Category: Blog

 

We are told that the government has brought the debate on the EU referendum forward to today so the Foreign Secretary can join  the debate. The debate will be led by Mr David Nuttall, the mover of the motion.
            Some have suggested the government switched the date because they want to stop the lobby of Parliament by the Peoples Pledge on the Thursday in favour of a referendum. I feel sorry for all those who had booked their tickets and were ready to come on what they thought would be an important day. However, I am prepared to give the government the benefit of the doubt. The Foreign Secretary does have to be in Australia on Thursday, and  his wish to be called in the backbench debate does show he is taking it seriously.
            I suspect the Conservative leadership wants  Mr Hague to speak as  a respected Eurosceptic. If the Speaker calls him to speak in Mr Nuttall’s debate, as doubtless he will, the Leadership hopes that some undecided backbenchers will be swayed by Mr Hague’s arguments and pedigree on the issue. It is for them  Mr Hague of the burning building speech to the rescue, the man who said the Euro would consume all it devoured in flames.
               Eurosceptic backbenchers are increasingly looking at what Ministers  do, not at what they say or have said. They judge Ministers not on words but on whether they resist powers going to the EU, whether they fight to stop the ever advancing swathes of EU law and regulation, whether they set out an alternative view in their area from that of the Commission. They want the Foreign Secretary to tell them how he is going to reverse the tide of regulation and powers which is still flowing to the EU.

             Some MPs present will  remember that in 1997 when Mr Hague became leader he argued that the UK should keep open  the possibility of joining the Euro. He came later to the view that the Euro was a bad idea. Today he argues that the Euro is a good idea for other countries, and wishes to help them make it a success by allowing them many more central powers. It is  apparently a burning building which only burns the UK.
           The government is likely to  rely on three main arguments, I suspect.
           The first is that we need to stay in the EU in order to trade with Europe. This is a silly argument. The USA, Norway, China all trade successfully with the EU without being a member. International trade is now guaranteed under international trade rules from the WTO. Germany will still want to sell us BMWs, whatever we say about our future relationship with the EU. They sell us more than we sell them. Our trade is not in jeopardy, whatever the British people decide.
           The second is  we need to stay in to have an influence over the rules for that trade. Well the US, China and Norway do not sit round the table and influence the rules. They can trade under WTO rules. Some of the rules the EU dreams up apply to us and not to them, and do us economic damage. The demand for a renegotiation anyway would not stop  us influencing  discussions around the table, if the British people vote to stay in. It means if successful we could have more influence.
          The third is the doctrine of the unripe time. Ministers  – and their  friend and ally in this, Mr Miliband the Labour leader- will say that as the Euro zone is in crisis, it would not be fair for the UK to raise the issue of our relationship now. Why not leave renegotiating and seeking powers back until a convenient date like 2015, after the next General Election?

           There are two great reasons for renegotiating now. The first is the EU needs our consent to Treaty changes to legalise what they are doing and to allow them further powers for Euroland. The second is, once the new Euroland has its strengthened powers within the EU the UK will by definition be in weaker position. A relationship which the government and Opposition  thinks works well at the moment would not work so well when Euroland meets more often and forms a clear and strong inner wheel to the EU.
            If the British people wish to stay in this new EU they will need and want a much looser relationship. My suggestion is a simple one. In return for letting them go ahead with full scale union we will need to have the right to opt out of measures we do not like. This must apply to past measures as well as to future ones. We would offer them the chance to repeal the measure for all EU members, or amend it to mutual satisfaction. If they do not wish to do so we must have the right to repeal it in the UK.
            That would be a single simple technical  change to the Treaty to balance their Treaty change to allow them to bail out Euro members with Euro and EU cash.
              I think  MPs today should  thank the government  kindly for its views, but  vote for the motion. It is strange to see the Lib Dems in the Coalition impose a three line whip to vote down a referendum, when it was their policy to demand an In/out referendum on Europe. It is even stranger to see Mr Miliband use the might of a three line whip to ensure the government he opposes succeeds in defeating its own backbenchers. Of course we all want Euroland to sort out its debt, deficit and currency problems. We are also very keen to ensure that the UK avoids the bills and as much of the damage as possible, as a reward for keeping out of this dangerous scheme. Minimising the damage to us requires strong minded negotiation.

