Author: johnredwood

 

          I believe in  freedom of the press. If the press  needs regulation on top of the criminal law which already applies to newspapers and journalists it should be self regulation, not regulation under any kind of political control.  In order to have a system of self regulation, the  press needs to buy into it and operate it. Politicians should not force a system onto the press that they are unwilling to operate.

          If there are bad practices which the country wishes to prevent, Parliament can legislate to make them illegal. The worst abuses by some in the press in recent  years were against the law. Phone hacking is against the law. There is no need to set up expensive and controversial regulation to tackle people wh0 break the law. They should be charged in a court of law.

           Other occupations which have fallen under politician inspired “independent regulation” are often the worse for it. After years of extensive increase in financial regulation, switching it from self regulation to Statute based regulation, we had the worst banking crash and set of scandals in living memory. That was no great advert for Statute backed regulation.

 

              I want cheap energy. I have tried various proposals to bring this about, all to little avail so far.

              The Chancellor and Prime Minister now want cheaper energy. It is good to have powerful allies. So why can’t they just fix it?

              The reason is simple. All the time we are in the EU and bound by its laws, there is strong pressure for dear energy. We are under several legal requirements which necessitate dear energy.

               The UK has been forced to close a number of coal and oil fuelled power stations which provided relatively cheap electricity, to comply with an EU emissions directive. I have urged the government to seek a temporary exemption whilst we sort out new ways of generating affordable power, but Mr Davey the Energy Secretary has not done so. There is no guarantee we would get such a derogation, but surely it would be worth a try? If we could demonstrate without these older stations we might run out of power we could  just ignore the Directive on grounds of security of supply and overriding national interest if they refused to see sense.

               The UK signed up under Labour to an extremely expensive renewables obligation. The UK is having to expand its output of renewable power massively. This is expensive power to provide. The more we rely on it, the higher our bills go. Much of it is interruptible, so we also have the extra cost of back up power sources for when the wind does not blow or the sun is not strong enough.

               The UK also signed up to carbon reducing requirements which reinforce the move to dearer energy.

               Labour signed up to these laws under Mr Miliband as Energy Secretary. He told us at the time that it would mean dearer energy, but he thought that a price worth paying to have a pioneering carbon reduction policy. Now he says he wants energy prices frozen, regardless of the rising costs of renewable energy as the proportion of it increases, and regardless of the costs of gas or oil on the market. Under pressure has had to agree his freeze policy could not work if world energy prices took off during the freeze.

           Nor can they work on the figures. The typical profit margin of a large energy company in the UK is 4%. If all companies worked for no profit at all – not something that of course can work – they would still need price rises now to hit breakeven, given what’s happened to costs.  Mr Miliband is trying to offer people something for nothing. He is seeking  to spend far more than the current profits of the energy companies. He needs to grasp that if investors think the relatively low margins of the majors are going to be slashed, there is not much point in investing in UK energy. Who will then build or the new and replacement capacity we need?

              So what should we do? The UK government should go to Brussels and explain we need to have a dash for gas and other cheaper energy. The UK will do this regardless. We would be happy to contribute to a revision of EU law to make it legal and to help other EU countries also damaged by dear energy.  If not, the UK will simply have to take action on its own. It would be part of our renegotiation.  Our country needs cheaper energy. It is an overriding national interest. I see from the remarks of the Industry Commissioner in Brussels there are some in our EU government who understand just how much damage the EU’s energy policy is now doing. It is pushing much industry and business out of the EU to places where energy is cheaper.

 

The Economist has supplied a graph which shows how far and fast house prices have risen in a range of countries.

Taking 1980 as the base with an Index of 100  (so there is available data for all  these countries) produces the following list of price rises: (approx Index level in each case judged from the graph)

South Africa   3590

Hong Kong     1450

New Zealand    1370

Spain  1180

Australia    1050

Singapore   1020

Italy 770

Uk 740

Ireland 580

US 360

Countries like Germany and Switzerland in the EU have seen smaller rises. In the EU  Ireland and Spain have shown the greatest overall rises in the boom. Both have experienced sharp falls  in recent years. Both have fallen victim to the destructive boom/bust cycle the Euro has imposed on them. Spain peaked at nearly 1700 before falling by 30%. Ireland peaked at 1151 before halving to 570. The UK was wise to stay out of this problem.

