Category: Blog

The latest figures show the UK economy has been in worse decline than at any time since the 1930s. As expected, the Chancellor’s forecasts have turned out to be too optimistic.

Worse still, the biggest decline by far has been in manufacturing. The government sector has continued to grow – on borrowed money – and private sector services have been patchy. The biggest hit has been taken once again by those who make things. This is the very opposite of what the PM always said he wanted.

Two of the weakest sectors have been new housebuilding and car manufacture. The government has sought to encourage the former throughout its life, but has been most unsuccessful. It has sought to tax the car into oblivion for much of its period in office, only to offer some offsetting cash breaks once the crisis in motor manufacturing was painfully clear.

The irony of the government’s strategy of subsidising banks, spending more in the public sector, whilst regulating and taxing private industry more has been to lead to relatively much more unemployment in the industrial sector than elsewhere. The legacy of the distorted economic policy will be more closed factories and more retreats from making things in the UK.

I was pleased to hear this morning that my Parliamentary question on where the money is coming from to build the new homes has been followed up by the media, only to discover the Communities Department has not identified the cuts to pay for the houses.

On The Today programme on Monday morning Mr Mandelson said that there could be reductions in the budgets of Transport and the Home Office. Later briefing told us the cuts were to come in the Communities and Local Government department.

As some of you have pointed out, none of this should come as a surprise. The announcement on new homes may be spin, and may not result in the extra “planned” spending any time soon. Alternatively, there could be extra spending and the increase will be lost amidst the giddy escalation of the deficit. Why worry about £1500 m you might ask when they are printing £125 billion?

So why do I go on about it? Because at some point government in this country has to get some discipline into public spending. The rules are simple. If the government wishes to spend more on something, it has to spend less on something else. That requires two decisions which need to be reported to Parliament. You shouldn’t just report the increase without reporting the decrease as well and in the same amount of detail. Or if the government wishes to increase its borrowing stilll further we need to be told that and debate the wisdom of yet more on the never never.

The government is in disarray over whether to have a “Comprehensive” Spending review or not. We are due one, and were promised one. Mr Mandelson yesterday told us the Chancellor had decided against one. When MPs sought confirmation of this in the Commons yesterday the Prime Minister told us it was a “matter for the Chancellor”. As the Chancellor was on the front bench at the time, it would have been an easy task for the PM to ask Mr Darling what his decision was.

Constitutionally, something as important as a thorough review of spending and future budget levels should be a matter for the whole cabinet, a decision taken by them under the chairmanship of the PM on the advice of the Chancellor. Under the rules of collective government, even if a spending review is the Chancellor’s sole decision, any Minister should know the Chancellor’s answer and give it when asked.

I can only conclude they are having a big row about shelving a spending review. The argument that all their economic forecasts are likely to be wrong so they cannot have one is bizarre. The Treasury has often made wrong forecasts in the past but has still recognised the need to set out how much it plans to spend and borrow. It is especially important to guide markets on this issue today, given the high level of the deficit. If markets think this government do not care how large the deficit is after 2010 it will make raising the money they need even more difficult.

Today the PM announced £1500 million extra spending on housing. He implied it was being “paid for” by cutting spending elsewhere.
I asked him what he was cutting. He declined to answer.
It makes a mockery of Parliament that he wont even answer that.

It is depressing that so many in the media are still following the Labour line that the choice is “investment” in public services or “cuts”. You woudl have thought that after the MPs expenses and the BBC salaries rows it would now be obvious to everyone that there are plenty of costs to squeeze out or down in the public sector without damaging services. The Today programme struggled with Mr Mandelson who intends to draw imaginary lines between a caring and brilliant Labour government printing as much as it takes, and Conservative policy based around his fiction of their proposals based on major cuts. Mr Mandelson did in fact tell us more housing spending would be paid for by cuts in Home Office and Transport budgets, but was not asked to elaborate or explain those cuts.

After 10 years of throwing huge sums of money at the public sector, and claiming this proves things are getting better, there are huge areas of waste, incompetence and over spending. Reading through the salaries of the BBC top executives, it is impossible to say that the top of the public sector understands the need for cost control, value for money or even still operates on the basis of “public service values”. What is true of the BBC is true of many quangos and Whitehall departments, of Town Halls and nationalised companies. The pay of the nationalised bankers is still based on the assumption that these are highly competitive businesses making good profits, with senior people at risk of losing their jobs. Instead they are now subsidised state employees. The pay of so called Chief Executives in local government is modelled on private sector CEOs who have to bring in the business and the revenue or else lose their posts, when Council CEOs just put the tax up and send people to prison if they don’t pay.

Labour should remind their overbloated public sector that it is meant to believe in public service values. They should ask all public sector employees earning more than the Prime Minister to take their pay down to his level of remuneration until they have got their organisations under financial control in a way which produces a realistic level of overall national budget defcit. They should all be set targets to make a quantum improvement in quality, efficiency and cash conservation. When was the public sector last asked to cut its stocks? When was it last given productivity targets that drove real progress?

