Category: Blog

Some of you have written in wanting me to cut loose from the Coalition and speak out for doctrinal purity. Others have written in urging me to support the Coalition.

I wish the Coalition every success. I have been arguing for months that this country needed to get rid of Mr Brown’s government, and needed a government which would start to control the deficit before the deficit swamps us. That has now occurred.

Contrary to those who fear “sell out” or “treachery” the events of the last few days have not suddenly changed my views on Europe, taxation, the enterprise economy or freedom. Just because the Conservatives are in coalition with the Lib dems I do not become an overnight convert to Lib Demmery, anymore than left of centre Lib Dems will suddenly become a convert to my views.

What both sides have to accept is that the Conservatives, the largest party, do not have the votes to implement their full manifesto, but they are the best placed to lead the task of financial and economic reconstruction which this country needs. The Lib dems can veto some of the things they most dislike. The Lib Dems did not have a good overall result, and they can only hope to get through those things which meet with the approval of many Conservatives. Thus, I have no problem voting for Income Tax cuts by raising thresholds rather than some other tax cut, but I could not vote for a Mansion Tax or for an increase in EU powers or an amnesty for asylum seekers.

Each individual issue of contention will cause argument and may cause rebellions in the Commons. What Eurosceptics have to appreciate – and I have no pleasure in reminding you of this – is that once again we have a Eurofederalist Commons, so rebellious Conservative Eurosceptics are unlikely to win as Labour -certainly under Miliband – will be firmly on the side of more European integration.

It therefore rests with us to influence the Coalition government in the right direction.They have a substantial majority for most of the things the two leadership teams agree. The large Conservative minority is the best buttress of our EU position we have.

The new government has lined up behind the Conservative proposal in the General Election. They say they will cut earlier and faster than Mr Brown was planning in his deficit reduction bill. I agree they need to do just that.

In their Coalition Agreement they say:

” The parties agree that modest cuts of £6 billion to non front line services can be made within the financial year 2010-11….Some proportion of these savings can be used to support jobs”

They need to go further than that. I hope they will put in place policies on recruitment and replacement that will start to yield more substantial savings and productivity gains outside the protected areas of teachers, nurses, doctors and other front line personnel. I hope they will press rapidly on with welfare and other economic reforms to get more people back to work to cut the benefits bill.

The BBC and others are trying to re-open the debate about the balance between tax rises and spending cuts. The Coalition has so far been clear that the bulk of the deficit reduction has to come from spending cuts. They should not waver on this fundamental point.

The only way out of this crisis is to get faster growth in the private sector, creating more jobs to boost living standards and take some of the burden off the publlic sector payroll. Trying to protect existing levels of public sector employment and public sector unemployment support by taxing more could have the opposite effect, making it more difficult to maintain private sector employment levels, forcing more people onto benefit and making the deficit worse.

The government needs an enterprise package to boost employment as well as cost reductions in the overborrowed public sector. Higher tax rates on business, earnings and savings would drive things in the wrong direction. Lower tax rates often yield more revenue because they boost earnings and investments. We also need banking reform, so that the banking regulations are no longer forcing the banks to lend just to the government and not to the productive private sector. Bank regulation is still hopelessly pro cyclical, reinforcing the downturn somewhere near the bottom of the cycle.

I have been frenetically busy for the last 48 hours, so please be tolerant. I have not had time to moderate longer or more richly phrased pieces, but will do so as soon as possible.

PS I am now up to date. If you want something posted quickly please avoid personal attacks on individuals and institutions and remember the censorship laws on free speech in this country.

One of the main constitutional innovations the new coalition government wishes to bring in is a fixed term 5 year Parliament. Apparently the Lib Dems were especially keen to have this, as they feared the Conservatives would use their support until the polls suggested the Conservatives could win an overall majority and then go to the country at a time of their choosing. Of course any looser agreement between the two parties also left the Lib Dems free to dictate the date of the next election as well, as they could withdraw their support at any time.

