Once again a Eurosceptic majority has managed to engineer the election of a Lib Dem Eurofederalist to Parliament. The EU federalists must be laughing all the way to Brussels.
It is remarkable that the Lib Dems at 8% in the national polls, and following their worst three weeks of news I can remember, should emerge as victors. No wonder we find it so difficult to get the new relationship with the EU we want.
Both the Conservative and the UKIP candidate made clear they find our current relationship with the EU unacceptable. They both wanted a referendum to allow the British people to vote No to staying in the EU. Between them they got 53% of the vote. Instead Eastleigh has a Liberal Democrat MP who opposes giving us that vote. We need more MPs in Parliament who will join those of us who have voted for an immediate referendum. Instead we have another anti referendum federalist elected with under one third of the votes.
Author: johnredwood
RBS loses £5bn
The taxpayers’ bank is still struggling to make money. We are told that if you regard the losses as special items relating to the past the underlying bank is now profitable. The problem is we the taxpayers have to pay for the total losses. More radical approaches to the structure and sale of this banking group are needed.
Mr Redwood’s contribution to the Opposition Day Debate on Housing Benefit (Under-occupancy Penalty), 28 Feb
Mr John Redwood (Wokingham) (Con): This issue is creating a lot of passion, which I can understand. People’s homes are very important to them, and none of us wants to feel that the possession of our home is threatened or is subject to high-handed control from above. The morality of the argument, however, is not all on one side as the Opposition seem to suggest it is. Indeed, I would find their moral outrage more convincing if their Front-Bench team firmly pledged to repeal this measure if they were ever returned to office. I would also find it more convincing if when they were in office they had not taken the steps they did on private sector rented accommodation, probably as a prelude to going further.
On the basis of what the more moderate Opposition Members have said, they accept that there is a problem of under-occupation where free or subsidised accommodation is made available through the public sector. The morality on the Government side of the case is to say that we have obligations to all those people who want that subsidised or free accommodation but who cannot get it on the size and scale they need. There are two different groups here, and we need to look after the interests of both groups as best we can.
Of course there are visionaries on the Opposition side who say that the answer is easy: we just need to build hundreds of thousands of more homes at public expense so that everybody can have the accommodation they want. The issue then becomes why that did not happen when we had a Labour Government who knew how to do those things. The truth is that for anyone who sits on the Government Benches, such housing will always be a scarcer resource than people would like. If we offer something free or subsidised, there will be more demand than provision, even when we are trying to be very generous, so we must have rationing and allocation. All Governments, in good times and bad times, have had to allocate and ration public housing.
Julie Hilling (Bolton West) (Lab): Does the right hon. Gentleman not realise that there was a period—certainly in Wigan—when we could not let council houses and they were knocked down, because people were buying houses? Our biggest problem now is that people who want to buy houses cannot get mortgages. They do not go into social housing because it is subsidised; they go there because they have nowhere else to live.
Mr Redwood: It is a bit of both. I entirely agree with the hon. Lady if she is urging the Government to do even more than they are currently doing to make more mortgages available so that more people can afford to buy homes. Members on both sides of the House would welcome that. I happen to know that Ministers are desperate to ensure that more mortgages are available than were available during the last few Labour years, and are working away with the banks to try to make it happen. That is very much part of the solution to the housing problem. [Laughter.] It is all very well for Labour Members to go into fits of hysterics, but they really should try to take a serious interest in the problem. Believe it or not, quite a lot of us Conservatives want better housing solutions for many of our constituents, and for people in other parts of the country.
Katy Clark (North Ayrshire and Arran) (Lab): Does the right hon. Gentleman not accept that there was a very different view of social housing in the past? Council housing used not to be seen as a precious resource. For example, at the time of the 1951 general election the Conservatives pledged to build 300,000 new homes. There was a view across the political divide that we should build council housing to improve social conditions. Is that not the vision that we should have now?
Mr Redwood: I seem to remember that the Conservative Government did indeed honour their pledge—and that was many more homes than the Labour Government were building each year—but, even in those days, why did they need to do it? They needed to do it because we were short of homes. It was the post-war period, the Germans had remodelled many of our housing estates, and trying to create the homes that people needed was a big problem.