There was some good news this morning for a change. I heard that “There may not be time in the legislative programme” to sell a minority stake in Royal Mail to a foreign company. It was presumably phrased like that by the BBC because they have both been told it has been dropped from the legislative programme, and told they must not confirm it until Parliament has been told officially just in case Parliament and the new Speaker wakes up on the issue of briefing before Statements.

This would be good news indeed. Selling a minority stake in current markets to a foreign company was always going to be a rip off deal at the expense of the taxpayer. Adding to it nationalising the very expensive and deficit ridden pension scheme made this government proposal yet another part of their scorched earth approach to the public finances. It would strip out assets at low prices and increase liabilities so the next government faces an even more impossible task to bring the public sector into balance.

Any new government serious about curbing the deficit will need to sell a majority of the Royal Mail and transfer responsibility for the pension fund to the private sector. It would be well advised to encourage and allow a substantial employee participation, as this is a people business where we need the saff to be well motivated to deliver a good service. The current position of a poorly managed Royal Mail starved of capital to grow, modernise and change the busienss is not a good one. Making the Royal Mail the creature of a foreign owner who controlled a blocking stake but did not own a majority would be even worse, leaving the taxpayer with the main liabilities and offering taxpayers a low share price for the stake. A foreign buyer of such a shareholding might well be more interested in blocking a competitior from full takeover, and in running down those parts of the business were they had spare capacity to take up the slack.

This is a rare case of the government deciding against making the public finances worse. At least it leaves the problem for someone else to sort out, instead of doing another bad financial deal at our expense.

The government wants to recruit up to 100,000 existing and former teachers to act as tutors to pupils falling behind in English and maths. There are worse ways of spending the money. Let’s hope it does help lift standards.

It leaves open the quesiton of why, after 12 years of large increases in cash for inner city and poorer performing schools are so many young people still in need of this extra teaching? What has gone wrong with Labour’s target driven top down system? Where has all the money gone that they have spent so far?

The government itself now says it wishes to end the top down system, and give more power to individual schools, Heads and senior teachers. This has been the Opposition’s song for years. Apparently the time for targets has passed, and the time for devolution has arrived.

The government has found some more money for this project – in other words it is going to borrow more. Given the size of the budget deficit, shouldn’t it be identifying items of spending elsewhere that are less desirable than this teaching project? Why doesn’t it listen to to the Commons, voting against more regional government this week, and make some economies there? If it can now see how unpopular its top down bureaucracy in education is, why can’t it see how more unpopular its heavy handed regional bureaucracy is in England? Why does it want to balkanise England?

Yesterday I attended a rather grand seminar in Oxford, to discuss the current state of world politics. It was a curious experience. Most people talked in soundbites from long gone spin doctors, or in media hype.

The first sessions concentrated on how Obama had made a difference. Instead of forensic academic analysis which I was expecting, most of the contributions told of Obama saving the world, saving the planet and creating permanent peace. There was no hint of criticism. Obama walks on water.

We were also treated to a view from Europe, which assumed that all in the UK and elsewhere in Europe were happy with a royal “we” as citizens of the European Union. The thesis was an amusing one. Under Bush, the EU apparently had been a force for consensus, peaceful and negotiated solutions worldwide and the exercise of soft power all wrapped up in smug moral superiority. The advent of Obama has apparently made this more difficult, presumably because he now does all of the above.

When I had a go, I felt like a fox in the duck coop, dealing with so many canards. The replies were predictable:

Obama – carrying on detention without trial at Guantanamo – “He wants to close it down but it is difficult”
Obama – creating new prisons in Afhghanistan to extend detention without trial – no answer
Obama – intensifying the war in Afghanistan, so US troops are still killing Arabs — “His speech showed he wishes to get on well with the Muslim world”
Obama – promised to save the motor industry – and the planet from climate change – is doing neither – answer “He is doing his best ”
EU – why do you think there is a demos, a people, where we can say “We”? – couldn’t concieve of such a question
EU – Why does the EU position on many world issues matter? – accepted that EU was not very serious about projecting power
EU – is a babble of voices and disjointed economies and nations – this led me into a volley of the predictable, tired and sad old soundbites — “Do you want the Uk to be isolated?” “Do you think the UK can go it alone?” “Do you know how much trade the UK has with the EU?” I was awaiting the usual 3 million jobs, but they did at least give that a miss.
I get fed up with constantly having to point out that international trade is now mainly regulated by GATT and global agreement, that Germany will want to sell her BMWs to the UK even if we do take a different line on EU government, and that the UK has had practically no influence for years in the EU, just going along with the prevailing bureaucratic and Franco-German consensus.