There are two main reasons why we have not in the past had fixed term Parliaments. The first is the Leader of the governing party has valued the ability to decide when to hold the election in the political interest of his party, and majority parties have usually thought that a good idea. A coalition obviously takes a different view. The second is that binding a Parliament to five years does not allow for accidents which could fail to produce a majority for any government. The right to hold an earlier election could be needed if, for example, a government with a small majority loses that majority through deaths and defections, or it could be needed if the governing party split apart on a big issue.

In practise, the Parliament which enacts a Fixed Term Parliament Act could also repeal such an Act. So if the Lib Dems did wish to end the coalition early and had the support of Labour and others for doing so, I guess they would just move the repeal of the Fixed Term Parliament Act. It is a lock on the door, and finding the key would be difficult, but not impossible. There is some talk of weighted majorities to repeal, to try to make such a course even more difficult. We will have to see whether these are either technically feasible or desirable.

It is a fairly safe assumption that we have a five year coalition government stretching ahead. Senior Lib Dems have decided to surrender some independence of thought for the opportunity to influence a government, and may well like the experience. The UK does need stable and strong government. Having a majority of around 70 and saying you will legislate for a 5 year Parliament gives you as strong a platform as you can create in the cirucmstances. What matters now is what they do – and events.

I assumed the Lib Dems would negotiate with both sides, even though they said they would just negotiate first with the Conservatives to see if they could do a deal. We now learn Vince Cable was meeting his Labour friends in private whilst David Laws was meeting Conservatives in public. Why didn’t the Lib Dems announce at the beginning it was a contract race or auction, so all could see what it was about and could bid accordingly?

It’s no advert for the “new politics”. It is fascinating that Lib Dems have struggled and argued for 34 years for another chance of a hung Parliament. Now their prayers have been answered they do not know what to do and are by all accounts hopelessly split over whether to do a deal, what type of deal to do and with whom.

On display are all the features of hung Parliament some of us warned about. The politicians have to try to make deals, which entails ditching important promises to electors because no party has the votes to keep its word, and seeking to decide who should govern and how they should govern behind closed doors. Meanwhile government drifts dangerously, when we need someone in charge who can start to sort out the finances in a way designed to fuel and further recovery, and overhaul the approach to the banks with recovery in mind. We need greater honesty and transparency from our politicians. The Lib Dem way of negotiating offers less of all of these things.

I think Gordon Brown was right to resign. However, he has not resigned forthwith and remains in Downing Street. We now know that if Labour does patch up a deal with various parties and stays in office, we will have a Prime Minister no-one voted for as Leader, a person who did not take part if the famous debates to give us all a choice of Prime Minister.

Many Conservatives are resolutely against the Alternative vote. It is not proportionate. Indeed it woudl have cut Conservative representation in past elections, when Conservatives got a smaller share of the seats than they had of the vote. It would be quite wrong for any government to seek to introduce this without first asking the British people in a referendum.

The immediate market crisis of last week should subside today. The Euro member states have realised the serious threat of the Greek crisis spreading to Portugal and Spain. They have decided to put in place huge credit lines in case member states can no longer borrow from the markets at sensible rates of interest. The European Central Bank can now buy up state debt from member states, just as the Bank of England has been buying up UK state debt. The immediate worry of the markets that Euroland member states would run out of money has been eased by the twin facts of more credit and the ability to literally print money.

All of this comes at a political price. It must mean two things. Firstly, there has to be more control and influence over member states budgets. What the EU has failed to do by law and agreement, it will now be able to do as the lender of last resort. It lacked the will to enforce its 3% maximum ceiling on annual government borrowing. Now it has to force reductions where member states have public finances wildly out of control. If member states need access to the special funds, they will be expected to undergo surgery to their public spending and deficit plans to qualify for the cash. Secondly, for it all to work, there need to be in place realistic plans anyway to get the budget deficits down. If there are no such plans, the markets will return to force up government borrowing rates.

One of the ironies of the left of centre thinking on economics that tends to prevail in European circles is they will end up concentrating on cutting spending rather than on policies to promote growth. They will be reluctant to slash tax rates and reduce regulation on earning and saving, policies which could promote faster growth and create a stronger private sector. So, instead, they will have to keep on cutting more out of their public sector budgets.

