Category: Blog

On Wednesday I had to give in and pay to drive in central London after 7 am. I had to deliver a heavy package to one place, drop off a print for framing at another, and fit in a haircut at another. I could not do all this on foot or by tube, and I could not do it before 7am when the charge comes in, given the hours of the other people involved

I got to the edge of the Charge zone after the rush hour. As soon as I could see the Congestion Charge zone signs hoving into view, the traffic jams began. The Cromwell Road was seized up. I discovered as I went about my business one lane of the two lane Fulham Road was closed for roadworks at the same time as the Cromwell Road problems. There were all too many places where our money was being spent on making the roads worse, only to delay us all more owing to the restrictions on use of the carriageway. The blockages on Southwark bridge are especially spectacular as they work to restrict the road system around that part of London and take the remaining useful general parking spaces out.

How right Ken Livingstone was to call it a Congestion Charge. He not only imposed the tax, but made sure with the changes to traffic light phasings, lane narrowings, chicanes and closures that you would be permanently in congestion if you still dared to use the zone. Under Ken only the rich could travel by car – as you would need to be very well off to afford £8 every day out of taxed income. It took me around 3 hours to get to all three places, have a hair cut and reach my Westminster office. To have to pay £8 on top was the last straw. I look forward to Boris carrying out his promise to scrap the charge in the west, and to rephase the lights so we can have less congestion in London. Maybe then he could rename the residual charge the Free flowing charge, and make sure we get something for the odd occasion when we have to pay it and need the roads to work. Shouldn’t it be refunded on days when they close too many streets,plunging us all into chaos?

First, the magazine industry lobbied MPs hard about the way the BBC moved into their business, using its own free ads for its own products to gain entry to their market. Next, the local and regional papers lobbied MPs about the impact the free BBC web and media service was having on their sales. Now James Murdoch points out the obvious main concern – the stronger the BBC brand and web offer is, the less private sector competitors can charge for news and views and the less plurality and choice there will be. THe BBC web offer is paid for by a poll tax which others cannot share or levy.

There needs to be a new settlement, to promote a vigorous and diverse media. We want the digital revolution to open up and sustain more choice and diversity of opinion, not to reinforce an old statist centralising system.

The war in Afghanistan is the defining action of Mr Brown’s administration, just as the war in Iraq defined Mr Blair’s. Now the first round of the election is over, it is time to ask what is the purpose of our mission, how long will our troops need to be there, and when will the Afghan security forces be in a position to police their own streets successfully? We need some answers.

If the government is determined to fight such a big war as intensively as in the recent past, it needs to make more men and equipment available. It needs to tackle the high level of casualties as a priority. It also needs to be more forthcoming in its explanations to the British people of what it is doing, why it matters, and what support it is offering to our armed forces. I would rather the UK government talked seriously to the new Afghan government once formed to set out a timetable for Afghan troops to take over the front line roles from ours, moving us to a support and training role.

Meanwhile, it could be significant that the Sun has taken such a tough line. Maybe they are picking up a shift in mood in their readership. Most of the people I talk to are at best in two minds about what we are doing in Afghanistan, and are united in wanting our troops to be given more support and back up for their arduous and dangerous mission.

The Bank’s last official Statement, and the Deputy Governor Mr Bean’s recent remarks, tell us that the Bank has little idea how much quantitative easing to do, or how to assess its impact.

The Bank’s main economic view is based on the economic theory that if there is excess capacity in an economy then you will not get price rises. Businesses will bring more capacity into use as people’s income and spending rises. In competitive businesses the presence of spare capacity elsewhere should prevent any one comapny raising its prices. Because there has been such a sharp drop in output, the Bank reaons there must be plenty of spare capacity. As money is injected so more goods will be produced without inflation.

Like many economic theories, the answer to that is it all depends. The Bank should take more seriously these points:

One, if the pound starts to fall again as it did last year, we will experience substantial price rises on the many goods we import. The authorities should not be so lax that they jeopardise the currency.

Two, this severe recession will remove capacity, as well as temporarily reducing it. Today we hear that the last TV manufacturing plant in England is closing for good. Many factories are being shut down, not to re-open.

Three, quantitative easing on both sides of the Atlantic, and the huge monetary stimulus in China, is boosting commodity prices. This will exert some upward price pressure on finished goods.

Four, because many companies cannot get more bank credit they are taking a tough line on price levels despite falling output. Some may continue to do so in the upturn.

There is a bigger worry. Both the Bank of England and the Fed ignored price bubbles in assets in the long boom prior to the 2007-8 collapse. The Bank of England seemed to take the view that high and rising house, property and share prices were not in themselves inflationary or a worry, yet they were fuelling the boom which in due course led to faster overall price increases. It seems that both the Bank and the Fed want to create another asset price bubble,and are beginning to do so. They should learn from the past. Asset bubbles in the end have to be deflated. They can also be inflationary.

