Category: Blog

What a difference a year makes. In May 2007, the professionals completing the RICS estate agents’ and surveyors’ survey of the residential property market were bullish on past property price rises and the prospects of more to come. That May survey showed a positive balance of 21 for past prices UK-wide, and a big 56 positive balance for London. New-buyer enquiries were in balance. The latest figures in 2008 show a negative balance of 95 on past prices UK-wide and a negative 94 on London. The business has never been more pessimistic, with practically every agent reporting prices down and expecting more of the same. New-buyer enquiries have reached early 1990s levels, at minus 68. Even the Housing Minister has to go to cabinet with a pessimistic forecast for house prices, and kindly lets the rest of us read what we already know from the public surveys.

This week also brought the expected bad inflation figures. Energy and food prices have boosted CPI and RPI inflation, with the government’s alcohol duty increases and VAT on petrol and diesel offering the extra boost to the rise. Readers of this blog will not be surprised by either development, following pieces on the coming drop in house prices and the short-term up-tick in inflation. Shop-price inflation is still much less than factory-gate inflation, which is far below the inflation in metals and energy used by the factories. Everyone is having to absorb higher prices to some extent. The consumer is unable to protect himself or herself through sufficiently large wage increases, so spending power is falling.

The UK is now paying the price of government and regulatory excess in recent years. The government sector has inflated its costs and borrowed too much. As a result, the UK government had to increase taxes at exactly the point in the cycle where it should be cutting them. The Bank of England is having to keep interest rates much higher than our leading first-world competitors, because the inflation here is exacerbated by tax increases and the sloppy credit conditions of recent years. The nationalisation of Northern Rock has left the government short of cash to improve the liquidity of money markets, when its US counterparts are being much freer with the extra cash.
It was against this background that Gordon Brown carried out his tax con, cutting the basic rate of tax to 20p, while removing the 10p band. People noticed this was a disguised tax increase for many, and that it affected those on low incomes disproportionately. It led to the forced U-turn this week, as Labour backbenchers reported accurately the mood on the doorsteps, and demanded a rebate.

In the US, a positive recession-busting strategy has been followed vigorously. Interest rates have been slashed from 5.25% to just 2%, cutting everyone’s cost of borrowing. Substantial sums have been made available to money markets to ease the liquidity crunch. Mortgage regulation has been eased. Consumers have been given a boost with a tax cut, helping those on lower and middle incomes.

The UK is unable to cut interest rates as much, because of its persistent inflation problem. The UK authorities have not made so much money available, because they foolishly spent far too much on Northern Rock, instead of heading off that problem with sensible monetary easing before the run. Northern Rock, in public ownership, is now increasing the credit squeeze by having to cut back on its lending. The UK government has been putting taxes up instead of easing pressures on consumers, because of the big appetite of the government sector to spend more. Yesterday, for one year only, we were offered a modest tax reduction through the gritted teeth of a government held to ransom by its backbenchers and afraid of the voters of Crewe and Nantwich. The UK is talking of intensifying regulation, rather than easing it, while there is no danger of over-lax lending. We are told there will be more and tougher banking controls in the draft Queen’s speech – the usual sound of bolting the stable door after the horse has gone, making it impossible to get the horse back in.

The US should get by without the savage recession some have already called and others have forecast, because they have been so determined to see off the downturn as quickly as possible. The UK will have longer to struggle, with its twin large deficits – an over-borrowed government sector, and a heavily indebted consumer one. While the tax rebate this week makes a small but welcome contribution to the consumer, it is achieved at the expense of an even worse public sector deficit. This will act as a further constraint on the government achieving a better economic performance. The Chancellor yesterday should have offered reductions in wasteful or needless spending, or, at the very least, postponed some of the expensive computer and consultancy schemes during the year when he intends to give some money back to taxpayers.

We have more months ahead of mortgage famine, falling house prices, and price rises squeezing us more. The government’s tax increases on fuel, alcohol and others have made it more difficult to get inflation down and to reassure people that their real incomes will not fall too much. Meanwhile, the Asia Pacific region continues to outgrow us, and the pound is now falling against the dollar as well as against the strong currencies of the fast-growth countries.

