Author: johnredwood

 

When I published the Conservative Economic Policy Review in 2007 it drew attention to the much faster growth rate recorded in recent years in London compared to the rest of the UK. Labour’s devolution and regional policies did not succeed in even arresting the economic underperformance of the UK outside London, let alone narrowing the gap between  London and the rest.

The ONS figures for gr0wth since then show more of the same. The period 2007-11 saw London grow by 12%  (nominal Gross value added) compared to just half that, at 6%, for the rest of the UK.  The CEBR and other forecasts are for London to continue outperforming in the period 2014-19, with their estimate showing London accounting for one third of the total likely growth for the UK as a whole.

No-one can deny Labour did direct much larger sums of public money to places away from London. They moved public sector activities including much of the BBC outside London.  They gave substantial devolved powers to Scotland, and some to Wales and Northern Ireland. They imposed additional taxes on financial and property activities concentrated in London. None of this balanced the growth or achieved the aim  of faster growth outside the capital.

I am all in favour of trying new policies, and extending old ones, that might help stimulate more growth outside London. I am happy for more of the public sector to move away from the busy city hub of our nation. What I am not happy about is the idea that London’s growth is wrong, needs to be stopped, or is unhelpful to the rest of the country. We should be pleased that we have one of the world’s great cities, that it attracts money and talent from abroad, and that it pays substantial taxes to contribute to the national public  spend.

The other evening I returned from speaking in Lincolnshire to Kings Cross at 11.15pm. The Victoria  line  train I took back to Westminster was standing room only for part of the journey. Last week I spoke to a business dinner about our EU relationship. When I left the restaurant in the West End at 10.30 pm it was difficult walking on the pavement for all the people out and about, and the buses went by  completely full. London is bursting with energy and activity, and is generating large numbers of business opportunities.

Brought up as a teenager in Kent, I looked to London for my future. I went there as often as I could afford the train fare. As a schoolboy and as a  student I wanted to enjoy museums, exhibitions, galleries, external lectures, music and theatre and the rest whenever possible. I always assumed I would get a job in London. London is still a beacon to many in our country, a place of opportunity and interest.

The problem we face is not that London grows too much, but that some other parts  of the country grow too little. The problem is not that wages  are higher in London, but that they are lower in some other places. Many people with businesses outside London do come to London from time to time to add to their orders and customers. London is not a threat to the prosperity of the rest of the country, but an opportunity to enhance it.

The government’s  economic policy has  allowed the economy to generate many new jobs. Many more families now have at least one income earner. The best way to cut the welfare bill is to help people get a job. The best way to cut  public spending is to help the creation of many more better paid jobs.

One of the best ways to get a better paid job is to accept a less well paid job and work your way up the organisation. Some get promotion with their current employer. Some change employer to obtain a better job. Some take advantage of  training programmes to lift their skills and earning  capacity.

The UK needs to lift its productivity so we can pay ourselves more.  We need to work smarter and more effectively. Current policies have led to more people working for themselves and to setting up new businesses. This augurs well for the future, as some of these will grow into larger concerns.

1.7m new jobs is a good start. Now we need more better paid jobs. I wish to see in the next Conservative manifesto tax, training and business policies which assist growth, higher productivity and better education and training for UK citizens. We need to place  strivers at the heart of our approach,helping remove tax, regulatory and educational obstacles to success.

It appears that Mr Clegg and the Lib Dems are as determined as Labour to deny England any justice on our lop sided devolution settlement. Rumour has it that they turned down Mr Hague’s request to join Conservatives in voting through English votes for English issues. If they would add their votes to ours we could pass a simple government motion to amend Standing Orders and from that date we would have English votes for English issues.

I am still awaiting a reply to my letter to Mr Clegg, which I reproduce below

 

The Rt Hon Nick Clegg MP

Leader of the Liberal Democrats

Liberal Democrat Headquarters

8-10 Great George Street

London SW1P 3AE

 

13 October 2014

 

Dear Mr Clegg

You have doubtless seen recent polls which show more than 70% of the public think that we need to offer justice to England as we complete further transfers of power to Scotland. As Scotland moves to having control over her own Income Tax rates, so we will need a way of setting Income Tax for England without the advice and votes of Scottish MPs.

The important first step to achieve more balanced devolution is the policy of English votes for English issues. We could do this by passing a simple motion amending the Standing Orders of the House. I would like to know if you and your party is in agreement, as it would be easiest to table it as a government motion and it would then have a comfortable majority. It would also mean you could share in the credit for doing something that is both just and popular. Our Amendment will give similar voting facilities to Wales and Northern Ireland depending on the degree of devolution to them.

