Author: johnredwood

Today various papers and commentators have come out to say the Coalition government is dismantling the welfare system, cutting it beyond recognition. It is difficult to reconcile these extreme claims with the figures.
In 2009-10, the last Labour year, social security benefit expenditure amounted to £163.7bn and tax credits were £22.9bn. The forecast for 2013-14 is £180.4bn on social security benefits and £29bn on tax credits, an increase of 12.2% in cash terms. This is after the creation of many more new jobs and a small fall in the unemployment benefit claimant count.
Those who say they do not like Coalition attempts to reduce the pace of increase in benefit expenditure should tell us how much more than £209bn they wish to spend on benefits and tax credits, and where this money would come from.

The departure of David Miliband for the USA is a wise move for the Labour party. As David is said to believe, his continued presence would add to speculation against his brother and allow all sorts of stories to run about disagreements, splits, and fraternal unhappiness, whatever the truth of it all.

I never thought Labour elected the wrong Miliband as their Leader. For all his abilities and charms, David Miliband had one fatal flaw in someone wishing to lead the UK. He remains a convinced Europhile. I like to think that the UK is now such a Eurosceptic country that anyone serious about leading it has to show a willingness to challenge the current EU orthodoxies, and talk about a new relationship for the UK as Euroland hurtles towards greater union. David Miliband is stuck in the past over the EU vision.

Rumour has it that Ed Balls has had to battle against David Miliband over Labour’s stance on the EU. More pragmatic and hungrier for power than David Miliband, Ed Balls has sought to move Labour away from unthinking support for all things European. Ed Balls after all wanted Labour to join Conservative rebels to vote for a smaller EU budget, an argument he won. There could also be pressures from within Labour to match Mr Cameron’s offer of a referendum on our membership of the EU in the next Parliament.

The pound was only safe and the Euro defeated in the UK when those of us pressing to keep the pound secured a pledge of a referendum before joining from both Conservative and Labour leaderships. It was the cross party support for such a move that made the pound safe. Mr David Miliband’s withdrawal from the fray is an important loss for the out of date Europhiles, unwilling to see that the new Euro government emerging is something the UK cannot be part of. Now Mr Ed Miliband has the chance to offer a new deal with the EU to reflect the growing impatience with the curreent EU here in England. Is he able to take that chance? Does he now see he is liberated to take his Europhile party nearer to the healthy and sensible scepticism of most UK voters?

I am taking a break from the Budget pieces today. I am inviting views on retirement.

Some people eagerly await retirement. They seek early retirement. They like the idea that they no longer will have to rise early and get to the office, shop or factory.

Others fear retirement. They fear they will miss the company of colleagues at work, the routine, the sense of achievement – and the income that comes from it. They are trying to extend their time in a job.

Both groups face the same problems when they do decide to retire, or when their employment is terminated for them. They have to find ways of spending the time agreeably and usefully, within the budgets that their pension permits. There seem to be four broad approaches.

Some choose to travel and visit to the full extent that their budgets allow. They go on cruises, coach trips or mini bus outings. They visit old buildings, take trips to entertainments, see countries they had not seen before.

Some take up a new leisure activity. They become leading members of the golf or bowls club, join a book circle or learn a craft at an FE College.

Some seek surrogate work. They often end up doing something similar to what they did when in full time employment. Sometimes they are paid modestly, sometimes they do it for free for a charity or local association .

Some do very little. They end up occupying themselves with the daily chores, and lots of tv, newspaper reading and the like.

Many of course mix up parts of all these approaches.

Do you think there is a right answer to what to do in retirement? Have you retired yourself, and how do you spend the time? Do you want to retire early? If so why?

PS I am not planning to retire early myself.

          Recently  I met the senior management of Thames Water.

          They told me of the costs and delays they are experiencing in preparing all the necessary documentation for their new London sewer tunnel. They argue that this large  civil engineering project is essential if we are to handle the volumes of dirty water London now produces, without having to put dirty water into the river when there is rainfall swelling the drains with surface water. The volume of paperwork and the detail of the presentations is such that millions have to be spent on the application, and much time is absorbed in the authorities coming to a decision. This is for a project which will be underground.

         Of course every major project should be properly considered, with objectors having their chance to say “No”.  Of course a large company wishing to put in such a facility needs to offer guarantees and assurance about how it will handle site works during construction, and how it will protect the interests of property owners affected by its project. All this need not take as long and be as complicated as it now is.

          I pushed along with other MPs present for an early decision on extra reservoir capacity in the South East. It seems quite obvious that in dry summers (we might have one again sometime, with all the global warming we are promised)  we are already short of water. As the population grows and people want to use more water we will need bigger supplies. Adding emergency water desalination plants is not as good a solution as simply collecting more of the rainwater in our rivers at times of flood and plenty. We have had more than enough water in our rivers this winter to fill many times the reservoir capacity we currently enjoy.

