Category: Blog

There has not been a lot of point in writing about the Lib Dems and Mr Clegg. Since the Clegg and Huhne race ended, a tired Mr Clegg, who had been slowing throughout the Leadership campaign, has had an even worse period as Leader. Occasionally, he comes up gasping for the air of publicity by stating something over the top, or self serving, only to disappear breathless.

It was typical to see that some Lib Dem source recently informed a press report that they would wish to support a Conservative government in office. I understand that Nick Clegg’s office has denied this is the position. This was said around the time the polls told him his party was in a poor third-placed position at Crewe, and around the time of the May 1st Council results, where the Conservatives had performed strongly. Someone must hope that showing sympathy for the newly popular Conservatives would lead to some of the stardust rubbing off.

It is a bizarre thing to say strategically. It would tell everyone that even the Leader of the Lib Dems does not think they have a prayer of doing well in a General Election. It would show Lib Dems have no principles, because he and his colleagues have spent much of the last few years in the Commons criticising just about everything the Conservatives say and do. It would be odd to pledge to support Conservative budgets before we are in a position to work out what those budgets might look like after 2010.

Today, we are asked to believe that, by some extraordinary metamorphosis, the Lib Dems are a party of lower taxation! They do not know how to spell it, let alone back it or implement it in local government, where they still control a few Councils.
They claim they would like to cut Income Tax to 16p in the pound, but only to accommodate a local income tax which would take it straight back to 20p in the pound, or higher. Meanwhile, many other new and higher taxes would be needed to replace the lost revenue from the fall in national income tax.

I will believe the Lib Dems support lower taxes, only if and when their Councils do what Hammersmith and Fulham, a Conservative-controlled Council, are doing – cutting Council Tax one year after another as a result of better control over spending. If I heard their spokesmen on radio and TV arguing for less public spending, I would be more inclined to think the leopard was changing its spots. I usually hear them supporting higher spending on all manner of causes, good and bad.

All the Lib Dems’ “conversions” to lower taxes tells you is that it now polls well. I am delighted to learn that all three main parties now want lower taxes. For Labour, we have seen they cannot deliver – those on lower incomes have to pay for the tax reductions for the rest through the abolition of the 10p band. Motorists, too, have to pay to allow a headline-catching income tax rate reduction. For the Lib Dems, by the admission of their own briefers who want to spell out which main party they would support, they do not expect to be able to form a government, so they can make foolish tax promises without ever being tested.

Today, David Cameron will speak out against wasteful government. He will tell us just how people cannot take any more tax, and how desperate the country is for some relief from all this taxing and wasting we have become so used to under this government.

He has encouraged me in the work I have been doing on running good services in local Councils at less cost, and keeping Council Taxes down. He is now extending the message to central government as well. (See ‘Running a Conservative Council’ under Downloads – or, better, still look at what Hammersmith and Fulham are actually doing, with cuts in Council Tax two years running).

Under Labour, the UK has been living beyond its means. The government sector has been especially profligate, spending ever-larger sums on quangos, spin doctors, regulations, banking support, railway support, welfare, bureaucrats and politicians. Gordon Brown has racked up huge debts for the taxpayer during the good times, over the “NICE” years, when a little more restraint would have seen good growth in public spending, paid for by the natural buoyancy of revenues in years of strong global economic performance.

Consumers overall have also been living beyond their means, building up huge mortgage debts, withdrawing some of the money to spend on consumption, and borrowing on credit cards.

As a result, we have run a large balance-of-payments deficit, so the country as a whole has had to borrow from abroad, or sell assets to foreigners (companies, football clubs, a slug of our gold reserves) to pay the bills.

Now it is pay-back time. All of a sudden, the consumer and house buyer find they cannot borrow as much as they want to on the terms they find acceptable. Some, dubbed sub-prime because their incomes are low and their past credit history not so hot, cannot borrow at all. The government ploughs on borrowing and taxing like there’s no tomorrow, seemingly oblivious of the damage this is doing and the extra pressure it places on everyone else. Government borrowing is now crowding out other forms of borrowing in the market. It’s Them, not Us, that takes the cash.

