Category: Blog

Mr Cable and his friends keep saying he saw the dangers of too much credit in 2004-7. So did the Conservative party and so did many of us watching the build up of the bubble. He was not unique.

What matters is the response to the crash of 2007-8, when Mr Cable failed to forsee the way public intervention and bank nationalisation would make things worse and damage the future recovery. There should have been earlier and private intervention with banks short of cash, and use of lender of last resort, not share purchase. He has not spoken out against boom and bust regulation, nor does he seem to understand the way tightening the regulations at the bottom of the cycle has made things worse.

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

Nulabour was Tony Blair’s way of distancing Labour from some of the Marxist thinking that enthused many of its older members and some of its past. The theatrical moment he invented was the one when he struck out Clause 4 from the party’s constitution, removing the promise or threat to nationalise the means of production. We now know his successor did not mean that move, being happy to renationalise the railways and to buy up a couple of banks.

Many people saw old Labour as a mixed economy version of communism. The Communist Party Manifesto of Karl Marx was a very influential document, which set a programme for more than a century which many countries followed wholly, and some in the west followed in part. The second half of the twentieth century in the UK when I was growing up was heavily influenced by Marxist thinking. When I first read Marx I knew I wanted to oppose its surveillance society, its attack on private property, its dislike of freedom and choice. What surprised me was how many members of the British establishment I came across as teachers, lecturers, civil serrvants and Labour politicians bought into much of the Marxist analysis and some of the Marxist policies. They were armchair class warriors. I didn’t want to fight the class war. I wanted to abolish it by helping create conditions in which all could have a good lifestyle and come to own property.

There were ten main proposals in The Communist Manifesto:

1.The abolition of private property and land ownership
2.A heavy progressive income tax
3 The abolition of all right of inheritance
4.Confiscation of all property of emigrants and rebels
5.Centralisation of credit through the state, through nationalised banking
6.Centralisation of the means of communication and transport in the hands of the state
7.More nationalised factories and means of production
8. Equal treatment of all labour and establishment of industrial armies(direction of labour)
9.Erosion of the distinction between town and country
10.Free education for all in public schools and abolition of child factory labour.

Number 10 is a good thing, and is accepted wisdom on all parts of the political spectrum in the UK. The rest are bad for prosperity, freedom and the quality of life.

Labour in office in the past got a long way with implementing chunks of this programme. They introduced land legislation to direct development and take the gains for the state. They put Income Tax up to a top rate of 98%, and put in place penal Death duties.
They nationalised or kept in the state sector telephones, post, the main airline, roads, waterways, airports, docks, National Freight, railways and buses. They acquired state ownership of a big part of the car industry,aerospace, oil, gas, electricity,coal, steel, and shipbuilding.

New Labour lived with Conservative tax rates for a time, and did even cut CGT and the standard rate of Income Tax in their more popular days. Now Gordon Brown is going back to the old agenda, with the hike in Income Tax to a 50% top rate. He has nationalised part of the banking industry and promised to control the rest more tightly by regulation. He has pursued an agenda which favours the town more than the countryside.

So what is the antidote? It is the agenda of popular capitalism , with its ten point programme to free people more and to pass the means of production and the land to the people to own, enjoy and improve through private ownership.

1. The broadening of ownership of land and commercial enterprises – everyman (and woman) an owner
2. Taxation reform to lower rates
3.Land reform, breaking up large state owned estates and encouraging family ownership instead (Council house sales etc)
4. Encouraging private pension saving on top of basic state pension and National Insurance
5.Abolition of exchange controls and reduction of state debt and borrowing
6.Denationalisation – rolling back the frontiers of state enterprise
7. Brreaking monopolies and introducing competition and choice
8. Debt swap programmes and debt reduction for heavily indebted coutnries
9. Encouraging the private and voluntary sectors in areas formerly dominated by the state
10. Definign the state’s role in maintaining law and order, defending the country and in welfare.

This programme which I published in the 1980s and took into Eastern Europe is still relevant today. The language and attitudes have moved on, but the main point remains the same. The Conservative manifesto takes on the task of involving people more in the ownership and direction of public services, one of the next stages of the wider ownership movement.

