Category: Blog

Social breakdown and economic breakdown- what to do about Breakdown Britain

I was invited to a meeting to discuss anti social behaviour in my constituency yesterday, sharing a platform with a local GP, an Inspector of Police and a charity worker specialising in tackling the problems of disaffected youth. I said something along the following lines:

“ Most of you in this hall today are used to getting up at a reasonable hour in the morning, washing and dressing, shaving or putting on the make up, and going out to make your contribution to our community life. Some go to work, as teachers or police, some to sell us goods in the shops or to make us things in the factories. Some retired people go out to lead local community clubs and activities, to run our charities and voluntary organisations. You have a sense of purpose and wish to live within the law.

“I was asked by David Cameron to produce an analysis of how we could make things better for all who wish to make their own way in the world, and want to contribute to our economy or voluntary activities. That work is now being adapted to manage the crisis in our economy that the Credit Crunch and its aftermath represents.

“My colleague, Iain Duncan Smith was asked to produce a report into Breakdown Britain. His task was the more difficult one of recommending how we tackle the problems of that other Britain. It is peopled by those who have no reason to get up in the morning and smarten themselves up, by people who are depressed, angry, lonely or out of sorts with the world around them. That other Britain throngs with drug peddlers and drug users, with the unemployed and the mentally ill, with those who failed at school and fear they will fail at most other things. It is full of people who cannot accept the rules of how the rest of us live, who see them as at best an irrelevance and at worst a tyranny they must break. Our prisons are full of the sad and the mad as well as the bad.

“Iain not only harnessed the talents and ideas of the many to write his analysis and proscription. He also plunged himself into the world of social entrepreneurship to gain first hand experience of ways of stretching out a helping hand to those down on their luck and to those who think the best thing in life is to look for trouble in gangs or idle time away on street corners. If there is one overriding conclusion from Iain’s patient work, it is that there is no top down answer government can impose or buy. He concluded that in the broken communities of Britain many of the dispossessed young need adults who will take time to cross the street to help, inspire or comfort before it is too late and they need the penitentiary. He recommended relying more on a renaissance of social entrepreneurship, letting a thousand flowers bloom in the unpromising concrete fields of our inner cities.

“Here in Wokingham we are blessed with fewer of these problems than you would encounter thirty five miles down the road in parts of inner London. But no community is free from drug abuse, drop-outs, mental illness, violent crime and casual damage to property. Here we have seen violent and casual knife crime, and syringes in children’s play areas. My message today is that all of us adults have a part to play – some small, some larger – in putting more of this right. Families can inspire and discipline, motivate and reprove. Where they can they should be encouraged to do so. Where parents are too busy to offer the love and time it takes, or where the families have been ruptured and the adults are themselves prisoners of emotional poverty, other adults from the local community need to be around to help. It is not financial poverty that does most damage. Some poor families make up in love and concern what they lack in cash, and some rich families may shower goods on their children for lack of time to do what matters more, to take an interest.Some will help by running voluntary organisations, organising sports, and by setting up social enterprise companies and not for profit bodies. Others will make their contribution through their excellence as school teachers, vicars, policemen and women and care workers. There has been tension and difficulty in talking between the generations from time immemorial. That should not stop us seeking to improve the dialogue of the generations. We, the generation in power, need to tell those who follow us what we are trying to do and how we are seeking to do it. The generation that follows will judge us, write our epitaphs and decide what to keep and what to ditch. The coming generation needs to tell us what they want from their future and how they see what we are striving to do whilst there is still time to modify or complete it.

“If there were a few silver bullets that government could fire to solve the problem this government or its predecessor would have done so. There is no party dispute over the need to mend our fractured society, and what disputes there are over means amount to very little. The truth is political parties have come to recognise it is not primarily a problem for new legislation or better benefit rules. It is a problem for all of us, to offer some leadership and to offer some inspiration to young people before it is too late and they have settled into a life of crime and futility.”

Oil prices rose and house prices fell again yesterday. It is the government’s nightmare scenario. They have left the UK short of energy by failure to make early enough decisions on replacement power stations using non imported fuel, and through their wish to tax the North Sea oil province too heavily, discouraging more production. They well know how important house prices are to consumer confidence and jobs in the UK economy, let alone to voter attitudes.