Meanwhile, there is a huge change underway in the world economy. The remorseless rise of both India and China is bringing another 2.5 billion people to the party who, until now, have lived in poor, low-income countries, making relatively few demands on world resources. All of a sudden, the explosion of domestic demand in India and China, coupled with their brilliance at producing lower-priced goods that can be exported to the first world, is placing unprecedented demands on oil, wheat, rice, metals and other vital commodities. When the western economies face a sharp slowdown, they are used to commodity prices naturally deflating, as their excess demand is removed from the system. That has not happened immediately this time, as the demand from Asia continues upwards, and the main commodity markets are largely short of stock, anticipating yet more demand. It is causing Central Banker paranoia about stagflation and, in the UK, uncertain and muddled policy responses.

Some in the west are now worried that these large price increases, which we see in input prices for UK business and, to a lesser extent, in the Consumer Price Index and the RPI, will bring yet more inflation on top of the obvious first-round effects. Not necessarily. This will happen only if the government prints too much money, and encourages inflationary wage demands, letting people believe they can get a big enough wage rise to cover these cost increases. This is unlikely in Credit Crunch conditions.

What has to happen is that the west must adjust quickly to much higher prices of energy and other basics, putting through the price increases and adjusting consumption of those and less essential items downwards. We have to accept that India and China’s success – and the oil producers’ good luck – means we have to tighten our belts. Higher commodity prices are the main way we pay for our excessive borrowing, and we have to recognise we are living beyond our means and need to cut back. China and the Middle Eastern oil states are earning much more than they spend, and now have the option of spending more from their massive reserves. The UK (and the US) has to shift some output into exports and import substitution. This will start to happen because of the weakness of both the dollar and the pound. China and the Middle East can shift some money from saving into spending.

There is no choice over whether we have to cut living standards or not. The game is up. We cannot keep borrowing at past rates to sustain so much more consumption by government and consumers than we can afford out of earnings. Gordon’s game of easy money and heavy borrowing is coming to an end. The issues are how quickly this adjustment will take place, and whether there will be a second-round domestic inflation as a result.

The best outcome is a rapid pass-through of these price increases, with no follow-up inflation owing to the tightened credit conditions we are experiencing. The danger is the Credit Crunch will overdo the tightening, adding to the fall in living standards which the commodity boom is creating. That is why we need sensible money policy to offset the worst of the collapse in credit, while allowing the adjustment to be made to a less borrowed world. The government would help greatly if, instead of increasing its borrowing, it took action to cut its own demands on a fragile economy by eliminating waste and too much bureaucracy. So far, all the strain of cutting borrowing has fallen on individuals and families, as we see in the collapsed mortgage market, while the government debt market carries on booming.

In the meantime, there are things the government can do about the longer-term position. We need to accept continuous adjustment to dearer commodities over the longer term, on the assumption that Asia will continue to improve its economy and want to buy more – and maybe Africa and Latin America will come to the party as well. Even if there are some commodity price falls ahead, as there has been a fall in the gold price from its high of earlier this year, the long-term trend is likely to be dearer commodities from the pressure of demand and from the needs of so many more people in the world.

Western governments should be making it easier for the private sector to respond to these changes. Here in the UK we need a faster move into new electricity capacity based on something other than imported gas. We need to create a favourable business climate where more progress is made in energy conservation, recycling and the development of substitute technologies. In due course, cars and lorries will be powered by something other than fractions of crude oil, more plastics will be used alongside metals, and more use may be made of renewable materials like wood. The UK public sector should take more of a lead in using its huge buying power to encourage these moves.

It also shows how crucial Common Agricultural Policy Reform now is. We do need to put more land under the plough. World market prices give plenty of encouragement to do that. Let’s make sure EU regulation does not stand in the way, as there is a hungry world to feed. The CAP has been a major impediment to developing countries, and a major extra tax on UK consumers. It is not needed now.

Yesterday, we saw how the Bank of England has been far from independent over the last 11 years, as it has been slimmed down and bossed around by the present government. The main blame for the current high level of inflation rests with the government. The Bank’s failure to control price increases as advertised is understandable when you see how the government changed targets, arranged appointments and took powers away from the Bank.

Today we should ask: Can you have an independent Central Bank in a democracy? The answer, of course, is only if certain, very specific requirements are met. There are three necessities to create and preserve a so-called independent Central Bank:

1. All the political parties capable of forming or influencing government must support an Independent Central Bank, whatever it does, whenever it does it.
2. Government must refuse to interfere or override when the Central Bank gets it wrong, even though there will be strong pressure for it “do something”.
3. There must be no other policy aim or requirement that comes to take precedence over the desire to keep the Central Bank independent.