                 The company seems interested in the idea of a new reservoir at Abingdon and has looked at  plans. Whitehall watchers   think a project like this would take ten years to get through planning. It is high time we did better than this. The moderately few people who would be advsersely affected should be generously compensated at an early stage. Surely it is better to pay out at a premium to affected property owners, instead of spending a fortune on fighting them through various rounds of a planning battle only one side can win.  If someone wanted to put a reservoir over my home I would object long and hard. If they offered to buy me out at a decent premium so I could afford a better house I would take the money. I hasten to add no-one does want to build a reservoir near me, so I do not write this out of the hope of personal gain.

It was a sensible gesture of the Today programme to offer the Good Friday “Thought for the day” to the Head of England’s established Church, despite him saying he never listened to the programme himself. You would have thought that on this of all days, the Archbishop would wish to use all his time to explain the importance and significance of the Crucifixion to Christians.
Instead he spent the first part of his allotted time describing the Cyprus Euro problems. He wrongly stated the bail out was Euro 10 billion, leaving out of account the far more contentious Euro 5.8 billion part of the package that had to be raised from the deposit holders and bond owners of the banks there, the very centre of the storm. Perhaps he thinks only taxpayers’ money provided by governments counts. Nor did he mention the negotiation to roll over and extend the Russian loan.
He spoke much more convincingly when he came on to the history and significance of Good Friday. There is a lot to be said for people on the religious slot sticking to religion, especially if they do not seem to know the numbers and issues involved in more modern secular crises.

I see The Financial Policy Committee has decided that the main UK banks need a bit more capital before they are as safe as the new authorities wish. Predictably, RBS seems to be the one in need of most new capital, and that is the one large bank that is still not making a profit. With a main shareholder, the UK government, rightly unwilling to subscribe more money, and no retained profits to fatten the assets on the balance sheet, RBS remains the most difficult of the banks to reform.

The Regulators and the shareholders of RBS need to look for other solutions. The government is right not to put more capital into RBS. It should not have put so much in as new equity at the beginning. What it needs to do now is what it should have done in 2008 when the crisis first erupted – sell off assets and slim the bank down by disposals. RBS was never a natural integrated successful group. It should sell its American bank, Citizens, sell the parts of its Investment Bank that are profitable and free standing, and create new clearing banks in the UK market out of the assortment of branches, assets and liabilities it currently enjoys. The taxpayer deserves to get some money back from the disposals of the good bits. Taxpayers in the UK also need more competitive properly financed banks on the High Street.

Taxpayers may have to remain as the owners of a bad bank that could remain once the rest is sold on. As we already own a large majority share of the bad bits of the RBS Group, that is no new hazard. The prize would be the creation of more competition in UK domestic banking, and a resolution of the problem that banking in the UK still is not backed by enough capital to allow sensible expansion of overall loan books. The UK recovery has been held back by the inability of the UK clearing banks as a whole to expand their loans to new people wanting to buy homes, set up businesses or expand decent small and medium sized enterprises. The Bank’s monetary experimentation has not had enough impact on the real economy owing to the Regulator’s insistence on more cash and capital to be held in the banking system, and owing to the weakness of some of the banks in the system.

Sorting out RBS would be the single most important contribution the UK government could now make to overall economic recovery. The fact the RBS remains the worst placed of all the UK banks on capital, more than four years after the crash, argues for new measures to tackle the problem of too little capital and too little competition in UK High Street banking.

When I visited Scotland earlier this week I was interested to see RBS can still afford a lot of advertising at Edinburgh airport. The advert I most enjoyed was the one on a walkway which announced “In 2011 RBS delivered Moneysense to 67,000 young people in Scottish schools.” I do hope it was a case of do as I say, not as I do. We would not want young people brought up to believe you go out and borrow and spend on a massive scale, then ask the taxpayers to stand behind the bills whilst you carry on losing money.

 

               In February European car sales fell by another 10%. They fell last year as well.

                Prior to the Euro crisis Germany did well out of the Euro and the EU. Germany worked hard to produce good products and to keep her own costs under control so her products were competitive. She was then able to sell her cars and other items throughout the Eurozone, earning a large surplus for Germany.

               Germany was not expected to  pay much extra in tax to send grants and loans to the rest of the zone. The theory was each member state in the Euro had to take responsibility for financing its own government, and balancing its own external payments. The system differed from a single country single currency area, where much higher levels of grants and internal transfers are made to let the system work without an exchange rate to correct the imbalances.

             Now the deal is a much worse one for Germany. She is having to look outside Europe for markets for her products, as the demand in the weaker Euro states has been in freefall. They cannot afford nearly so many luxury cars as before. Meanwhile Germany is being expected to put up much more money to help finance the overborrowed states and to pay for the balance of payments imbalances and to recapitalise the weak banks.