Yesterday I visited Crewe to help with the by-election. The Labour vote was crumbling as we visited. Practically everyone I spoke to was angry about the big increases in petrol and diesel prices, food prices, and the vanishing 10p tax band. Understandably, they felt their family budgets were being squeezed too much, and, understandably, they blamed the government for the part that tax has played in all this. I canvassed into the evening, long after the news first broke about the government’s spectacular U-Turn – for one year and for one by-election only – on income tax, but it made no immediate impact on the feelings of voters, bruised by tax bills and inflation. Life-long Labour voters confessed they were having to think long and hard this time, because they could not believe how their party had let them down over tax and the economy.

The Conservative operation seemed well-organised, with plenty of good material being put out containing strong messages about the war on motorists and the squeeze on incomes. There was a detailed set of arguments being conducted by several parties, about who had the most or least local candidate, which preoccupied some voters, but overall the issue was simple: “We’ve had enough. We can’t afford all the bills”.

Labour’s backbenchers, ably led by Frank Field, “got it” well before the government. The Chancellor has gone from zero to hero with Labour MPs for his lend-lease approach to tax reductions. He hopes his one-year special offer of a tax cut paid for by yet more borrowing will take the political trick. The danger for Labour is that people will say “Too little, too late”. They may also worry that because this government cannot afford the tax cut, it is but taxation deferred. We will all be paying for this tax cut – with interest – as we are having to borrow it. It would have all been better if the Chancellor had been able to say this would apply for more than just one year, and if he had covered its cost by reducing wasteful and needless spending. Goodness knows, there’s enough of that to pay for this modest reduction. The Taxpayers Alliance found £82 billion of waste in its 2006 book, and even the government found more than £20 billion.

On the trains, there and back, I saw plenty of Conservative MPs but not one Labour MP. Are they still shy about facing the voters of Crewe?

On a rare occasion when I saw some TV, I was intrigued to see an advert from the government demanding that people pay their Vehicle Licence fees.
It did not surprise me that they are wasting more public money on ads, or that they wish to portray themselves as money-grabbers. That is exactly what we have come to expect from this rapacious crew. What did surprise me was their decision to tell the audience they have taken powers to crush your car if you forget to pay the VED. They showed a film of a perfectly good-looking car being needlessly destroyed, just because the owner had not paid the tax. No wonder they are 23% in the polls and falling.

I understand a lot of non-VED payers are also committing other crimes, and that the car impounded may have been stolen. Surely, in such circumstances, the authorities should seek to return the car to its legal owner, rather than crush it? If the car belongs to a forgetful, legal owner on holiday or otherwise away, it seems very unfair to crush the vehicle, if he or she has had no opportunity to pay the tax and penalties to get the car back.

It sums up this government’s approach. Taking money off people – to pay for ads, spin doctors and more bureaucracy – is the aim. Getting brutal with people who do not pay is the means. Viewers were obviously meant to feel on edge, and had to rush out to where their cars were parked to check they had not made a mistake.

Someone might be away on business, on holiday, or very busy when the VED tax demand arrives. The renewal note might be sent to the wrong address, or they might have forgotten to notify all the money-grabbing branches of government when they moved. Shouldn’t such people be treated more sympathetically? By all means charge the non-payers extra to help cover the costs of compliance, but isn’t crushing a car way over the top?

Now we hear today that Nottingham Council are planning to levy a tax on employers – who may make their employees pay it – for every car-parking space they have thoughtfully provided in the city centre. For heaven’s sake! The employers who provide car slots are helping take vehicles off the road. If you rely on municipal car parks and on street parking, you often have to drive round and round looking for a space as they usually underprovide. The employers who have their own car parks contribute to reducing congestion, at no cost to the Council.

If the government have begun to “get it”, they will veto this scheme as yet another example of how to pillage the parker and milk the motorist.