The nearest any democratic country got to a truly independent Central Bank was post-1945 Germany. The folk memories of the hyper-inflation of the inter-war years were so strong, that the political parties all agreed that they would rest control of inflation in an independent Central Bank and live with its rulings. It had just one main task – to defend the internal and external value of the currency – the newly created DM. The Central Bank made a fairly good job of the task, which made it easier for the political parties – and the public – to go on supporting it. In the end, however, two political priorities emerged, which meant the end of the experiment. The first was German unification. The German government was so determined to see it through quickly and favourably to East Germany, it overrode very good advice from the Central Bank. It created far too many DM to replace the Ost mark in East Germany, which blew the Central Bank’s controls out of the water, and added to the economic turbulence created by re-unification. Subsequently, the politicians decided European integration was such a high priority that they would destroy the currency the German Bank was set up to defend. The death of the DM went through with scarcely a murmur from the Central Bank, which showed it accepted the supremacy of the German government.

Some say the US has a truly independent Central Bank. Certainly, if you want a so-called independent Central Bank, the US model is probably the best to follow and has proved to be relatively long lasting. National banking was established by the National Currency Act in 1863 to help finance the civil war. The banking system was subject to frequent crises, which led to a wide-ranging enquiry and public debate in the opening decade of the 20th century. In 1913, after endless rows over the relative roles of centralised and de-centralised banking, and over private banks and public involvement, a compromise was reached with the creation of the Federal Reserve Board and its system of banks.

The genius lay in the flexibility and the careful compromises in its constitution. The executive – the President of the US – appoints the Board members, but the Senate has a role in ratifying their appointments. The Fed has to work within the government’s economic policy, and has wide-ranging requirements that relate to employment and growth, as well as to inflation. It works closely with the Treasury over government debt-management and the wider economic aims. The whole system is subject to Congressional oversight. If the political support for this sophisticated and balanced system ever did break down, Congress could legislate to change it. It has survived and flourished because the Fed has been responsive to the public mood, to the needs of each Administration, and to changing fashions in the worlds of banking and economics. The Fed system brings in all the important players and balances their views and interests. Its handling of the Credit Crunch has showed this flexibility, responding with the Administration to the change in priority, from inflation fighting to recession fighting.

The UK should study other regimes, and learn more about the need for commonsense and balance in the system. The UK’s version of an independent Central Bank left a much enfeebled institution, shorn of important powers and duties, unable to deal with a government that decided to borrow far too much for comfort, and decided to change the one central target at a damaging time.

If the last few years were NICE, according to the Bank, surely that makes the acronym for today SO MAD – Slowing Output Massively Accelerating Deficit.

This week, the Bank of England took leave of its senses again. It generated blood-curdling headlines that the state of inflation and the economy was now such that interest rates could not be lowered again, this year or next. Newspapers wrote that we are to look forward to letters from the Governor to the Chancellor explaining why inflation is well over target. They even gave the press the opportunity to ramp the story up, by using colourful language, telling us the “Nice decade” was over, and inviting us to expect a nasty time ahead.

What do they think they are doing? No sensible analyst would dream of saying interest rates cannot fall for that length of time, given the slowdown and the uncertainties. Why on earth, when sentiment is collapsing, would the Bank wish to strengthen the forces of gloom and doom? Don’t they understand that we need to be fighting slowdown as well as dealing with the inherited inflation from the Bank’s excesses of previous years leaving interest rates too low and debt too high? Have they seen what the Fed is doing? Why do they take unacceptably high levels of government borrowing for granted and never speak out against them?

The truth is the Bank of England was badly broken by Gordon Brown’s attack on it in 1997-8, and it has not recovered. In the age of spin, it has gone along with the fatuous nonsense that it has a valued “independence”, when it has lost its power to regulate and understand the day-to-day activities of the many powerful commercial banks in London, and been stripped of its control of government debt issue by a power-hungry Treasury which nationalised it. In place of these crucial powers and duties in the Money markets, it was given a monthly academic tea party to set indicative interest rates, rates which the markets have scorned and ignored in the last few months of turbulence.

