Category: Blog

It’s a bit rich that Gordon blames Conservatives and nationalists for the current unease with the bodged devolution proposals he and his colleagues gave to Scotland and forced on England without ever asking us our opinion.

You reap what you sow.

It was never a good idea to offer Scotland more powers of self government than Wales, and to cap it with no self government for England. Now??Mr Brown presumes to lecture Conservatives, who wish to give to the English similar powers of self government through the MPs elected to Westminster for English constituencies, in an effort to restore some symmetry and fairness to our governing system.

Mr Brown will discover that the English are slow to arouse, but if he and his party continue to give England such a bad deal it will be difficult for him to control the forces for fairer treatment for England which his one sided devolution has unleashed.

Naturally as a Scottish MP aspiring to be Prime Minister of the UK Gordon Brown feels uneasy about the present position. The Prime Minister of the UK has wide powers as the chief politican of the Union over foreign affairs, defence and taxation. He also has large powers as the de facto Prime Minister of England, able to settle English education, local government, the environemnt, planning,law and order, health, social services?? and much else besides – all the issues that in Scotland are settled by the First Minister and his colleagues in the Scottish Parliament.

Gordon Brown probably remebers the huge fuss his Labour MP friends made in 1992 when a Conservative government assumed power for the whole UK with very little representation in Scotland. They claimed it meant we had no authority or right to settle "Scottish" matters. Exactly the same argument could come back to haunt a Scottish MP seeking to be Prime Minister of the UK today, for the Conservatives gained more votes in England than Mr Brown’s party in 2005.

Many will ask what does Mr Brown know or love about England? Isn’t he determined to introduce the heavily centralised, public sector led slow growth model he and his friends have pushed onto Scotland in the last decade, with such poor results for the Scottish standard of living and freedoms.

Last year the government and Pensions Regulator listened when business lobbied strenuously about the amount of money a company had to pay to the Pensions regulator to create a fund to take over pension funds in trouble and meet the payments to pensionsers.The levy came in?? at a lower level than orginally mooted.

This year they have quietly made a large increase in the required payments. The Regulator has?? to raise money under the government’s unfair and foolish legislation. Many companies will now face a large increase in?? their required payments, for two main reasons.

The first is the big increase in the total amount of money the Regulator thinks it needs, leading to an increase in the levy rates.

The second is the introduction of the pension deficits onto each company balance sheet, required by new accounting rules.?? Because companies with weaker balance sheets pay more, all companies with a pensions deficit now have weaker balance sheets than they would otherwise do because of the accounting change.

The irony is the government’s own position. The government’s balance sheet is flattered because this government just shows some of the outstanding debts. It misses out the estimated ??700 billion of pension deficit the public sector is running, thanks mainly to completely unfunded schemes where people have to rely on the future solvency and goodwill of the state.????It?? also misses out ??100-200 billion of off balance sheet liabilities for PFI, PPP, Network Rail and other items. It’s one rule for companies – show everything or face prosecution??- and one rule for the government – show very little and claim the rules do not apply to you.

The consequence of the government’s decison to set up a tax raising regulator will be to kill off??most final salary pension schemes. More and more companies??have shut their final salary schemes to new members, and some are trying to sell the closed scheme on or to wind????it up altogether. Companies are deterred from setting up new ones, because they have to pay twice – once for their own scheme, and again to help underwrite every other scheme.

It is sad that the UK’s pension position, the envy of Europe in 1997, has been so badly damaged in the last few years. It began with the government’s??large tax on pensions, taking around ??5,000 million a year out of the funds, and??the ??22 billion tax on the telecoms industry in the form of the sale of airwave rights. These two decisions led to a bigger decline in UK share prices, especially of the leading telecoms stocks, than elsewhere in the world. This??undermined the very strong solvency position of funds around the end of the last century which were heavily invested in shares ,including telecoms shares.

