? What return will taxpayers receive on that and similar investments? Why can’t the railway earn a living on all this new investment? The fares are certainly high enough. The problems lie with the cost base, and with the large number of empty seats they run around the country without the marketing flair to fill them. Meanwhile commuters and people on busy routes at busy times of day suffer from too few seats and high prices.

German enthusiasm for a United States of Europe has been a given of the European project. Mrs Merkel is probably allowing herself a little private celebration that once again she has quelled rebels over lending money to Greece and has persuaded her anti bail out Finance Minister to back her and refrain from playing to the no more loans gallery. She probably knows that in practice money lent to Greece is going to be written off or placed on the never never in a way which makes it effectively a grant. She also knows that the German people are not ready to approve grants to Greece.

Juts as one problem recedes temporarily, another arrives in her In tray. Germany wants some migrant labour, as its population is falling and its economy is capable of generating extra jobs. The shock news that Germany might accept 800,000 refugees this year shows the scale of the problem now confronting the EU’s rulers. Germany may well be tolerant and friendly toward migrants for the most part, but the pace and size of this migration stretches even well run administrations trying to register, help and house all these new people. There are those in Germany who now say this is too many too quickly, and despair of the lack of proper border controls elsewhere in the Union that allows so many to travel through their countries to reach the German promised land.

Mrs Merkel does what is now a reflex action for German Chancellors under pressure in the EU – she picks up the phone to the French. On this occasion she wanted to discuss changes to the Schengen agreement on open frontiers. This response is somewhat different to her initial response to the UK’s proposal that we gain more control over EU migrants into the UK when she claimed to be a resolute supporter of free movement or completely open internal EU borders. Now German public opinion is on the move, maybe reform is possible after all. Germany seems to be considering reimposing proper German border controls, with German decisions on who should be admitted, if the rest of the EU both fails to control their own external borders properly, and fail to take their fair share of in bound migrants to the EU as a whole.

The BBC likes to contrast the UK taking say 15000 refugees with Germany taking 800,000. The true comparison is with the UK taking 600,000 migrants in various categories, many of them coming under free movement rules within the EU. Maybe German can now understand our worries about the ability of a government to keep up with migrant demand for homes, school places, health facilities and benefits if they come on too big a scale.

The German people have not been told the truth about the price of creating a United States of Europe. Germany will need to pay a lot more to other parts of the Eurozone, just as West Germany had to pay a lot to East Germany when they amalgamated currencies. Germany will also continue to be the receiver of migrants of last resort if they continue with one EU country with a common external frontier policed by Greece, Italy and the others.

For now under Mrs Merkel Germany remains the leader of an EU on a wild ride to political union. If more of the German people rumble the nature of the plan and see just how much the Euro will cost them German opinion might shift towards more German answers to EU created problems. Germans do not seem to have the same commitment to helping Greeks that West Germans had to helping East Germans.

Should anything more be done to promote and encourage safety and security on trains? Today’s worrying news makes this a topical question which I would be interested to hear about.

I have pointed out in past years that Network Rail, our nationalised railway industry, is very good at reporting large losses on trading and owning derivatives. Yesterday I looked at charities close to the state and in receipt of large grants that have made a financial success out of it. Today I want to start a review of a nationalised business that receives far larger sums from the state and has made large losses out of it.

The Network Rail management claim they need to deal in derivatives, as they have substantial long term borrowings where the interest rate might go up when they need to refinance. Worse still the company has borrowed considerable amounts in foreign currencies, meaning they have a foreign exchange risk which would require them to pay back a larger sum if the pound falls whilst they owe the debt. They call what they do hedging.

Their latest annual account for 2014-15 states ” Some derivatives do not qualify for hedge accounting and are therefore classified as held for trading. Changes in the fair value of derivative financial instruments that do not qualify for cash flow hedge accounting are recognised in the Income statement as they arise.” This is a complex way of saying that although they claim all their derivatives are needed against borrowings they have made, accountants regard some of them as trading activities. When these go down in value they have to declare the loss each year as it occurs and put up more collateral – more cash – against the position they are running. Last year they needed to find an extra £690 million of cash to sustain their derivatives. The reported loss on derivatives was £982 million.
Is this what a nationalised.l railway should be doing with taxpayers money? Is this Jeremy Corbyn’s dream way to run a nationalised railway? I don’t think they should be borrowing in foreign currencies in the first place, and am glad they are now treated as a business owned for taxpayers by the Department of Transport, using the Treasury to borrow money for them in sterling. Their revenue is in pounds so it is better their debts are in pounds.