If the Bank had been an institution of substance it would have fought against the stripping of its powers in 1997-8. The Governor then should have resigned if he could not keep his Bank in good shape. Subsequent Governors should have made an issue of the Bank’s loss of influence and power in the money markets, and the Bank’s loss of understanding of the actions of the commercial banks in those markets, to wrestle back those necessary duties. The Bank should have fought for proper independence in the appointments to its Monetary Policy Committee. When I asked why some members were renewed and others were not, no good reason was given. When I asked what process of review and decision was in place to ensure that good and truly independent members were renewed, there was no proper reply to my question. The MPC became the Treasury’s plaything, appointing who it wished, when it wished, with no independent control on the appointments. The fact that some members were very good is no substitute for having a robust process to reassure us all. The whole system was deeply compromised by Gordon Brown’s decision to switch inflation target at a crucial time, diluting monetary discipline by opting for the soft target of the CPI instead of the RPI. There was no loud voice of complaint from the so-called independent Bank.

The change to the RPI helped undermine inflation control and public confidence in the system. No-one I know believes 3% is the current rate of inflation, yet this is what the CPI tells us. Even the RPI at 4.2% does not reflect the full pain of the very high increases in the prices of the basics we have to meet day by day, because of the weightings of cheaper and lower inflation goods in the RPI. When Gordon Brown switched targets he cut the target by just 0.5% to “allow” for the relative softness of the CPI. Today, the true differential with RPI is 140% more than 0.5% at 1.2%. Government further complicates it all with RPI-X as well as RPI. Fortunately for people with inflation links in their savings or their pay deal, they use the RPI and not the meaningless CPI. In that sense, this is an economy facing full RPI inflation, not CPI.

The Bank has to accept its junior role to the Chancellor’s in creating the current mess. It is now widely accepted that the UK is in the worst position of the major economies to tackle the Credit Crunch because, uniquely, it has spent and borrowed far too much in both the government and private sectors. It has compounded its fiscal laxity uniquely with the botched nationalisation of a leading mortgage bank at great cash cost and financial risk to taxpayers. Even Will Hutton now agrees that the government overdid the spending and the borrowing! He and I don’t often agree on these things. How did it get into such a state?

The main blame must rest with a government which has spent and wasted too much money, and now seems to think its capacity to borrow is unlimited. £2.7 billion to see it through a by-election to give people the promise of a tax cut? No problem. £13 billion a year for centralising computer schemes in the public sector, some of which won’t work as intended? Yes, let’s have them. Thousands more civil servants? Yes, let’s not leave the others lonely. £90 billion of swaps for commercial banks? Is that enough? £100 billion of new liabilities for the state by nationalising a bank? Bring it on. More spin doctors to explain how wonderful everything is? You can’t have enough of them these days.

But the Bank is not blameless. Here are the questions the Bank should at least be asking itself about how it all went so wrong:

1. Why did it not complain about the loss of powers and explain the need to keep them in the late 1990s?
2. Why did it not oppose the new target based on CPI when it was announced, or at least set out clearly why it was a weakening of discipline at a crucial time?
3. Why did it never warn of the inflationary dangers inherent in the huge build-up of public sector debt and spending during the upswing?
4. Why did it fail to supply sufficient liquidity to the money markets in August 2007, when it was obvious banks were starting to struggle?
5. Why did the Bank famously state there would be no banking bail-outs shortly before helping bail out Northern Rock?
6. Why did the Bank make available large funds this year, when it had said “No” to such measures for banks last summer?
7. Why did the Bank keep interest rates low in the run-up to the 2005 election, when there were inflationary signs?
8. Why is the Bank now keeping rates high, when credit is well and truly squeezed, and the inflationary burst we have to live through cannot be stopped by high interest rates today?
9. Why is it now saying interest rates cannot be cut for a long time in the future, narrowing its future room for manoeuvre or, in due course, forcing it into another U-turn?
10. Why is it still not telling the government it needs to cut its borrowings to get the UK economy into better shape?

The danger for us is that the Bank is trying now to follow a tight policy, at a time when the government is still borrowing as if there were no tomorrow, as it adds huge banking and money-market liabilities to its creaking balance sheet. The Bank and the Treasury need to sit down together and settle their differences. We need a proper plan for getting out slowdown, which needs a government plan to cut its borrowing sensibly, and the Bank to show greater flexibility and understanding of the needs of the money market. This government could easily cut borrowing and spending without touching schools, hospitals, police and other core services.