As I am never shy to criticise the BBC, I should be fair. Today, they invited Brian Wilson and me to debate the issue of devolution and the PM’s wish to have a debate to “save the Union”. It was a balanced and sensible piece, which I hope the audience found worthwhile.

It enabled me to explain that I opposed Labour’s devolution scheme in the late 1990s because it was lop-sided and unfair.

I want proper devolution – devolution of many more decisions to individuals, families, companies and communities, in both Scotland and England. The UK is over-centralised.

I am against regional devolution in England, and in favour of equal treatment of Scotland and England when it comes to making decisions at UK or England/Scotland level. If the PM wants to save the Union, he could begin by abolishing unelected regional government in England, and by giving power to English representatives to decide the issues the Scottish Parliament decides north of the border.

Three years ago I worked on a proposal for “Thames Reach – A New City”, and published the ideas with sketches, provided by Area Architects, of what could be achieved. I was seeking to show that there was scope for more construction, and a more imaginative approach to new housing estates and commercial estates in the East Thames Corridor.

The part of the plan which excited most attention from the media was the suggestion that we could reclaim some land from the Thames, and extend the built area into the estuary. It seemed to me that we could use such new land to take the pressure off greenfield sites in Kent, and, out of the proceeds of all the planning permissions, we might be able to pay for the additional flood defences London and the East Thames developments are going to need.

I was delighted to see yesterday that Scott Wilson, the engineering consultancy, has taken up a variant of the idea and has drawn on Terry Farrell’s scheme for a bridge linking Kent to Essex via islands in the estuary. Apparently there are interested Middle Eastern investors, who have seen how well reclaimed land and property development has worked in Dubai.

If London is to keep its place as one of the world’s great cities, and as an attractive place for inward investors, we need the next Docklands to keep the momentum going. What better option than to create waterside locations for offices, shops and residential developments, by reclaiming estuary land? At the same time, deep-water channels could be dredged for shipping and London’s sea defences strengthened.

Click here to download John’s PowerPoint presentation on “Thames Reach – A New City”. Please contact his office directly for a copy of his pamphlet on this subject, which is too large to upload onto the website.

I thought Gordon Brown was an intelligent man. I read that he has hired, at our huge expense, a number of intelligent advisers. How can they, between them, have come up with the subject of care for the elderly as the topic for the “fightback”?

Anyone with half an ounce of commonsense – or do we have to say gram these days? – would see the pitfalls. The popular position on care for the elderly is to offer “free” care for all, the one thing the government has to rule out on cost grounds. The issue is one settled by Members of the Scottish Parliament for Scotland, where they have more generous arrangements than England.

So, in the middle of a row about the unfair treatment of England and the state of the Union, generated by his own side led by the Labour Leader in Scotland, a Scottish MP, acting as Prime Minister of the Union, decides to highlight the unfair treatment and tell us, the English, it has to stay unfair! Did no-one, from the PM down, see what an own-goal this was likely to be?

My colleagues and I have sat through many a surgery appointment where constituents have complained that their elderly relatives have had to sell their homes to pay the nursing home or residential care-home fees. We have had to patiently explain (under this government and its predecessor) that offering to pay all nursing and care-homes fees from taxpayer receipts would mean a big increase in taxes. We have explained that health care is still free to all of whatever age, but living costs in a home are more akin to you and me paying the mortgage and the grocery bills, so they have to come out of private funds until the elderly have run out of cash, when the state will then take over. The constituents are rarely persuaded, and feel a great sense of injustice that their elderly relatives have to sell up and pay.

There are four possible answers to the vexed question, ‘who pays the care-home fees?’ The first is the elderly themselves, either out of their savings, or from the proceeds of selling the houses they no longer live in. The second is the relatives or friends of the elderly, often the people who will inherit the houses if they do not have to be sold to pay the fees. The third is for the elderly to have put in place some type of insurance or financial arrangement in their younger years when they had more income, so they do not need to touch their previous homes and their capital value. The fourth is to require the taxpayers to pay, as if residential care were a full cost on the NHS.