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

Lib Dems want to spend today telling us the poorest would be taken out of Income Tax under their plans. They are less keen to talk about how they propose paying for that. Their tax policies include:

Higher Capital Gains Tax, at rates up to 50%
A £5 billion tax on pensions savings
A tax on more valuable homes
An aviation tax – the Lib Dems holiday tax
and £5 billion of unspecified tax rises by closing so-called loopholes which they do not name

If you enjoy it Lib Dems will probably want to tax it. Their lethal cocktail is anti enterprise, anti success, anti investment and anti jobs. Far from helping the poorest, Lib Dem policies would make it more difficult for them to get a job to get out of low incomes, because their tax ideas would damage job creating savings and businesses.

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

Sometimes it is back to the future. This week brought a strange coincidence to my life. There on the same desk was the Conservative manifesto seeking much wider participation and ownership for all in the life of our country, and there was a request from a Cambridge researcher to expalin the intellectual origins of the books I wrote and the policies I promoted under the last Conservative government which I called “Popular capitalism” at the time.

The idea behind both sets of policies is the same. The passage of time changes the language and some of the details, but not the underlying vision. What I have always sought is to help create a country where many more people have a stake in the wealth of the economy. Wider ownership means more home owners, more people with pensions savings, more owners of small businesses, more employees owning shares under an employee share scheme, more people owning shares in other people’s companies as part of their ISAs or other savings.

Why do I want this? Because I see the long march of everyman and woman to enfranchisement, to having a role and a position in a democratic soceity, as the British story. The nineteenth century brought the working man the vote. The early twentieth century brought votes for women.The second half of the twentieth century brought majority home ownership and some progress with pensions and share investments. The twenty first century should be about spreading ownership ever more widely, so almost all come to have a stake in our society.

My answer to the researcher as to the origins of my ideas of Popular Captialism was not one an intellectual historian wanted. There was no book I read or pamphlet I picked up which inspired me. It was years of practical experience in business,and years of talking to people on doorsteps that persuaded me that wider ownership would make for a fairer, happier and more prosperous society. This was a view which visits to communist countries reinforced, when I saw how freedom and good living standards had been extinguished with the eclipse of most private property.

As I struggled to explain this pragmatic origin of Popular capitalism, I then recalled that there was an important intellectual influence on it all in my mind. The main influence was Karl Marx. I read Marx as a young man and was so repelled by what I read – and by the pale distillation of his class warfare and state power thought in some of my teachers and their books – that I did in the end set about writing the antidote. I took the Communist Party Manifesto and its ten points and wrote “The Popular Capitalist Manifesto” with a very different ten points. Whilst it has not been such a good seller as Marx’s original, the ideas of the Popular Capitalist Manifesto are now much more common around the world in modern governments than Marxist ideas. I will reproduce the ten points tomorrow – a successful recipe for economic progress and democratic success.

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

The Conservative manifesto today points us in a better direction – towards smaller government, towards a world where government is more the servant of the people and less the master.

Under it people will be able to set up their own school with public money diverted from state schools, vote for a Police Chief of their choice, run parts of the public sector as co-ops or employee led private companies, get a share in the state owned banks, vote on the level of Council Tax, see their Council freed from much of the Whitehall regulation that currently controls it, and exercise more choice over access to public services. It offers some lower taxes to create more jobs. It wants to help more people own a home, participate directly in the business or servcie area they work for and to save for the future.

There will be a Bill to cut regulation and abolish some busybody quangos. Many people want to see an end to too much political correctness, some reversal of the surveillance society, and deployment of the thought police to more useful tasks.

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

By this stage in a normal recovery there would be rapid growth. The hesitant and much spun recovery so far is symptomatic of serious problems remaining with monetary and banking policy.

Whilst the media and political parties talk about the odd few billions, I have been trying to draw the debate onto the big numbers that matter – the £800 billion reductions in the RBS and Lloyds balance sheets last year, and the £170 billion public deficit. Yesterday the Telegraph picked up the bank contraction and gave me space to restate the case I have often made over the last year.