The Prime Minister can today reflect on the first anniversary of his victory in the Labour leadership election. It would be a good time for him to dwell on what has gone wrong. It would be an even better time for him to be positive about how his second year as Leader could be so much better for the country than his first has been.

In a defensive statement this week about why he should stay as Leader, he made three claims. He said he was the man to “build for the future”; to “reform public services”, and to “steer our economy through difficult times”. He wishes to govern as “New Labour”, in a clear recognition that the Blairites are very restless within his party, and “Middle England” has largely deserted him, when many more of them were more sympathetic to Blair’s self-styled New Labour approach.

The first big change Mr Brown needs to make is to stop spinning by the day, and to start governing by the month and year. Making things happen in government takes tenacity, consistency and patience.The best policies do not necessarily poll well at the beginning, and may require “tough choices” and frequent explanation before their beneficial effects are felt and appreciated. Telecommunications privatisation was one of the best policies the Thatcher government introduced, leading to the mobile phone revolution, bringing the costs of telephony down to suit the pockets of most people. It democratised the phone and humbled the monopolist. It led to many more jobs and a surge in tax revenue from the sector. It was deeply unpopular when we launched it, and polled badly. No serious party now wants to reverse it. Mr Brown’s three reasons for keeping him in, at the moment, so much hot air that they are in danger of becoming stale air. If they are his brand, then he has to start living his brand.

Building for the future

If he wants to show progress under this heading, there are three obvious areas where he could do so.

He could stop talking about the UK building new power stations, and bring in the licences and permits needed so the private sector could get on with their construction. He has promised faster planning processes and streamlined regulation. He has said he wants the UK to build a new fleet of nuclear stations. Well then, get on and do it. If he’s had second thoughts, then get on and order the construction of other types of station. We need them, and we need them soon. Ten years have been wasted. The preceding Conservative government supervised the construction of a large amount of combined cycle gas power, which is the main reason we can hit our Kyoto targets. What does Labour have to show? Most of us will only believe it when we see the foundations being dug.

He could recognise the chronic lack of capacity on our main transport networks, and issue the permissions and permits for the private sector to build more capacity. In the short term, he could order a review of impediments to use of both the road and rail networks, and instruct the relevant authorities to take simple actions to use existing capacity more effectively. Again, over the last ten years, practically nothing has stirred. The government has presided over the building out of the Channel tunnel rail link and the private-sector Birmingham M6 relief road – schemes it inherited. What is it going to have to show for its tenure, other than the country grinding to a halt?

He could back the decision by Ofwat to support full competition in the water industry, to start tackling our shortage of capacity in this basic requirement. He should want to see reservoir construction and pipe renewal well underway before the General Election, as this is the neglected monopoly whose prices and service quality are not satisfactory.

Reforming public services

The biggest let-down for many, over the last 11 years, has been the discovery that spending eye-watering sums of money on schools and hospitals has not led to the improvements in quality and access many hoped for. All too much of the money has disappeared on central and regional bureaucracy, on elaborate and sometimes botched IT schemes, on large pay increases, on endless consultancy contracts and on a glossy-brochure industry in overdrive.

In education, he should continue to drive to create different kinds of schools, building on the City Academy scheme. He should welcome in new providers and relax the central and LEA controls. If he really is New Labour, he should go for parental and student choice that is effective. There are Scandinavian models for these, which may prove more palatable to his party.

In health, he needs to intensify the drive to offer choice and to provide the range of care, in a variety of different institutions, that the public need. The single-monopoly District General Hospital is remote from many of its users, is often an infection centre, and may not have specialists performing the same routines every day so that they become really expert at them. We do need the specialist clinics and smaller units, with the radical idea that sometimes the doctors should travel for the convenience of the patients, rather than the patients having to travel for the convenience of the doctors.

Steering the economy

The very area which the PM sees as his strength, and Labour’s trump card, is now their joint Achilles heel. It is the most difficult area of the three to get right from here, the one where there are no easy choices.

