Author: johnredwood

          Yesterday morning I heard a patsy interview of a senior manager of the Environment Agency. It started with sympathy for the difficult time they are experiencing, went on to ask them if they needed more money to do their job, and ended with the usual invitation to express the helplessness of the Agency before the force of climate change.  I can only assume the BBC are  colluding with this body, as I know they can give tough interviews if they wish. You would have thought they would pick up the public anger. Don’t they think it unacceptable that people have flooded homes and businesses?  Isn’t the main point of the Agency to do what it takes to protect us from floods and ensure we are supplied with clean water and a good waste water service? Where did the £1200 million spent last year go?

          What should they have asked?

          They should first have explored the issue of whether it is a deliberate policy of the Agency to allow large parts of the country to be flooded, as they seem to wish to restore old landscape prior to the draining of the land to create homes and farms for people. It appears from various EA statements that they do hanker after more wetlands and fewer farms and homes in certain areas. It also appears from the Chairman’s recent article that they think they can only protect urban areas, and will sacrifice rural ones. Clearly it is government policy to protect people and farms from flooding wherever possible. The Agency may be at variance with this aim.

          They should have asked where all the £1200 million spent last year went. Why was only £20 m spent on maintaining ditches and culverts? Why so little on dredging? Have dredging machines been sold off for scrap or allowed to rust without use in some places as has been alleged?  Why did the INCREASE in the staff budget, £30m, exceed the total spend on essential maintenance?

           They should have asked why the Agency seems to think it is sufficient to warn people of impending floods, rather than putting in place the bunds, barriers, pumps and other methods to divert the water from homes and businesses?

             I want Ministers to bring  this quango to account. It will probably need a new Chairman to give it a sense of urgency, to sharpen its priorities in the way most people want, and get value out of the huge sums its spends.

The French have often briefed against the Anglo Saxon way. They dislike our success at banking and financial services, disagree with policies that allow more freedom and flexibility to set up in business, to take a job or find a new employee, to encourage enterprise. President George Bush was not completely wrong if  he did famously say the French have no word for entrepreneur!

President Hollande set out on an interesting economic experiment. He was cheered on by socialists and bien pensant commentators on both sides of the Channel. Where the UK cut the top rate of tax he would increase it. Where the UK cut the tax rate on business, he would squeeze them harder to get them to pay their fair amount. Where the UK would curb the rate of increase in public spending, he would promote growth through a bigger public sector. Mr Miliband was egging him on, and used to refer favourably to the French experiment. Though he no longer is so keen on the French model as an example to us, he seems keen to copy parts of the policy  nonetheless.

So how has the French leader got on? He is now  very unpopular. The French economy hovers around another recession. Unemployment stays stubbornly above 11% compared to 7% for the UK. Youth unemployment is especially high. France has many areas of high deprivation in the big cities. The gap between Paris and the rest remains very large. 400,000 talented and hardworking French people are now working in London. Those recently interviewed by the BBC have told us they love the greater freedom, flexibility and positive environment London gives them to start up and grow a business.

It would be wrong to write Paris off. It is the only other great city in Europe besides London in terms of scale and prosperity levels. It still has many fine businesses and brands and many talented people who have not left. Similarly, it would be wrong to be complacent about London’s current success. Hidden in the figures is a decline in London as a financial centre relative to New York, thanks to tax and regulatory policies followed by the EU which are having more and more influence on the UK. Paris has lost a lot to London, London has lost high earning business activities to Switzerland, Hong Kong and Shanghai.

However, today France has deeper social and economic problems than the UK. Mr Hollande says he does not want fundamental reform of the EU or any Treaty change. The UK is pressing for it. If Paris wins this battle, as some expect, then that might merely hasten the UK’s exit when the people vote. Outside the EU the UK could pursue an agenda more friendly to business, jobs, success than we currently can achieve inside the EU. Then the gap between London and Paris would grow much greater in London’s favour. Does Paris want that outcome?

The Environment Agency last year received a £723m grant from the taxpayer and spent in total £1207m, the rest paid for by charges.

The staff costs of the Agency rose by £30m or 8% compared to the previous year, reaching a total of £395.3 million. The Agency employed 12,252 people including  temps and contractor personnel.  Pension contributions cost £56 m , with a loss on the fund recognised that year in the accounts bringing the total pension cost to £197.4 million.  The total cost of pensions was almost as high as the capital works, where they spent £219million during the year.

Within the capital works just £20.3 million was spent on improving or maintaining culverts and channels to ensure free flow of water. That is a mere 1.7% of their total budget, or 3.4% of their staff and pension costs. A further £69.6m was spent on improving embankments.

It looks as if the Agency has got the balance of its budget wrong. It clearly needs to spend more on keeping culverts, ditches and rivers in a good state to be able to handle large quantities of water when we have heavy rains.  The Agency spends a lot on people to warn us of approaching hazards, and to map and discuss the problems as they arise. It needs to do more and spend more of its large budget on works on the ground, probably using contractors not on its own payroll, to keep the water flowing.

It is an interesting to note that under the Coalition this quango has continued to be chaired by a senior Labour person. There does not seem to have been any attempt to remove the Labour Chairman, and he has clearly not made sufficient attempt to get value for money nor to ensure the Agency’s priorities are our priorities – keeping people and property safe from floods, and ensuring a good supply of clean fresh water for households and businesses. There is no evidence here to support Labour Lady Morgan’s claims.