Outside the EU several Asian success story economies have experienced rapid house price rises. Hong Kong and Singapore have been particularly strong.  So too have Australia and New Zealand.

Judging by these international comparisons the UK experience has been in the middle of the pack. UK house prices experienced falls in 1990-92 when the UK was locked into the boom/bust cycle caused by membership of the Exchange Rate Mechanism and exit from it. The UK also experienced sharp falls in 2008-9 when again it experienced a violent boom/bust cycle thanks to misjudged fiscal and monetary policies.

There is no evidence from international comparisons that the UK is currently in an unsustainable house price boom, nor from the domestic market in most locations. It is true that in  central London in expensive areas there is substantial buying from abroad, usually for cash, which has been bidding up  prices strongly for some years. The competitive jurisdictions like Hong Kong and  Singapore have experienced something similar. To judge whether Central London is expensive for foreign buyers you need to compare high London prices with high prices in Hong Kong, New York, Sydney etc.

The government has this week published its details of the Housing deposit guarantee scheme. All those who have written in to condemn subsidies to the house buying market will be pleased to know that the scheme charges the lending institution a fee for the guarantee priced to avoid any state subsidy – which would be illegal under EU state aid rules anyway. This fee can and will be adjusted in future in the light of the actual bad debt rate experienced. I would not support a housing subsidy scheme where taxpayers were paying part of the bill for someone buying a property at up to £600,000.

 

 

         Inland Revenue figures confirm what this site has been saying for some years. To collect  tax from  the rich you need to set a competitive tax rate. That helps you offer  Income tax cuts to everyone else.

         In the last year of Labour when the rate of Income tax for the rich was 40% the top 1% of earners earned 13.9% of all the income in the country. They paid 26.5% of the total Income Tax.

        The advent of the 50% tax rate led to a predictable decline in the numbers of rich staying and paying, and to lower incomes. Their share of total income fell to under 12%. Self assessment tax receipts fell.  With the reduction of the top tax rate  to 45% the top 1% have got back up to near their 2009-10 position, earning 13.7% of total income and now contributing a record 29.8% of the total income  tax. (HMRC estimated  figures for 2013-14) Both the amount paid and the proportion of total tax  would doubtless be higher if the top rate was back to Labour’s 40% rate.

 

The UK has two governments for the price of three. Ministers are busier these days, because so much of what they do entails checking the EU government will let them do what they wish, or requires endless negotiation of new laws and requirements with their European partners.

I was asked yesterday to explain how Uk Ministers interact with the EU government. Ministers  have to attend Council of Ministers meetings to discuss EU policy and the introduction of new EU laws with fellow Ministers from the other member states. Each new EU proposal for a law is drafted and introduced by the Commission, the permament government of the EU. The Commission needs the approval of both the  Council of Ministers and the the European Parliament to introduce a new law, but has extensive powers to administer and enforce the large corpus of established EU law. Most EU laws are passed by qualified majority in the Council of Ministers, which means if the UK wishes to block a proposal it needs to find a number of like minded states to vote against.

A UK Minister faced with a new proposal for a law is wise to bring it to the UK Parliament. Parliament can debate it and offer advice to the Minister on what the UK’s negotiating position should be.  Parliament’s best chance to influence and scrutinise occurs before the law is passed by the EU. Once passed by the EU the UK Parliament has no option but to co-operate in the law’s introduction into the UK, short of seeking exit or renegotiation of our relationship with the EU.

Most major  EU laws pass in the form of Directives. These are instructions to national governments to pass into their national laws a new law meeting at least the minimum requirements laid down in the EU Directive. The UK Parliament has a role to supervise the Minister’s translation of the Directive into UK law. The Parliament can, for example, seek to limit gold plating, requiring the Minister to do the minimum necessary for compliance. Alternatively Parliament can ask the Minister to go further than the Directive where this is permitted. The EU also puts through Regulations, which are directly acting and do not need UK Parliamentary approval in the way a Directive does.

Usually a Directive is transposed into UK law as a Statutory Instrument. This limits Parliament’s ability to debate and prevents amendment. Parliament votes on a take it or leave it basis, under the pressure of knowing that the UK has no option but to introduce the law as required. Parliament could vote the Statutory Instrument down, demanding a rewrite, but this does not usually happen. The only way Parliament could refuse to implement the Directive would be by means of amending the European Communities Act 1972, which would presumably be part of exit from the EU or part of a renegotiation of our relationship.