I think that under-occupation is a problem, and I think that the Government have come up with one part of the answer, but I urge Ministers to listen carefully to all those who are saying that the positive way of proceeding is through incentive, encouragement, persuasion, and giving people a better answer than the one they currently have, which may be a larger property that may not be suitable.
The Government have excluded everyone of pension age from the proposals, and I welcome that. I think that it is smart politics, and very sensitive to the elderly population. However, in my constituency, where most people own their homes—elderly people tend to own them without mortgages, and younger people tend to own them with rather big and difficult mortgages—a good many elderly residents decide to sell the family home because it has become too big and unmanageable, and to buy a smaller property such as a flat or bungalow. Many then sell again when they are becoming more frail, and move to semi-sheltered or supported accommodation.
That is a natural process of trading down in the private sector, but there is sometimes too much of an obstacle for elderly people in social housing to be able to do the same. Perhaps not enough of the right properties are available; perhaps they are not offered in the right way; perhaps there should be some incentive. I think it perfectly acceptable to try to create an atmosphere in which there can be the same sensible mobility in public sector housing as occurs naturally in areas with rather more private sector housing, so that elderly people can have housing more suited to their needs.
I hope that Ministers will consider the question of elderly under-occupation, which I think is very much part of the story, but will do so in a positive way that encourages, promotes and helps, rather than removing benefit or imposing a tax. I wish that the Opposition understood the meaning of the word “tax”. Imposing a tax means taking money from people who are earning it for themselves; it does not mean paying them less benefit. I hope that Ministers will work out an answer to that soundbite. I have heard soundbite arguments before, but I congratulate the Labour party on thinking up a brilliant and misleading one. I am afraid that it is better than the soundbites we have heard so far from this side of the House, and I urge my hon. Friends to come up with a soundbite that represents the truth. This is not a bedroom tax, but a reduction in the amount of benefit paid, which is very different.
Several hon. Members rose-
Mr Redwood: I am afraid that I cannot give way again. I am running out of time, and if I give way I will not be given any injury time.
We need to look at the issue of under-occupation among the elderly, and we need then to look at the issue of the disabled. That was why I approached this debate with considerable nervousness. As I think my hon. Friends know, I wish us to be more generous to the disabled, not less generous, and I think we all feel a little nervous about how far we should go. I was somewhat reassured to see that there are different definitions of disability and a rather wider definition is being used than would, perhaps, be normal. I am interested in the people who are seriously disabled, as recognised through the receipt of disability benefit.
I urge my ministerial friends to be as generous as possible. We must not presume that there is an easy solution, however. Again, if there are issues that need to be sorted out, the best way to do that is through support and persuasion and offering people something better. That must be the aim. Why would somebody move if their new home is going to be worse than their current one? If it can be shown that there would be better, more appropriate and better supported accommodation, however, I might be more willing to accept that we should follow the proposed course of action. I urge my ministerial friends to be extremely careful about the definition of the disability category, however.
One Opposition Member argued that this is a cynical policy and there might not be many savings if it works. That is a misunderstanding of the true nature of the policy. It is not primarily a public spending-cut policy; it is a policy designed to try to get more people into public sector housing that is suitable for them. That is the bigger picture.
We have an inadequate amount of housing stock, and some people have more of it than they strictly need, whereas others do not have as much of it as they strictly, technically need on the needs definition. We are arguing here about the balance between those two groups, and whether it would be feasible to solve the overall shortage by producing more housing. Even the Labour party must understand that if we were to go for the big build answer, that would take several years to come through. Ministers are feeling very frustrated at present that they have identified places for building and the means of financing that building, but it is taking a very long time to get the building to come through so we can start to tackle this problem.
My next topic is how to tackle the problems of insufficient housing and excess welfare spending. The issue of eligibility is key. My constituents tell me that they feel much more inclined to pay taxes to make sure that people who have been settled in this country for many years, or who have been born and brought up here, can get access to proper housing than to provide housing for people who have only just arrived and seem to know how to work the system to get access to housing. The Government could productively focus on that. I am sure there will be European Union rules, but we need to negotiate on this with our European partners, and make a stand if necessary, because there is a strong feeling in our country that public housing will be limited—more limited than some would like—and if we are to make choices, the priority must be those who have been here for some time and who have made a contribution and are part of our settled community. That does not always seem to be the case. I hope Ministers will see the issue of eligibility as a proper avenue for addressing both excess benefit expenditure and the shortage of available property.