 

 

           There was some good news in the September figures for public spending and borrowing. So far this financial year spending is only up 3%, a bit below the forecast. Meanwhile tax revenues are up 5%, usefully ahead of costs, even though they are down on forecast.  Between April and September this year the government added  £54 billion to total state borrowing, down £3.4 billion on the same period in 2010-11. 

             The Treasury tells us this means we are on track. The government should they say be able to limit additional borrowing to £122 billion for 2011-12, compared with  £137 billion in the previous year. The government  needs to redouble its efforts to explain to people that it is only trying to cut the growth rate in borrowing. It is not in the business of paying back debt.  The pace of planned deficit reduction is quite slow in years one and two of the plan.

                The more worrying figure was the Public Sector Net cash Requirement, which came  in at £19.9 billion. The Treasury says not to worry. This was inflated apparently by interest payments on the debt. It is still cash outflow, and those interest payments are going to continue to rise, as the government continues to borrow more.

               Over the year to June 2011 the  number of public sector employees fell by 240,000, whilst the number of private sector employees rose by 264,000. The consolidated debt figure of £2.3 trillion which includes the state owned banks is still very high. It argues for the UK government  to find ways of shedding more of its banking assets and liabilities. That  is the quickest option to cut or limit the debt, and to cut the risks taxpayers are still running by owning these companies.

 

           Mr Barroso made clear in his recent speech in Brussels to the European Parliament that the EU needs more integration. To him  the answer to every tension and problem is more EU central power.

            The Commission plans a “single coherent framework for the better economic governance based on the community method. …The proposal will ensure the compatibility between the euro area and the Union as  a whole.. It will be done in a way that aims to integrate the Euro Plus Pact because coordination and integration must be carried out on a single Community level. ….It is essential that we do not create a division between the 17 members of the Euro area and the 27 members of the EU – most of whom wish to join the euro….”

This is a bureacratic way of saying the EU wishes to control the UK economy as well as Euroland ones.

 

 His detailed measures include rapid implementation of the 6 pack (economic surveillance and budgetary control) and incorporating them into the “Community” method, as opposed to just confining them to the 17 euro members.

            Despite UK government messages to the contrary, much of this work programme applies to the UK. The banking system measures apply to the UK, even though the UK authorities say they have done the job and all is fine. Mr Barroso wants more EU financial regulation which will affect us, and still of course presses the Financial Transactions tax which the Uk government says in certain circumstances it will oppose.

               Mr Barroso says “We have to complement the monetary union with a real economic union”. “We will further reinforce the role of the Commissioner for economic and monetary affairs in full respect of the Treaty”  … “we urge for more discipline, more integration. It means more Europe…”

                 This is all clearly on the public record. The UK government has to wake up to this reality. It has to say we cannot possibly go along with this. This huge push for more control and more power is why the UK needs now to negotiate a different relationship.  Mr Hague’s burning   building is well on fire. We need to be well outside the burning Euro building, and  keep it well hosed down to stop  catching light to the UK. We need to control the hose ourselves.

               The latest YouGov poll shows 67% of the public are for the motion on Monday and only 16% against. It also shows that 74% think MPs should defy their 3 line whip if they wish, and only 15% think they should obey it.  47% want to negotiate a new relationship with the EU, 28%  want to pull out, and only 15% want to stay in on current terms. It will be interesting to see how many MPs are in tune with public opinion in all three main parties on Monday.

 

             I am all in favour of saving energy, of promoting fuel efficiency, saving the greenfields and the  best heritage of England. Much of the green agenda is popular. Many are happy to recyle, to insulate, to buy more fuel efficient vehicles when money permits. No-one wants to see the Green Belt concreted over or the ANOB sprout an industrial estate.

             What is more contentious is a green agenda built around cutting carbon dioxide emissions. The government embarked on several talismanic policies to promote this form of greenery. Several are now experiencing some difficulty.

            The idea that London does not need any more airport capacity has come up against a concerted business lobby saying the UK needs more flights to emerging market centres if the UK is compete with Frankfort and Paris, New York and Los Angeles. The Mayor of London advocates a whole new London airport to the east of the capital. Others want more runway capacity at Heathwick, with a better link between the two main London airports.Exporting the airlinks abroad does not cut oevrall carbon dioxide emissions.