Ministers also face officials advising them that things they wish to do in the UK in the normal course of government business might be illegal under EU law. Such advice is a matter of opinion, seeking to second guess the possible legal actions of the EU. It encourages a caution in  the governing system which some will like and others will find frustrating, as the easiest thing to advise is to do nothing for fear of EU displeasure. Ministers rightly have to live under the law in the UK as well, but here Ministers have the power to amend the law for the future if the courts interpret it in ways that do not seem sensible from government and  Parliament’s viewpoint. If the UK government falls foul of a perverse interpretation of EU law Ministers have no similar power to change the law for the future so they can carry out their legitimate business.

The EU has made huge changes to our constitution. One of the biggest is Parliament now regularly binds its successors,by rubber stamping EU law which a future UK Parliament cannot repeal. Another major change is Ministers are now not only beneath the law, but in the case of European law cannot change the law for the future when it gets in the way of good UK government (Unless the Commission, the European Parliament and other member states agree)

 

               The Prime MInister has rightly been tackling the EU Commission over the excessive zeal for new regulations. He is putting deregulation back on the agenda.

                 The new Transport Minister Mr Goodwill needs the PM’s help. His very first Transport Council tomorrow has on the agenda a new regulation on compensation and assistance to air passengers, as well as a new approach to joint air traffic management. It will also discuss a new Directive on railway safety.

                  Meanwhile, back at home we heard yesterday of the government and opposition combined plans to regulate the press, and listened to Ministers make a case for regulation of lobbyists through new UK law.

 

What should we expect of Ministers? What are they meant to do and what do they do?  Today I wish to set out a little more detail on a typical Ministerial job description, trying to explain why we have 3 different levels of Minister.  It should be born in mind that most Ministers are also MPs who still have to do most of  their MP duties, so being a Minister is a demanding and time consuming second job. Their Parliamentary activities  can be  more time consuming than a typical backbenchers, but are all related to their Ministerial job and are timetabled for them.

Parliamentary Under Secretary of State  (PUSS)

A PUSS or junior Minister is often the Ministerial assistant to a senior Minister of State with a large command, or for the Secretary of State in a smaller department.

Duties include:

 

Parliament –  Adjournment Debates answering one MP or a few MPs with specific cases or detailed queries on policy and the conduct of the department.

Handling many of the Committee stages of Bills and maybe some of the  Report stage on the floor of the House

Case work for the department, dealing with many routine cases that need Ministerial oversight – explaining the department’s policy to others, handling complaints, adjudicating some conflicts

Advising the Minister of State on policy and matters relating to the Department based on case work/ meetings/ contacts

Working with officials to ensure smooth running of the interface of government with MPs, the public and interest groups.

Ministerial visits to see the operations of the Department and issues/ people on the ground

Briefing and appearing in  some technical and specialist press and regional media explaining departmental policy

Handling consultations and other meetings with lobbyists/Councils/MPs and reporting to the Minister of State

Handling some specialist Parliamentary Questions in his or her area.

Some of the senior PUSS ranked jobs like Economic Secretary to the Treasury have their own courtesy titles and some delegated responsiblities.

Minister of State

May have a courtesy title (Minister of Housing/Minister of Health/Minister of Local Government) for his or her quite large command

Responsible under the Secretary of State for the day to day running of the command. Influential in detailed policy development. May have substantial delegated authority under the Secretary of State to make decisions.

Chairs departmental meetings of officials and with outside interests to progress the work of the department.

Takes responsibility for all stages of many Bills and may make the speeches on 2nd and 3rd Reading. Will probably do the most difficult clauses in Committee/on report to relieve the PUSS.

Answers Parliamentary questions on his or her area of interest.

Makes Ministerial visits, handles substantial media on his or her  specialist subject.

Reviews difficult cases, adjudicates disputes within the department and between the department and others. May belong to junior Cabinet committees for agreeing cross departmental policy and approaches.

May act as the representative or envoy of the Secretary of State to sort out a given problem.

 

Secretary of State

Ultimately responsible for everything that goes on in the Department he or she leads, save for those financial, personnel and regularity issues which are the responsibility of the Permanent Secretary, the top official running the department.

