Author: johnredwood

 

               I will be making speeches at three meetings at party Conference. The main event will be my speech on Economic growth and taxation at 1pm on Monday 30 September for the Selsdon Group.

               The meeting will take place at Manchester Town Hall (outside conference security) in Committee Room 3.

I will also be speaking  on housing policy, and on the general political background post Coalition at other meetings.

             I will blog tomorrow on economic issues as an introduction  for the speech.

 

              What a difference a Parliamentary debate can make!. When many of us Conservatives  made clear we would not vote for a cruise missile attack on Syria, we were granted a debate and a vote before action. Labour late in the day joined our opposition to a military attack. The government agreed to offer a second specific vote before any military action, followed by  acceptance  it could not win a majority for such a vote so would not hold one.

             Mr Obama then decided he had to consult his Congress before embarking on the military strike which the US, UK and France had been planning. He cited the UK precedent as part of his reason for asking Congress. It soon became clear to him that winning the vote in Congress was going to be difficult. Meanwhile Mr Putin offered a diplomatic opportunity to the west.

             The west was at first reluctant. However, we now have progress with an agreed UN line which Russia and China as well as the US, UK and France can accept. The Syrian dictator has agreed to reveal and then destroy his chemical weapons. The Inspectors start their work this week.

               Even more remarkable, Iran has now decided she wishes to negotiate a new relationship with the west, saying she has no wish to develop nuclear weapons.  Iran wants to end the sanctions against her, and start to benefit from some of the technology, advice, goods and contacts the west can bring.

              Of course when dealing with people like Assad, the Iranian leadership  and Mr Putin the west needs to be careful and seek sensible guarantees. There could well be bumps on the way to more peaceful relations. However, it is good news that diplomacy is now possible. It is  better news that there are some signs that some dangerous weapons can be removed from the Middle East and some friendlier relationship can be established with Iran.

             The UK Parliament played its part well on the world stage. We showed the world that a democracy can challenge its leaders and advise them to adopt a new course. That new course will be very popular if successful. So far it has proved much better than letting off missiles from a distance without having the intent or unleashing sufficient power to change the regime. As some of us argued at the time, the problem with regime  change if you escalated to achieve that , is how do you then create a peace loving and settled democracy out of the ruins of a toppled dictatorship and on the foundations of the lethal hatreds of a civil war? Now it appears we are getting some welcome changes in the Middle East through alliance building and persuasion rather than through bombing.

 

 

     The Today programme this morning suspended rules of impartiality once again when it came to the climate change debate. There was no spokesman to put a sceptical view. The interviewers were all primed to constantly repeat the assertion that climate change scientists (unspecified) are now 95% certain -which is apparently “more” certain” – that most global warming (recent presumably) is man made. Past prolonged periods of global warming were clearly not man made.

 The scientists they interviewed were not repeatedly interrupted as politicians are. Nor were they asked the same question more than once when they failed to answer. They were allowed to say that they should not be expected to have to face a critic or enter a debate about the “science” because the “science” was 95% settled. No-one asked where the 95% figure came from. It is 100% certain that global warming prior to the last few centuries had nothing to do with man made CO2. What is the  95% certainty about recent years based on?  Why has it risen  5% since last time?  What has happened to the forces of nature that caused global warming prior to mankind’s arrival? 

       They do now accept that the warming has slowed in recent years. They claim this is due to the warmth being absorbed by the oceans, something they did not forecast before. According to the BBC they also now forecast that whilst the world as a whole will get warmer, the UK is going to get colder. They tell us warming will shift ocean currents,  so we will no longer get so much benefit from a warm current.

           It strikes me that this change of forecast for UK weather is another hostage to fortune. It was not so long ago some were forecasting hot dry summers and droughts for the UK, with mild winters. This proved wrong in the short term. We had a series of cool wet summers and cold snowy winters. Given the variability of the climate we may now experience a milder winter or two. It is fascinating that the scientists are said to  have nailed their colours to a new mast, and threatened us with colder winters from here. We will watch with interest to see  if these latest forecasts work better than the last lot.

                 As they now think that ocean currents and ocean warming and cooling are more important influences on climate than before, will they be changing their climate forecasting models to take these factors into account?

