Author: johnredwood

 

      Today’s guest editor of the “Today”  programme produced a series of items where she required the interviewee to speak or sing or recite poetry as they wished to get their points across without the tedium of having to respond to a probing interview.  This might have been interesting if the items chosen had shown range and different viewpoints, or if normal journalism had required a right of reply or an alternative voice to follow the monologues. Instead we were treated to a series of  her prejudices.

          Government was given no right of reply for alleged torture in a past decade, nor was it cross examined to see if it were true and why it happened. No-one was asked to make the case for running the risk of some soldiers being badly injured because the national or international interest required military engagement and more lives could be saved – and I speak as one who has often opposed us using military force as often as we do.  No-one was brought on  to expressly make the case for the City of London and the tax revenues and jobs it brings after a piece knocking it. Instead the Business slot had to be taken over in a poor attempt to provide a little balance.

             I doubt if any Eurosceptic or free marketer will be offered  a Guest editorship to provide some balance to PJ Harvey. If they were I trust they would wish to observe the rules on balance, and would interview people who disagreed with them to explore their different position, and would submit themselves to independent interviewing by a professional journalist. This was a new low for the Today programme.

 

How would sharing and trading more electricity with the rest of the EU help us, when all the EU is under the same regulations insisting on dear power? I could understand how importing electricity from the USA would help, if only we could build a long enough interconnector and if they were willing to sell at their cheaper prices, two very unlikely developments. Having the chance to buy more dear European power from the continent will not solve our problem. It would also be good to produce our own power, as that way we minimise transmission losses and maximise jobs at home. The problem Mr Davey is not a lack of a European market, but the presence of EU laws which drive the price of power too high.

 

      We need to deal with the big lie of the federalists, that the EU supports or creates 3 million jobs in the UK and the single market is an enterprise friendly job creating bonus to us.

       The single market may have started out as a well intentioned project to allow freer trade between EU member states, but soon became a power grab by regulators and governors out to limit and control economic activity from the Brussels centre of the emerging European government.  The lie of the 3 million jobs is so obvious that it is amazing how many commentators and media interviewers still allow the dwindling band of Europhiles to trot it out as fact.  If the UK was not in the EU we would still be exporting to the continent, because they would still want to export to us and would have to reach a sensible arrangement on terms and tariffs. It would also be regulated by international trade rules anyway, preventing retaliatory tariffs and other impediments to trade.

           Worse than the lie is the deception over the single market. The EU’s economic and business rules now have destroyed and will destroy a large number of jobs in the UK. They do so by four main routes.

1. The imposition of physical quotas or restrictions on what the UK can produce. Thus we are prevented from producing all the milk we need, British b0ats  are prevented from fishing above a certain quota, and we are limited in how much electricity we can generate from carbon based fuels.

2. The enforced closure of UK plants that do not meet specified standards. We are in the process of closing eight power stations owing to an EU Directive, even though these stations produce cheaper power than their replacements. The slaughterhouse industry was subject to a large number of closures under EU rules.

3. The insistence on dear energy. This is probably the biggest single job destroyer the EU has so far come up with. We are living through a closure programme affecting petrochemcials, aluminium, steel, and other high energy using industries.

4. Banning or over regulating particular products. For example,  the herbal medicines and food supplements industry and retail  has been hit by the application of much more expensive regulations affecting these businesses.

           You could have a successful free trade area between the leading members of the EU. All you need is the simple rule that if something is of merchandisable quality in country A it can be offered for sale in country B.  Thus English cheeses, regulated by the UK authorities, can be offered for sale as English cheeses in France without additional French or EU regulation, and in turn French cheeses can be offered for sale in the UK without additional UK rules. What more do we need? Customers should decide what they like, based on reading the label which should include the country of origin.

 

 

 

                  2014 could be a good year for many in the UK.  The long shadow of the Credit Crunch, Labour’s spectacular boom/bust of the last decade, is receding at last. 2014 could see more people getting work, some rises in wages and even growth in living standards after a long period of squeeze.

                  The economy ends 2013 in much better shape than in recent years. People are more optimistic, with businesses now more inclined to invest in future products and capacity. The rate of new job creation has been good, and now more of those jobs are being taken by unemployed people already settled here rather than by recent arrivals.

                  Some already complain that we are sowing the seeds of the next bust. They complain that people are borrowing too much money. As the numbers living here expands, and as the numbers in work increases, so you would expect total private sector borrowing to rise. There is  nothing wrong with people borrowing against their incomes to buy a home or even a car. They need them to lead their lives and cannot afford the full cost or anything like it all in one go. It’s what has driven living standards higher in  past decades, and will do so again.