The main reason we have such a poor recovery is the impact of our banking regulations on lending to the private sector. This is allied to the huge imbalance between public and private sectors, where so much of the available money is pre-empted by tax and loans for the public sector, leaving the private sector short of cash and confidence. The Banking Regulator has made two big errors. The first is now well known – the failure to rein in bank exuberance in 2005-7, allowing an inflationary bubble. The second, tighening the capital and cash requirements too much near the bottom of the cycle, still goes largely unacknowledged, but is the origin of our present discontents. This is the time to allow banks to lend more without demanding more cash and capital. Those demands for more prudence should come as the cycle lifts. The first requisite for a decent recovery is sensible banking regulations that allow bank balance sheet expansion now, instead of forcing the mega contractions we are witnessing at RBS, and the lesser ones elsewhere.

The second requirement for a better recovery is recognised in the Conservative approach. We need more enterprise friendly policies to allow expansion of the private sector and the creation of many more private sector jobs. That will require lower Corporation Tax, lower small business tax, fewer expensive regulations, more tax incentive to create jobs and take risks. This needs to be balanced by measures to cut out wasteful and less desirable spending in the public sector, as we have often analysed on this site – with many examples of the cuts we need. We need to get the deficit down to ensure poor public finances do not force up interest rates as they did for Greece, and to prevent the public sector pre-empting all the available loans.

The only way out of this crisis is for us all to work harder, to earn our living at home and abroad, to make and sell more here. Government needs to help that. Present policy stifles it.

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

In my world good quality public sector health and education services are a good thing. In Labour’s world high levels of public spending on health and education are a good thing. The two things can be different.

Labour have always peddled two myths – that spending more on the public sector is always a good thing, and employing more people in any given service area is always a good thing. That is why it was such a breakthrough when a small group of Conservatives in the 2001-5 Parliament forced Labour into accepting that there were inefficiencies in the public sector, and persuaded them to set up a unit to try to get more for less, to run things better. The significance of that change or break through was not fully understood at the time. Part of the reason is that Labour adopted the rhetoric of efficiency, but were not good at securing it. Many Labour people, and the government itself, have often lapsed back since into the high spend is good, higher spending is better mode of thought. So often if you ask a Minister about the quality and reliability of a given public service you get an answer about the increases in “funding” instead of an answer about what is being delivered.

Now, deep into Mr Brown’s return to socialism, we are given a third myth about public spending – “it sustains the economy” and the withdrawal of the spending ” would undermine the recovery”. They have no understanding of the dynamics of the economy. The extra money spent by the government has to be taken from the private sector by higher taxes or more borrowing. The increase in one sector is therefore matched by a decrease in the other sector. It is not reflationary. Because their banking Regulator is busily squeezing the private sector to free the money for the public sector, it is arguably unhelpful, because private sector lending through the banking system would increase activity by more, given the gearing involved.

This morning we learn that many CEOs in the Health Service have had inflation busting wage increases on their generous pay. They belong to that large, growing and privileged group of senior Executives in the public sector who are called CEOs and have pay comparable to larger private sector companies, but whose jobs are nothing like private sector CEOs. As I have pointed out before, around 70% of a private sector CEO’s job is winning business, increasing the revenue,taking steps to secure and grow the turnover. Public sector chiefs simply bill the taxpayer, who is sent to prison if he does not pay. The remaining 30% of the typical private sector CEO’s job is controlling the costs and seeking to do more with less. Few publlic sector CEOs bother with this bit of the job either, preferring to write continuous propaganda to say that if they are not sent more money their service will fall to bits.

Labour have employed more than a million extra public employees. The overwhelming majority are not “front line” employees like nurses, teachers and doctors. They are administrators, auditors, regulators,spin doctors and advisers. The Conservative party has made clear it is not going to make anyone compulsory redundant. It is also clear that as around 300,000 or more leave or retire every year, any government that wants to control the deficit is going to have to employ fewer as the vacancies arise, whislt replacing the “front line” employees. They will also find as I did when I applied just such policies to parts of the public sector I have been responsible for in the past that service quality as well as efficiency can rise. They should discover you can employ too many managers, administrators and bogus CEOs. As they leave voluntarily, abolish the post or promote someone from within who is good whilst abolishing another post. That’s good for morale and for cost control.

