Author: johnredwood

I will attend the Conservative conference tomorrow.

At 11 am I will give a speech on what conservatism is all about at the Lyttelton Theatre , Birmingham Institute, 9 Margaret Street outside security. All are welcome. Mark Francois as Chairman of the European Research Group  and Sir William Cash will also speak.

At 5.30 I am on a CPS panel in the Conference centre  ( ICC Hall 4 Level 5) to discuss What would Margaret Thatcher do? I will concentrate on the pursuit of prosperity through wider ownership and lower taxes.

It is time to change the OBR driven control system. It is said to control the build up of debt and to keep the U.K.  state solvent. Strange then that over their years of influence state debt has grown massively, huge sums of money have been printed, we have lived through a nasty inflation, and debt interest costs as they report them have leapt up. To make it worse U.K. growth has been almost as bad as the EU’s, falling way behind the USA.

The central OBR control is absurd. Government has to set out tax and spending proposals to give a falling state debt relative to GDP five years out. So budgets revolve around an OBR forecast of a deficit in five years time. The figure is bound to be wrong as no one can forecast that figure reliably. OBR forecasts of nearer term deficits are regularly out by large margins. The five year target is a moving target, shifting out another year as each year passes, so the accuracy of the original target forecast is irrelevant. It does however lead to a permanent bias in official advice against any so called unfunded tax cut. There is no similar pressure against many unfunded spending increases. There is no pressure of any kind to get the Bank of England to lose less, and no effective power to cut the losses of nationalised rail or the Post Office.

We need a new system that controls current year and next year spending and borrowing better. The new government saying current spending and current revenue should balance is a start. Their wish to be allowed to borrow more to invest only makes sense if what they invest in goes on to make returns. Borrowing to do more HS2 or Horizon computer type projects is a very bad idea. Leaving utilities investment to the private sector is a better idea than effectively nationalising them and discovering the state  cannot afford the investment and are no good at running them.

When I listen to the PM and Chancellor I want to remind them they are trying to steer or improve a £2600 bn  economy. All we hear from them as they seek to find an alleged £22 bn is items involving £1 bn or £2 bn. These are scarcely rounding errors in the national accounts. If they want to make a difference they need to be moving and finding tens of billions as £26 bn is just 1% of the total.

The big idea to get faster growth bears a resemblance to the previous governments policy, with the injection of a faster pace and less realism. It is to generate green jobs through decarbonising energy in a hurry. This entails writing off much of our fossil fuel driven economy before it is worn out, making net growth difficult to achieve. The £3 bn a year of state investment through the National Wealth Fund and Great British Energy is tiny in relation to the total investment of well over £200 bn it would take to decarbonise electricity generation and to replace the nuclear power stations about to close through old age. It is not a lot more than the previous government was spending through U.K. Infrastructure Bank and the British Business Bank. It is an expensive  new pair of letterheads and brass plates and more management overheads.

They invented a £22 bn black hole as a political slogan to seek to bury a Conservative Party that had been badly wounded by a disastrous election defeat. They do not deny that £11 bn of it is their very own inflation busting no productivity gains awards to public sector employees. They do not set out how many underspends or over provisions they also inherited. Without the detail why should we believe them?

There is a rule emerging. Every spending cut or tax rise they want to make can disappear as it hits reality. Taking fuel payments away from most pensioners is meant to save a modest £1.3 bn. Now they are energetically trying to get more pensioners signed up for Pensioner  Credit. If 400,000 do so there is not net saving from the change.

They told us they could get £1 bn more from taxing Non Dom’s more. As the rich head for the exit it is quite likely there will be no net Non Dom  gains. Meanwhile a lot of money that would otherwise fund businesses, employ people and lead to shop and VAT revenues will have gone elsewhere. There could be an overall loss.

They look to VAT on school fees to bring in another £1.4 bn.   They now face a court case claiming VAT on school fees violates the  very Hunan Rights laws Labour normally reveres. They could lose the case. Meanwhile they need to offset against the extra tax the costs of more pupils taking state school places when their parents can’t afford the fees. Those parents who do dig deeper to pay may then not be paying so much VAT  on other things they would have bought if the school fees cost them less. The schools will of course be able to reclaim  the  VAT they pay on inputs which also reduces the gains  by a Treasury estimated one quarter.

The extra oil and gas windfall tax helps kill off extra investment and production from the North Sea. Aiming to raise maybe an extra £500 million it is along with the end of new licences likely to mean a fall in revenue. At a combined tax rate of 78% who is going to want to take the risks of anything new?

 

Mr Miliband spent years in Opposition preparing for the day when he could unleash his decarbonising zeal on what is left of U.K. industry. Once in office he announced a firm target of all electricity generated here being clean or carbon free by 2030. Only after this extremely expensive revolutionary pledge was made did he write to National Grid asking for urgent site of the plan to do this,and an estimate of the costs. What a disaster to have to admit he had no plan and settled for a target with no idea how much it would cost to hit it, or even whether it could be hit.

