Author: johnredwood

The Coalition splits on press regulation

November 30, 2012 138 Comments

Yesterday the long Leveson report produced different statements from the Prime Minister and from his Deputy. The Liberal Democrats opted for the less liberal option, leaving opinion very divided in the Commons and potential voting tight.

Amidst all the pages filled and ink spilled there was little debate over why people think Statutory regulation would work better. Where is the evidence that it does? The main faults in the press in recent years were crimes – they probably broke the law over eavesdropping and bribery in the worst cases. The answer is to enforce the law properly, and to bring cases to court where there is evidence. How does introducing a heavy handed Statutory Regulator help?

The Statutory Regulators in financial services, introduced in 2000, have not stopped financial crime or deterred it judging by the number of scandals and pending cases that have come out. They also presided over the collapse of large parts of the banking system they were meant to protect.

The irony of this debate on Leveson, ignoring the key question about effectiveness of regulation, is that it comes about at a time when the traditional papers are having the fight of their lives to survive. There is a danger that any Statutory Regulator would add to the cost burdens and the inflexibilities of these organisations just when they need to be cheaper and more flexible to combat the huge competitive challenge of the new media. Regulators tend to regulate the old or the decaying more than the new and the emerging, because they can measure it, talk to it and pin it down.

Mr Redwood’s signature on a letter from MPs and Peers to the Daily Mail on Leveson Inquiry, 28 Nov

November 29, 2012 1 Comment

DAILY MAIL (London)

November 28, 2012 Wednesday

THEIR MESSAGE TO DAVID CAMERON

With the publication of the Leveson Report on Thursday it is clear that the central issue will be whether the Press should, for the first time, be subjected to statutory regulation or have the opportunity to put in place a new system of binding self-regulation.

As Parliamentarians, we believe in free speech and are opposed to the imposition of any form of statutory control even if it is dressed up as underpinning. It is redress that is vital not broader regulation. The prospect of drafting legislation may have the dual benefit of exposing the dangers of the statutory regulation and at the same time focus the minds of those seeking to further strengthen the existing tough independent proposals.

No form of statutory regulation of the Press would be possible without the imposition of state licensing – abolished in Britain in 1695. State licensing is inimical to any idea of Press freedom and would radically alter the balance of our unwritten constitution.

There are also serious concerns that statutory regulation of the print media may shift the balance to the digital platforms which, as recent events have shown through the fiasco of the Newsnight broadcast prompted by Twitter, would further undermine the position of properly moderated and edited print journalism.

The Press abuse chronicled at Leveson was almost wholly about actions which were against the law. It demonstrated not a sole failure of regulation but rather of law enforcement.

However the status quo is not an option. We cannot countenance newspapers behaving as some have in the past. The solution is not new laws but a profound restructuring of the self-regulatory system. Lords Hunt and Black have come forward with a detailed proposal for a much improved, genuinely independent regulator with the power to intervene proactively, to levy substantial fines, and to enforce membership for the first time through a system of civil contracts. They need to deliver on this promised reform.

We agree with the report of the Joint Parliamentary Committee which came out against any form of statutory regulation – not least because of the signal it would send to emerging democracies around the world.

Public debate will necessarily follow publication of the Leveson report and will be needed to provide confidence in a rigorous tough new system of self-regulation. Such a debate will lead to a speedy way of establishing a new self-regulatory regime that can restore confidence in the Press.

SIGNED BY: David Blunkett, Conor Burns, Stuart Andrew, Steve Baker, Lord Bell, Bob Blackman, Nick de Bois, Baroness Boothroyd, Peter Bottomley, Peter Bone, Graham Brady, Angie Bray, Julian Brazier, Andrew Bridgen, Alun Cairns, Baroness Chalker, Bill Cash, Douglas Carswell, Lord Cavendish, Geoffrey Clifton-Brown, Lord Coe, Therese Coffey, Damian Collins, Earl of Courtown, Tracey Crouch, David Davis, Glyn Davies, Philip Davies, Lord Dobbs, Brian Donohoe, Stephen Dorrell, Lord Eden, Lord Fellowes, Liam Fox, Frank Field, Lord Flight, Lord Forsyth, Mike Freer, Lord Glentoran, James Gray, Robert Halfon, John Hemming, Gordon Henderson, Kate Hoey, George Hollingbery, Lord Howell of Guildford, Margot James, Eleanor Laing, Pauline Latham, Phillip Lee, Julian Lewis, Peter Lilley, Karen Lumley, Jason McCartney, Karl McCartney, Stephen McPartland, Baroness Morris, David Morris, Stephen Mosley, Baroness Neville-Jones, Brooks Newmark, Lord Norton, Mark Pawsey, Christopher Pincher, Mark Reckless, John Redwood, Lord Renton, Lord Risby, Baroness Shephard, Lord Skelmersdale, Graham Stringer, Julian Smith, Gisela Stuart, Graham Stuart, Lord Swinfen, Lord Tebbit, Justin Tomlinson, Lord Trimble, Lord True, Andrew Turner, Martin Vickers, Lord Wakeham, Heather Wheeler, John Whittingdale, Sarah Wollaston, Tim Yeo.