             The proposal for a High Speed train from London to Birmingham, Manchester and Leeds is encountering strong opposition. Some think it is too dear and will be  too heavily subsidised. Some doubt the need for it. Some dislike the impact it will have on the countryside where the track would be placed. It is by no means clear that such long distance fast trains do save carbon dioxide when you add in the car and taxi rides to get to the stations.

            The idea that the Uk will pioneer high cost  carbon capture technology for power generation has just been hit by the cancellation of the Longannet proposal. Business wants cheaper energy. Carbon capture is both untried and expensive.

             Some  renewable power has been delayed  by Mr Huhne’s indecision over renewable subsidies. There are rumours that he is going to have to cut back on the generous regimes made available to encourage solar and wind energy.

           This autumn there is a public backlash against dear energy. All three main political parties, who have been united behind the carbon dioxide agenda, are saying  the answer to higher prices lies in more competition and shopping around. I am all in favour of more competition.It is the best means to stop unacceptable profit margins.  However, the energy companies do need to make some profits, so they have the money to invest in the large amount of new energy plant this country badly needs. If the investment is to be in carbon capture and storage and in certain renewables it will be much bigger than conventional power generation. This will require bigger profits and higher bills for longer to pay for the investment.

                Carbon dioxide policies are now adding nearly  10% to the total cost of typical bills. This is going to get bigger if current policies continue. Energy is now hot politics. People want a break from high and rising bills.

                   The BBC climate change  show this morning told us there is a new independent scientific study which proves the world’s land surface is now 1 degree hotter than in 1950. They jumped from this to imply  that therefore the global warming powers of carbon dioxide have been proven. We need to know if the temperature increase was consistent , correlated with the build up  of carbon dioxide. We need to know what other explanations for the warming  they have examined and rejected. I think from what the BBC said the paper does not go into causes . If it did not the BBC should say so, instead of implying that this is the long awaited proof after the East Anglia problem. The only genuflection to sceptics was the statement that there remains an argument about whether to tackle carbon dioxide now or to leave it until the world economy has grown more.

 

Many Conservative MPs want a new relationship with the EU. They fought the last General Election saying they wanted powers back. They value a relationship based on trade and co-operation, but think the EU regulates, taxes and interferes too much. They were pleased that the Coalition Agreement, despite Lib Dem enthusiasm for the EU, said no more transfer of powers.

Since the government started they have seen a continuing high volume of EU regulation which affects and some thinks damages the UK economy. They have seen the government opt in to new powers in Criminal Justice and  go along with the increasing ambitions of the EU in foreign affairs. They have seen the Lib Dems get their referendum on voting systems. Many now want the Conservative vote on the EU that was Conservative policy pre Lisbon but ceased to be on ratification.

There are various EU initiatives being undertaken by a variety of Conservative MPs. Bill Cash has tabled a Bill to seek to sort out the growing legal and sovereignty difficulties.  Bill through the European Foundation keeps up a stream of informed comments on the evolution of the EU. As Chairman of the EU Scrutiny Committee he and his colleagues daily seek less or better rules and regulations, and try to strengthen the government’s hand in negotiations about the new measures.

Peter Bone has proposed a Bill to repatriate our fisheries. The way our fishing industry has been affected by EU policy is a long running sore. The Conservative party has often argued for UK control of UK waters. Peter Bone is a leading light of the Backbench Business Committee, the body which can choose Parliamentary business for the days the government allows backbenchers to select what happens. He is a doughty fighter for less EU in the UK. He is backing the approach of selective repatriation of powers, the approach set out in the last Conservative manifesto.

From the new intake is the independent  and tough minded campaigner, David Nuttall. He has tabled the motion for a three way referendum which will now fall for debate and vote on Monday. Many Conservative MPs have apparently told him they want to vote for his motion. Now there is some suggestion of a three line whip against we will have to see how many show resolve to do so if and when advised not to. The Chairman of the 1922 Committee and other senior MPs are advising a free or less heavily whipped vote

George Eustice set up another body to study the problem of the EU and come up with proposals for alleviating the obvious extremes and tensions for the UK. So far his initiative seems to have been overtaken by events, though he would say it will in due course come up with practical proposals that may command majority support. It will be interesting to see how he votes on Monday. I note his name is not yet on the motion.