The UK economy is now in one of the weakest positions to respond to the international Credit Crunch, and has its own version of the Credit Crunch, which has been been made far worse here by the bungled handling of Northern Rock. Only the UK has put £100 billion of a single bank’s liabilities onto the government’s balance sheet, and only the UK has the government sacking staff and halving the activity of one of its larger mortgage companies. The UK has a very large government deficit, a large balance of payments deficit and high consumer borrowing. As it now has a rattled Central Bank, which lurches from extreme Puritanism to making large sums of liquidity available, it is especially vulnerable to disappointing performance and a more miserable outcome on both growth and inflation.

If the Prime Minister wishes to meddle here to try to salvage his reputation, there are three things he needs to do immediately:
1. Restore the power of the Bank of England, which he destroyed by his 1997-8 reforms. He should give the Bank back their banking regulation and debt management, so they understand the day-to-day business of the money markets. He should tell the Governor and his team to speak less, and to speak more wisely. What ever was the point of the Governor last year telling us there would be no bank bail-outs when he must already have known of the problems at Northern Rock? Why did the Bank allow papers yesterday to run the absurd story that there would be no interest-rate cuts before 2010? Those will be more words they have to eat if they wish to get out of the Credit Crunch.
2. Start squeezing bureaucratic spending by imposing an administrative staff freeze, a freeze on new IT and consultancy contracts, a stop to most new regulation, and by resisting claims for yet more programmes or projects, based on public money. The UK’s economy will not come good until public spending is brought under proper control. Shifting more higher public-sector pay into performance-linked, where the payments are made only if efficiency rises.
3. A deregulation bill which strips out substantial regulatory cost from business, as a surrogate for a further business-tax reduction.

I fear none of this will happen. The government seems well set in a disastrous pattern of stunts, press conferences, bodged launches and internal strife. If all it is going to do is to dance to the media tune, it is doomed, and the country will continue to be badly governed. We need a government which will truly do something for the longer term. That means seeking to amuse the media less, and trying to deliver more. Good government is not all about media appearances and news launches. It is about the daily grind of trying to get the official machine to do something efficiently and well, to improve the condition of the country. When you have been in government for more than ten years, words cannot solve it. You will be judged by your cumulative deeds, and by whether you have vigour and purposes left to tackle today’s problems.

Ofwat have at last got there – they want competition in water supply to tackle the shortages, the high prices and the single-quality offer we all face. I am delighted. Let’s hope the government will now get on with it.

Like all monopolies, the water industry fails to innovate, fails to make enough supply available, and over-charges. You can have any type of water you want, as long as it is the standard-issue drinking-water quality, adulterated by chemicals it thinks are good for you, and sometimes with forced medicines as well. You have to tip expensive drinking water down the loo, wash the car with it, and water the bedding plants – unless it’s hot and dry, in which case you will probably be under a hosepipe ban.

Once competition is introduced, all kinds of things will become possible. Let me hazard a guess, by peering into a liberated future:

1. Cheaper kits will be actively marketed, to harvest the water from your roof to flush toilets and wash the car;
2. More borehole water will be tapped into, and new reservoirs will be built, so we do not have to ration water if we ever get a hot summer again;
3. Better pipes will be put in to waste less water;
4. Water prices will go up by 20% less than under monopoly regulation as competition comes in – we may even get lower bills;
5. Business consumers will be able to buy different quality water for different purposes with, or without, specified additives.

We were told that competition in telephony could not work, that it was a natural monopoly because of the network of cables around the country. How wrong those defenders of monopoly were. Competition led to lower prices, the widespread adoption of radio technology to create rival mobile networks, and investment in a completely new fibre-optic cable network to replace the old and inadequate copper network of the monopolist. We went from being backward to being a market leader in phones. We went from a country struggling for every household to afford a single fixed line, to a country where most people now own mobiles.

Let the market loose in water, and something similar could happen. It will mean more jobs, lower prices, and better service – and it will be greener and cleaner.

On the 26th January 2007 I posted a Reading Evening Post article about the need to improve forces’ housing. I took the proposals to the Defence Secretary, who expressed enthusiasm for some such scheme. I am reissuing it today, because nothing seems to have happened, and it is time to take it up again. Our armed forces are getting a rotten deal. The very least we could do is offer them some stability in their family housing, and offer them a way of improving it. We need to ensure that when they leave the services, they have a deposit for their own home and are not left trying to obtain poor quality accommodation from reluctant, hard pressed local authorities.