Yesterday his embarrassment should have got bigger. National Grid published a reply saying they do not have a plan either, but they will work hard to produce one. They will consult everyone who would need to do so much to bring it about and presumably include in consultation all those who would be expected to stump up the cash. To plunge the friendly knife further into Miliband’s side they said they would need from the government a definition of the grand target Mr Miliband has set. Ouch!

So there we have it. An impossible target to hit unless you redefine it to allow the burning of fossil fuels in stand by generators when wind and sun let us down. A huge and unspecified budget to end all our current nuclear and gas power stations and to build enough replacement power taking account of the variability of wind and solar.

One final thought. As Mr Miliband has admitted he does not know the costs of putting in all that renewable power, how can he offer us £300 off our bills were all the money to be found to build so many windfarms.

People have suffered  in recent years thanks to the lockdowns, the Bank of England created great inflation and some tax rises. The public sector has witnessed a surge in public spending and a big increase in staffing levels. The problems  in the public sector are not austerity but a big drop in productivity and massive misplaced spending.

I used to take to Chancellors and Chief Secretaries short lists of large losses by the public sector. The state has clearly not been short of money because the Bank of England has pocketed £75 bn so far to pay its losses in the last couple of years. We have seen a £20 bn loss of productivity in public services since 2019 as they were given plenty of money to add personnel without adding output. The true figure is higher, and we now have a five year loss of any productivity gains during a period of big spending on smarter digital technology.

The public sector had billions to sign people off as permanently unable to work when more with support and training could get a job. Government tipped billions into a southern railway called HS 2, as its budget overrun more than threefold and the decision was taken that it would never get to the North which was the original big idea. The state afforded the luxury of a Post Office expensive management which ran up losses of £799 m with no one in power objecting. The new government  has not queried or changed any of this.

The new government is worse. It thinks it fine to give out big pay awards with no clauses on boosting service quality and output for the extra  money. We need better pay with smarter working. Whilst they say there is a shortage of cash for pensioners winter fuel there is no shortage of cash for anti driver road schemes, for welcoming more migrants who came illegally, for importing more of our energy as we close down our own oil and gas prematurely.

The public sector is not short of administrative staff and not short of money, It is not short of expensive managers. It is short of effective managers who spend wisely. It is also now short of Ministers who care about value for money and know how to get back lost productivity.

The government says it brings change. It wants national renewal without describing what this looks like or how it happens.

They promised to stop the small boats by appointing a new Border Commander. Conservatives had already done that. The Labour one will be the boss of the Conservative one, but as yet there is no legislation to give them any new powers.Meanwhile numbers arriving have gone up

They said they will set up Great British Energy and a National Wealth Fund to boost investment in renewable power. The Conservatives had set up U.K. Infrastructure Ltd and the British Business bank to do that. Ironically as they have a corporate structure and powers they have to implement the same Labour policy until the government manages to set up the renamed bodies.

They think regulating landlords more will help the housing problems. They have decided to take over the bad Conservative bill and make it worse. Their Bill will cut the supply of homes by more.

They say they are ending austerity. Instead they do the opposite, cutting pensioner benefits and threatening many with tax rises. They claim Conservatives starved public service of money when Conservatives put through huge money and real increases in NHS spending. The issue is how do you boost productivity and quality and manage the money better.

They say they inherited £22 bn of unfunded spending but refuse to itemise the bill or provide any evidence. They have increased public sector wages by £10 bn which is unfunded.

They carry on with creeping full rail nationalisation with no plan to boost fare revenue and cut the huge losses. They grant a big pay award to well paid drivers without negotiating any productivity gain.

They sound like an Opposition with a majority. They criticise what government is doing and blame past Ministers. They criticise the economy and then seem surprised when confidence falls. They criticise the public for our behaviours.

When will they show how they will stop illegal migration, slash NHS waiting lists and get the economy  back to being the fastest growing of the G 7 as it was in the first half of 2024 after a slow patch.

 

 

 

 

 

 

 

 

 

 

 

Why didn’t the PM and Chancellor see that telling us Things will get worse was bound to put people off spending and investing? Why didn’t they think forward to their October 14 th Investment summit when they want to tell the world investing in the U.K. is a great idea?

Why did they think making up a large number for a deficit which they could not back up with credible numbers was going to help? In their rush to trash everything about the finances and government to blame the Conservatives why didn’t they see that would alarm everyone with prospects of more taxes and spending cuts to come?  When will they take responsibility for what is happening, as they can change anything they want to as quickly as they wish?

The Chancellor’s speech failed because it was still looking both ways. It both said there are plenty of opportunities ahead whilst continuing to argue the government will need benefit cuts and tax rises to battle the alleged budget black hole.

If she really wants faster growth she needs to cut taxes and boost benefits to those in need. She needs to get more people into work and off benefits. She needs to tackle the disgraceful waste and bad spending in the public sector. She could start by slashing losses at the Bank of England, the nationalised Post Office and the nationalised railway and HS 2.

 

It is her choice to lose billions on bonds. Her choice to continue with public sector management of rail that needed. £ 33 bn of taxpayer cash last year. Her choice to allow the public sector to charge taxpayers £20 bn more for inefficiencies on top of the inflation if wages and costs.