When we are trying to control public spending it does not help when a large taxpayer owned business has such an expensive position in derivatives.

It is good to see a group of charities which are closely linked to the public sector doing well financially. The Housing Association movement has a successful business model. They invest in residential property, often with grant aid for the investment. They let most of the homes out to people who usually need Housing Benefit to pay the rents, so there is state underwriting of their main income. Housing Benefit stands behind many of the rent increases that are now common, owing to pressures from demand on the supply of rented properties. They make a surplus or profit on their trading accounts. They pay no tax on this surplus all the time they maintain their charitable status. They then see the value of their residential holdings go up as the market rises, yielding substantial tax free gains.

One of the largest reported a surplus of £209 million last year on trading account. It held £340 million in cash and liquid investments. Its properties which cost it £5.6 billion to buy and build were worth £16.3 billion (at market value assuming with vacant possession). It had received £2.695 billion of accumulated grants. This pattern seems common. Another I look at recorded an operating surplus of £106 million last year, held £170 million in cash and liquid assets and held £3.7bn of gross assets at book cost which was doubtless a substantial understatement of market value.

The issue I want to raise is what more can the Housing Association movement do to assist with the wish of many more people to own their own home? Could they use their cash, their skills as developers and their ability to borrow against the security of their large portfolios to make many more new homes available for affordable homes to buy? What should the government’s policy on grants be, given the financial strength of these bodies? Are these bodies doing enough to help in a market short of housing with high rents?

86% of UK householders would like to own their home, but only 64% do. This is down from 69% in 2001. Worse still the proportion of people under 40 who own their home has shrunk fastest, thanks to the pressure of demand and pre 2007 lending policies driving up prices.

The government has set an ambitious target to double UK exports by 2020. That would certainly boost growth and transform the balance of payments. Equally helpful would be reducing imports by making and providing more of the things we want for ourselves instead of importing them.

The Environment Secretary has recently said she would like to see the UK dairy industry expand its cheese, yoghurt and other added value manufacture of milk products. As someone who usually buys English cheese I know there is plenty of choice and good English product already available. Today I carefully selected UK yoghurt which was also available. It should be possible for the home grown industry to woo more domestic customers. I look forward to progress with clearer labelling without EU interference.

Homes are UK produced, but there is a wide array of components, utilities, fixtures and fittings which are imported. Maybe businesses could respond to the challenge of coming up with the perfect English or Scottish home, with a higher proportion of local materials and products included.

UK buyers seem to like buying cars imported from afar, whilst the UK industry is especially good at selling cars abroad. I have always bought an English manufactured car. I only once used a German car many years ago provided by the company I then worked for and was disappointed with the build quality and reliability. I have been satisfied with most of the English cars I have owned and impressed by many of the huge improvements they – and other overseas car industries – have achieved in recent decades in specification and performance. The UK industry could persuade more UK buyers.

Great advanced country manufacturing businesses are driven to success by great design and good technology. The UK has allowed some of its design edge to slip in textiles, ceramics, machine tools and other areas of engineering. As change is ceaseless and the digital age is anarchic in its impact on many old business models, there is still opportunity for the makers to march in bigger numbers.

One of the disappointing features of the public sector is how much it imports and how little it sells abroad. As a recent blogger has reminded us the NHS fails to bill lots of foreign visitors who receive treatment here. The nationalised railway along with the subsidised and directed private companies that form part of it import large quantities of equipment from overseas instead of basing the technology, design and production here.

Various parts of the UK public sector buy cars made overseas when there are perfectly good UK produced ones available. If I challenge this I am usually told it’s the result of EU procurement rules. Funny I don’t see German or French officials travelling around in UK made cars.