If you do not agree with this proposal, then I and a number of my Conservative colleagues will aim to table it anyway, as we believe there will be a narrow majority for it in the Commons even without Liberal Democrat official support.

Yours ever

 

The Rt Hon John Redwood MP

Member of Parliament for Wokingham

Meanwhile the latest poll from Scotland points to a massive surge in SNP votes. If this is sustained at the General Election Westminster cannot ignore the force of the wish for more Home Rule.The UK government and Parliament will have to sit down and discuss  a new settlement for Scotland. That must also mean a new settlement for England too. If the SNP win most of the Scottish seats in 2015 it will mean the need to discuss a proper federal solution for the UK.

 

At the peak in 2007 130,000 mortgages a month were being issued. House prices were rising, new buyers came into the market. The rise in interest rates and the credit crunch which the authorities organised in 2008-9 changed all that. Banks had to throttle back on new loans. Some individuals struggled to meet their mortgage payments. The number of new mortgages slumped to 30,000 at the worst in 2008.

There has been a reasonable recovery this decade. By January of this year the monthly rate of new mortgage approvals was running at 76,500.  £18.5 bn was lent. By this September the figures have fallen back a bit. 61,000 new mortgages were arranged, with a value of £15 bn. This is still well above the low point, and well down on the high point of the  bubble in 2007.

Home ownership is a good aim of public policy. It is far better to look forward to your old age knowing by then you will own your home and not face a rent bill. Owning a property will be cheaper than renting the same kind of property over a typical adult lifetime. Ownership also gives you greater flexibility about use,adaptation and decoration of your home, subject to planning rules for the bigger changes. It is also 0ften easier to switch homes and move locations if you own, than if you are a tenant in social rented accommodation.

Homes are less affordable today when comparing prices with incomes than forty years ago. Part of this reflects social change. Two earner couples are more common now, and  greater account is taken of both incomes in mortgage calculations. Part of it means young people have to wait longer, save more, and achieve higher earnings levels before they can buy their first home. Some get round this by buying property jointly and sharing.

The Mortgage Market Review has required those advancing money to be properly trained, to take full account of the affordability of the mortgage for the individual, and to stress test the mortgage asking what would happen if interest rates rose. Some say this has held back mortgage lending in recent months as people adjust to the new system. Others say this is a welcome, as it should make it more difficult for people to take out unaffordable levels of new debt.

To have a healthy first time buyer market there also needs to be a sensible balance between new home construction and additional people seeking accommodation.

 

 

The latest polls from Scotland all show the same picture. The Labour vote has fallen substantially, and the SNP vote has risen in its place. One poll on a small sample (YouGov) goes so far as to show the SNP on 42% and Labour as low as 27%.  This accentuates the move more than others and would mean 43 SNP seats at Westminster to Labour’s 12. This would make the  SNP the third placed party comfortably ahead of the Lib Dems in seats given their current poll position. Other polls point to Labour losses on a more modest scale.

In the run up to the 2015 election I will not be making any of my own predictions of the Conservative result. I take this view for two obvious reasons. I believe a Conservative majority is in the best interests of the c0untry, and is the only way to guarantee the renegotiation and referendum on the EU which I think we need. It can be achieved and is my preferred outcome.  I know that if I made an optimistic projection for the Conservatives it would be written off as self serving and arrogant, and if I made a pessimistic forecast for the Conservatives I would be seen as defeatist and would delight my opponents who would use and abuse it.

According to pollsters and commentators  from here a Conservative majority is clearly  possible, but so are a number of other outcomes. The latest polls showing the SNP doing better are a reminder of the significance of third, fourth and fifth placed parties when they reach a certain level in the polls.  It is important to remember just how many MPs were elected in 2010 from parties other than Conservative or Labour:

 

Liberal Democrat       57

Northern Irish parties    18

SNP   6

Plaid     3

Green     1

Total  85    (13% of seats)

 

If we project this forward, there are some  reasons to suppose on current polls that this number could stay high in the next Parliament. Whilst persistent polls point to a substantial reduction in the number of Liberal Democrat seats, the polls also suggest there could be a substantial gain by the SNP in Scotland at the expense of Labour, and there could be  modest gains by Plaid in Wales.

If the two main parties again only share 565 seats out of 650, this means to have an overall majority one party  has to win 58% of the seats going to the 2 main parties to do so, obviously  more than the Conservatives did last time.  This is possible for either party to achieve, but gaining an overall majority is clearly more difficult when there are so many MPs from other parties. There is also the impact of votes for third and fourth parties on the outcome in close races.

