Author: johnredwood

John Redwood (Wok, Con):

I want to see far less imported LNG. Can the Minister give us some good news on what we might be able to achieve in getting more gas out, and will he ensure that many blocks—not just one—are put up for a licence round to get rid of that LNG?

Graham Stuart (Minister for Energy Security and Net Zero):

The estimate from the North Sea Transition Authority is that a billion of barrels of oil equivalent, including gas, would be lost if we did not have new licences. That is lost tax revenue for this country, on top of the 200,000 jobs and lower emissions—[Interruption.] So far, I have not mentioned the tens of billions of pounds of tax. [Interruption.] It is not surprising, given how comprehensively easy it is to destroy the Labour party’s arguments, that the right hon. Member for Doncaster North keeps up his constant chuntering. He cannot win the argument while he is on his feet, so he sits there and tries interrupting those who can. If we do not have new licensing, which is Labour’s policy, we will see emissions go up in the short term; 200,000 jobs undermined; tens of billions in tax not brought into the public Exchequer; and—for those who care about dealing with the climate emergency—we will lose the very engineering skills and talent that we need to retain in this country in order to make the transition.

The government yesterday secured passage of its Bill to encourage more oil and gas from the North Sea to its next Commons stage.

It was an important policy change when the government  announced it did wish more oil and gas to be produced from known fields, and wanted the quango in charge of the North Sea to license more blocs for exploration. It makes no sense to run down our oil and gas fields faster than we need do claiming that helps reduce CO 2 when the country then imports LNG instead. Such gas creates four times as much CO 2 as home gas down a pipe, given the large amounts of energy needed to compress it, transport and to switch it back into gas to go down pipe system from the seaport.

Some query whether it needs a new Act of Parliament to achieve this. Why not just instruct the North Sea Transition Authority and win a vote in the Commons if the Opposition objects? Some wonder why the requirement to hold an annual licence round is set out with a minimum of one bloc, when of course they will need to offer many blocs to an active industry. It would also help if the Treasury would review energy taxation which is higher in the UK than in many competitor countries. Far from helping our Treasury that policy drives both energy production and energy using industries away from the UK.

The UK needs to take energy security much more seriously and needs to do all it can to extract more home gas all the time people and businesses have gas boilers for their main source of heat. Using the road to net zero as an excuse to make us more import dependent on energy which entails more world CO 2 is a very bad policy favoured by the Labour, Lib Dem and SNP parties. That policy means all those well paid oil and gas jobs are in another country. it means the bulk of the taxes levied on producing oil and gas are paid to a foreign Treasury. It means the UK is made beholden to more overseas energy interests.

I read and hear in various places that Kemi Badenoch is out to woo the right. I know she has been very loyal to Rishi Sunak. Contrary to some briefings she sent no message of support to the sponsors and supporters of the amendments to the Rwanda Bill . The sponsors in their discussions with No 10 and the Home Office did not report back on any interventions from the Business department to help them amend the draft. She has kept out of the difficult issues preventing GB to Northern Ireland trade.

The  relevant groups on the so called right that would  like to help her in her important job as Business secretary include the Growth Group, the European Research Group, the NTB and the Net Zero realism group.  These Groups were very disappointed when she abandoned the Jacob Rees Mogg Retained EU Laws Bill, which was designed to remove and amend bad or needless inherited EU laws.

We have offered to work with her and the other Business Ministers on a programme of better and less regulation. We have been pressing the need for more and cheaper UK  produced energy. The EU carbon emissions and interconnectors framework for more imported power are particular concerns. It is leading to much industry closing down in the UK making us more dependent on imports. We await a response on how the UK can retain a basic new steel making capability. We are worried that current regulations  to force Electric vehicles will lead to too rapid a decline in car industry based in the UK and to more Chinese imports.

See Facts4EU. Excellent graphs and analysis today showing strength of jobs since the referendum, contrary to gloomy official forecasts.

https://facts4eu.org/news/2024_jan_brexit_is_working

I am an unpaid fellow of an Oxford College and a former part time Professor at another University. I come  to the debate on students from a position of sympathy, wishing to see a strong UK independent university sector. I am pleased we host several of the world’s best universities.

