Category: Blog

The essential issue is the budget.The outgoing Labour government refused to hold a full spending review, or to supply the detail of their spending plans for the post Election period. Any new incoming government has to get on with that task quickly.

Mr Cameron is right to say to the Lib Dems that any agreement to work together has to start from the proposition that we need a new budget which sorts out the public spending, within the next fifty days. The Lib Dems at the very least have to agree to abstain on the votes to get that through, so we can start to reassure the markets that the UK intends to control its deficit before the deficit swamps us.

The Lib Dems could agree to support a Conservative Queen’s Speech programme which centred on abolishing ID cards and other attacks on civil liberties, and legislated for school reform. Not seeking too much legislation could be an improvement, and avoids the need for so many cliff hanger votes.

A minority Conservative government could insist on no new powers transferring to Brussels and could negotiate for the UK on any new EU legislative proposals. The fact that it could not guarantee to get any measure through the Commons would be an added good argument against agreeing to anything that did require new law or extra spending in the UK.

In the end Mr Clegg’s busy day will revolve around the extent and the credibility of Mr Brown’s offer on changed voting systems, and the degree to which Mr Clegg understands his responsibilities now to help the country through the next worrying phase of the rolling debt crisis.

It is unusual for the leader of the second largest minority party in the Commons to speak for the country and to represent us in important national discussions. Yet that is what is happening this week-end concerning the current phase of the sovereign debt crisis.

There are good practical reasons why it makes no sense. Let us suppose this week-end the Finance leaders of the main governments wish to discuss putting in place back up facilities for countries at risk, to talk about making larger contributions to the IMF capital, or some other financial commitment from their countries as a stand-by for any developing crisis. Or let us suppose they wish to discuss changing financial law and regulation in each of their countries.

How Can Mr Brown and Mr Darling promise or commit the UK to any such measure, as they have no idea what they could get through the House of Commons if anything from their much enfeebled voting position in the new Commons.

The sovereign debt crisis is serious. Markets world wide have a bad attack of the shakes over it. It requires steady purpose and wise decisions from here by the leading governments and financial regulators. I do not see what is the point of Messrs Brown and Darling pretending they speak for the UK when they do not speak for a majority in Parliament any more. On past form they have always showered public money at any such problem created on their watch. One of the messages from the largest party in the Commons is we no longer have big money to commit, thanks to the massive borrowings the last government ran up.

There are three features of the result that I find particularly worrying. The first is once again a largely Eurosceptic country has elected a Parliament with a federalist majority. UKIP played a minor part in again securing this unfortunate outcome by standing against Eurosceptic Conservatives , allowing federalists to point to their tiny vote and no seats to claim the Eurosceptic cause is a small minority one.

The second is the growing split in the politics of England from the politics of other parts of the Union. Scotland elected just one Conservative MP and saw a swing to Labour. Northern Ireland elected no Conserative and Unionist MPs. Even in Wales, where there was a modest Conservative revival, the country remained a Labour stronghold. In a hung Parliament the politics of devolution mean the non English parts of the Union demanding all immunity from public spending reductions as the price of their support for other measures.

The third is the election of a Parliament with an overall majority for putting off tackling the deficit. A majority of MPs in the new Parliament – though a smaller majority than in the old – probably think spending more public money will “sustain recovery” and see no threat from taxing too much, borrowing too much and regulating too much.

This is the bakground to political attempts to find a way of governing. If Conservatives compromise with the Parliamentary majority they will be placed under suspicion by their true supporters. If they refuse to seek a means of governing the country they are letting it down at a time when some important decisons do need taking, whatever the composition of the Commons.

Mr Brown is within the rules to stay as Prime Minister, and to seek to form that “progressive coalition” that we have been debating on this site for a few days.

The question which needs to be asked,however, is does he understand the mood of the country? It is within the rules to do as he does, but is it within the spirit of the election result? Does he recognise that if you lose around 100 seats and fall substantially in the popular vote, if you come a poor second , it is possible that the country does not want you to remain as Prime Minister?

Listening to him last night he was still speaking as a partisan politician as if he had a majority and an election to win. Surely the tone should be different if you are leading a minority which has just lost so many seats and votes?

It poses an interesting problem for Mr Clegg. Is there a deal which is too good to turn down? Just add a few nationalists and there could be a leftwards leaning coalition in a country which just swung markedly away from the left in the way it has voted. More to the point, could such a coalition start to tackle the huge fiscal and economic problems that now confront us?

I would like to thank all those who voted for me to continue as Wokingham’s MP. The election campaign has given me renewed determination to work for all the people I represent, and has confirmed in my mind the local and national issues which most concern electors. It is great to know more than half those voting gave me their mark, and important to reassure all that I will work for everyone, whatever their politics and viewpoint.

I wish to thank all those helpers who worked on the campaign, and my Election Agent for tirelessly supervising the production of the literature and the work of the volunteers.

My wish is to help create a better and stronger Parliament that can hold government to account, and can help government make decisions which will foster economic recovery, restore liberties and encourage a civil society.