The problem has now been compounded by actuarial advice persuading or requiring Trustees to hold large portions of their funds in government debt. This investment strategy has undermined funds further in the last three years, when property and equity investment has been so much more worthwhile than holding government bonds. The flight into bonds has only benefitted the government, enabling them to borrow cheaply at the expense of pension funds. The pension??funds have had to buy more and more??government IOUs??regardless of the low returns to fill the gaping hole caused by the taxes and to meet the actuaries requirements.

Yesterday we had another very unsatisfactory debate on the Post Office in the Commons.

The Conservative front bench pointed out that 2500 sub Post Offices will close according to the government, but the top management of the business probably will close many more over the years ahead as they do not think they can make money out of the large network they currently enjoy. Conservatives proposed that sub post office contracts should be loosened to allow them to undertake more business for others to give them a chance of survival. It was a sensible and modest proposal, but the government could not bring itself to say "Yes". It was difficult to understand why.

The whole Post Office suffers today from poor morale and a very lop sided management approach. In recent conversations with senior management at the local level, I discovered that local postal businesses are set cost reduction targets, but they are not told what their revenue is and have no control over their property and other assets. In a normal business senior managers are set profit targets, and have some freedom to grow the reveneue rather than cut the costs to deliver. They also have more influence over property and capital investment than postal managers have to help them meet their targets.

There are a whole series of good property deals to be done to give the postal business better premises for the mail activities, freeing in town sites for other commercial development as well as for the counters business. There are ways of growing postal and other related revenues. The bosses of the Post Office should have another look at the way they organise the business, and give good managers more scope to manage. Instead of managing cuts and decline we then might see more growth. Local business units need to know what their own revenue account and balance sheet look like. The top management might then be surprised at how innovative some would become.

Last November the No Turning Back Group of MPs decided we needed to do more work on how to tackle the problem of too little social mobility.?? By clicking <a id="p44" href="http://www.johnredwoodsdiary.com/wp-content/uploads/2007/01/social-mobility-3.doc">here</a>??you can download a file which sets out my thoughts in this area.

As always, I welcome your feedback.

I have no problems with a Labour Cabinet Minister choosing a better school for her child. I do have problems that there is insufficient choice for many under this government.

I would like to see all schools becoming independent, with money from taxpayers sent to the schools chosen by parents up to a reasonable limit, so that all who want a free place can still have a free place, but at a better school with more choice than some experience today.

I also want to see better provision for special needs within the taxpayer financed sector. Conservatives have warned that too many special needs schools are being closed. Some children are better off in mainstream schools, whilst ??some are better off in special schools. Again, there should be the choice for those who rely on state schools, just as there is choice for those who can afford private educaiton.

I was fortunate to win a scholarship to a Direct Grant school from my local state primary. A previous Labour government knocked away that ladder of opportunity for people from lower income backgrounds. It is high time Labour now accepted that we need to remove the apartheid between independent and state schools, by making all schools independent, and by offering payment of fees for everyone who??wants ??that help, up to a sensible limit. Such a change would not only give people more choice, whatever their background, but would also help raise standards.

It is shocking?? but not surprising to read of the damage being done to the army and navy by this government’s budget plans and poor management of the money. I have never known morale so low, or money so badly spent.

The poor state of barracks and quarters has caught the attention of the media. Many soldiers would like to be able to gain a foothold on the housing ladder, like their friends on civvy street. The MOD should look at ways of helping soldiers acquire a property of their own – maybe by allowing them to take on poor MOD housing and fix it up for a share of the equity, coupled with a further share based on their mortgage capacity.??When they leave the armed services the equity could be sold on to the replacement coming into the service under the same equity share/mortgage scheme at market prices.

Officers I have talked to say the army does not have the expertise to go into the housing market, yet that is exactly what it has done in the rented market. Ministers need to move with the times, and let organisations into defence housing that can help arrange the finance. Another way of protecting people from rising house prices would be an army savings scheme that put the soldiers money into financial instruments linked to house prices, so they could be saving for the deposit/share of a house whilst serving.