At least the Bank now accepts that printing more money will not necessarily create more credit, the original aim of the policy. They need to persuade the FSA to change its bank regulations if they want more credit. It would also help if the government didn’t want to pre-empt all the money for its own borrowing.

The idea that we should now tax bank transactions to stop them paying mega bonuses is absurd.

The government says it wants the banks to lend more money to business. The Regulator says the banks need to have more cash, capital and reserves before they can lend more to business. The best way for them to get more cash, capital and reserves is to make more profit. Now if they make more profit it is proposed they should pay more tax, removing the extra profit from contributing to the cash and capital. They should make up their minds what they are trying to achieve.

I have no time for mega bonuses to the highly paid in state aided banks. Why doesn’t the government just ban them? They are either the owners, or set the terms for the government assistance, so they can just do it.

Given that the Regulators allowed too much excess risk taking in the good times and now want to allow too little in the bad times, wouldn’t it be better to change the Regulators? And can we have an assurance that in the meantime no highly paid Regulator is enjoying one of these bonuses they now condemn?

I understand why many of you are very sceptical about any proposal to shift the log jam – and the over taxing – on our roads. Many politicians are anti motorist, and do see motorists as an easy source of tax. You should know me better. The scheme I outlined does not increase the revenue take from the motorist for existing travel levels. It offers more motorists the chance of a better deal.

You win if you travel less than the average in your car.
You win if you travel on non toll roads.
You win if you travel on toll roads outside peak hours.
Everyone on the roads wins because there would be more capacity and better management of the roads.
You pay a user charge for using big roads at dear times of day instead of having to pay a tax which you cannot avoid

Our roads are grinding to a halt. They are very badly managed. The motorist is ripped off every day for a rotten service. The phones used to be like that. We were short of capacity and phone lines because they were part of the public spending exercise and rarely took priroity. After privatisation they provided much more capacity, and the companies concerned started paying tax to the Exchequer instead of needing subsidy.Prices fell.

Most of you tell me regularly the state is doing too much and should be smaller. Let’s get it out of the super highways business.

The government which gave you such a spectacular boom and bust in the private sector thanks to their crazy money and banking policies, now seems to want to repeat the experiment in the public sector – with the bust delayed until after the Election.

We learn that cuts will be needed after all. Some are pushing to scrap Trident. Clearly the defence budget is being singled out yet again for a mauling, with plenty of softening up with stories about poor and expensive defence procurement. Today Labour has adopted the populist mantle by attacking the so called Boomerang bosses – Council CEOs who earn too much, receive too large a pay off when asked to leave Council A, only to appear earning even more shortly afterwards at Council B. Readers of this blog will be well aware of the mis naming of some so called CEOs in local governent, who are not revenue responsible, and maybe cost irresponsible as well. The government has sanctioned the downgrade of benefits under the RBS pension scheme – is this a harbingner for their plans for civil service pensions as well?

Wouldn’t it be better to seek value for money now, instead of waiting for another year? Why does the mad over recruitment of so called managers have to continue? Why does the quango world need to expand more before it contracts?

Shortly before Labour tried to close down all serious debate on public service reform I promised you all some more ideas on how we could raise quality and save money on public services. Let’s get back to this, our agenda, on the day after Mr Brown himself concedes there needs to be cuts after all – after the Election!

The government cannot be trusted to run our roads. They have all the hallmarks of a monopoly – expensive, poor quality, and in short supply. You literally have to queue so often when you want to use them, and motorists have to pay many times over through taxes for the costs of provision and management. Government management these days often entails expensive and fiddling changes which end up making them them less safe with increased congestion. Stopping free flowing traffic seems to be one of the main aims of the car haters who design our road policy.

Meanwhile most UK people make it clear they like the personal freedom that car use brings. It is the main way people get to their jobs, to the shops and to their friends. The last time I spoke to six formers about green issues, the questions were mainly about how they got access to a car of their own.

So I have a simple proposal. Let’s franchise the main motorways and trunk roads to the private sector to run. Let’s do it in a way which sends them clear financial incentives to cut pollution and congestion.

The maths would be good for taxpayers as well. I would start by abolishing the vehicle Excise Duty, a tax on ownership, and replacing it with permission for the private sector to impose tolls on use of the main roads. The aim would be to impose tolls that yielded £5.6 billion a year at current usage levels, the exact cost of vehicle Excise Duty. This would be neutral for motorists as a whole, but would cost those of us who travel more a bit more, and those who travel less would benefit. People who travel less tend to be worse off. There would be regulation to prevent excessive charging, with clear stated maximum toll levels.