These are difficult waters. Anyone who looks at the situation rationally will agree that there is under-occupation and we need to tackle it sensitively. They will also agree that we need more housing provision overall, and we need to do what we can to tackle that. I hope we can all agree that the best answer is to find a way to enable more people to enjoy what every MP takes for granted. We take it for granted that we have a well-paid job and that we can afford to buy a house. I think that every MP owns a property. Indeed, some of them own rather more than one property, I believe, and that has sometimes become a matter of comment. It is normal for an MP to own a property—to be an owner-occupier—and to enjoy a good income, and I am sure most MPs own a spare room or two.
I do not think there is anything wrong with people striving, getting a better job, earning more money and having spare rooms. I am personally very much in favour of spare rooms when people can afford to have them. We also need to make sure we have a fair tax system so that we are all making a decent contribution to those who cannot afford spare rooms.
Jim McGovern (Dundee West) (Lab): May I ask the right hon. Gentleman how many spare rooms he has in his house—or has he not got round to counting them yet?
Mr Redwood: My spare rooms are a matter for me because I paid for them myself, and I am sure the hon. Gentleman has spare rooms and I dare say he paid for them himself. That is exactly the kind of society we all want to live in, I would have thought. I do not know of any Labour MPs who could stand up and say that they are at the minimum accommodation level—I invite them to do so, but I do not see anyone rushing to stand up.
Mr Russell Brown rose—
Mr Redwood: The hon. Gentleman stands up but he has no voice. I think that means he does not want to say that he has the minimum accommodation available or thought specific to certain people.
I want to live in an aspiration society. We want to promote better jobs, better paid jobs and more people owning their own home. Where that is not possible, we need a fair distribution; we need to provide more and to distribute it more fairly. I just hope that Opposition parties, if they have serious aims to be in power one day, will think more carefully before pledging to repeal things, or will come up with better ideas on how we can promote that better use of the housing stock that must make sense.
Cheaper energy?
The Coalition’s inheritance on energy was a poor one. The previous government signed up to renewable obligations, to coal fired station retirement and carbon policies at EU level without accelerating the investment necessary to provide alternative energy outputs. They spent many years asking for a debate on nuclear, without getting round to building replacement power stations for the old nuclear about to retire. This government now needs to accelerate progress, not just to try to get fuel prices under some control, but to keep the lights on and ensure enough power for business requirements.
What are the options?
1. Negotiate with the EU an extension to the life of coal stations pending the construction of alternatives
2. Accelerate the building of new gas powered generating stations
3. Press on with nuclear replacement build
4. Accept that the large amount of renewables now in build will require almost 100% back up by conventional power stations, as so much of the alternative energy depends on the wind blowing
5. Expedite shale gas extraction onshore
6. Continue or strengthen a favourable tax regime for offshore oil and gas, to raise the investment and exploration rate further in the North Sea and other offshore waters.
7. Improve import facilities and contract arrangements for gas
All or any of these approaches requires stability in the framework which will now require firm contractual commitments or clear promises which all political parties will keep to reassure investors. Government has to allow energy producers the opportunity to make a fair profit. It also needs to ensure enough competition in the market to avoid monopoly exploitation of customers.
The Italian election
The Italians are angry. Being in the Euro means big cuts in public spending to get their budget deficit down and keep it down. It means cuts in pay and spending power across the board, as they suffer an “internal devaluation” to make themselves more competitive again. The election results were a cry of anguish about the impact all this is having on families and living standards.
The pay cuts are correcting the balance of payments. People can afford fewer imports, cutting the deficit on trade account. The Italian budget deficit is under better control than many. The worry the establishment shares in Italy is the need to refinance a very large debt inherited from former governments and decades. The establishment parties and personnel in the Italian government are keen to keep the squeeze on so the markets will not take fright at future borrowing requirements. The EU establishment is even keener, as the last thing they want is Italy to need special loans and support from the rest of the Eurozeone.