           Frau Merkel is no longer an automatic ally of Mr Hollande. Germany backed the UK’s calls for cuts to the EU budget recently. There are signs that Frau Merkel has to tell her voters she will not use too much German money to prop up the Euro. The more the EU market declines as a source of German prosperity, the more likely it is German voters will oppose putting more money in to keep the whole system going.

           The best hope we have all the time we do not have a Eurosceptic majority in the UK Parliament is the growth of Euroscepticism in Germany. It appears that Mrs Merkel now has to accept that German voters are turning against Germany paying ever larger bills for her partners. That mood forced Mrs Merkel into a tougher approach towards Cyprus than she adopted to Greece. The Euro cannot survive for many more years without Germany and the other rich states agreeing to put much more of their taxpayers’ money into the common cause. The UK is more likely now to get German support for less Europe.

         Meanwhile, some Germans are beginning to worry about stealth ways of Germany paying for all the losses and economic disaster elsewhere in the zone. Too much monetary experimentation could give Germany inflation, eroding the value of her savings. Tougher approaches to broken banks could lead to German losses on desposits around the currency area. German money has been committed via the European Central Bank to keep the weak banks elsewhere in funds.

         The truth is, all the time Germany remains in the Euro, they will have to find ways to make the German public pay. If they will not vote for higher taxes to send the rest of the zone grants, the officials and politicians will find back doors ways of taking German wealth to do the job.  The Euro comes with a high price for the prudent and successful caught up in it.

I am sending the following letter to the Energy Minister. It reinforces the points I made to him in the recent Commons Committee (available on the site under Debates on renewables)

Mr John Hayes MP
Minister of State, Department of
Energy and Climate Change
3 Whitehall Place
London SW1A 2HH

26 March 2013

Dear John

I am worried about the future reliability and costs of our electrical power system. In recent years there has been a preoccupation under EU policy with introducing high cost renewables, primarily wind farms. These require back up from conventional power plants for periods when the wind does not blow. Now under another EU Directive there are plans for the accelerated closure of our coal fired and some oil fired stations which have generated an important part of our power in recent years. This week saw the announced closure of 2000MW at Didcot at the end of the month, and 1000MW at Fawley. There are also plans to convert Drax to burn processed timber, a dearer fuel than coal.

The UK has a growing population. The government is pursuing an industrial strategy designed to increase the volume of energy using manufacturing based in the UK. Both these require more power to be available. We need cheaper power as part of the package to encourage more industrial investment here. It is taking time to grant the permits and find the right incentives to get new combined cycle gas and nuclear power stations built. In the meantime we need to worry just how the lights will stay on post the closures.

I urge you to go the EU And say the UK needs a longer transitional period for phasing out the coal power stations. We need to have in place not only all the extra renewable capacity, but also the standby back up capacity that windpower requires. We need to have the additional capacity that a rising population and more industry needs. The aim should be to negotiate a longer phase out period to get us over a period of vulnerability in our power supply.

I suspect we can attract support for modifications to the EU rules, as other countries find themselves in similar difficulties. Germany is especially hard pressed given her decision not to use nuclear. If , however, the EU refuses to co-operate we might need to keep the stations open anyway and pass a suitable short UK law saying we are modifying the EU requirements owing to an overriding national interest.

Yours ever

The Rt Hon John Redwood MP
Member of Parliament for Wokingham

CC: The Rt Hon George Osborne MP, Chancellor of the Exchequer

PS Now John Hayes has been moved to the Cabinet Office and Michael Fallon takes over at Energy, this letter will fall to be answered by him automatically. I will also highlight it to him by sending him another copy in his own name.

 

            After five days it was a draw. The last England versus New Zealand test produced no winner. The series produced no winner. Yet the action of the last day was fantastic. Both sides and their fans can bask in acts of glory and heroism, resulting in an honourable draw under the rules.

          In the spirit of cricket the New Zealand team website salutes the amazing innings of  Matt Prior, 110 not out  from batting 269 minutes. His innings, along with Bell’s brilliant 352 minutes of resistance, and Stuart  Broad taking 137 minutes to score very few, allowed England to save the match. Meanwhile a part time bowler Williamson  took two wickets in the same over to give New Zealand a chance of victory and ended with astonishing figures of 4-44. Their seamers strode in energetically and purposefully for the whole day, always leaving their fans with the belief that they were going to win. When Boult had the ball in his hand England hearts wobbled.

             It was great box office. It broke all the rules of other games – it took too long, it had no result, one of the teams simply had to spend time and absorb pressure. It made brilliant drama. The fact that both teams can praise the other after such a forceful encounter  is the true spirit of cricket.