There is a growing sense of impatience over the whole EU issue in the Conservative Parliamentary party. The gathering Euro crisis and the likely substantial strengthening of EU central powers worries people. The way the UK is being dragged into paying some of the bills of the folly of the Euro is a growing concern. The avalanche of new regulations which could make the UK more uncompetitive angers many Conservatives. Most feel the government should draw up a list of the things the UK needs to grow faster and create more jobs, and then negotiate a position for the UK on the back of the constitutional Euro crisis which allows the UK to carry them through, whether the EU wants to as well or not.

Most Conservative MPs are focused on the need for faster growth and more jobs at home. They do  not take kindly to the EU if it gets in the way of achieving just that. The current situation is pushing more to the radical view that the UK will have to leave the EU, as they do  not see progress being made with an approach based on sceptical engagement with the project of European Union. Most still hope the UK will negotiate a better relationship and would like the government to  try.  This of course remains a federalist Parliament, as there is no Conservative majority, and the other main parties are fully committed to EU government. Only a handful of MPs would currently vote to pull out unilaterally and rapidly. In the words of Monday’s motion, there is probably overwhelming   majority support amongst Conservatives in an unwhipped vote for a new relationship based on trade and co-operation.

 

           The Bank of England and some commentators seem to think the higher rate of inflation we now have was a necessary side effect of action to boost the growth rate. They do not apologise for almost two years of inflation above the   2%  target, or for the very high level of 5.2%/5.6%  (CPI/RPI)  it has now reached. They imply that if they had not taken monetary action to boost price rises, we would be experiencing even worse results on growth.

             In the 1970s this country learned a very expensive lesson. It could not keep on borrowing and inflating its way out of debt. Then inflation was  considerably higher than  today. There were  high levels of public borrowing. High inflation and excessive borrowing  depressed activity and led to a trip to the IMF and interest rates above 15% for longer term loans by the government. Government resolved to mend its ways.  In the 1980s better controlled public spending and borrowing, and lower inflation, enabled faster growth.

            In the last two years inflation has lost us some growth. Price increases have outpaced wage increases. Consumers have been able to buy less as a result. This has knocked demand. The high price rises in energy have adversely affected the UK’s attractions as a manufacturing centre.

           The government’s search for a stronger growth policy has to include as a central requirement, bringing inflation down and keeping it  down. Inflation is not yet in the dangerous territory it reached in the 1970s. Most commentators think it will come down in 2012. It is most important the Bank helps it down and then keeps it down. Taking the fear of price rises out of the system would do more good than printing more money. Reassuring people that there will be no further squeeze on their real incomes from prices rising faster than earnings would be an essential first step.

          The Bank needs to set realistic interest rates which are fair to savers as well as to borrowers and which bring base rate back into play for the private sector. Today base rate only seems to  apply to the government. The Bank  will find if it delivers its first duty to keep inflation to around 2% that will make a better contribution to growth than monetary experimentation linked to faster price rises.

           The government has this week acknowledged that energy price rises are a problem. Shopping around, and creating a more competitive market are part of the answer. So is pursuing an energy policy geared to providing more good value power from the best available sources. Mr Osborne has said the government no longer wishes to outdo the EU with dearer power and more rapid moves to carbon dioxide targets. The government needs to recognise that we are trying to compete with India and China as well, and energy is an important cost. They also need to see that we need more demand, and that requires lifting the inflationary burden from family budgets.

 

         I have been asking a few Ministers to tell me how much current public spending  has gone up by so far under this government. So far no-one has been able to tell me it has gone up by £56 billion or 9.3%, 2011-12 compared to 2009-10.  They have seemed rather suprised by the size of the increase.

       Then they have said it must be a real cut. It is difficult to see how a  9.3% increase  is an overall real cut, even at the current rate of inflation. We need to take into account the pay freeze, where pay is such  a large element in public sector costs, and the better buying initiatives which are said to be keeping cost increases down. It is of course true that there are some cuts in some budgets within the growing totals. It is also true that some departments favour sacking some staff at considerable cost, and then  hiring new people at further cost.

                 If you allow for the full 4.5% of stated CPI inflation (Ministers chosen measure), and then allow for some forecast drop in CPI inflation early next year as higher VAT falls out, you do not get to 9.3% inflation for the two years. RPI inflation is higher, but there ought to be a big offset in public sector costs for the pay freeze.

         The issue before us is by how much will the deficit increase as lower growth is put into the forecasts? We know that the Office of Budget Responsbility is going to have to cut its growth forecasts again.  These were last seen at 1.8% for 2011-12, 2.7% for 2012-13, and 2.9% for each of the following two years. That gives us 10.7% over the four remaining years of the plan.