The Greek cuts should be a warning to us. One of the reasons they are so strongly contested, is that they come with a sharp decline in living standards attached. One of the reasons they have to be so large is the failure of the Greek and the wider EU economies to grow at a decent pace, despite the chance to recover from the recent recession.

It was worrying last night to see so much violence on the streets of Athens, to see senseless burning of cars and buildings. The Greeks need to create more wealth, not destroy it. It is no good going on strike against the money lenders, when you need to borrow so much money. The murder of three young bankers was alarming.

If you need to slim the public sector, there need to be job opportunities, the hope of a better life, in an expanding private sector. If you decide to make too much of the adjustment by tax increases rather than by spending reductions, you may cut private sector opportunity at the same time as depressing public sector pay and output, in the pursuit of equal misery.

One of the reasons so many UK people are telling pollsters they may vote for a party of the “progressive consensus” – parties in favour of high public spending and borrowing despite the financal backdrop – is they do not wish to experience any more pain and reckon if you refuse to cut spending all will be well. If only.

The Greek example shows us what can happen if you ignore the need to keep borrowing under control. You reach the point where no-one will lend to you on realistic terms. You literally cannot pay all the public sector bills, until you submit to an international plan to slash spending in return for a special international loan. There is no point going on strike against the IMF – you either borrow from them on terms you do not like, or you go bankrupt. It’s too late by then to seek pleasant options.

The UK has avoided this so far because it is outside the Euro and has more options. The UK government has chosen to cut the living standards of all of us by devaluing the pound, cutting by one quarter what we can afford to buy from abroad. It’s a crude device for getting things into balance, but has the advantage that people get poorer gradually without being able to blame anyone in particular. Indeed, people are most likely to blame the oil companies, as one of the most visible impacts is the rising price of petrol. It does mean the balance of payments starts to right itself as people cut expensive imports out of family budgets, seek UK substitutes or go without.

The UK government has prevented fears about its intentions making it difficult for the government to borrow by printing £200 billion to lend to itself. Despite this, the UK credit rating has fallen below Germany’s in the market.

We have to assume that most politicians think they can do no more of the same, that they must not print any more and they must at some point seek a stable pound berore the decline in living standards is blamed to them. So from here we will have more in common with the Greek situation.

If people are to be persuaded that we need to do more for less in the core public services, and less for less elsewhere in the public sector, it is important that politicians expalin why we can’t go on like this. It is even more important that they help create the conditions for strong economic growth in the private sector, so the economy can take the strain of adjustment, and so there are other answers for people who would like a state job or state benefits. One of the dangers for Greece, which is intensifying the political backlash, is the danger that the Greek private sector will be in no condition to respond positively as the public sector is cut. High taxes, the inflexibility of Euro money policy, and the bureraucratic impediments in the way of starting and expanding businesses are all against it.

If the UK is to succeed where Greece is failing it needs to use its advantages of its own currency and money policy to ensure more rapid private sector led growth. There needs to be hope. Hope does not come from high taxes and heavy regulations on the wealth creating sector at a time of compulsory slimming of the public sector. “The progressive consensus” who got us into this fine mess are right about this one thing – you can get into a vicious cycle of decline if you don’t stimulate the private sector when you cut the public. They are wrong that you can avoid cutting the public sector when you are borrowing so much – you need a stronger and bigger private sector to pay the bills.

Ps I don’t suppose all those pro Euro establishment figures will say thank you to the few of us in Parliament and in the commentariat who campaigned against joining it when the fashionable consensus thought it would be a great idea? Thank heavens for the commonsense of the British people which enabled us to persuade both major parties to put a referendum lock on the door of the pound, which worked.

Promoted by Christine Hill on behalf of John Redwood, both of 30 Rose Street Wokingham RG40 1XU

The latest polls reveal a muddle. By a large margin now people do not want a hung Parliament. They seem to accept that the UK needs a government which can get to work on sorting out the many problems which are obvious to most observers. Yet those same polls suggest a hung Parliament is a likely outcome. That just adds to the difficulty of the individual voter’s decision. Ignore tactical voting and you may end up with a hung Parliament. Indulge in tactical voting and you still end up with a hung Parliament, as for each of us it is nowhere near in our power to decide as it all depends on how the others vote. In any Parliament where the Conservatives do not have a working majority there is the possibility that the “progressives” – Labour, the Lib Dems, and the various Naitonalists,could come together to form a coaliton government, even though Labour had lost the election.

The biggest argument against a hung Parliament is it delivers too much power to certain politicians and parties. Many voters have felt that the politicians have not taken enough heed of their wishes in recent Parliaments. They could find a hung Parliament even less to their taste.

I would also say to some voters, beware lest in the short term you do get what you ask for. If voters in sufficient numbers think the UK can muddle through at current levels of public spending and borrowing, avoiding difficult decisions, then think again. Even Labour in its more honest moments says they need to halve the deficit, without telling us much of the detail of how they would do that.