                  Of course individuals, companies and the state have to be careful not to overdo the borrowing. Businesses have overall cut their borrowings substantially and generated more cash in recent years. They can afford to borrow more if good investments present themselves. Many individuals have cut their credit card and other expensive borrowing. As home ownership expands again we should expect to see debt levels overall rise. Individuals and their mortgage advisers need to make sure they borrow amounts they can afford to service when interest rates rise again, as they will one day.

                        The state is the most exposed, as the state has built up its debt much more quickly in recent years. It has also benefitted greatly from buying in its own debt, keeping the interest charges low. This has come to an end and is unlikely to be revived, so it is even more important now that the state cuts its deficit and gets its debt to affordable levels.

                            I wish you all a happy and prosperous new year.

Some of you here are critical of the coalition for not cutting more and not removing the budget deficit in this Parliament. Some of you are critical of the tax rises that were put in as part of the policy to get rid of excessive borrowing.

The choice before us in May 2015 is a simple one. The Conservatives offer the end of the whole deficit within the life of the next Parliament, whilst Labour only wishes to remove the current deficit, borrowing more for capital expenditure.

Both parties want higher ages. Labour offers an increase in the minimum wage, with the Conservatives likely to increase it by a similar amount by relying on the independent system of fixing it currently in place. Labour wants to take more action to enforce it and to prevent undercutting by migrant labour behaving illegally, which Conservatives too have said they wish to do. Conservatives wish to cut the flow of new migrants significantly. Both parties want benefit reforms within the EU to reduce amount of benefit the UK has to pay to newly arrived EU migrants.

Labour wishes to collect less tax from the rich by putting Income Tax up to 50%, where it collected less than at 45%, whilst claiming that next time round the higher rate will in some mysterious way raise more. Labour also want to tax dearer homes with a so called Mansion Tax.

The issue is therefore a simple one? Will spending, taxing and borrowing more generate more wealth and income, or will it, as in the past, generate less? If you want more taxing spending and borrowing then Labour is your party. If not the Conservatives offer the alternative.

 

                 There have been recent fears expressed that the No campaign against Scottish independence is too complacent and could lose. I would be most surprised if that happened. My recent visit to Scotland found a business and professional community worried about the idea of a split from the UK, but a community cowed into public silence by fears of  the Scottish government’s displeasure  if they spoke out.

                  As the Yes campaign has proceeded it has looked more and more like a campaign for devo max rather than for independence. The so called nationalists want to stick with the pound, the Bank of England, the Queen and the full UK single market and borderless free movement between Scotland and England. Their forecasts  rely heavily on optimism about continuing oil revenues, when decline in Scotland’s oil output is likely. If even the main advocates of independence do not seek  true independence, it would be surprising if the Scottish people voted for it nonetheless. Much would hinge on the subsequent negotiations with England, with the Scots seeking all sorts of concessions having voted for out. The Scottish government is not simply prepared to leave the UK and get on with doing everything for itself.  

                   Meanwhile, our constitution is unsettled for two other crucial reasons. The first is the  continuing federalist drive of the EU and the ECHR, a force that remains most unpopular with a majority of UK voters. The second is the continuing attempts to break up England or to deny England its identity and voice.  Just as Mr Salmond hoped, English nationalism is on the rise in response to both the pressure for more independent government by the other countries in the UK union, and more expressly by the studied disregard for England from the EU and elsewhere.

                   England faces cultural attack from the BBC. They are ever keen to stress independent Welsh, Scottish and Northern Irish identity, but rarely allow England a say or even name us. They are keen along with their friends in the EU to try to split England into a series of artificial regions which carry little support or weight with English people. I am not a “Rest of the south easterner” nor a “South easterner”  nor even a “Thames Valley er” or a “Bucks Berks and Oxon er”. The more they try to make us fit into these varied and meaningless places, the more we prefer to be English.

                        England faced a political attack from Labour in government , but they gave up when they lost the referendum to create an elected government for the then most Labour of regions, the North East. They were forced to recognise the reality, that England does not wish to be balkanised.

                           I predict that the only big force  of unrest with our current constitution in 2014 will be the wave of Euroscepticism generated by  unpopular EU policies on energy, migration, human rights and the rest. Politics in 2014 will be dominated by our relationship with the EU, and maybe more people will come to understand that when we are discussing energy prices, living standards, jobs and even public services, the EU involvement is now big and often damaging.

 

          As 2013 draws to a close the bond markets have been quietly increasing UK government interest rates. The rate on a 10 year loan by the  government has reached 3%, double the low point of 2012.

            The official forecast by the OBR assumes gentle but consistent rises in the UK government’s borrowing rate. They measure the average rate on the UK government’s debt, and expect this to rise from 1.6% in 2012-13 to 3% next year to 4.2% by 2018-19.  As so often with these predictions, the markets are taking the rates up faster and further than the official forecast suggests. 