         Let us suppose  growth this year is 1.0%, and then growth averaged 2.0% for the last three years. This is a moderate forecast by the standards of current forecaster gloom.  That gives us 7.2% instead of 10.7%, or 3.5% less. That would imply that the government would have to borrow an additional £5 billion this year, an additional £9 billion for 2012-13, an aditional £14 billion in 2013-14 and an  additional  £20 billion in the final year to make up for lost revenue. That makes a total of £48 billion more borrowing, on top of the £485 billion planned for the five years of this Parliament.

          It is also quite likely more spending would be needed, as there would be more people on benefits and other spending pressures from slower growth.  We might need to add in another £20 billion of spending slippage. This means we could be in for a another £68 billion of borrowing, an increase of 14% for the period as a whole. This comes on top of the £34 billion increase in total period borrowing announced in the March budget.

          The Treasury will say this is all allowed as the cyclical effects will be higher. It all, however, needs financing. It just goes to show how crucial growth is to getting down the deficit, if you want to do it mainly by increasing tax revenues rather than by cutting spending.

           My advice was to have a small spending  increase in Year 1, a 2% increase in year 2, then larger increases than the Coalition plans in Years 3-5, averaging 3% per annum instead of  their 1.9%.  This alternative would have cut borrowing back  from the £485 billion planned for the five years  thanks to lower spending in the first two years, whilst giving better spending increases in  the second half of the Parliament.

                   Now the government has difficult choices ahead. How much of the slippage will it seek to erase by spending cuts or tax rises? I assume none. How much extra slippage in the short term will it permit, in an effort to buy some more growth?  How many more EU one-offs will there be, like extra money for the IMF?

 

            We hear that the EU is working away at a solution to the Euro crisis. It comprises three main elements – more capital for banks, bigger write-offs on Greek debts, and a huge support fund to bail out any other country or bank that needs subsidy.

             If the package lives up to the billing it might impress the markets for a bit, and buy them some more time. It does not solve the underlying problems. There still needs to  be a solution which enables the uncompetitive countries in the south to become more competitive to earn their living. If they cannot do that by the stealth of devaluation, they need to cut wages and other costs sharply, which is unpleasant and difficult to do.  There has to be  a way for  the countries too heavily in debt to get their deficits and in due course their levels of debt down. Lending them more money puts off the adjustment, it does not make the adjustment for them.

              The proposal to put more capital into  the banks is not unalloyed good news. The EU governments would prefer the private sector to do this, under orders. The easiest way to do get better banking ratios is for the banks to lend less. This will not help the recovery.

             The German end of the argument does not like the idea of  big state injections of capital. The German position has favoured private sector solutions, ranging from raising more capital on the markets through controlled administration for failing banks, with bondholders and shareholders taking the loss. I advocated controlled administration for failing UK banks in 2008.  It would have been a cheaper and more rapid solution than the nationalisation model adopted, and would have spared the taxpayers such anger making losses.

            The UK has moved to this position through the FSA work on “living wills”, advanced plans to wind up a bank in an orderly way if it runs out of cash and capital. The Vickers Report rightly endorses this approach. It now sounds as if the EU is back tracking, moving back  to the old idea that in the last resort the state gives a failing bank any amount of cash and capital it needs, effectively nationalising the losses and risks. Given the weak state of most country finances, and the dislike of banks amongst electors,  this is a kind of madness. Weak countries and weak banks cannot in the end prop each other up: they pull each other down.

            We are openly told the governments are working on a second Greek default proposal where lenders to the Greek state will lose more than the one fifth of their money in the old plan. It is now universally accepted that Greece “cannot” pay back its debts. If they fail to pay back half or more of what they owe, they will then be spared substantial  interest and capital payments which eases the pressure on their state budget. It is a short term palliative. Once again it does not solve the underlying problem, which is the Greek propensity to live beyond her means.

             A Greek default is not necessarily helpful for the other weak countries in the Euro scheme. If one country is allowed to default and does so, might another?  How do the Euro authorities draw a line under a Greek default, and convince markets that other countries will be made to honour their debts? It is hardly a good advert for Euro zone management that a member state is actively encouraged to say to the countries, companies and individuals who lent to it they will not get their money back. Markets are likely to price in default danger in other Euro sovereigns, charging the weaker countries more for a loan as some protection against similar treatment.