Both subjects were on my agenda in Parliament yesterday. At lunch time HBOS came in to tell any MPs interested what they thought was likely to happen in the UK housing market. Last time they had dropped by I had found them wildly optimistic, anticipating little change in house prices. This time they were gloomier, forecasting a 9% fall in the average price of a home in 2008. I still think that is looking on the bright side. HBOS argued that the supply of houses would remain tight, thanks to a collapse in housebuilding, against a continuing lively pace of immigration and divorce generating more demand for households. I reminded them that fewer migrants will come if the economy gets grimmer, whilst divorce and migration only translates into demand to buy homes if the mortgages are available so people can afford them.

Anecdotage tells me that some sellers of houses are now beginning to cut their prices by rather more in a desperate attempt to find a buyer. For several months the market has held its values better than might have been expected, because there have been precious few transactions. Sellers have held out for the original price, and buyers have simply stayed away. Gradually some sellers will decide they have to take whatever price is available, and a few more buyers will be tempted by significant price cuts. One friend of mine has cut the price by more than 20% and still has no takers. Another cut by almost 15% and found a buyer. Meanwhile mortgage offers have more than halved. Banks are understandably cautious, lending a smaller proportion of the price, expecting a more cautious valuation and seeking a higher margin through a higher interest rate. That’s what a Credit Crunch is all about, and that’s what the government and Bank of England said they wanted when they warned banks to be more careful last summer. Sometimes governments should be careful about what they ask for, in case their wish comes true. This blog said at the time the authorities would reap a bitter harvest from their approach to money markets last autumn. It is not going to make the banks more popular, but it will strengthen their solvency and repair some of the damage to their profitability.

Back in the Commons Chamber in the afternoon we had the opportunity to debate the government’s wish to charge people more for owning a car. The absence of most Labour members, and the fears of some of the few who came spoke volumes about their underlying concern. They must know that the plan to increase Vehicle Excise Duty substantially on older cars that emit too much CO2 is seen as unfair, and on their own figures is not a green policy as it achieves practically no reduction in CO2. Most people are stuck with their older vehicles, especially now the price of them is falling to reflect the higher running costs form the higher tax in prospect. The Conservative Opposition offered them a way out, seeking to stop the government from going ahead, but the Labour MPs declined the life line.

For most MPs it’s not easy being a rebel. You are pulled between remembering that your party allegiance accounted for a large part of your vote at the election, and the strong view that your party is making a big mistake which is letting down the voters. On 42 day detention more Labour MPs felt that the principle of the issue mattered and they should vote with their consciences. They had not signed up to eclipsing important civil liberties. On higher taxes they are uneasy because they can see how unpopular they are, yet individually they are drawn to support their party out of their instinct that higher taxes are good. On Tuesday the rebels over the abolition of the 10p band accepted a weak formula to look again at compensation for losers from the Minister and backed off their tabled amendment. On Wednesday the possible rebels on VED did not even table an amendment and returned to tribal loyalties as they queued up to distance themselves from the amendment the Conservatives had tabled.

In each case the rebels felt better for rejoining their party in the Commons – it makes for easier relationships with colleagues. A long summer back in the constituency may serve to remind them just how toxic these higher tax policies have become, bearing down especially heavily on those on lower incomes. Then they may remember why they felt they should rebel – the government is destroying their chances of re-election if they have marginal seats, and hastening the day they will be out of government if they have safe seats. It is now the economy, stupid, which will determine the government’s chances of re-election. If they do not do something soon to lower inflation and ease the squeeze on incomes, they are doomed.
So far the government seems set on intensifying the squeeze on all of us by increasing taxes, whilst spending yet more and more money they do not have in the public sector. Today sees at last the signatures on the contracts for two large aircraft carriers. It is doubtless a coincidence that this brings work for Glasgow ship yards at a time when we are fighting a Glasgow by-election.

On both sides of the Atlantic the news is of slowdown and decline. US car output has been badly hit, UK housebuilders and construction companies are struggling and UK house prices are now falling in the way expected. There is deteriorating news from retailers. The leading indicators for UK manufacturing look bad.

People in the UK housebuilding and housing related areas are reporting a worse crunch than in previous downturns. This is the result of the badly managed credit and money policies of the last few years, and the result of the run on the Rock and its subsequent nationalisation. The most aggressive large lender of 2006 has been effectively withdrawn from the market by the need to get cash back for the government and because of the competition rules which rightly impede a nationalised subsidised concern making attractive offers to new borrowers.

In the House yesterday afternoon the government was still unable to tell us how it will compensate the 1.1 million remaining losers on lower incomes who have been hit by the abolition of the 10p tax band. The government declined to support a backbench Labour proposal to give them the money. Its promise to come forward with proposals at the time of the Pre Budget Report was sufficient to persuade the Labour rebels to back off. The longer it takes to solve the problem, the worse it is for consumer sentiment and spending power.