© Daily Mail

Article for Wokingham Times

November 28, 2012 5 Comments

All the talk in Westminster is of “shovel ready” building work. The government is keen to give the economy a push by allowing or initiating new projects. They want better roads, more power stations, faster broadband, improved railways, new free schools and new homes. They are trying everything to see how they can stimulate this activity.

Locally we see people pressing on with the large project at Reading station. It is now taking shape. We have had a new fire station headquarters for Wokingham, a new free school at Ryeish Green and can look forward to the start of the Wokingham Town Centre facelift and expansion. We may even get the often promised new railway station. Faster broadband is edging its way round our homes and district. Ministers are keen to see us do more and build more, and have had conversations with the Council about the next phase of their plans.

The government has announced a massive £80 billion of money to help the banks, so they can lend it on to companies and institutions who need it for these kinds of projects. They are hoping to tap into longer term investment by pension funds. Recently we put through a piece of legislation authorising the government to spend up to £50 billion, another huge sum, on ways of helping finance major new infrastructure schemes.

So why isn’t more happening nationally? The UK still finds it takes a long time to decide what to do and how to do it. Give us a task like building an Olympic Park to a deadline, and we surprised ourselves. The industry did it magnificently. Give us the problem of how much runway capacity to put into London and the South-east, and we spend years arguing over how much we need and where it should be put. Ask us how to keep the lights on, and we find Lib Dems and Conservatives in disagreement about how much power people should be allowed and how cheap it should be, with the Lib Dem Secretary of State favouring dearer energy. We also find the EU telling us to go for dearer power, at exactly the same time as the USA and the developing world pushes for cheaper power. As a result we are losing industrial jobs from the UK, with Tata Steel announcing more job losses and explaining that energy costs are the main reason they are going to put the jobs elsewhere.

The banks are still not financing a stronger recovery. Small and medium sized enterprises are finding it difficult to raise the money they need to grow, or fear there will not be sufficient demand. Larger companies often have plenty of cash and good profits, but they are afraid they need to put much more of their cash into their pension funds, thanks to the ultra low interest rates created by the government. These same interest rates, planned to help us grow, are doing plenty of damage to the pension funds who need better returns and suffer from low rates in the way they work out the pension deficits.

I have set out my views again on how we might move to faster growth, and will lobby the Chancellor ahead of his Autumn statement and next year’s budget. There is much more to do.

The lessons from Canada

November 28, 2012 108 Comments

 

We are all fans of Canada now. The outbreak of cross party support for the appointment of Dr Carney to the Bank of England was based on enthusiasm for the way Canada got through the last boom and bust crisis in much better shape than the UK. There were no failures of major banks, a smaller drop in output and a much quicker recovery. So we need to ask what were the magic ingredients behind this success?

It was not just better Central banking, though that did help. The Central Bank of Canada did make enough liquidity available to banks at a time when the Bank of England was preaching moral hazard and watching banks go bust as a result. Today Canada has an official interest rate of 1%, and an inflation rate below the 2% target. It was also the state of the Canadian public accounts. that helped Canada through the Credit Crunch.

Canada had followed a path of spending and borrowing too much, leading to an earlier crisis. A fundamental review of public spending was undertaken and substantial cuts pushed through. Following this adjustment, the economy started to perform better. The UK Conservatives studied this in oppposition, but have not been able to do something similar in a Coalition government.

In 2011 the figures show that Canada’s public spending as a percentage of GDP was 39.7%, compared to the UK’s 47.3%. Keeping public spending under better control before and during the crisis clearly limited the damage from international events and allowed a swifter recovery.