Gaining a majority is also made more difficult for either party where people who would in the past have preferred one or other of the main parties and who wished to help choose between them in a General Election now wish to make 0ther points by voting for other parties. Clearly those voting for SNP know their party cannot possibly form the next UK government, but they may have other reasons for voting for them even in a General Election.

Last time there was only one combination of 2 parties that could command a majority in the Commons. That was a  Con/Lib Dem alliance. If the Lib seats say halve, and if the SNP gain more than  20 seats the position would be different next time if one of the main parties still fail to achieve a majority.  There are permutations where it would take three or more parties to form a government.

As the General Election gets closer some think more people will wish to contribute directly to the decision about whether to have a Conservative led or a Labour led government, by voting for their preference between the main two. This could lead to a majority government offering more stable government and the ability to deliver the manifesto promises. Others think this time more voters will want to make a different point, whatever the impact such voting may have on the balance between the two main parties.

Devolution could become an even more important issue if a Parliament is elected with more nationalist and regional party MPs elected and no overall main party winner. The party which had the best offer on devolution might be the best placed to form a coalition government in such circumstances.

 

 

Update 30.10.14   A further poll today now gives the SNP 54 seats with Labour down to just 4 and Lib Dems 1.

 

When I was committed to arguing the case to keep the UK out of the Euro I found the interventions of senior corporate representatives of some large multinationals  far from helpful.

Some car companies  for example were in those days committed to our membership of the Euro. They   told us we should  join otherwise it would adversely affect their investment in the UK.  They  forecast an erosion of the competitive position of their UK operations over time if the UK stayed out. They  told us or implied  that out of the Euro the UK would lose investment and jobs as they7 would need to place new capacity  and new models elsewhere.

Fortunately the main manufacturers   changed their  minds . The leading overseas companies  continued to invest in the UK, and still believe  the UK to be an excellent manufacturing base for some of their  operations. I was very glad to several of  them announce yet more investment for the UK recently . I am pleased they agree that the UK outside the Euro is a good place to make cars, in contrast to what some of them predicted during the Euro debates.

Other senior business people speaking for their large quoted multinationals got the Exchange Rate Mechanism totally wrong. They urged government to join it, which the UK  foolishly did. Predictably it did great damage to our economy, causing first a rapid inflation then a recession. The businesses in the UK which had urged membership were often badly damaged by the results.

Before commenting on our future membership of the EU, it would be good to have an explanation  from these large multinationals who got the past big European issues so wrong. They usually enlist on the EU side of the argument, whatever damage  EU policies do to  our economic progress.
It would be useful to have a critique from big business of the EU;’s dear energy policies, for example, or of the EU’s Euro austerity policies which have hit jobs and prosperity in many continental countries. When I led a large quoted industrial company I did not express political views as its Chairman, even though at the time I personally thought EU monetary and exchange rate polices would be very damaging and said so as an individual. Had I issued bad advice politically with my company hat on , I would have felt I should correct it for the sake of the company at a later date.

 

 

I am all in favour of better transport links to speed faster growth in the northern cities. I look forward to reading an appraisal of the various options for the Leeds/Manchester routes that we hear about this morning. We need a good business appraisal of capacity requirements and the cost of  various options to improve journey times.

We should remember that today the train journey time between Leeds and Manchester is 50 minutes, for a distance of  45 miles ( by road). The train time for the 18 mile journey across London from Ealing to Stratford is also 50 minutes.

The Ealing to Stratford time will be  reduced by Crossrail.  London badly needs both more capacity and faster journey times east to west. The trains are currently very crowded for long periods of the day and evening. The idea behind the exploration of northern options is to offer  improvement to the north similar to  the extra capacity and speedier journeys that Crossrail will bring to London.

In London the 50 minutes from Ealing to Stratford is as good as it gets, as it is a journey on a single tube line. Ealing to Upminster, at 33 miles still less far than  Leeds-Manchester, takes 1 hour 22 minutes by train and at least that time by road.

The growth of London was spurred by the construction of tube lines into the centre. These offered relatively slow trains taking direct routes into the heart of the city and meant people could live further out from the centre but still have a reasonable journey time into the business, shopping  and entertainment districts at the heart of London. Cross London travel prior to Crossrail has never been great. The northern needs are different, as they have  a pattern of segregated cities and the Pennines  in between which has to be taken into account when working out what best transport links can promote their growth. It is good to see some positive thinking on this topic.