Today we turn our attention to Vehicle Excise Duty. Labour rebels are now concerned about the large hikes in VED planned for next year, which include increases on VED on older cars. The Opposition and these Labour MPs point out that hiking VED on them cannot affect behaviour over which cars people buy – if higher VED on high emission cars is a green policy it can only work by applying it to new vehicles.

Meanwhile the truckers will protest in London in an effort to tell the government that high diesel tax and other transport taxes here in the UK is another blow to the UK trucking industry. Far from maximising revenue, it encourages truckers to fill their tanks on the continent, and helps the foreign competitors to the UK businesses.

If the government feels the pain and wants to do something about it, it needs to bring the crazy increases in tax on fuel to a halt, and compensate those on lower incomes who have been clobbered by its tax changes. In this nasty squeeze every little relief would help.

Yesterday I met leaders of the NUM, Unison and the carbon capture industry, to discuss the future of coal along with some other MPs.

They made a good case, urging that we expand production of domestic coal, both to substitute for the large quantities of imports currently coming into the country and to fuel a new generation of cleaner coal power stations.

They argued that there is a lot more coal for us to mine and quarry, that at present coal prices that production could be economic, and the government should accelerate the pace of development of clean coal technology and carbon capture.

Some looked back nostalgically to the age of the nationalised industry, without any great belief that the present Labour government would want to revisit that approach. It is curious how nationalisation still has a grip on their hearts, when the nationalised industry under governments of both parties so let down the mining communities. The 1970s Labour government was in the business of closing mines and sacking miners, just as the subsequent Conservative government was. Each of those governments did so on the advice and at the command of the nationalised industry, which systematically failed to make mining economic enough to sustain a decent sized industry in the UK.

The miners of Tower Colliery proved the Coal Board wrong when they took over their mine and worked it profitably when the Coal Board management had wanted to close it on the grounds that it was uneconomic. Why would we want to go back to management like that? Isn’t the future a more mechanised, safer industry where those who mine the coal share in the profits?

It was refreshing to hear that the President of Poland respects democracy and the popular vote sufficiently to say he will not sign the Lisbon treaty now that Ireland has vetoed it. Let’s hope he keeps this belief in listening to the people, as he will now doubtless be briefed against and pressurised by the Euro political class.

It was depressing to hear the President of France lecturing us all on how important it is to get Lisbon through despite the Irish vote. It shows he has not got it, and is a fully paid up member of the Euro elite intending to carry on with their power grab however unpopular it is. The French threaten us – we will not expand the EU further if you do not let us centralise – as if that were a threat to Eurosceptics. They demand that 26 of the 27 nations go ahead with ratifying anyway as if nothing had happened. They tell us wrongly that the EU cannot function without this ghastly new Treaty, and seek to find out how to buy off or sideline the Irish, refusing to take “No” for answer.

At the same time they dare to say they are out to create a “Europe” that helps its “citizens” and takes them seriously. If they really meant that they would seek to base their “Europe” on the wholehearted consent of its prisoner people, by offering referenda through out the nations of the EU and accepting the verdicts of the national votes. They would find that different nations want very different levels of integration and common policy, but in many cases like the UK we want the EU to do less, to legislate less, to spend less and to allow us to get on with our own lives without its constant niggling interference.

The French government openly wants European defence – a European army. It wants agricultural reform of a kind which will continue to cut out imports from poor countries elsewhere in the world and costs the taxpayer and food buyer a small fortune. It wants more laws and regulations in many areas of life, as if we did not already have far too many of both. It wants higher taxes throughout the Un ion, to avoid “tax competition”. It’s a recipe for less enterprise, lower incomes, and higher unemployment.

The British government claims to want to put constitutional change behind us, knowing it is very unpopular with the public. It knows it is so unpopular that they dare not match their promise of a referendum on Lisbon, and then wonder why people feel cheated. They state that the EU can make important contributions to tackling the big international issues once Lisbon is put to bed. When I asked the other day what they wanted to push through the EU legislative factory post Lisbon that they could not get through under the current arrangements, there was of course no answer. Most of the problems they think the EU can help solve (like climate change and food and energy prices) require global agreement anyway.