In 2011 tax revenues amounted to 32.2% of GDP, compared to 38.9% in the UK. Canada’s economy benefitted from lower rates of tax and less tax being raised by fewer taxes. The UK’s level of taxation was 6.7% of GDP higher. Canada’s top rate of federal income tas was just 29%, compared to the UK’s 50%. It comes in when incomes rise above $132,000. Even adding in state income taxes, Canada’s income tax levels provide a top rate of around 40%, not 50%.

Canada has been running a smaller deficit and building up debt less quickly.

The Canadian economy was assisted by sensible Central banking across the crisis,, but performed better for a range of reasons. Lower tax rates, better value for money public spending, and better control of state debt levels were important factors in the success. Can Dr Carney help persuade more UK politicians of the wisdom of such a policy package?

Canada is now generating 7% more output than before the crisis, whilst the UK, Japan and the Euro area are still below 2007 levels. The Canadian economy has grown in every quarter save one since 2010.

Mr Redwood’s contribution to the Statement on the Future Leadership of the Bank of England, 26 Nov

November 27, 2012 4 Comments

Mr John Redwood (Wokingham) (Con): I welcome the appointment of someone (Mark Carney) who should bring new thinking to troubled banking and monetary policy in the United Kingdom. Will the Chancellor confirm that, when he has studied the subject, Mr Carney will be free to change our monetary and banking policy in ways that could promote a more sustained and favourable economic recovery?

The Chancellor of the Exchequer (Mr George Osborne): I thank my right hon. Friend for his support for the appointment. We have now united all points on the spectrum.

The Governor of the Bank will chair the Financial Policy Committee, the body that will be responsible for macro-prudential regulation. In other words, he will set overall guidance on issues such as capital and liquidity, about which I know my right hon. Friend has spoken powerfully. Any decision on the framework of the inflation-targeting regime and the like will be made by the elected Government and not by the Governor of the Bank.

Public borrowing and the size of the state

July 21, 2012 68 Comments

 

          June’s borrowing totals were not a pretty picture. The state borrowed £ 0.5bn more in June 2012 than in June 2011, after adjusting for specials.  The April – June quarter saw borrowing £6.8 billion up on the same quarter a year earlier, again adjusted for the Royal Mail Pension Fund and the closure of the special liquidity scheme for banks.

          However, there is some good news in the figures. At last the rate of increase in public spending is slowing. Current public spending was only 2.1% higher than a year before. Most of the increase came from benefit and state pension spending, where the substantial price related increase in rates last autumn is pushing total spending up sharply on this item. 

          The private sector  employment figures reinforce this good news, with 800,000 new private sector jobs since the government came to office.  This  outpaces the job losses in the public sector which now exceed 400,000,and mean a lower cost base for the public sector going forwards.

            As expected here on this blog, the main reason for the shortfall in the borrowing figures is poor revenue. Income tax receipts continue to fall in cash and real terms.  This should be no surprise, as the rate for higher earnings is uncompetitive and clearly many have no intention of paying it. 2nd  Quarter  2012 income tax receipts are down on 2nd quarter  2011, which in turn were down on 2nd  Quarter  2010. The economy has grown a little since then and employment has risen, so it is behavioural  not cyclical.  The last quarter brought in £32.7 billion from total income tax, compared to £34.366 billion in the same quarter in 2010.  The losses doubtless are all at the higher end, as PAYE payers on normal salaries will be paying as much or a bit more thna two years ago.

Public Sector employment:     March 2010  6.323m

                                                              March 2012  5.899m

Private sector employment     March 2010    22.539m

                                                             March 2012     23.382m

              Some of you have pointed to the possible discrepancy between the output figures, showing two quarters of declining activity, and the employment figures, showing jobs growth. The only way both can be right is if productivity is falling. It does seem odd that it should be falling so much. It seems even stranger that despite the rate of increase of the total population from migration, actual output is down. I suspect the output figures will be revised up a bit in due course. I think I trust the employment figures a bit more.

John Redwood – Video of Long Finance Autumn Conference Speech 04/11/11

December 16, 2011 3 Comments

Keynote note presentation entitled ‘Does Bursting One Bubble Lead to Another?’ delivered by the Rt Hon John Redwood MP to the Long Finance Autumn Conference on 4 November 2011.

The event was sponsored and hosted by HSBC. Supported by the City of London Corporation, Gresham College, Chartered Institute for Securities & Investment, Tomorrow’s Company, UKSIF – the Sustainable Investment and Finance Association and Z/Yen Group. The video is hosted by Gresham College.