Surely by now we can have some proper analysis of the extent and reasons for Euroscepticism, the fact that trade is now dependent on global agreement on tariffs and terms, that you can work together with other nations through NATO, the UN and European institutions without having common government, and that the top down bureaucratic centralised model is out of date as well as irksome and adding to our economic woes?

There seemed little grasp of the mood of the British people, and no comment on the recent European elections, which showed enormous ennui, allied to strong Euroscepticism on the part of many of those bothering to vote.

Labour tells us we need full time MPs. What a good idea. It is the Labour government and the Labour majority in the Commons that makes all MPs very part time.

My main job is to hold the government to account. It is to cross examine them over their policies, to request they put things right that government has got wrong, to seek improvements to public services, to expose waste and maladministration, to criticise, amend and improve their laws, to approve or vote against their budgets.

I am not allowed to hold the government to account in Parliament on Saturday or Sunday, as we do not meet, or on Fridays when only meet to consider private members business. Parliament is closed completely for 17 weeks of the year. In July we will be told we have to stay away until the second week of October!

That means, in total, we can only do our prime jobs for 140 days of the year. It is a part time Parliament. It is all part of this governement’s wasteful and ineffective public sector. No surviving private sector enterprise would be as overmanned as Parliament, and no successful company would work its key personnel as little.

Labour say an MP has work to do when their Parliament locks us out. Yes, it’s true there are still cases of take up and emails to answer. There are people and organisations to visit. In the long summer recess, however, all the schools are closed. Now the Health Service has been organised around large regional hospitals each MP has either just one or none to visit. Without Parliament in session it is not a full time job.

Some people think an MP should be a kind of ersatz or para Councillor. Councillors elected to the job do not take kindly to an MP trying to second guess their every move. If Labour wants us to be effective para locals, then we need powers to call in decisions, overturn planning or school allocation choices, or have some control over local executives and their budgets. No-one is proposing that, for the good reason that we elect Councillors and pay their bills to carry out just those tasks. Of course good MPs promise to take matters up with the Council when constituents are frustrated, but we have to explain we have no power to put things right or to change things for the better. In local matters we are just another lobbyist.

Providing value for the taxpayer has to be the theme of the next few years, as we battle the bulge in public spending and borrowing. We need fewer MPs, and Parliament needs to meet more often. It does not need to legislate more – indeed, legislating less would be welcome. It needs instead to spend more time going through budgets and programmes line by line, helping public sector executives root out waste and improve quality and efficiency.

Yesterday enough Conservative MPs stayed in Parliament to defeat the government. By the time we got to the votes there were only just about 100 Labour MPs still there. The government was busy trying to set up yet more regional government bureaucracy and supervision in England. It was a pleasure to help vote down one of the motions, and disappointing that Labour then stirred themselves and called a few more MPs back to win the remaining votes.

Each motion proposed a Regional Grand Commmittee for a different part of the country should hold a meeting in the specified region to discuss that region’s response to the economic downturn. The votes recorded were as follows:

4.16pm South West 114 for, 105 against
4.27pm East Midlands 98 for, 104 against (government defeat)
4.38 pm South East 112 for, 105 against
4.49pm Yorkshire 118 for, 110 against
5.01pm East of England 120 for, 105 against
5.12pm North West 120 for, 105 against
5.23pm North East 121 for, 100 against
5.32pm West Midlands 124 for, 99 against.

I have always told my electors I do things as well as being an MP. I have kept my local electors informed through the local newspaper. Doubtless now new rules are being brought in for disclosure of earnings, the national media will run a series of stories, as if this were all new or news.

The only time I have had a second job which really stretched me as well as being an MP was when I was a Minister. Ministerial life makes many more demands on time than a non executive directorship, and often makes demands on time when Parliament is in session. No-one is suggesting in the national media that MPs should be banned from Minsiterial office, so in practise most agree you can do another job as well as being an MP.

For those who are interested, the Register of Members interest records 3 companies with which I am connected.

I am a member of the Advisory Board of Intelligent Engineering Holdings. No meetings are scheduled and no payments are being made.

I am non executive Chairman of Concentric PLC, now part of the Haldex Group. I chair a monthly divisional Board which takes the form of an international phone meeting, involving the USA, China, India, Germany and Sweden. I undertake special projects for the Group at mutually convenient times when Parliament is not meeting. The business is in automotive engineering.

I am Chairman of Evercore Pan Asset, an investment advisory business. In 2007 when I took it on I drew no salary, undertook light duties, and became a minority shareholder. Late in 2008 the founder CEO died suddenly. I have agreed a contract to offer the company strategic advice on global investment, and write a twice weekly economic and investment summary on the main world markets, concentrating on US/EU/China and India for them. I also chair the Board and attend meetings. The contract states that there are no formal hours of work and my Parliamentary duties take precedence.

I will make the necessary declarations of income as required when I receive payments from these two activities. The EPA contract allows me to pay the costs of the second home I need to undertake my Parliamentary duties without recourse to expenses.