Mr Monti was parachuted in as Prime Minister by the EU although he had not been elected. He replaced Mr Berlusconi, who was making Eurosceptic noises and beginning to represent the dislike of EU austerity policies felt by many voters. Mr Monti calmed the markets and started to make some progress. Soon he discovered that without his own party and his own MPs in parliament he not get much done. They decided on an election.
The European establishment threw its weight behind the centre left mainstream party, expecting them to win easily. They hoped Mr Monti too would poll well, and be able to assist the new centre left government. Instead Mr Berlusconi, mildly Eurosceptic, and the 5 Star party of Mr Grillo polled more than half the votes. Mr Grillo campaigned against politicians, and in favour of a referendum on withdrawal from the Euro.
The political establishment sees this as irresponsible and damaging behaviour by the voters of Italy. It is surely predictable? If people feel their living standards have been pushed down too much, and are offered no immediate hope of a better tomorrow, they are quite likely to complain and refuse office to those who have been the architects of the single currency led policy. Mr Monti’s desultory showing in the elections demonstrates just what a huge chasm there is between the political establishment in Euroland and the voters.
Markets and commentators are shaking their heads in disbelief. They are telling the Italian people they just have to knuckle down and do as the EU and Euro authorities say. The public may not have an immediate and better answer, but is not surprising they are demanding that their politicians find one. Permament austerity, locked into the single currency, is not palatable to many voters.
Mr Redwood’s contribution to the Statement on Economic Policy, 26 Feb
Mr John Redwood (Wokingham) (Con): Does the Chancellor agree that the state balance sheet would look an awful lot better, and that the economy would function better, if RBS was sorted out more quickly and sold back to the private sector in a way that promoted banking competition?
The Chancellor of the Exchequer (Mr George Osborne): I agree with my right hon. Friend. RBS is now pursuing a policy of becoming a much more UK-focused bank than it was under the strategy we inherited. We are absolutely clear that it should not be in the universal banking business on the scale that it has been and that the investment bank should be supporting its corporate and retail business in the UK, and it has made important steps in that direction.
Why hasn’t there been a private sector led recovery?
The original idea behind Plan A that we need a private sector led recovery to rebalance the economy and pay more of the public sector’s bills was a good one. The trouble was the government also tried to pursue other objectives at the same time. Several of these got in the way of recovery.
The government signed up to carbon taxes, renewables and dear energy. That has cut into people’s spending power, and made industry less competitive.
The government carried on attacking the banks and bankers, and forced them hold more cash and capital. As a result they were unable or unwilling to lend to smaller and medium sized enterprises to help them expand.
The government left RBS to get on with it, instead of insisting on an early and full clean up of the outstanding debts and balance sheet. As a result parts of the property market are still suffering from the overhang of the past, and a shortage of new credit for new purchases.
The government backed a High Speed Train plan, and more expensive replacement of railway bridges, instead of spending money on improving the crucial road network which transports more than 90% of our goods.
The Bank of England presided over a rapid inflation, which cut into people’s take home pay and left the markets short of confidence and spending money.
The government’s tax rates on higher incomes, on fuel, and on capital gains were too high, leading to a loss of revenues rather than bringing in more tax. These taxes meant some people left the UK altogether to earn large sums abroad instead, and others could only afford to do less. High inherited fuel taxes have hit everyone, and left many families short of spending power.
Government moves to increase spending again
It’s that time of year when the government asks Parliament’s approval for increased spending within the 2012-13 year.
On cue I find on my desk three supplementary estimates for increased spending. The government plans to spend an extra £531 million in Scotland this year, boosting that department’s Expenditure Limit by nearly 2%. It plans to spend an extra £327 m in Northern Ireland, boosting the Limit by 3%. It plans another £107m in Wales, a rise of 0.7%.
It would be good to hear a bit from other MPs and the media about these increases and the reasons for them, at a time when we are told about “cuts”.
Austerity hit the wrong targets – Plan A has long since been abandoned
The problem with Plan A, the government’s June 2010 Plan to get rid of the deficit this Parliament, was it relied on a big hit on the private sector. The Plan was to increase cash public spending over the five years, and to pay for the extra spending and get rid of much of the inherited deficit at the same time by a huge tax increase. It was tax and spend on a vast scale.