If the Euro elite wants to know why they keep losing referenda and why their project is so unpopular they do not need to look very far. It is unpopular because they either deny us a vote or ignore the results. It is unpopular because the EU serves the political class that draw their salaries from it, not those of us who have to pay the taxes to keep them in the style to which they are accustomed. It is unpopular because all its plans entail more laws, more rules, more taxes. Many of us want fewer of both. That’s why we despair of this power grabbing overcentralised EU, living in the past and unable to grasp the sheer competitive power and energy of Asia.

One of the many policies and aspirations of the present government that lies in tatters is its wish to see many more houses built in Britain. With an impeccable sense of timing and no sense of irony, the government chose the top of the housebuilding cycle to announce that it intended the building industry to step up from around 180,000 new homes a year to 240,000. With all the certainty of the old Communist regimes announcing their tractor production targets, Ministers told us solemnly that another three million homes will be built by 2020. The policy was to be pushed through by the construction of numerous “eco” towns on greenfields, coupled with brownfield redevelopment, town cramming and back garden building.

All of this looks absurd when you see the reality of the Credit Crunch. The first thing the government did to “help” implement its policy was to nationalise the most aggressive of the mortgage banks, and then stop it undertaking new lending! With the Bank of England the government failed to keep markets liquid enough, so credit dried up at many of the smaller lenders, and the larger banks all had to rein in their lending and raise new capital. As a result in the first quarter of this year only 32,000 new homes were started – an annual rate of a mere 130,000 if the first quarter’s activity levels can be sustained, or little more than half the government’s ambition.

At the same time the government decided it needed to speed up the granting of planning permissions for major projects. It has chosen to do so by legislating to set up a new quango to become involved in these decisions. In our recent debate on the subject Ministers were unable to confirm it would be quicker to wait for the new quango if you want a major planning permission, whilst the Opposition pledged to abolish it and pointed out it was likely to delay matters with judicial review of decisions a distinct possibility.

Regional government – unelected, expensive and much disliked – is currently dividing up these top down government targets for more housebuilding. It is playing the part of a faithful retainer in this process of illusion – instructing councils to make land and planning permissions available on a huge scale, as if the industry wanted to build all these homes, or people could borrow the money to buy them. I look forward to a Conservative manifesto pledging to abolish both these hated regional governments and the silly housing targets they generate. Planning applications should be considered on their merits by the local authority involved. If a company or a landowner wish to gain a permission which greatly enhances the value of their land, they should make it worth while for the local community and the people who will be adversely affected by the development. They should not be able to rely on unelected regional officials, on chief executives of councils keen to do the government’s bidding to advance their own careers, and on the idiotically optimistic government view of how many houses people can afford to build and buy.

I was pleased to hear shadow spokesmen sharing my view that top down targets, regional control and over optimistic plans are a bad idea. The planning system at the moment suits no-one. Developers think that in better economic times they cannot get the planning permissions they want, whilst most people feel the system fails to take their views seriously and fails to protect communities against unwanted development or to provide the additional facilities needed to make a housing estate part of a thriving community.

So what should councils do about the pressures from the top to identify more greenfields to be bulldozed? They should argue, remonstrate and use every clause in the long manual to slow things down. There is no need to identify new sites at the moment. This system cannot last. There is no need for more planning permissions today, as the housebuilding industry is going through extremely difficult times. Land values are going to fall. There is too much land with planning permission around for current needs. Leading housebuilders need to sell land and finished houses to pay off some debt. The government is in a world of its own. The problem today is not a shortage of planning permissions, but a shortage of mortgages and people to buy the homes.

Today is a good day to review the progress of two leaders at modernising their institutions.

David Cameron’s Conservatives are in good shape on the back of election victories. There are many more women prospective candidates. Homosexual MPs and candidates are treated like any other, as their sexual orientation is not relevant to how they do their job. No-one thinks it wrong that there are women in the Shadow Cabinet, or that the party was once led by a woman. Indeed most Conservatives are united in thinking that the party’s most successful period until recently was under a woman leader. David’s strong support for liberty has persuaded most within the party – so much so that the one time leader of the traditionalists in the Shadow Cabinet has just resigned to fight the government more strongly in defence of more civil liberty and less authoritarianism. He did not have the leadership’s encouragement to make such a stand, but I am delighted they back him and want him to win, for his fight is our fight. It is in many ways the ultimate proof that the Conservative party has “got it” and has modernised under David. No-one I think could have written such a script four years ago of how the Conservative party would come together behind the cause of Magna Carta and Habeas Corpus, making them thoroughly modern causes, under threat from a punk modernising government with no sense of history or personal liberty. As someone who backed David Cameron for the leadership when others thought I should vote for the “traditional” candidates, I feel pleased with my choice, and pleased that so many in the party took the same view.