It might be a good idea for the relevant Secretary of State to consult on more imaginative ways for elderly people to finance their possible need of care-home services that do not require the sale of their residence when they do have to move into a home, if the government now has such ideas. It makes no sense for the Prime Minister himself to open up the whole issue of care for the elderly when he cannot afford to offer the solution those most affected by the issue would like, and when it is treated differently on either side of the English-Scottish border. It just reminds people that he is a Scottish MP, and reminds us all of the differential treatment under his lop-sided devolution.

Care for the elderly reveals the unfair settlement for England. The Prime Minister and his advisers are letting England down again, and spending our money on highlighting just how they are doing it. They are showing that Scottish MPs in this government can lead the debate and settle the outcome for England when they cannot do the same for Scotland, and when English MPs have to keep out of the Scottish decision.

The Prime Minister tells us he will do whatever it takes to save the Union.

He should begin by remembering it was the Labour government he supported which put through lop-sided devolution for Scotland, and half-hearted devolution for Wales. Far from saving the Union, as advertised, these schemes made the Union unstable. I wrote my book, “The Death of Britain”, to explain how Labour’s constitutional revolution meant “tearing our country up by its roots”. I argued that “devolution Labour style will devolve more power not to people, but to politicians and administrators. Far from cementing the UK, it will pull it apart as advocates of a Europe of the Regions intend”.

If Gordon Brown is serious about wishing to save the Union, he needs to understand the strong feelings of injustice in England.

1. English people do not want their country balkanised into Euro regions. We do not think you make up for the lack of an English Parliament by offering elected Assemblies for the South East or the North West. Indeed, these unelected regional governments throughout England, which Labour wishes to offer in elected versions as substitute, need to be abolished to show the government has at last understood the meaning of the “No” vote in the North East. Regional government in England is an insult to those of us who love our country.

2. English people want some symmetry in the constitutional arrangements. If Scotland can decide matters like local government finance, planning, health, education and the environment without English MPs being involved, why can’t England decide the same things without Scottish MPs being involved? Nationalists in England now want the extra cost and complexity of a full English Parliament in addition to Westminster. I prefer making English Westminster MPs do both jobs. The same could also apply to Scotland, with the Scottish MPs settling Scottish matters in Edinburgh for part of the week, and joining us to settle Union matters for the rest of the week. If Scotland wants to have two lots of representatives, as they do now, they should have the pleasure of paying for them.

3. Many English people want fairness in allocating the money. Constituents want to know how it is that Scotland can afford a better deal on student finance and, in some cases, a bigger range of pharmaceuticals on the NHS. Gordon Brown should tackle the more obvious anomalies that hurt England.

4. The Prime Minister should grasp that the biggest constitutional threat to the Union comes from EU developments. English people are not going to be happy until they have a vote on the Constitutional Treaty, and have their view taken seriously that we want less EU power over us, not more.

I concluded in 1999 that “The Government’s devolution plans will create more tension and conflict, rather than less. We already see London complaining that Scotland gets too much money. We will soon see Wales complaining that it is not being treated seriously and Scotland complaining that the powers it has received are not enough… It is all playing into the Commission’s hands beautifully. It is creating a Europe of the regions in the way the Commission wants. It is helping to fuel nationalist movements in Scotland and Wales. London is useful to begin the process of regionalising England…The end result will be a more divided, more factious, more overgoverned, more overregulated UK… it will just create more armies of bureaucrats and politicians wringing their hands, complaining that they do not have enough power, and levying money from people to keep themselves in a lifestyle to which they wish to become accustomed”

Just when you might have thought it could not get worse for the Prime Minister, we enter the battle of the memoirs. Reading the press this weekend, it is as if senior Labour figures feel they need to speed their stories to the papers while the two words “Gordon” and “Brown” are still high news. Labour figures have certainly learnt from the NU Lab Bumper Book of Spin when it comes to sending out salacious stories and exciting tittle-tattle to boost circulations and encourage good contracts with newspapers for extracts from their literary toils.