It was misrepresented by many commentators as a big cut in public spending – because the original plans were for an even larger cash increase in public spending. Austerity was not visited on the public sector in the way it was on the private sector. Even now, during a wage freeze in the public sector, public sector wages are going up faster than private sector wages.
Now we hear endless arguments about sticking to the Plan. I do not know why. The government abandoned the Plan shortly afterwards. We are well into Plan B, which has delayed cutting the deficit because they now realise they will not get all the extra tax revenue they wanted. We are also into Plan C, a plan based on an attempted large increase in capital spending, the one area they did cut at the outset, based on Labour’s planned cuts.
Before people can comment sensibly on what the Chancellor should do next to rescue some growth, they need to understand what has happened so far. It is silly having to field interviews based on the false premises that they cut public spending, and that they are sticking to Plan A. This week I will be looking at the options for the Budget in more detail. I will include inflation and energy prices, banking and credit, public current spending, capital spending, and taxes.
Plan A June 2010
Total Spending 2009-10 £669bn 2014-15 £737bn (plus 10.2%)
Total tax revenue 2009-10 £479.7bn 2014-15 £656.5bn (plus (plus 36.9%)
(Red Book Budget 2010)
Plan B December 2012
Total spending 2009-10 £669bn 2014-15 £731bn (plus 9.3%)
Total tax revenue 2009-10 £479.7bn 2014-15 £604bn (plus 25.9%)
Green Book (Autumn Statement 2012)
Plan C
Add a £50 billion Infrastructure funding scheme to the cut level of capital spending in the original plans.
Plan B accepts a revenue shortfall of more than £50bn a year by 2014-15 compared to Plan A, leaving a much larger deficit and more borrowing.
Leaked Letter to Dame Lucy shows worries in civil service
Dear Lucy,
Just when I thought Ministers were learning of the compromises and commonsense government needs to progress, I am alarmed by some recent developments.
Our carefully crafted compromise over the EU designed to keep the Coalition together is in danger of being broken by the Prime Minister’s latest speech. Many of us are deeply unhappy about his new language. The UK does not need a new relationship with the EU. There is nothing to put to the British people in a referendum, as there is no new Treaty in the making that the Uk is going to sign. Some of us think it a pity we did not join the Fiscal and Banking unions, but understand the political sensitivites at the current time. We think ti will be very difficult to maintain our position at the European table with all this ultra sceptic rhetoric flying around.
The Foreign Office has rightly been saying under this government that it is in the British national interest to be a full member of the EU and to stay engaged. It has been long standing policy of all three main parties that the Uk needs to be a member of the single market. We need to explain this more to some of our current Ministers. They seem to think it is or should be a free market or even a free for all market. That was never the idea. It brings duties and responsibilities. The European single market is about regulation to combat climate change, regulation to ensure high labour standards, regulation to ensure it is a social market, regulation to promote more environmentally friendly methods of travel, and regulation to ensure high standards of health, safety and cleanliness.
We need to explain to the Environment Secretary that the agricultural and fishing policies are to do with solidarity and sharing around the whole European space. These were not entered into lightly, and cannot suddenly be renounced by the UK. We need to tell the Welfare Secretary that the UK does have obligations to people coming to the UK from other member states. We cannot have a welfare state for poeple already here, but deny it people arriving from elsewhere in our Union.
I do hope the Home Secretary’s wish to pull out of many of the Justice measures so carefully compiled in recent years will be tempered by the need to re-enter many of these agreements. We need to co-operate fully on justice matters with our partners, and need to grasp the requirement to share intelligence and enforcement with our partners now most of the border controls have been dismantled within the Union.
I will pass over our major worries with the Education Secretary, who seems to think he needs an alternative civil service to carry out his duties. I would be grateful to hear from you what we can do to prevent the march of unreason over EU matters.
I would also be grateful for guidance on how much we have to accept from the new arrivals in the form of senior Ministerial advisers from outside the service. We must avoid traffic accidents and misunderstandings , which become more likely if Ministers do not trust and confide in us, their faithful servants. The last government wrestled away control of media and communications from us, which was just about tolerable. It is not possible to govern well if they wish to take away control over policy as well.
Yours ever
Roy