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

Today I wanted to check out Lib Dem policy for the election. Their site contained what looks like a helpful “Pocket Guide” to Lib Dem policy. It advertises a handy page a department to get the gist of their plans.

The only problem is, I was unable to download it. It refused to open – everything else was working fine on the computer. I guess they are worried in case the truth gets out during the Election.

You can still find the Mansion Tax, the 40% and 50% Capital Gains Tax, the local Income Tax and the slashing of Pension Tax relief if you go into their past Conference Motions, but I suppose they think mention of tax rises and spending cuts might frighten the horses, so the Guide is safely barred.

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

It was good over the last couple of days to be back on the doorsteps. There is more commonsense. More interesting issues emerge than in the musings and rantings of the “air war” on the media.

So what are people talking about? A large number raise the issue of immigration. They do so in a non racist way. They just think we have invited in far too many people in recent years. They see the strains this places on housing and public services. They expect the next government to control the numbers and are grateful to learn of plans to do so. They also want our borders beter policed against the handful of criminals who come here with criminal intent.

They are talking about the economy – about the shortage of jobs especially for young people, about the poor returns on savings, about inflation and the price of petrol. There is understandable resentment about the huge salaries of some public officials and about the crazy bonuses of the state subsidised bankers. Many of them want change, as they have suffered from the recession. Many fear that things will get worse after the election when the true state of the books will have to be revealed and tackled.

They are talking about the state and cost of public services. Individual households have understandable worries about school places or facilities for the disabled or treatments in the NHS depending on their personal circumstances. Overall there is a feeling that local service providers are not empowered enough, and above their heads there is an expensive and unhelpful bureaucracy. One local civil servant was particularly keen that a Conservative government should be elected, as she is fed up with expensive consultants coming in, asking how she does her job, and then claiming large sums for telling her how to do it. They think Council Tax is too high.

More people are engaged with this election than were engaged in 2005 at a similar time of the campaign. The Conservatives are more confident in their view, keen to tell us they are Conservative, and often keen we should move on to talk to others who might not yet be of the same mind. Those in the Wokingham constituency who have decided to vote for other candidiates, especially those voting Labour and Green, tell us so, but sometimes kindly sugar the pill with a comment that their opposition is not personal, or even with a comment that they have no criticism of the way I did handle being their MP when I was in that job. As I often explain, I think it most important that any MP takes seriously the duty to represent all constituents, and to represent views to the government of the day with which he himself does not agree where needed. A good elected official needs to be fair and fair minded, and to understand there is a range of legitimate views.

There is a third group who say they have not made up their minds. They are often unwilling to discuss the election or the main issues, leaving the canvasser wondering whether they do not intend to vote,or whether they have made up their minds and disagree with us. The 2005 election and the recent by elecitons and Council elections I have canvassed have also had more people saying they don’t know and then declining further conversation. In those cases the numbers of non voters was very high and accounts for the scale of “Don’t knows” in the canvass. It is their democracy too. We, in the political parties, would like to draw them into conversation. That is the way we can either explain that they have misunderstood what we are trying to do,or can understand what they think is wrong with our approach. Political parties cannot learn to serve you better if you will not tell them what you think. Saying “Don’t know” is also the way to invite more literature and visits – it is not the way to deter a motivated party, who will concentrate on the “Don’t knows” rather than on those who have decided they like some other party better.

Everyone knocking on doors – including the candidates – is a volunteer. We do it because we think democracy matters. We do it as a public service. We do it because we do want to know what you all think. Sensible candidates and canvassers do it in the spirit that there can be wisdom on the doorsteps, and we don’t know all the answers. They also do it knowing no party will please all the people all the time.

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

All the time we continue to run a large balance of payments deficit, because our economy is so unbalanced and the private sector so squeezed, we have to continue selling the family silver. More companies will be sold abroad, to raise the money to pay for the imports.

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