In contrast Rowan Williams’ Anglican Church stumbles over all these same issues. Where Conservatives appoint more women, the Anglican Church faces an internal revolt against allowing women to be bishops. They are miles away from having a woman leader. Homosexuality has rent the Church asunder, with much support in Africa for the alternative manifesto “The Way, the Truth and the Life”, and latent support from traditionalists elsewhere. The archbishop floats on the Church’s website the idea of having associated and constituent churches, where the associated ones will pursue a different approach to main issues, and look to bishops other than the archbishop for their leadership.The Anglican Church gives an uncertain message on the role of the family, their approach to sexual relationships and personal responsibility, often preferring to say nothing. Often they just demand some more British public spending for some other cause as the easy way out.

David Cameron knows that there is still much to do and that there is no reason for complacency. I guess Rowan Williams must have some sense of foreboding as the Anglican Church sets out to prove just like Brown’s Britain that devolution and alternative sources of authority and power do not bring unity back, but foment the forces that wish to pull an institution apart. The Archbishop has not found the words and the actions to unite his unhappy Church. His every word seems to widen the divide, encouraging the warring factions to push further and harder in the direction they wish to go. In contrast, on homosexuality, personal freedom, the role of women and the need to curb the excesses of the authoritarian state the Conservative party has found a new settlement under its Leader.

No sensible Conservative need doubt the Leader’s Conservative credentials. This is the man who led his party in its calls for a referendum on Lisbon and to oppose the whole Treaty. This is the man who led his party to advance cuts in Inheritance Tax for the many, as well as the man who has presided over most important work on how to mend Britain’s damaged society. Under Cameron Conservatives know what we believe in – we believe in opportunity for all, with reform of public sector housing and schooling to make that more of a reality for those currently excluded from home ownership and good education by Labour’s clumsy state. We believe in individual and family responsibility, with welfare reform to encourage and require people to work if they can and where work is available. We believe in looking to the security of our country, with appropriate measures to make the UK and its citizens safer. This includes action to reduce our dependence on imported oil and gas, to increase fuel efficiency, and to look after our green landscape.

There is unity around these central aims. There will be unity about the need to tackle the mess that Labour is creating with the economy, which is now the dominant concern of most voters. In contrast the Anglican Church can look forward to more disunity, as the rival archbishops and bishops set out their stalls. As an Anglican myself, am I to be offered a choice of styles locally? Will I be able to find a church which both values the fine traditional language of the Book of Common Prayer, the great anthems and choral works, yet be rooted in the modern world when it comes to personal freedoms? Watch this space.

Fiscal policy is too lax — the government is spending wasting and borrowing too much. Markets fear that the government is going to borrow far more than in the budget. Each day brings more evidence of a loss of financial discipline in the public sector.

Monetary policy is still too tight – the banks are still short of cash. The collapse of the mortgage market will mean further falls in house prices, a low level of construction activity, more losses of jobs in the building industry, more declines in commercial property prices and falls in land values.

The squeeze will primarily affect individuals and families. High energy prices, council taxes, the income tax rise and the impact of higher food prices are beginning to hit real incomes. This is going to get worse over the rest of this year, as relatively low wage increases meet rising bills.

Companies have so far been able to pass on quite a lot of their cost increases, with the pain mainly concentrated in financial and property companies. If volumes fall then the squeeze will affect a wider range of commercial businesses.

What could the government do? It could ease the squeeze by cutting out some of its own wasteful excess, and using the money freed partly to cut borrowing and partly to take fuel taxes down to offset some of the price rises. It could with the Bank of England provide more liquidity and lower interest rates to the money markets. Above all it could return what is left of Northern Rock to the private sector, so that once important mortgage bank could stop shrinking its loan book and the taxpayer could get more cash back.

What should the Opposition say? It should keep well ahead in the polls thanks to the economic worries and the gathering dissatisfaction with the squeeze. It could start saying in general terms what action needs to be taken to start to adjust the huge imbalances in the economy created by the wasted Labour years. Gordon has presided over his own version of boom and bust – today it is boom in public spending, and bust in many family budgets.We need some economic stability, which requires a different approach to running the public sector, to get us better service for less cost. We need a government which doesn’t just talk about making long term decisions, but gets on and takes them to provide more water, energy and transport capacity, and deals forcefully with an agricultural system which still does not encourage sufficient production.