              The EU is proposing a mega fund, briefed at anything from Euro 2 trillion to Euro 3 trillion, to provide shock and awe to markets. Euro 3 trillion would probably  impress the markets. It would show there was a lot of fire power, enabling Euroland authorities to help secure  lending  to Italy and Spain  at low interest rates if the market is unwilling to do so, and enabling them to prop any bank in the system that was weak. This has to be done indirectly and clumsily, as the ECB cannot lend direct to Euro sovereigns.

               The issue here which the markets  may test is how much political will is there to spend this money if need arises? How real is the Euro 3 trillion? Where does it come from? How does it get repaid in the end? In  short, it has to be a genuinely available Euro 3 trillion that comes from a plausible source or sources. Is it any more than saying Euroland as a whole will borrow on its combined credit rating to lend to its weaker members at subsidised rates? Is Germany really up for this? Does it mean that the AAA ratings of France and Germany have to be downgraded, as they come to assume more responsibility for the debts of the weaker states?

                   Euro 3 trillion is a lot of money even for Euroland. It either is borrowed, or it has to be raised from taxpayers. Either route poses problems, as well as offering a temporary answer for markets. Higher taxes can have a depressing effect. There seems to be no agreement to a financial transactions tax as part of the package.

                       Of course, there is a third route. They could sanction the European Central Bank to go printing it. The Bank could buy up as many bonds as was needed, using electronically created money like the US and UK. That might work for a bit as well. If you do that to excess it causes too much inflation. I doubt the Germans would openly  sign up for that. We need to watch the small print behind the spin.

                     I was pleased to hear yesterday  that the UK and US were both objecting to a greater use of IMF money to buttress the single currency scheme. I have been trying to persuade the UK government that IMF money should not be used to bail out rich countries that have chosen to inflict a currency scheme on themselves which does  not work. Why should some of the world’s poor have to subsidise the rich in their folly? And why should UK taxpayers be dragged into subsidising Euroland through the IMF, when we did them a good turn by staying out?

                       Today’s news that despite the opposition voiced the UK might go along with another increase in IMF resources to allow more bail outs of the Euro zone is bad news. The UK needs to get its public spending under control. Starting with no new money for EU bail outs should the the easy bit. The public will not be pleased if we end up picking up yet more of the bill for this ill judged and expensive scheme.

                     The UK should say to the IMF it should stop encouraging the idea that other countries should send money to rich countries that decided to inflict so much damage on their own economies, and intend to persist with doing so despite all the evidence. The answer to the Euro scheme is to reduce its membership, not send it more cash.

 

            The liberal media tends to call anyone “right” as a term of abuse for people they disagree with.  The “right” within the Conservative party is a term used  to describe a wide range of people, often with very different views on issues.

            There are, for example, right wing  liberals, and right wing authoritarians. The right wing freedom lovers want more civil liberties, seek proper checks and balances to the abuse and use of state power, distrust ID cards, excessive stop and search, detention without trial and the rest.  The right wing authoritarians think the state’s prime duty is to defend its citizens. They think the state might have to restrict freedom, keep more records, spend more on police, prisons and surveillance.

              The first group of “right wingers” often find themselves in alliance with “left wing” civil liberty lobbies. The second group of authoritarians have more in common with Blunkett and the populist authoritarianism of New Labour.

                There are then the small state “right wing”  Conservatives, who want the state to do much less, spend, borrow and tax less. These are countered by the better state Conservatives, who want expanded Armed forces, police and security budgets and budgets for some other public services even at the cost of higher borrowing and taxes.

                  There are “right wing” moral Conservatives, following a Catholic style morality. They want tight control on abortion, religious education, tax breaks for the married family, support for traditional families. There are then the new liberal right wingers, who want much greater freedom for various lifestyles, and favour liberalising drugs, and avoiding moral comment on how people live.

              In foreign policy there are “new right” neo-cons, who support muscular intervention, often led by the USA. They gave Tony Blair strong support for Iraq and Afghanistan. They are opposed by small state Conservatives, who disliked the assertion of force in the Middle East by the UK.