Meanwhile, the Europeans love of proportional representation and hung Parliaments makes the task of government more difficult. Mrs Merkel has just lost her majority because she went to the aid of Greece. The German political class may be committed Europeans who want to integrate further and who understand that if you share a currency with another country you also have in effect to share a budget. The German people think otherwise. They resent these obligations and degree of common working, and have as punishment snookered their government. That makes handling the next phase of the crisis that bit more difficult.

PS The pro EU Europeans in the UK might like to thank those of us who fought against British membership of the Euro. If the UK had been in the Euro in the last year our public finances would have wrecked the common currency. I remain a strong supporter of our independence, but have to admit it leaves us free to make a mess on our own, instead of helping destroy the common cause. Let’s hope soon we can start to use our freedom from the Euro to good effect.

Could UKIP supporters explain why it helped to prevent Eurosceptic Conservatives winning in 21 seats, so giving us a a more pro EU Parliament?

More importantly, could they explain why their candidate came third in Buckingham, when there were no Conservative Lib Dem and Labour candidiates? What do they deduce from this about their tactics?

England gave the Conservatives a strong popular vote and a majority of the Parliamentary seats. It is time for us Conservatives to speak for England. For too long we have criticised but had to accept unbalanced devolution which allows Scottish MPs to determine English issues at Westminister, whilst only Scottish MSPs can determine Scottish issues in Edinburgh.

The English problem shows just how untenable Gordon Brown’s position is. He has no mandate to be the UK’s Prime Minister as the leader of the second minority party, but it is even worse for England where he is seeking to prevent the Leader of the majority party from making the decisions the English now wish to be made.

Lop sided devolution on Labour’s lines was always going to be damaging to the Union. We see just how unfair it now is. The position is untenable. Mr Brown has to go.

PS I am pleased to report that Conservative MPs are going to Westminster to meet on Monday, even though the authorities are not opening Parliament.

1. Parliament should meet on Monday. Leaders need to hear directly from colleagues in the new Parliament as they negotiate. The new Parliament needs to have more teeth than the old, and to do that it needs to meet more often.

2. The Conservatives won a clear majority of all the seats in England. Given nationalist views, we should have a majority for the proposition that from now on it should be English votes for English issues. Pass such a motion, and then Conservatives could appoint Ministers to the English Ministeries like Education, local government and transport, and at least get on with sorting out those backed by a good English majority in Parliament..

Yesterday when I gave some interviews to the BBC I was impressed by the change of aproach. I have always been ready to criticise them here, so let me on this occasion priase them. They were courteous and thoughtful in their overtures. During the interviews on and off air I could see them struggling to understand the fact that I simply do not see the world through the eyes of 13 years of Labour spin as many of their broadcasters have done. The problem is, as readers of this site know, I disagree with so many of the conventional mistakes in analysis it takes time to explain the alternative view.

Two of the crucial issues relate to the public sector. I was asked why Conservatives wish to take £6 billion out of the economy this year. I had to explain we have no wish to take £6 billion out. We wish to spend and borrow £6 billion less in the public sector to leave more scope for private sector revival, and to try to stop a further increase in borrowing costs. Indeed, the £6 billion figure itself is suspect, as we have promised an accelerated reduction of the debt based on a faster pace of controlling public spending and raising the efficiency of the spend. Every penny the public sector borrows and taxes cuts private sector spending.

I was also asked about why we intended “Thatcher” style cuts. I had to explain Margaret Thatcher did never cut the overall level of public spending compared to the previous year. She had to control its growth and cut unrealistic plans. Further more I had to explain again that Conservatives do not come into office wanting to sack teachers, nurses and doctors – that is all absurb Labour myth.

So based on yesteray, let me give one cheer for the BBC. They sounded as if they did wish at last to understand a different viewpoint. The problem is Labour has not just messed up the government for so many years, but has spent much of our money on ensuring the circulation of distorted thinking and misunderstandngs galore about how the economy works and what Conservatives think.

We need to start to establishing that the eocnomy and the public sector are different things. The new jobs, new prospoerity and higher living standards we want are going to mainly come from an expanding private sector. The public sector has spent and borrowed too much and we cannot have a sustained recovery unless we sort that out.