 

            Germany’s PR system has delivered uncertainty and a log jam at the heart of Euroland. Mrs Merkel is way short of a majority in the Budesrat, where the SPD still have a strong position. She has 311 seats in the Budestag, compared to the 319 seats majority of the Green/red/ left, were they ever able to act together. Today the SPD debate with themselves whether they could consider a Grand Coalition with Mrs Merkel.

            The price of coalition for Mrs Merkel, whether she tries the SPD or the Greens, is similar. They both want a Minimum wage and greater labour market regulation. They want a continued drive towards dearer energy and renewables. They want higher taxes on the higher earners. They want higher domestic state spending at federal and especially lander and  local level.

               The German election has broken the FDP, followed by the resignation of its leader. It has led to the resignation of the leaders of the Green party. The leadership of the SPD contains people very unwilling to enter coalition. They are apprehensive about being very junior partners.

              Meanwhile the EU seeks approval for higher spending than planned, despite the political pressure of a smaller budget. It seeks more assistance to broken banks in Euroland. An impecunious union, supported by some states that are themselves financially very distressed only knows one song – higher taxes.

                The tax, regulation and energy plans of the EU, buttressed by the left of centre German parties, is bad news for Germany’s motor and manufacturing industry. It means they will want to cling to the Euro for longer, as  a weak Euro from Germany’s point of view will offset some of the competitive damage done by the other policies.

                 The UK has to reassert its position that it will not help pay for a higher future EU budget, and will certainly not provide bail out money for Euroland banks. The Germans have been paying a 5.5% tax surcharge or “solidarity payment” for the expensive currency union of East and West Germany. They have no wish to start paying an even larger extra tax as a solidarity payment for the Euro. Nor will many of them welcome the idea of bailing out Euroland banks.

                    The truth is, in a single currency you do have to help the neighbours, as you share a bank account with them. The UK has wisely stayed out, so we must make sure not a penny of our money goes into trying to support such an uncomfortable structure.

 

Mr Miliband is right about one thing. Energy bills are too high.

He should know why. It was his Climate Change legislation which underwrote EU energy policies to push the price of energy up in the UK. The EU/UK policies of pricing and taxing carbon dioxide emissions, requiring substantial generation from very expensive renewables, and making it difficult to exploit local carbon based energy resources have helped force up domestic energy costs.

One of the architects of dear energy did not go  to Brighton to recant. He did not apologise for creating dear energy. He did not  say we should make it a priority to have affordable energy to heat our homes, and affordable energy to price industry back into business. He did not hail a shale gas revolution, so we could drive our energy prices well down as the USA is curently doing so successfully. Instead, he decided to blame someone else, and attack the energy companies forced to carry out his policy will.

It is all too easy to whip up popular hostility to large companies who report large profits. It may look inviting to suggest those profits should be given back to the customers, to hide the impact EU government policies are having on  bills. It does, however, reveal a fundamental misunderstanding of the role of profits.

Companies providing large scale facilities for electricity generation or for collecting and distributing gas need to generate profits so they have money to pay for the maintensance, renewal and expansion of their facilities. They also need to have some money to pay interest and dividends on the investment monies others have put into their businesses. Many of the providers of capital are the same people as the customers, placing their pension and insurance savings in to these companies.

Announcing  a long freeze in prices could do considerable damage to supply and future investment. If raw material energy prices rise – the gas/coal/oil needed to drive electrical plant for example – the companies could be badly squeezed and lose large sums, undermining their financial stability. The threat of frozen prices will put off anyone from making a new investment in energy provision in the UK, at a time when we badly need more capacity. The prime duty of government is to set an energy policy which can keep the lights on. The second duty is to help create a competitive market which can turn to the lowest cost solutions to keep energy affordable. Labour’s new policy fails on both these counts.

         It is difficult enough as it is with EU policy controls and Lib Dem renewable enthusiasts in the government. The UK needs to change energy policy by building a new generation of gas power stations, whilst bringing the plentiful gas supplies beneath our feet to the surface.  That may require both a majority Conservative government and a renegotiaiton of our relationship with the EU to bring about. Mr Miliband in office made sure we faced high and rising bills for the future.

I was asked to contribute to the BBC’s website on this topic yesterday. They commissioned me to write this piece with a tight deadline, which I did. They then failed to post it and said they had changed their mind. I will therefore share it with you, and leave you to wonder why the BBC behave like this. They now say they might post it some other day, after I complained.