Consumer confidence has fallen. Investors are putting off new projects. Landlords are selling up. Shareholders are taking gains while they can. That’s what two months of things can only get worse from the government does. That’s what leaving open so many possible tax rises does as people fear they will be taxed into financial difficulty.

Newspapers and media fuel the downbeat mood with item after item asking who might the government come after? There is a mighty long list as there so many groups Labour seems to dislike. Will they come for landlords, savers, people wanting a decent pension, the self employed, the drivers, the rich, the high earners, all the successful, the strivers, people with good homes, energy companies, banks, small businesses, large companies?

If you want growth and more investment that list is the list of people and companies that will do most to deliver it. It is a bad idea to let them all fear the budget. In three months many of the super rich will have gone to homes elsewhere and will have signed the papers to pay their taxes to other governments. Many of the well off will be well advanced with plans to move away or with better legal ways of placing their savings at home to reduce the coming tax bill. Many strivers will strive less or take early retirement, deterred by the likely higher tax and growing hostility to running a business or renting out property.

The government message seems to be “I warn you, do not work for yourself, do not save too much for your retirement,do not  build a successful company or invest successfully. The government will be out to tax you.”

 

Once you are in government with a big majority and a mandate for change you are responsible. The electorate knew what they didn’t like about the former Conservative government and sent it packing. They did so by half the 2019 Conservative vote abstaining or voting Reform. Labour now has to prove it can govern better. It has to earn the huge majority first past the post delivers when one of the two main parties sees its support collapse.

So far we have an Opposition with a majority. How is the economy we ask? Broken they say. Will you make it better? No, it will get worse.

How is the NHS we ask? Broken they say. Can you fix it? It is going to take years they reply. The plans of how to do it are still secret.

How will you get growth we ask? By delivering huge amounts of investment in wind and solar power they say. How will you do that and afford that? The Secretary of  State sends an urgent letter to National Grid demanding a plan to get to net zero and asking how much it will cost. Listening to Labour in the election they had worked all that out in 14 years in Opposition.

How will you stop illegal migration we ask. By appointing a new Border Commander and working with the French authorities they reply. We do not need an offshore processing centre or destination for illegals they assert. The last government had tried both those options. Why have numbers been going up over the first three months of the so called new policy?

How will you deliver the promised £300 off home energy bills we ask? Domestic energy is about to go up 10%. Firms putting in new renewables or running back up gas power stations will need to make profits from higher prices. The government seems to be dropping the £300 pledge.

How will you clean up politics as promised we ask. We will bring in a rule against donors buying us all expensive new wardrobes of clothes after they have given us an initial makeover they reply.  We will say Unions giving us loads of money  has no bearing on our employment law changes, they chirrup.

It’s time Labour behaved like a government. You defend what the government is  doing or you set out a detailed working plan of how to fix problems. You are proud of what the country is doing and highlight success, not look for everything bad to run down. If something needs improving then fix it.

 

In the last Parliament I had a policy of not accepting gifts or paid for hospitality at sporting events or expensive concerts. I did not ask for or receive payments for articles and media appearances about U.K. politics. I paid for my own clothes and entertainment and for my own election leaflets in 2019.

An MP is on over £91,000 a year and does qualify for expenses when living away from home to do a job which requires you to work both in Parliament and in the constituency. I find it difficult to know why an MP would think it a good idea to accept the gift of expensive clothes when it is bound to lead to a huge debate about the suitability of them and the motives of the donor. It is also debatable whether accepting invitations to expensive entertainments is wise.

Clearly if you are Prime Minister or a Cabinet member then some great events require your presence as office holder. A PM should be seen at a major sporting final with a  U.K. competitor. A culture Secretary needs to attend a wide range of events to take an interest in the sector.A Foreign Secretary needs to do plenty of international travel and attend grand events.  An MP should attend Remembrance Day and other civic occasions in his or her official capacity if invited.

We are not debating official and accepted roles and support,  but discussing how some MPs pursue  personal pleasures in a privileged way, getting a freebie because of their office but not undertaking an official duty at it.

Different and tighter rules apply to Ministers than to MPs.Ministers make decisions. Many people want to influence them, either in a specific case like a grant of a licence or planning permission they need, or in a general tax or regulatory change they would benefit from. I remember as a Cabinet. minister being invited to join rich people on their expensive boats in the Mediterranean with flights paid to join them. I used to reply that I was busy as a Cabinet Minister so could not join them but would be pleased to be invited when I  was no longer in the cabinet. Although they assured me they were not just inviting me because of my position I got no updated invites once I left the government.

A Minister of course compromises themselves if they accept expensive leisure activities with rich people. A Minister also invites suspicion if they meet and wine and dine with leading billionaires without coming clean  if the billionaire influenced them to support their drive for net zero or vaccination or more EU or whatever global cause they are promoting.

Rich people tend to press Ministers to do what the governing elites of the world and the international treaties require. The elites usually get what they want without financing the leading politicians, because the whole net zero ,world health and wars approach is baked in anyway by international law and international get togethers . As a Minister you need to be strong and self confident to turn down one of internationally agreed nonsenses that public bodies unite behind.