Strikes and pensions:the government needs to make the case about affordability

July 1, 2011 107 Comments

 

Yesterday’s strikes passed without huge passion or support. The Labour party did not come out for the strikers. Union leaders were split over the wisdom of the strikes. Most newspapers wrote mildly in support of the government’s approach to public sector pensions.

Some public sector employees feel strongly that their pensions should not be altered. They should understand that the government has promised to honour all  pledges made to date – there will be no attempt to take away pension entitlement already earned. The pensions issue has created a divide in the country between public and private.

A couple of decades ago the defence of the more generous index linked public pension was simple. Public sector employees on average earned less than  their private sector neighbours. They were given a better relative deal in retirement as some compensation. The funded public sector schemes were capable of paying the future pensions.

The last twenty years have seen three hugely important changes. The first was the rapid increase in public sector pay, leading to the average public sector worker now earning a little bit more than the average private sector employee. The second has been the big increase in longevity, as better diets, lifestyles and health care have enabled many more to live in to their 80s and 90s. The private sector, once the home of the final salary pension plan, was hit badly by the taxes imposed on pension plans in the 1990s, and by the poor investment returns of the noughties. Companies have in the main closed their funds to new members, many to new accruals. A significant number of funds have been closed down altogether.

As a result we now have pensions apartheid in this country. Many in the private sector think it most unfair they have to pay more tax on their lower earnings to pay for generous pension schemes in the public sector that they cannot enjoy. Some wanted the new government to do to public pensions what has been done to private sector pensions. They wanted the funds closed to new members, and maybe to new accrual as well.

Instead, the government has gone for a more moderate approach which will still leave the public sector with more generous pensions than the private. The government is proposing that indexation be switched from RPI to CPI, that the age of retirement be delayed and that public sector employees contribute more themselves for their pension provision. The details of the changes are up for negotiation.

The country cannot afford to pay for a large number of public employees to retire at 60, or even at 65, on final salary pensions indexed to the RPI. The outgoing Labour government admitted that, and a former Labour Cabinet Minister has prepared the Report on pension changes that the government is using as its text for the deal on offer.

Something has to give. If anything  governments have been   slow to raise the retirement age in line with rising expectations of longevity.The total pension liabilities of the UK state are bigger than the national debt, and do need controlling.

The  government must not concede or lose the argument about affordability. On BBC figures there will be an increase of £2.4 billion a year in the taxpayer cost of public pensions between this year and 2015-16. That means each family having to pay around £500 a year more tax to meet the bill. The accumulated capital cost of the unfunded schemes and the deficits on the funded ones now amounts to a debt of around £20,000 for every man, woman and child in the country. There has to be some limit. Let us hope both sides negotiate about what that limit should be, and then agree the best way of hitting that target with least damage to the future benefits of public sector pension recipients.

Some questions for Mr Miliband

September 26, 2010 21 Comments

It was bound to be Ed, as this site has said throughout the contest. I send him congratulations on his victory.

The task ahead is to answer some of the country’s questions about what went wrong in the last five years. Why, for example, did Labour’s very own system for regulating banks and other financial institutions get it so wrong, allowing such growth of risk and credit up to 2007? Why did they then get it wrong the other way, forcing such a tough pace of contraction that even Northern Rock, their favourite bank, got into difficulty? Why did they commit such huge sums of taxpayers money to rescue by buying shares and underwriting, when a more sensible money policy and lender of last resort actions coupled with sales of assets would have been a cheaper way of avoiding deposit losses for taxpayers?

They also need to answer how they managed to spend so much in the public sector, and borrow so much, without obtaining the big improvements in public services people wanted? How did they preside over 5 million people out of work and on benefit even at the height of the boom? Why did all the spending and borrowing fail to keep the economy going as they promised?

The test for Mr Miliband is whether he is indeed Red Ed, keen just to argue for more public spending and borrowing come what may, or whether he will develop a reform agenda. Will he recognise that the Labour model went wrong? That many voters want something different and better? That Labour needs to have a message for people of enterprise and for savers as well?

It will be interesting to watch how it develops. I expect Mr Miliband to seek to move back from the left now he has won the leadership. The government should not underestimate him. He is a modern politician who has risen without trace and has put little of his views on the record. It will get more competitive from here – only Mr Balls has shown much aggression so far from the Opposition benches, making it easier for Ministers.