John Prescott has confirmed what all good journalists were telling us – and all MPs who watched carefully knew. There was a series of bruising rows between Gordon Brown and Tony Blair, and Brown did want the top job. All those official denials, all those pictures and stories spun, especially at election time, to show what good buddies they were, did seek to conceal a very difficult relationship. The Blair government was split into rival camps, and they did all seek to mislead with their official statements, while briefing extensively behind the scenes about the endless disagreements and hurt feelings. One of the reasons why the taxpayer had to pay for an expensive Office of the Deputy Prime Minister, was to handle these family rows, apparently.

John Prescott gave good advice when he suggested to the Prime Minister that he should have sacked Gordon Brown. I always felt Tony Blair should have offered Gordon Brown the Foreign Secretaryship in the third Parliament. He could have presented it to him as a necessary broadening of experience before eventually taking over as PM. If Gordon had accepted, it would have broken his power-base at the Treasury, which was used to associate Gordon with the large sums of public money being spent on causes dear to the hearts of the Labour MPs whose support the would-be Leader needed. It was also the power-base he used to block any Blair reform he did not like. Had Gordon refused the move, all but his strongest supporters would have thought him petulant and disloyal to the team.

Cherie Blair’s memoirs have been brought forward for earlier publication. It is not helpful to the PM to have this concentration on the Blairite past, and the rows at the top that characterised it, so close to an important by-election in Crewe. The aside that Tony is now offering advice on the next election, and how to win, invites retaliation from the PM. The Memoir threatens to rekindle the old rows, as it is difficult for the PM to leave it all unchallenged, without someone putting his point of view. It was, after all, the unpopularity of Blair’s war which led the Labour party pressurising him into going. Raking over the immediate past like this encourages some to remember what they did not like about that period, and others to make unfavourable comparisons between the old PM and the present one.

The loathsome government of Burma is an extreme example of an all-too-common phenomenon. Too many people in power have a cruel desire to control everything in the society they are meant to serve. They wish to manipulate the media, send out only positive images of themselves, and exclude, punish or destroy anyone who wishes to disagree with them. The military junta produce ludicrous television pictures of a happy people gratefully receiving aid from the army, at a time when thousands are close to death without shelter, without enough clean water or food, and prey to disease. They seek to ban any foreigner from coming to their country to help, as they fear they will send back words and pictures reporting the truth, and fear they will expose the gross inadequacies of the regime’s response to such a major human tragedy.

I admire the bravery of the anonymous BBC reporter who has sent back vivid and worrying words to describe the tragedy unfolding in the delta. I admire the patient work of the humanitarian organisations, trying to persuade the military government that they should be allowed to help. I regret the clumsy, attention-seeking intervention of the Lib Dem leader, Mr Clegg, who suggested dropping food supplies from helicopters or planes without the permission of the Burmese government. Has he checked that the military regime would leave such planes unmolested and not treat them as enemy aircraft? Has he thought about the problems of the terrain in the flooded delta, and how difficult it would prove to retrieve many of the large packages sent from the skies? How would he prevent the junta seeking to intercept those parcels which could be reached, and taking them for their own purposes? Did he not hear the impatience in the response of those who are trying to negotiate an agreement with this dreadful government? We all share his wish to do something, but believe the international community can do more if it works with, and through, people on the ground in Burma.

The Burma regime is clearly paranoid. It remembers that the US, EU and UK have all condemned it in the past and have imposed sanctions. It fears they will use this opportunity to expose it and will be intimidated by proposals for unilateral western intervention. It naively believes it can control the information, words and pictures coming out. Fortunately, in a footloose world where westerners are already in Burma for other purposes, and in a world where there are so many cameras, mobile phones and communications equipment, pictures and information will flow out to tell the rest about us of the sad plight of so many Burmese.

The international community wants to help, and can help. To help effectively the regime has to be persuaded to take in not just more food and water, but also equipment to deliver the supplies to the dispossessed, and technical assistance to begin the recovery. That cannot be done by aerial bombardment. It can only be done by negotiation.