“I was upset to see the poor living conditions many soldiers have to put up with in the recent revelations about the modern army. It was a reminder of how the public sector can let its staff down in important ways.
We saw the lack of maintenance, the poor facilities and run down state of some forces housing. We did not hear about the other problems besetting forces families from the nature of army life. It isn’t just a case of broken bathrooms or worn out kitchens.
Soldiers and their families get moved around a lot. This can disrupt schooling, employment for the non soldier in the marriage, civilian friendships and wider family life. As the accommodation is rented, when the soldier leaves the forces he or she has no accumulated investment in a house or flat and often finds it very difficult or impossible to get the first foot on the housing ladder. Most of their friends and contemporaries have owned a property of their own for several years by the time the soldier’s tours of duty end.
So what could be done about this? I am proposing a means of bringing greater stability, better housing and an investment to those soldiers who would like it.
The MOD should invite tenders from outside financial and property companies to run a scheme which permits the soldier to buy all or part of his married quarters from the army on a mortgage. Very run down quarters would be sold at appropriately low prices with a requirement for the soldier to renovate it. If he chose to renovate it himself he would gain an extra investment for his work. If he used private contractors he would need to borrow the money as part of the mortgage.
When the soldier left the army he could sell the house or flat. The army would have the right to buy it with and for another soldier wishing to enter the same scheme. The transfer would take place at open market value, as if the soldier owner were selling it on the open market. The retiring family would have capital from the sale to buy a new home. The incoming soldier would have the chance to build up his investment over his time in the army.
Each soldier would buy at a barracks which became his home barracks. In all normal circumstances whenever he was in the UK he would be based at that barracks. His family would stay there if he was abroad on duty without them. If the family went abroad the army and its contractors would organise a short term tenancy so the rent could help pay the mortgage payments.
This scheme would be voluntary, but I think it would be popular with many army families. They would like more freedom to do up and look after their own property like the rest of us, and they would appreciate keeping up with the housing market when it starts to rise again in due course. They would welcome money coming in to improve the quality of the accommodation. The army would still have the right to allocate the home to a new soldier when the old owner left the service, and in the early years would have substantial capital receipts allowing it to buy better equipment, or more land and buildings for other purposes. It would be a win win.
Perhaps there are some bright entrepreneurial businesses out there that would like to make it happen. Something needs to be done, and it doesn’t look as if the Treasury is going to come up with enough money to do up all the run down houses anytime soon.”

Yesterday the Opposition highlighted the great Vehicle Excise Duty take away. Brought to you by the same people who doubled the income tax rate on the lower paid, they have thought up another unpopular wheeze to lift an extra £2.5 billion from motorists as if we were not paying enough already.

Deep in the small print of the budget was the fact that the large increases in VED would apply, not just to new cars, to put people off buying the larger and sportier vehicles, but also to older cars where there is no such element of choice. Even Labour MPs now see how unpopular this could prove to be when it comes into effect next year.

If you own a car which emits 161-165 grams of carbon per km (where are the miles the government said they had protected for us?) your VED will go up from £145 to £175, an increase of more than 20%.

If you own a car with emissions of 201-225 grams, you will have to pay 43% more, a rise from £210 to £300.

If your car puts out more than 255 grams, the rise will be 10%, from £400 to £440.

The government have dared to “sell” this idea as a green tax, which will limit carbon output from vehicles by persuading us to buy greener cars. Yet the government’s own figures say that, as a result, UK vehicle emissions of carbon will fall by just one seventh of one percent, a figure so small that it could be lost in the estimating error. Their forecast for a stonking 130% increase in tax revenue from this source shows they know it will not change behaviour, just swell the Treasury coffers.

This is no green policy. This is another milk-the-motorist policy, from the people who have brought us rip off petrol prices (with an added 70p a litre of tax!), rapacious parking charges and congestion charges. There is also their enormous speeding fine revenue from a system so complicated and perverse that you need to be a bad driver to be able to comply with it, watching your speedo so often whilst scanning the horizon for the speed signs rather than the road ahead.

The average motorist already pays £1,800 a year for his or her motoring, and does not have an extra £90 available to pay to the government just to keep the car on the road. Government Ministers, firmly insulated from these costs in their Ministerial cars, just think they can clobber the motorist again. Yesterday’s performance from Treasury Ministers goes to show they have still not understood just how people are being squeezed, and how fed up they are with a government which takes all their money.