              The OBR expects the Bank to keep official short rates down for longer. They are forecast at 0.5% this year, 0.6% next year and 1.2% in 2015-16, before rising to 3.1% in 2018-19.

              The Governor of the Bank of England made a lot of his wish to keep official short rates down to very low levels for a couple of years or so. He wanted to reassure borrowers, and force investors to take more risks, by holding out the prospect of poor returns on deposits, bonds and other “safer” investments. He was keen to see more growth, which he recognised would require more money in circulation and more borrowing.

                   The markets immediately challenged his view by driving up government bond rates, and through a series of comments arguing that the property market would require higher rates earlier to prevent a  bubble. The Governor responded by saying he could always take action other than interest rate rises to deal with any excess credit in the property market. He then showed what he meant by stopping Funding for Lending   money being available for mortgages.  He could take future action to demand higher capital ratios, special deposits or other quantitative controls to slow mortgage lending.

                         Recent polls show that higher interest rates would be popular.This is no surprise, as the number of savers is greater than the  number of borrowers. Quantitative Easing has been seen as a kind of additional tax on the prudent. It has transferred income and wealth from savers to the state. The issue before those making the judgement about whether and when to raise rates is the issue of what impact an interest rate change would have on output and jobs.

                              It seems likely that 2014 will see more of the same that we have witnessed in  the second half of 2013.  Market forces are likely to raise interest rates on government debt higher, given the absence of further quantitative easing.  The Bank is likely to keep official short rates down at very low levels, to be surer of the recovery and to assist with more jobs and better growth.

                            The Bank thinks there  is currently no case to raise official rates to cut inflation. At last, after a period of excess inflation, it is coming down. Persistent weakness in many commodity prices, coupled with recent strength in the pound, gives a better inflation outlook. This implies the Bank will keep official rates lower for longer.

                             Meanwhile, the upwards movement in government  bond rates may lead to some improvement in longer term savings rates generally, which will be most welcome for the prudent.

 

In the run up to the European elections we will hear the oft repeated claim from UKIP that they are going to “win” the European elections. They aim to obtain the highest share of the vote of any party and therefore gain the largest minority of the UK  seats on offer through the EU’s complex system of PR. UKIP followers who love to set out their case on this site have been “warning” us of this possible outcome for many months. Today I am giving UKIP supporters a free chance to make their case.

Last summer it was revealed that our current UKIP MEPs have the worst attendance and voting record of any party in the European Parliament. Four of their MEPs turned up for less than half the votes. As Mr Nuttall said at the time ” I’ll hold my hand up, as my attendance record is flaky to say the least”. The UKIP defence has been based around the proposition that they do not think it their job to try to amend or block new EU rules by turning up and voting. They prefer to draw the pay and support staff costs to help them campaign and take up issues  around the country. UKIP also enjoy the biggest loss rate of MEPs by a long way, finding it difficult to keep people in their party once elected to office.

It would be good to hear some answers from UKIP on what we could expect if UKIP MEPs are elected in 2014.

1. Would it continue to be UKIP party policy not to try to amend or block much EU legislation, leaving the detailed work of the Parliament to others?

2. Should people wanting an MEP to represent their view in Brussels look to MEPs of the other parties, given UKIP’s view on the irrelevance and undemocratic nature of the EU?

3. Would UKIP MEPs continue to draw  salaries and allowances whilst not wishing to be participating Parliamentarians in a full sense? What will the support money to spent on?

4. How would the presence of UKIP MEPs speed the UK’s exit from the EU ?  What have the current UKIP MEPs done to speed our exit?

5. How will UKIP MEPs be whipped to ensure the elected party sticks together and delivers in relation to its manifesto?

Some UKIP supporters seem to think voting UKIP is a kind of referendum on coming out of the EU, and that more people voting UKIP makes coming out of the EU more likely. The problem with this approach is that as UKIP will poll less than 50%, if UKIP insist on saying they are the only true Eurosceptics it means commentators can use their approach to say the UK wants to stay in the current unreformed  EU. It makes more sense to recognise the Europscepticism of the Conservatives, and to accept that it will take Conservative votes in the Commons to sort this problem out.

It would also be interesting to see how many possible UKIP voters like Mr Farage’s latest policy of more immigration from the Middle East.

 

 

 

 

                Many of us awake to the sounds of the Today programme on Radio 4. It likes to think of itself as an agenda setting news and comment programme. This week we are treated to “Guest editors” who so far have served to remind us that the professional team knows a thing or two about how to construct an agenda and keep the audience engaged, even if we are shouting at the radio, annoyed  at the continuing human made global warming big government EU friendly bias of their interviews.