The main motorways and trunk routes would be put up for franchising in suitable packages. Where possible alternative routes would be in different packages, bringing competition between franchise holders. In return for access to the assets and the toll revenue they would need to pay the state a premium. We would need to raise around £110 billion, so that the state could pay off £110 billion of debt which would save it currently around £4 billion of interest. By the time the scheme came in I reckon it would save us about £5.5 billion of interest given the likely trend of government borrowing costs. This makes the scheme self financing in terms of its immediate impact on state finances.It gives the first franchise holders a running return of 5% on day one, rising as they improve the use and management of the asset.

The prices of the packages could be fixed to ensure the state received enough money to pay off sufficient debt. The auction would be based on bidding for length of franchise, as the state would want the road assets back at some point to do the whole thing all over again, to the financial benefit of taxpayers. Bidding for the duration enables bidders to work out how they can make money, without changing the state finances.

The results would be dynamic and favourable. Bidders would be expected to come forward with plans to enhance the assets. They may well want to add another lane, or to use the hard shoulder. Their interests would be to encourage more free flowing use of the road, so they could charge more and charge more users. If they ran a bad or congested motorway use would drop off, going to alternative routes.

The state, as a result , would benefit financially as well. The more toll revenue the franchise holders enjoyed,the more profit there would be for the state to tax. The state, as in all private businesses, has a share in success. The immediate future after the scheme was launched would also see some much needed improvement capital investment. Free flowing motorways are both our safest and greenest roads. We need to use them more to cut deaths and raise the fuel efficiency of travel.

This morning’s posting was delayed as I was asked in to the Today programme studio to discuss the high and rising contributions the Uk now has to make to the EU.

The programme highlighted the big increase in the UK’s net contributions to £6.3 billion next year, and correctly drew attention to the loss of rebate which Mr Blair negotiated away.

They invited Mr Macshane to put the case in favour of the new higher sums. He did so on two grounds. Firstly, he claimed there would have been no expansion of the EU without our surrender of rebate. Secondly, he said the spending by the EU was very good, citing an example of a new Polish motorway. Neither of these propositions was a credible response. For every Polish motorway there are dozens of marginal projects and much administrative waste and worse. The new member states would have joined even if the UK had successfully defended the Thatcher rebate.

The truth is we cannot afford the large increase in our net contributions, and need to be pressing for a lower gross contribution. It is not just the money we do not get back that should worry us, but some of the money we do get back where the EU decides what we should spend it on. We need to be masters of our own budget, and capable of weeding out cost and needless expenditure where it rests. Quite a lot of those two categories can be found in EU budgets.

Mr Macshane resisted the temptation to say that our partners would not agree to cuts and to seeking better value for money from this big spend. Had he done so I would have reminded him of two things. Firstly, he and other Labour Ministers and ex Ministers are always telling us they have influence in the EU. There would be no better way to prove this to us doubters, than show we could have more of our way on the budget. Secondly, the EU itsefl wisely tells member states to keep their public deficits to just 3% of National Income. When ours is now four times that level, and many other member states are exceeding their limits, surely the EU must see it needs to help all member states to cut spending by leading the way and cutting its own?

Many of us want the EU to do less and spend less. Now would be a good time to do so. Why do we need a system of overseas aid for relatively rich countries? Why are we paying so much of the bills?

Click here to listen to John’s discussion with Denis MacShane on the Today programme.

Last week I had to renew my tax disc for the car. I received a notification that I could now find an easy way to pay the new rip off levels of the tax. I rang the number late one evening. It proved as easy as advertised. The cash was taken from me effortlessly over the phone. I was not kept hanging on, nor did I have to listen to endless multiple choices requiring me to dial some other number. The new tax disc came by return of post well before the month end.

This week I received a follow up card. It told me I still had enough days left to pay my tax disc. If I had not already done so, I should try the new friendly phone line or the web pages, available any time of the day or night. If I had by any chance already paid I was to ignore this card. It was no marks for the system picking up quickly that the tax had been paid, but full marks for persistence, and fulll marks for ensuring the maximum take as quickly as possible.

It leads one to ask, if this government can be good at taxing us, why can’t it show similar skill and customer awareness when delivering services?If you want to contact a government department or many a Council department about what they are meant to be doing for you, you need to try in the minority of hours during the day when there is meant to be someone there. So often you are left hanging on, being told you are in queue. You may face ordeal by multiple choice, be lectured by a computer,or be told that all call lines are busy. If you do get through to a person, you may discover there is some other reason your query cannot be dealt with.

No wonder people are so cynical about government. It is good at taking the money off us, but so bad at spending it for us and providing value. There is one level of competence at milking us, and a far lower one for everything else.