                 The Commons often throws together some unlikely collaborators. Traditional socialists want less power to go to the EU, as they see the EU as a kind of capitalist plot. Many Conservatives want less power to the EU, as they see it as a kind of social democrat plot. The two groups agree about several things, They agree that decisions should be taken in the UK, not in Brussels. The main decisions should be taken by elected officials answerable to the UK electorate. The decisions should be capable of reverse if the Uk government changes.  They merely disagree passionately about what those decisions should be. Anti EU votes bring together so called left and right.

                Some Labour people were upset by the attack on civil liberties mounted in the name of counter terrorism by the last government. They do end up voting with Conservatives to curb the powers of the state.

                      The Catholic family agenda has adherents on the Labour benches as well as on the Conservative benches.

                      It is all a lot more complex and fluid than a simple left-right analysis would suggest. The prism of party loyalty and dog fights is no longer a perfect one through which to see three party politics with many pressure groups and splintered factions within main parties.

 

                     The Prime Minister was correct to seek the facts on Dr Fox before making a judgement. Dr Fox himself decided to resign as he reflected on the facts that were emerging about his case. The Prime Minister need not worry about the “backlash from the right” that the media have been trying to create  as the next phase of this story. The right accepts the Prime Minister behaved sensibly in a tricky situation.

                    I have never felt right-left is a particularly good way of analysing modern UK politics. It is, however, preferred by many in the media, so let’s try and shed some light on it. To me the one big division in modern UK politics is pro and anti EU, the division  between those who want the EU to do more and more, and those who want it to do less or want out of it altogether. This cuts across right-left and across party.  The unifying characteristic of those the media call the “right” is that they want a lot less EU or want out altogether. There are many more Eurosceptics in the Conservative party than in the other two main parties.  They are joined in this by figures on the “left” as well. The Bennites in Labour have the same view as the Better off outers in the Conservatives.

           The “right” of the Conservative party are perhaps best defined by who they vote for. They are the MPs who voted Graham Brady in as Chairman of the 1922 Committee. The establishment wanted a different candidate. The party choose a Eurosceptic, who also believes in selective education, lower taxes and other such causes. This election showed that the “right” has the majority in the Parliamentary party. That same majority in an earlier Parliament had voted for Iain Duncan Smith as Leader. Some of the “right” voted for David Cameron as Leader in 2005, believing him to be a Eurosceptic too.

            The “right” was not keen on a Coalition government. It did not want the issue of the EU blurred by Lib Dem enthusiasm for it.The “right” would have preferred a looser arrangement possibly followed by an earlier election. In the first Cameron Cabinet the “right” felt it only had three clear champions, Liam Fox, Iain Duncan Smith and Owen Paterson.   The Home Secretary has been giving Criminal Justice powers away to Brussels. The Foreign Secretary put through the expanded External Action Service and keeps saying now is not the time to sort out the EU issues and demand powers back. In areas like energy, environment and business we are effectively governed from Brussels for much of the time.

             The “right” saw that Liam Fox was determined not to let the EU take any more powers in defence matters, and to keep the UK as free as possible to make its own decisions. They saw that Iain Duncam Smith and Chris Grayling are trying to get more control over UK benefit and migration policy.

               There are other issues for the “right”. The right would like more cheaper energy, disliking the global warming ideology. They see the EU as a  major obstacle to commonsense on fuel. They are very strong supporters of the deficit reduction policy, and want this to be primarily achieved by spending reductions. They would like to have more cuts in selective areas, starting with the EU budget.

               The right felt the old Cabinet grossly under- represented their strength and views. The reshuffle does nothing  to correct that feeling.

               So how does the “right” feel about the new Cabinet? I will have a better view next week when Parliament is back. The “right” has no ill will to Justine Greening: nor does the “right” think she has been pushing for a more muscular approach to EU negotiation. Now she is in the Cabinet MPs will be watching to see if she will take up the cause.

               It will also be interesting to see if she wishes to redress the anti road transport and motoring bias in modern transport strategy, and to see how she tackles the highly contentious HS2 project. The BBC today were saying that Mr Hammond was a “safe pair of hands” at Transport. That’s not how the right saw him. They were very disappointed by his failure to end the war on motorists as promised, by his refusal to back more private sector investment in transport, and by his repeated defence of HS2, a very expensive project which many would like cancelled or deferred until the national budget is in good shape.

               Meanwhile, at Defence, there will be new concerns about how robust the government will be when dealing with the constant drift to more EU control.