Each naval person has a home port they return to after each operation. Maybe each soldier should have a home barracks/married quarters they return to after overseas tours. If they are going with their families on long overseas tours the army could help find a temporary tenant for their property to give them an additional rental income. Maybe more marriages would survive the stresses of army life if there was home that remained permanent during their time in the army, where wife and family or husband and family could stay during most courses of duty for the service member of the family.

If you want an independent England and an independent Scotland, with no Union, then of course my proposal is not for you.

I think it is worth a try to give England a fair devolution settlement, and then see if the public would rather live in a Union with such a settlement or wants to vote to break up the Union.

Of course if the British people voted to break up the Union then England would be governed by the English Parliament at Westminster, which would have fewer MPs than the Union Parliament, and fewer officials.

All who have written in seem to agree we need change to Labour’s bodged devolution fix, and all seem to agree that the position of England needs recognition. There also seems to be universal support for banishing all the much unloved English regional government.

The disagreement seems to be over whether the Union is worth saving, with some wanting to go straight to an independent England. Such a country would not ened a new Parliament bulding, as the Union Parlaiment at westminster would revert to its origins as the English Parliament.

I think it is worth trying the federal model I have proposed, with symmetry and fairness between Scotland, England Wales and Northern Ireland. If that did not suit the majority because they did not think it worked well or fairly, then we would have to consider referenda on whether to dissolve the Union or not. The pace may be forced by Scottish nationalists. The interesting issue is who should decide on whether Scotland should stay or leave the Union? Just Scottish voters in a referndum, or all UK voters? It is high time the government told us what they would do if Scotland votes for a Nationalist government in Edinburgh.

Many of the local and national government services in my part of the world closed down from 22nd December until 2nd January, and many public sector workers (including MPs of course- we are locked out of Parliament by??a government that does not like us asking too many quesitons)??are not yet back at work.

I would be interested to know from people elsewhere in the country of their experiences with shut down public services over this long Christmas and New Year break.

Churchill’s ringing phrase about an iron curtain coming down across Europe proved prophetic. For forty years Europe was split into a social democratic part in the west with considerable freedoms and an economic system that could keep?? within sight of the USA’s rear view mirror, and a communist east which performed so badly it was soon out of sight economically.

Conditions in the east were so bad they had to shoot people?? to stop a mass exodus to the more prosperous and freer west.

??I was proud to play a small part in the great drama of the end of communism as a governing system in Eastern Europe. When I wrote the <a href="http://www.amazon.co.uk/Democratic-Revolutions-Popular-Capitalism-Eastern/dp/1870265378/sr=8-2/qid=1168351201/ref=sr_1_2/203-2466118-7917518?ie=UTF8&s=books">Popular Capitalist Manifesto</a> in the 1980s I self consciously modelled it on the far more infamous and better known Communist party manifesto, recommending that countries seeking prosperity and freedom should do the opposite of nine of the ten central tenets in the original Marxist document.(Free education for all paid for from tax was the exception). I advised Margaret Thatcher on the changes that were emerging in Eastern Europe, and had the privilege as a UK Minister to make the first visits to leading Eastern European countries to offer advice on how to establish free enterprise economies and democracies once the Berlin Wall fell.

It is a sadness to me that after such glorious beginnings in those countries, and after such bravery displayed by the people who broke free of the evil empire, we should now be witnessing a bureaucratic curtain or blanket being thrown around the whole of Europe by the EU. We do not want over government, or erosion of?? freedom. We do not need the daily infuriating nit picking intervention in our lives that is the common fare of EU officialdom. We do not want the EU to seek to cut us off from the rest of the world, where many countries are growing more quickly and are more lively.

It is good news that Angela Merkel has said she will place deregulation at the heart of her EU policy as President in the first half of 2007. It is good that some Commissioners now understand just how damaging to our interests this hyperactive lawmaking has become. It is far more worrying that at the same time Angela Merkel thinks she can breathe life into the Constitution. That?? is part of the system which is failing, and should be buried as quickly as possible.We want less central power and freer trade, not further progress to a??forced and unloved EU nationhood.