Can you imagine the partners in a “progressive coalition” – Mr Hain’s latest dream – wanting to sit down after an election to settle all the detail of spending cuts? Much more likely would be endless haggling over the Cabinet and other Ministerial jobs, the wish to expand the number of such jobs to accommodate more egos, and then the insistence by each party to such a coalition that certain crucial budgets be protected on their public say so. As I understand it, “progressive coalition” means a grouping of politicians who all believe a larger state is the answer, who all think spending more public money than we currently do can build the perfect society. As they would all be looking forwards to an early election to improve their respective positions, I cannot see such a group wanting to tackle the finances.

The only issue would be, would the markets force them to take action as they are forcing Greece before the second election, or would such a coalition call a second election in time? All this would merely delay the inevitable.

There are a large number of people still saying they have not made up their minds. So we could see a late swing to a majority government, or just more people voting for a hung Parliament.

Promoted by Christine Hill on behalf of John Redwood, both of 30 Rose Street Wokingham RG40 1XU

Roughly Labour has aded a million extra employees to the public payroll since taking power. Overall it employs around 6 million state employees. To be able to pay all the wages without ending up in a Greek type mess, we need to reduce these numbers in a sensible way.

Let us assume 1 million of them are uniformed personnel and front line medics, teachers and other essential workers. Let us assume that overall 5% or around 300,000 leave public employment each year, to retire or do something else. Let us assume we would need to replace all of the front line staff leaving, and need to replace some of the others leaving. That would still enable us to save substantial numbers of posts each year as natural wastage continued. It means no -one faces compulsory redundancy and taxpayers do not have to make redundancy payments to departing staff.

This would be good news for all working within the public sector, as it would increase the opportunities for promotion. There should also be programmes to encourage retraining and accelerated promotion for those already on the payroll. A Conservative government is going to have to weight the reductions more heavily on the overhead, as it has promised a 30% reduction in overhead cost over the next Parliament.

Some will say this could cause more unemployment as the public sector sharply reduces the amount of recruitment it undertakes. However, if it is allied to good policies to promote a private sector revival, it will assist that, building confidence in the public finances, allowing more talented people to join the private sector,and avoiding crisis interest rates. By the end of a five year Parliament the public sector would have a more affordable level of employment, with a better balance between front line employees and back office and regulatory overhead.

Prmoted by Christine Hill on behalf of John Redwood, both of 30 Rose Street Wokingham RG40 1XU

As I have often mentioned on this website, the biggest single current budget in Whitehall is the welfare budget. (£200 billion). It’s the one Labour rarely talks about, and does little to manage downwards.

I am all in favour of generous treatment of the very ill, the disabled and the disadvantaged. I also wish to see many more people currently on benefits helped and incentivised into work.

The Conservatives have come up with a raft of proposals that combine help for the willing and a tougher regime for the unwilling. They have made it clear that if people refuse a job they could do, they will lose their entitlement to benefit. They have said that people on long term benefit will be given work to do for the benefit, which will help them gain experience and the discipline of work to reassure a future employer. Combined with much stricter control of numbers of new economic migrants and illegal immigrants, this policy should start to make inroads into the unacceptably high levels of unemployment.

Positive measures to stimulate small enterprise, to get the banks lending again, and to start to bring the regulatory and tax burdens on small and medium sized enterprise down should create more job opportunities for the out of work.

The UK cannot afford to have well over 5 million people of working age on benefits without a job.

It was good news yesterday to see a Great Repeal Bill announced as a first measure for a new Conservative led Parliament, in the Sunday Times. As one of those who has urged this on the leadership, it was great to see it has survived the drafting of the first Queen’s Speech. The Economic Policy Review contained many ideas for the items that could be included in it. ID cards and Home Information Packs are prominent in the early lists, but there are many other measures from the last thirteen years that have raised our costs, complicated our lives but not brought worthwhile benefits which should also be cast on the bonfire.

Promoted by Chrisitne Hill on behalf of John Redwood, both of 30 Rose Street Wokingham RG40 1XU

So far the UK appears to have come off lightly compared to Greece. This is owing to the huge devaluation in the UK currency, which means a lot of the hit on living standards which Greece is now taking from wage cuts is happening in the UK from surging import prices and a rate of inflation well above wage increases. It has also owed a lot so far to £200 billion of money printing, something Greece cannot do for itself as a Euro memebr. This has kept UK official interest rates and government borrowing rates artificially low. It gets a lot tougher when rates rise further: then the taxpayer gets sandbagged by the increased costs of servicing the rising debts. The state borrows more to pay the interest!

I always thought it a nonsense that we could solve the bank bad debt problems by transferring them to the state. The state can no more afford them than the banks. We needed to manage the bad debts as well as possible at as little cost to both banks and taxpayers as possible – instead this government bailed them out too readily after condemning them and their weaknesses in public to worsen the trouble.

Meanwhile the UK went into the recession with too much borrowing, and increased the borrowing as a “fiscal stimulus” when that very stimulus has helped choke the private sector with the public sector pre-empting all the credit. There is a great deal to sort out rapidly if we want a happy ending to Mr Brown’s ruinously expensive experiment in expanding the state. Otherwise, just like Greece, the markets will force bigger cuts in our public spending, and threaten us through higher interest rates with little or no recovery to help us pay the bills.

Promoted by Christine Hill on behalf of John Redwood, both of 30 Rose Street Wokingham RG 40 1XU