Labour and Liberal Democrat MPs mainly stayed away form the Referendum Bill in the Commons. They clearly recognised that a referendum is popular with their electors and they did  not want to be seen opposing it and voting it down. In the Lords Labour and Liberal democrat peers did vote it down by refusing it the extra time last evening it needed, and refusing to speed up consideration of their many needless amendments.

It is strange world where two parties love the EU and all its works, want us to stay in, yet are determined to deny the rest of us a say in a  referendum. The stealthy way they killed the Referendum Bill tells us a lot about their approach to this most important of issues. Mr Cameron intends to try again in the next session, and may also use  the Parliament Act.

I welcome the Conservative decision to have more free votes. Far from creating a split party, this encourages better debate and more thought by individual MPs. The Conservatives offered a free vote on the Raab Amendment to the Immigration Bill and will be offering another on the issue of smoking in cars carrying children.

I see the mythmakers are back saying that a  divided party cannot be elected to government. This is complete nonsense. Margaret Thatcher led a very split party. She was constantly subject to attacks from the group of MPs who disagreed strongly with her economic and social policies. Called the wets, they briefed against her, ran rebellions against her in Parliament, and encouraged Michael Heseltine as an alternative leader or challenger. She won three election victories in a  row despite this strong internal opposition.

Tony Blair led a  very disunited Labour party. A group of left wing Labour MPs were never reconciled to his leadership, regularly rebelled against it and made clear their general displeasure. More importantly, that government was riven with a huge split right at the top. The Brown and Blair factions fought each other over many issues, and regularly briefed the press against each other. This did not stop them winning three elections in a row.

It is true there were splits against John Major from the Eurosceptics, and against Gordon Brown from a  range of ambitious people who wanted to bring his leadership to an end, and these 2 leaders did lose heavily in subsequent General Elections. Most sensible commentators should surely recognise that John Major was  defeated  by the recession and crisis brought on by his decision to enter and stay in the Exchange Rate Mechanism. Gordon Brown was brought down primarily by presiding over the debt , borrowing and banking crisis of 2008.

Spare us the nonsense that independent thought by MPs leads to election loss. I do not expect the polls for the Conservatives to move downwards because Mr Raab dared to move an amendment. The polls under John Major did not move much with acts of rebellion, and when they did it was not always down. They slumped on exit from the ERM and on the economic problems that caused.

There has been some very odd coverage of yesterday’s events in the Commons. Mr Raab’s amendment was decided by a free vote on the Coalition side, and a whipped vote to oppose it by Labour.  Those of us who voted for Mr Raab’s amendment were not therefore “rebels” as described in parts of the press. Conservative  Coalition Ministers abstained, presumably because there was no agreement between the two parties in the Coalition.

Labour opposed it on the grounds that it would be illegal. They were joined by Liberal Democrat MPs.  Mr Raab, a lawyer, had a different view and argued that it would not be illegal under the European Human Rights Convention. Had it been passed – and had it also passed the Lords – it might have been tested in court. Who can be sure what the outcome would have been? The UK government is 0ften these days tested in European courts for decisions they have taken.

Many MPs voting for the amendment, which would have made it easier to deport serious criminals from the UK, felt that anyway Parliament ought to have the power to be able  to change the law in these important matters, and that this needed to be re-established by Statute law.

Public sector net debt when Labour came to power in 1997 was running at 40.5% of our total national income. In the early days of Labour, following Conservative spending plans, they took it down to 30.4% by 2001-2. They used to say wisely that they wanted to spend more of the tax revenue on services for people and less on debt interest. Thereafter, they greatly increased spending, and later acquired holdings in large banks. By the time they left office, in 2009-10, national debt had reached 151.7% of our national income.

At the end of last year this figure had fallen to 134.5% of GDP. Reductions in other public sector liabilities, primarily those held by the banks in public ownership, and the increase in nominal GDP, more than offset the impact of increased borrowing by the central government. Sale of the banks will make a further large difference when that is accomplished. The four years 2010-2013 have seen the public sector banking liabilities cut by £78bn.

These figures do not include the value of future pension liabilities under the state pension scheme, though the government has published separate numbers for this for those interested. Nor are these larger numbers, provided by this government, in common use despite many people requesting more accurate overall statements of government indebtedness. Most commentators and politicians still concentrate on the narrower definition of public sector debt which excludes the banks and trading businesses in the public sector. Here in 2005 net debt was just £475bn- – on both definitions as the state owned no banks. By 2010 the narrower definiton of debt had reached £984bn, hitting £1254 bn by the end of 2013. This is 75.7% of GDP, compared to the 30.4% in 2001-2.

Some contributors to this site persist in saying the total level of debt does not matter. I disagree. If the state owes £1250bn and has to refinance this, being unable to repay it, it is vulnerable to rising interest rates. If over the next decade the average cost of state borrowing rose by just 2%, that means an extra £25bn of public spending every year on interest charges. That will require either £25bn of spending cuts or £25bn of extra tax revenue. That is why controlling the debt and deficit matters. Getting rid of more of the banking risk is an important part of this process. Even the UK state is stretched by the size of RBS, and the potential it still has to lose money. The sooner that risk is reduced and removed from the national balance sheet, the better.

Today the Chief Secretary to the Treasury has explained how Labour’s proposed rules for the next Parliament should they be in government would allow them to borrow substantially more than the Coalition proposals over the next Parliament. Labour contests the £166bn figure of extra borrowing  which assumes they use all their available flexibility to 2021, , but has not come up with a revised figure of their own. So far interviewers have not pinned down how much extra they would be likely to borrow for capital projects.

(The figures come from December 2013 Statistical Bulletin Public Sector Finances ONS)