May leave all the Parliamentary work on new laws to his junior Ministers, but would be expected to make big speeches on 2nd reading of major contentious  Bills and handle any really sensitive and hig profile  issue that takes place on the floor of the Commons.

May leave most casework to Juniors, but would be asked to decide in big cases involving high political risk or high  risk to the department.

Has to attend Cabinet and Cabinet committees, represent the department to the rest of the government and help form general government policy.

Handles the major  interviews and media enquiries, particularly where the interview is national and likely to wander into general government policy.

Has his or her own pattern of visits.

Chairs important working meetings of officials, junior Ministers and outside interests.

May chair a daily or weekly departmental meeting of Ministers with or without senior officials to provide a general sense of direction and oversight.

Can help the Permanent Secretary run the department and can  control its policy (subject to the EU, official views, legal position etc), or may work collaboratively with senior Ministers of State who do more of this for the S of S. May delegate much of implementation  and day to day running to officials, or may take a personal interest in administration and implementation.

 

 

 

 

 

            Labour and Conservative Prime Ministers have for many years undertaken reshuffles that can do more harm than good.  The way they are carried out is crude. Too often there is insufficient time spent on training, mentoring, career and succession planning. The good practices of personnel management, and some of the common courtesies of working with others, are ignored because we are told “government is different”.

              Government is different. It has  more power. It has the power to take money off people, sending them to prison if they refuse to pay. It has the power to make everyone do as it says, by changing the law. It operates on a  huge scale, affecting directly the lives of every single person in the country.  Those characteristics, you might have thought, would encourage the use of the very best techniques of personnel selection, retention and promotion.

            Instead, reshuffles are often seen as ways of disciplining MPs by idle threats and hints of advancement. We read of far more reshuffles than are carried out. We read of far more sackings than happen. Whilst some of the press stories on Ministerial changes are  planted by others which the government cannot control, some of the most persistent have under various PMs come from the centre. A Minister learns of his pending sacking from a paper, not from his boss.

            There are three  good reasons why some Ministers need to be sacked. If a Minister is not good at the job and lacks the Ministerial skills, he or she might need to be asked to stand down. This should only follow clear warnings, the offer of mentoring and training, and all the other usual efforts made in business to get an executive to perform. The eventual sacking if  the help fails should not be a surprise and should be managed by mutual private communication.

          If a Minister is becoming too detached from  the government’s policy, is becoming an encouragement for dissenting views, and is seeking to rally MPs or other outside forces to his cause, the PM may have to move him or her or get them to leave. This should also follow attempts to get the Minister to play by the rules  and to stick to the common line. Mr Clegg should be having these types of conversation with Mr Cable, who often seems to be a loose cannon seeking to  appeal to Lib Dems thinking of a different Leader by providing a running critical commentary on the government he is meant to defend.

         If a decent hard working Minister has spent a long time at a given level of government and is not thought suitable for promotion, there comes a time when his or her place might be needed for some new talent. This is the more difficult case for sacking. The sensible way to handle this would be for the PM when appointing a PUSS or a Minister of State to outline the options for the future. He could say that typically someone might be a junior Minister for up to say  4 years, but then it would be upwards or out. The regular reviews a junior Minister should have with a Senior Minister would cover the Ministers future eligibility and suitability for promotion. By the time the Minister was asked to leave without promotion it should be no surprise, as expectations would be managed accordingly.

               Quite often the need for changes to Ministerial ranks is forced on a PM. This government has had to find a new Chief Secretary to the Treasury and a new Energy Secretary following the enforced resignations of Mr Laws and Mr Huhne. More  recently the government has lost its Railway Minister to the ambition of becoming Deputy Speaker. If the government is following a good policy of career advancement and training there will be natural successors available to bring on.

                 Managing expectations and eliminating most surprises will remove much of the bitterness from sackings. If someone is sacked out of the blue they will feel the world is unfair and will resent the PM. If they have been through a long process of trying to meet targets and expectations but have failed at least they will understand why they have gone and will have had a chance to put it right. If they have not made it to promotion they will have some idea of why and may be more reconciled. It will not have been a shock.   Each category could also be given some flexibility on leaving date if that would help. We need to get away from the idea that many jobs have to be switched all at the same time. Occasional minor adjustments might be a better, less destabilising way.