 

 

The UK is the crossroads of the free world. Bridging the time zones of east and west, London makes the markets and leads many of the debates about how the world should change.

The UK belongs to many clubs and networks. As a member of the Security Council we will  undertake peacekeeping and armed intervention where the world community thinks it is needed. As a leading member of NATO we will be at the side of the US where we are happy with the common cause. Through the Commonwealth we create one the world’s great meeting places for an attractive diversity of countries and cultures, to strengthen the impulse to democracy, free trade and the rule of law.

The UK needs a new relationship with the European Union, as we cannot become part of a united Euroland. As the single currency seeks to create a country to love it, the UK has to reassert its independence. We need a relationship based on freer trade and political co-operation with the European continent, not one based on common government.

The UK is at her best when we take to the five oceans and the adbundant airspace over the globe. We are a nation of free traders, advocates of freedom and democracy, supporters of the oppressed and fighters for justice. We know the world does not owe us a living. We also know how to earn our living by working with the sources of power and wealth as they shift decisively towards the emerging markets. The UK is at its best creative, innovative and energetic. It will need to be all three as the world becomes more competitive in the years ahead.

 

I would add to my word limited comments:

The UK’s stature was enhanced by Parliament’s debate on Syria. Not only did the UK Parliament persuade the Coalition government to favour diplomacy over a  military strike, but our example helped influence the President of the USA to call the Congress for advice. I think many around the world will be glad that instead of a rash limited cruise missile strike against some Syrian targets, the main protagonists are now seeking a diplomatic solution to the problem of Syria’s chemical weapons.  It was a good example of how the “mother of Parliaments” can still show the world the important role of a deliberative assembly in influencing and changing government and speaking for the people.

UKIP have now lost 38% of their elected MEPs since 2009 with the departure of Mr Bloom from their party. This is an unusually high rate of loss. Parties are prone to lose the odd one or two representatives, but the attrition rate is usually in low single figure percentages.

In my recent post on UKIP I pointed out that 4 of the 13 MEPs elected in 2009 for UKIP had left the party. That should now read 5, as today Mr Bloom has left to become an independent MEP.

I would welcome explanations from UKIP supporters who are always so keen to highlight the problems in other parties. It will naturally lead people to ask who and what they are voting for if their choice of party cannot even be sustained for a single Parliament by such a large proportion of the  representatives.

 

I would also welcome information on what the UKIP MEPs have achieved for us.

 

(Those departing were Bloom, Campbell Bannerman, Sinclaire, Andreasen and Nattrass. 2 have joined the Conservatives, and one is an independent)

The German election was a big win for the Euro and the EU. The anti Euro party did not quite manage the 5% needed to gain seats in the Parliament, whilst all the other elected parties are strongly in favour of the Euro and EU integration. Mrs Merkel heralded her victory as  a victory for European integration. German PR, much praised by some on this site, ensured the near 10% who voted FDP and AFD went unrepresented by their parties  in Parliament.

Whilst Mrs Merkel is enjoying the plaudits for boosting her party’s vote and getting close to winning an outright majority, it is necessary to grasp that the election has not made governing either Germany or the Euro any easier, and in some ways has added to Mrs Merkel’s difficulties. The main vote change was a big shift of votes from the more free market more Euro cautious FDP to Mrs Merkel’s party. Her coalition partner lost all their seats and has been all but destroyed for the time being as a political force. This follows on the crushing defeat of her main opponents, the SDP, in 2009  after they had joined her in coalition in 2005.

There are two consequences from these changes. The first is that Mrs Merkel’s policies, dragged in the direction of less spending, more free markets by the FDP are  no longer  under  that pressure. The second is the SDP – and the Greens-  will be understandably worried about any offer to join Mrs Merkel in coalition, as it does not look like a good idea for them. The Leader of the SDP made a very vocal rejection of the idea that he personally would serve in a Merkel government both before and immediately after the election.

 

There are four  possible outcomes. The first is a coalition with the SDP.  They will demand a Minimum Wage and other social legislation. They are unlikely to be much more well disposed to bailing out the Greeks than Mrs Merkel, as they will be fresh from  an election where the German people made clear their hostility to paying the bills for the south of the currency zone.  As the SDP leader has ruled out himself serving in a Merkel led government, it would require another senior SDP figure to volunteer, and may lead to a change of leader of the SDP.