            Sir Tim Berners Lee is a great man whose role in the development of the internet can be recalled and celebrated in various ways. Asking him to choose the items for Today produced a turgid show based around his one main interest. The regular presenters struggled to generate dispute, varied opinions  and criticism in the interviews and selection of guests.  Eliza Manningham Buller avoided the error of filling the entire programme with stories of a secret service reluctant to have much airtime to expose itself, but ended up producing a timeless and harmless magazine of a  programme with features on house plants and actresses which added nothing to the Today tradition of tackling more serious topics.

         I will tune in for the remainder of the week in  the hope that a Guest editor with something to offer appears – and will turn off much more rapidly than usual if the present pattern persists. I long for the day that the programme contains stories like the attitude of the French to EU migration, the problem of ultra high  youth unemployment in Spain, or  the growing resentment of the Germans in the struggling Eurozone countries. I have got used to the Today diet assuming that anything European is great.

             I long for a few stories which suggest public spending is too high, not too low, that taxpayers money is being wasted,  how  the public sector could easily become more efficient, or how we could gain a few million jobs by leaving the single market. I would like some audit stories to run back over campaigns and spending plans that have been pushed through with the encouragement of Today programme guests, to see if any of them worked as planned.

            I would like to hear about all the jobs that higher taxes and higher energy prices destroy. I would like to hear from climate change “experts” in response to yesterday’s report that our wildlife flourished last summer when it at last warmed up, and that wildlife is very capable of adjusting to different temperatures.  It would also be good to hear them answer how they are getting on with their predictions of sea level rise, disappearing islands, higher temperatures and ice levels in Antarctic.

             Indeed, many of us would welcome a day or two when the Today programme conducted all its interviews from the opposite perspective they usually adopt without thinking or realising the bias implicit in most of what they do. Big government is not always best. Higher and more  taxes are not always a good thing. More government action may make things worse. Overseas aid may go to the wrong people and causes. The EU may damage our wealth. The single market may be more about laws and less about free trade. The 3 million jobs that “depend” on the EU may be a ideological myth. The climate may change in unpredictable ways, and may change for reasons other than man made CO2. Some public services might run better with fewer people and fewer levels of hierarchy, not more. Maybe people could take more responsibility for their own lives, and we could look to government less in some areas. England has a right to self expression, just as Wales and Scotland enjoy on the BBC.

             I yearn for just a few of these ancient heresies, as I think we might need some of them back.  

 

 

               Yesterday the papers splashed a long range forecast which said the UK economy would soon overtake the French in size, and by 2030 would be larger than Germany. The reasons given were the UK’s relatively low tax regime compared to the continent, a younger and growing population compared to declining and ageing populations on the continent, and our avoidance of the Euro. All that makes sense.

             However, what the forecasts and figures also reveal is the growing irrelevance of Europe to the progress of the world economy. The individual large EU economies will lose out to China, India and other emerging market countries, as they surge. According to UN population forecasts Europe’s overall population will shrink from 728 million in 2000 to 632 million by 2050. Meanwhile China’s population will grow to be more than twice that of Europe’s and India’s will be more than 2.4 times Europe’s. As India and China get bigger and as they raise their living standards and output per head, so they will come to dwarf the economic output of the main European countries.

            Mrs Merkel has wisely asked the question how can such a small part of the world’s population in Europe account for one quarter of world output and one half of world social spending? It looks as if the answer to the question on the share of world output will be answered by Europe’s share contracting over the next two decades, as the emerging economies outgrow the west. Our living standards can only remain substantially higher than those elsewhere if we continue to develop the companies, the products and services with high value added that command good prices around the world. This is going to get more difficult as the rest of the world catches up with brands and technology and as EU government does its best to undermine enterprise.

             Whilst some of the high proportion of the world’s social spending will be eroded by the same process, by growth elsewhere, it looks as if the brutal logic of the Euro will continue to put downward pressure on social spending, forcing higher retirement ages, lower pensions and meaner social benefits. That is what Mrs Merkel implied in her remarks.

            Europe will make its position worse by continuing with high energy prices, relatively high taxes, and an excess of poor regulation. EU government specialises in  the hammer of regulation to miss the nut, and will probably continue with more of the same. This will compound Europe’s difficulty in earning a good living and boosting value added and real wages. The pressures from EU government are mainly in the other direction, forcing EU companies to do less with more.

             And what of the UK?  If  the UK could cut lose from the EU’s dear energy and excessive regulation it could grow faster still. It has an advantage from being out of the Euro, and another from relatively low corporate taxes. If it added more competitive personal taxes and dug itself out of the excessive burden of so called single market regulation it could do even better. Above all it needs a more plentiful supply of cheaper energy, which is probably beneath our feet as we think about it. Lots of cheap gas would power an industrial recovery, which would add to the present recovery underway.