I am no supporter of the model which creates a large number of places for overseas students which leads to a major expansion of students staying here after graduating taking low skill jobs and seeking to convert their degree course into a permit to live and work in the UK  thereafter. Nor do I think it a good idea to encourage a lot of older postgraduate students to  come with their families adding to the pressures on public services and housing. It is a thoroughly bad idea to let good postgraduate students from authoritarian and hostile countries get places  in cutting edge research that could be useful for weapons manufacture, electronic  surveillance, new materials, and other dangerous technologies as they will  return to their homes to apply what they have learned in ways which might harm others.

The government is taking action to restrict university action in each of these three categories. Selling courses to overseas students mainly sells to the rich from abroad as these courses are expensive. Charities and the overseas aid budget can provide money for low and no income  students from poor countries to come  to gain necessary skills and to return to apply them to help their own  country.

UK universities at their best are hosts to the best of world academic talent capable of world class research. Inviting in some overseas students to pay  high fees helps with their finances. If they invite in too many without ensuring they return home  after their course they add to housing and public service stress. Some of these universities imply there is no other way of covering costs other than a big rise in foreign students. They need to develop other ways of paying for university. Too many foreign students changes the ethos  and culture of the institution and limits places for UK students where we want a better educated and skilled workforce.

The Endowment model of leading US and  UK universities is a good one. Many ex alumni who succeed are happy to offer money during their lives and or on death to build endowment funds . These provide an excellent addition to student fees. There can be profits from spin out investments from university research. There is also plenty of scope given the many weeks each year when universities do not teach students to use their buildings and personnel to earn conference and adult training money.When I was years ago a full time academic I taught at summer schools as well,

Whitehall thinks the answer to every lobby from business over shortage of employees is to grant permission to bring in more people under a Temporary Skills shortage designation. For years we have had these temporary shortages of care workers, farmers, medics and others. We have also watched as many more categories have been added. It is high time we remedied more of the shortages ourselves. Temporary should mean temporary.

The cheap imported labour model has several major drawbacks

1. It keeps wages down, making it less likely for the lower paid jobs that UK residents will want to do them
2. It deters investment in productivity enhancing machinery and computing power, reinforcing a low productivity low wage outcome
3. It imposes large extra costs on taxpayers to meet the bills for top up benefits, subsidised housing and a range of public service provision for the new comers.
4. When it comes to public services it brings more demand as well as some labour supply to meet demand for services. You need then to invite in more health workers to take care of the other workers you have added to the population.
5. Keeping more UK residents out of work is costly for the state.

The government did show how you can cure an acute shortage in the way it tackled the shortage of drivers created by the big move to on line shopping over covid, and by the UK’s net zero model of importing more and more things to cut the UK national CO 2 output.  The government did put in  a lot more capacity to train and licence more people as  truck drivers, and allowed the market to put wages up. There was also necessary discussion of improving facilities for longer distance drivers so they can get a meal and decent rest facilities en route.

Sector by sector where currently the government is granting thousands of permits for imported labour it needs to have better defined and more urgently implemented strategies for attracting and training people already settled here. I have been urging these, and urging the DWP Secretary of State to roll out his promising plans more rapidly than the civil service is currently allowing. Get on with it.

In the year to June 2023 1.2 million people came to our country legally. This overwhelms the 30,000 illegals who made their way here. The new arrivals were rightly welcomed. Some came to take educational courses, some came to fill jobs, some came to join  family here or as dependents of those coming to work or study.

In the years ahead we will want to welcome more students to fill courses, some people with skills we need for jobs we find difficult to fill. We want more investors, entrepreneurs,  business builders. We do not want to prevent families reuniting where there is good cause.

We also need to recognise that the huge numbers are no longer fair on either those who come or who  are in  the settled communities that receive them with a welcome. We want people coming to enjoy a good lifestyle. They need decent homes, school places for their children, NHS doctors and hospitals capable of seeing them  promptly when  need arises. They need roads to drive on and utility supplies for their energy and water. All of these things are under stress and much stretched as we are not keeping up with providing the extra capacity in all these areas  that 700,000 extra people a year need.