The second is a coalition with  the Greens, who might in the end find the lure of office too great and help her out. They will make more demands on renewables and other energy issues, and may also pursue the left of centre employment agenda as well. Mrs Merkel’s past U turn on nuclear makes this option easier.

 

The third is Mrs Merkel cannot agree a coalition with either the Greens or the SDP. There is no tradition of minority government in  Germany, and it may mean an early new election, after a period of government doing nothing to provoke the Parliament.

 

The fourth is the SDP and Greens get over their aversion to the rest of the left in the Parliament and form a grand socialist coalition, something they have always declined to do. German commentary appears to find this very unlikely. Such a red-red-green coalition would want to pursue a social agenda on labour law and minimum wage, higher spending and deficits, stricter controls on markets and finance, and maybe  disarmament/neutrality policies.

Some UK commentators say that an SDP or Green – Merkel coalition will be keener to subsidise the south and west of the Euro zone and accept debt write offs. I am not so sure. Each German party will have heard from the doorsteps how unpopular using German tax money to bail out other countries still remains. The SDP and Greens want to spend more subsidising and investing in Germany, not in Greece or Cyprus. They will be very conscious of how dangerous it is in coalition with Mrs Merkel and will not want the blame for unpopular Euro bail out policies to be landed on them.

Mrs Merkel did a good job keeping the Euro crisis off the agenda in the run up to her election. Now she does have to tackle the banking crisis and proto union, and the issues over financing the governments and balance of payments deficits of the weaker countries.

Ironically her famous grand victory was not grand enough to give her a majority. In a way it has left her more exposed than when she had the FDP as her coalition partners. If she has enough of the conservative in her, allying with either the Greens or the SDP is going to be a trial. Let’s hope her effusive united Europe rhetoric strengthens sinews in the UK for more independence.

 

              Mrs Merkel has increased her vote and  remains Chancellor. Her coalition will be different. If she has to do a deal with the SPD she will be under some pressure to be more generous towards the southern Euro states, and to be less accommodating of the UK’s wish for less EU.

            The AFD attracted some support which tries to create  the opposite pressure, but failed to win a single seat. This was a bad result. After all, all the other parties in the German election are pro the Euro and pro more EU integration, so AFD had a clear run at  Euroscepticism and was working in a PR system. Merkel’s current coalition partners the FDP struggled and lost all their seats. 

          Some of the UK establishment think Mrs Merkel will make some concessions to the UK’s wish to return powers to the member states from the EU. After all, Germany sells so many goods to the UK she needs to be friendly to such a big market. She also values the UK’s support on trying to limit EU spending and our offer of  some moral and political support for cutting deficits by spending control.  She is a natural consensus seeker. If the UK – with the Netherlands and a few others – argues strongly for powers back, by definition the mid point or consensus will have shifted and Mrs Merkel will wish to reflect that.

          However, we are talking about two different negotiations here. The UK can hold a negotiation with the re-elected Mrs Merkel under the coalition. This will be with the approval of the Lib Dems, will be an agreed government policy, and will be seeking some powers back for all member states by consensus. I wish it well, and it may get something back we want.

             It is not, however, the negotiation the Conservatives will pledge in the next manifesto  to negotiate a new relationship for the UK with the rest of the EU. That will be a negotiation just by  us to create a new relationship. It is not something the Lib Dems or Labour  support. This is necessitated by the move of most of the rest of the EU to unity under the Euro, with the non Euro members largely agreeing to follow suit. The UK’s refusal to join the Euro, now common policy of Conservatives and Labour, puts us in need of a new and looser relationship with the emerging political union on the continent. A few agreed powers back is not the answer to this problem.

             That is why the referendum promise (and attempt to legislate for it) is so important. The voters then have a guarantee that if the government is unable to negotiate a new sensible relationship with the emerging wider Euro union, they can vote us out of the EU altogether. It will give Mr Cameron leverage when negotiating with the rest of the EU, and it will ensure he cannot come back and recommend a deal which fails to tackle the underlying main issues. He will not want to return with a package which will be defeated. If he cannot get a sensible deal then he will have to recommend refusal. He naturally remains optimistic he can get a deal which makes sense for the UK. Any negotiator is often wise to remain upbeat about the chances of success.  Mrs Merkel will be important in just that matter.