               Equally important to the task of removing people without surprise or without too many feelings of ill will is the task of giving new Ministers clear instructions on what  they are expected to achieve. Indeed, you can only have a fair and effective system of personnel management if people are set achievable tasks and are judged by reasonable criteria on how well they have achieved those tasks. I will talk in a later blog about what the different levels of Minister should be expected to do, and how a PM and his senior Ministers can monitor, assess and encourage to get better results.

 

In the 1980s I published an antidote to the Marx Manifesto. A similarly slim volume, it was entitled “The Popular Capitalist Manifesto”.

I accepted Marx’s tenth proposal, free education for all children. I stood most of the other Marxist proposals on their head to recommend policies which could promote the freedom and prosperity Marxism repressed.

In place of the abolition of private property I proposed Everyone an owner, everyone a shareholder – wider ownership.

In place of a heavy progressive Income Tax I proposed lower tax rates for all earners.

In place of preventing inheritance I proposed a multigenerational society where property can be passed relatively easily from one generation to the next.

In place of centralising credit in the hands of the state I proposed the ending of exchange controls, the conduct of a prudent monetary policy, competitive private sector banks and the  reduction of state borrowing and debts.

In place of more nationalisation and state control I proposed more competitive private enterprise

In place of enforced movement of labour and state control of production I favoured freer markets, freedom to work and to invest as you chose.

In place of industrial armies I proposed a sensible welfare system allied to freedom to chose your employment

In place of nationalising the commanding heights I favoured more private sector involvement in the economy.

In place of the state forcing town and country together, I proposed roles for the state in maintaining law and order and defending the state from threats.

My slim volume was of interest to the eastern European states emerging from the long winter of communist tyranny. I went to several of the newly freed countries to talk to them about the transition to a freedom loving democracy backed by a free enterprise economy.

 

 

 In 1848 the slim volume entitled “Manifesto of the Communist party” was produced for a revolutionary Europe. It contained the by now familiar distorted view of history that it was a  prolonged class struggle which would end with the triumph of the proletariat. More importantly, it proposed ten major policies or Big Ideas  which have held considerable sway in Europe ever since.

           1. Abolition of all private property and the application of rents for public purposes.  This  helped inspire Development Land Tax, Section 106 agreements, the accumulation of large areas of public property and a range of other Labour measures and taxes to try to capture  wealth from property.

2.A heavy progressive or graduated Income Tax. Labour got its marginal rate up to 83% for earned income and 98% for unearned income in the 1970s, rates Marx would have approved. They resiled from these 1997-2009, but started to hike rates again at the end.

3. The abolition of all right of inheritance.  This has fathered Inheritance taxes,  the Republicanism of some Labour supporters, the end of hereditary principle for the Lords – though political succession is a feature of some of the great Labour families.  

4.Confiscation of the property of all emigrants and rebels. Never caught on in the UK, though popular in some autocratic regimes abroad.

5. Centralisation of credit in the hands of the state, through a monopoly nationalised bank. This is now done through a monopoly Central Bank with extensive regulation of the commercial banks. Labour got furthest with this during the crisis of 2007-8 when they bought shares in banks instead of putting them into controlled administration or some other private sector solution. As a result more than half the UK’s banking system was in public hands or under strong public influence.

6.Centralisation of the means of communication and transport in the hands of the state. Labour reached the point where the UK had a nationalised airline, railway, road freight, postal and telecommunications service.

7.Extension of factories and instruments of production owned by the state (plus planned agriculture).  Labour did assemble substantial nationalised manufacturing interests, (aerospace, car manufacturing, computers etc) and the EU has taken to substantial planning and direction of agriculture.

8.Equal requirement of all to labour and the establishment of industrial armies. Public sector employment has risen substantially, but there has not been enforced direction of labour.

9.A gradual erosion of the distinction between town and country, by a more equitable distribution of the population – this has increasingly happened as a result of economic growth anyway.

10. Free education for all children in public schools . Abolition of child labour.(Good ideas) This I am pleased to say has happened.

  One of the main reasons Mr Blair wanted to make such an issue of abolishing Clause IV in the Labour party constitution was to renounce the Marxist influence over Labour’s past. Is this to remain Labour’s position, or are they moving back to the Marxist influences? They seem now to favour more public sector control of energy industries, are against employee and citizen ownership of the Royal Mail, and moving towards more general price controls.

The fact that policies in this little book are still actively promoted today, including damaging ones, means we need to keep a look out in debate for those who are influenced by it.