It is true that last year 500,000 left the country which is why I wrote 700,000 not 1.2 million. Some people just net that off, but in practice for some purposes you need to look at the gross number. People leaving may sell or vacate homes that are are in different parts of the country or in a different price bracket to the new comers’ needs and pockets. People leaving may be older  requiring  fewer school places than younger migrants arriving. There may be concentrations of new arrivals particularly in big cities and in places with plenty of jobs.

We also need to be fair to taxpayers. The low wage model, inviting in people to fill low paid jobs may be cheap for the employer but it is very dear for the taxpayer. A low wage worker will need a subsidised home, benefit top up of wages, a wide range of free public services, and extra capital for the additional utility supplies and  transport they need. I have set out before how it probably costs around £250,000 per low paid migrant in public sector capital set up costs and early years public service and benefit costs. This is in line with the EU estimate of 250,000 euros a migrant in 2016.

In future pieces I will explore the government’s plans to reduce legal migration by 300,000 a year. This could be expanded and speeded to the benefit of  many. We need a higher wage higher skilled economy.

Recent governments have allowed too many so called independent bodies to continue, to increase their fees, charges and budgets and often do a poor  job. When they let us down Ministers get the blame, as the Environment Agency has on sewage discharges, the Rail regulators and public sector bodies have on train services, the North Sea Transition Authority has on energy self sufficiency and cost, The Post Office has on treatment of its sub postmasters, HS2 has over building a railway to time and budget, the Highways Agency has over keeping the main roads open and free flowing and the Border controllers have over illegal migration to name a few.

The public want controlled migration, good roads, affordable railways, well run Post Offices , more of our own oil and gas for our needs and clean water. They do not want Ministers who say it was not us, and responsible bodies who suddenly claim it was nothing to do with them. Ministers tell me with these bodies they are warned off intervening and told they have independent powers. In  practice they are creatures of the state. Ministers need to get them reporting to them  in an agreed and sensible way. Ministers should act as the non executive chairman or the responsible  shareholder, They can delegate their authority but they need to know the up to date position, supervise the annual report and the budgets, and ask good questions if there are complaints. They need to be ready to praise or blame, reward or fire the top management related to their conduct and performance.

In some cases we would be better off without these bodies. Take the work back into the department and supervise it directly.

^The large fall in public sector productivity since 2019, assessed at 7.5% by the ONS to last year, is a major cost to taxpayers and a major drag on economic performance.

The immediate task for the Chief Secretary to the Treasury and the Cabinet Office Minister for the civil service must be to arrest the big increase in management and administration. The more managers and senior staff they recruit or promote, the worse the productivity becomes.  The easiest thing to do it to impose a ban on all new external recruitment into the civil service and the public administration, unless a special case is made out and approved by a Minister.

Natural run off occurs at around 6-7% a year as people retire, find other jobs elsewhere or change their work life balance. As a post is vacated one of the many managers needs to decide if the post can be eliminated, or amalgamated with another. If not then a new appointment is made from within the civil service or public body, and some other post removed.

Ministers and top management would also have to make clear that to raise productivity the work done by these extra people either has to be abolished by better process or carried out more effectively. They must not contract more work out to the private sector. They should review their use of private contracts on a  regular basis, asking each time the contract comes up for review if this is the best way to do the work or if now they know how to do it more of it could be done in house to raise productivity. There is a tendency to  have a bigger overhead of managers who then buy in more work from outside to keep their own headcounts down a bit. There has been a big grade inflation as the civil service has expanded, implying more buy in of the work from  outside .

We may need more doctors, nurses, teachers, police and other front line personnel. There are plans underway to do so. Some of this requires extra back up staff so they can do their jobs well. That should be allowed where it  is needed for growth of output. If we need more doctors and nurses to put through more treatments, or more teachers for more pupils then that will not depress productivity to have sensible support staff numbers.

What is strange is the fall in productivity and the big increase in clerical staff has taken place against a background of large expenditures on new computer systems and big breakthroughs  with artificial intelligence, faster and better data processing., more remote working and conference calls to cut down travel time , better software for everything from booking systems to accounts. So why hasn’t this led to a big productivity gains in the public services that have a high administrative content?