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My Telegraph piece on Nigel Lawson (with addition)

April 10, 2023 79 Comments

The sad news of Nigel Lawson’s death gives us the opportunity to remember his great contribution to the success of our country. We mourn with his family but celebrate a life well lived. It was a life which made a big addition  to the debate about how to promote prosperity for the many and how to fuel faster growth with better economic performance. The arguments he deployed are relevant today as we consider how to carry on the great task of promoting greater prosperity for more people.

 

Nigel  Lawson proved that lower tax rates can bring more revenue and higher living standards. Faced with a Treasury that did not want to believe you can increase the income by reducing the tax rate, he made big reductions in the company tax rate and the rates of Income Tax. This helped propel the economy to faster growth. Rich people came or returned to the Uk to invest, to create jobs and make their homes. Large international companies took a more positive view on the attractions of the UK as a place to put their car plant or their consumer   product factory.

 

The Conservatives took over after a poor decade. Half the car industry output had been lost in the first ten years of European membership. With no tariff protection the Uk industry lost out to continental competition. In the 1980 s with new policies that were friendlier to business the industry was rebuilt by attracting in new overseas investors including the leading Japanese car makers.

 

He worked closely with Margaret Thatcher  in the early years as Chancellor to liberate the self employed and small businesses, as well as to foster more large company business. I remember being able to draft for a speech of Margaret’s the news that the Income tax rate cuts meant the rich paid more income tax in cash , paid more income tax in real terms, and paid a higher proportion of the total income tax take. The depressing socialist case against tax cuts for the rich seemed absurd. The  way to tax the rich more is to set tax rates at levels they will stay to pay. Nigel was out to reverse the brain drain of the Labour years when successful UK people from pop stars to entrepreneurs left the country in search of lower tax rates. The government welcomed aspiration and recognised the importance  of spreading wealth widely, not confiscating it for a jealous state to spend.

 

Nigel Lawson had been Energy Secretary and recognised from his experiences that introducing private capital and competition into major national monopolies could help transform the country. The privatisation of gas, electricity and telecommunications unleashed a feast of new investment. It transformed an out of date electro mechanical phone system with electronic technology and extra capacity. It drove down electricity prices whilst shifting from dirty coal to cleaner gas , making it a great environmental as well as business policy. It became possible to get a phone line quickly without having to share it with the neighbours. The UK got cheaper energy to help business compete.Nigel and the Treasury resisted opening the monopolies up to maximum competition, though over time it was still possible to move policy in that direction. I always argued introducing competition would improve outcomes more than just changing ownership, though both were helpful.

 

Nigel Lawson was an innovative Financial Secretary to the Treasury setting out a new control system for the UK economy which worked well, combining controlling budget deficits with curbing money supply growth. After years of boom inflation and poor output the UK economy started to perform much better. It was a pity that later as Chancellor he lost faith in his own economic policy framework, accepting official advice to seek to join the European Exchange Rate Mechanism. This introduced an unwelcome lack of discipline into money and credit , created a fast inflation and then led to a traditional boom/ bust cycle as the authorities battled with their own past mistakes. It also led to tensions with the Prime Minister who believed the advice she was given that the Exchange Rate Mechanism would be destabilising.

 

Nigel Lawson achieved a great deal for our country. He showed that a country needs to earn its living, and can only do that when it backs the entrepreneurs and investors and allows lower tax rates to work their magic.  Just as Ireland today shows how a low corporation tax rate gives them a giant advantage in attracting big business, jobs and investment, so Nigel Lawson reminds us just how much we need such bravery again to grow faster and offer better pay and wider ownership to the many. The Opposition parties in Parliament seem to think you can keep upping the tax rates on the enterprising and successful, apparently unaware of the history. Tax too much and the enterprising will leave. Tax too much and the new factories go elsewhere. Tax too much and you will raise less revenue for public services not more. Thanks to Nigel we know what works better.

 

Blocking the roads

April 9, 2023 97 Comments

Each time I use my car to get to work or to visit places in my constituency to keep in touch I encounter some new obstacle to getting around. Each journey poses its own mixture of traffic jams, temporary lights, closed roads, restricted carriageways, narrowed lanes, reduced lanes and new speed restrictions.

Some of the disruption is the result of the Uk madness of putting most cables, pipes and wires under tarmac roads then digging them up every time you need access for repair and improvement. The utilities and Ministers I have talked to over the years about why not place new or replacement cables and pipes in accessible conduits, preferably under pavements to avoid digging up main roads have always agreed but failed to implement. Management of road closures to allow access to existing pipes and cables is often poor with much wasted time with the road closed but  no work underway.

Some of it is Councils wanting to force people out of their cars and vans. Councils who claim to have  no cash to pay for decent social services or to maintain a good refuse service have bundles of banknotes to change kerbs, pavements, install more traffic lights, paint roads and festoon them with new signs and surveillance cameras. Many Councils take a sadistic delight in making the lives of the motorist, the van driver and goods delivery driver almost impossible.

Some of it is pressure of traffic on the diminishing number of roads that survive. We invite in hundreds of thousands additional people each year but fail to put in extra roadspace for theirs cars. In fast growing areas like Wokingham the Conservative Council did put in some important new roads and by passes, but the Lib Dem led Council is now busy narrowing or closing roads to make life difficult.

This is a major impediment to productivity and business success. Those running businesses to help us at home book fewer appointments to allow for the delays on the roads. They need to add to the charges the costs of Congestion and low emissions zones, car parking charges and the extra fuel used in traffic jams. The London Mayor’s widened ULEZ zone is very unpopular, seeking to stop people with older vehicles and lower incomes from using their cars.

My Telegraph article on parking and driving to towns

April 8, 2023 106 Comments
I often see people wrestling with the latest technology in Council car parks. It is not just the elderly or the technology challenged. Quite often the newer systems do not work, or require several attempts to find the way to unlock their iron grip over whether you can get in or out of the park. My constituents keep me informed of their daily struggles and their car park paying nightmares.
        Locally some have  recently experienced the hospital car park where the number plate recognition to let you out when you have paid does not always work. They had to put in an employee standing by the exit ready to  check you had paid and then to manually override the exit barrier control. Another  complainant told me she drove to a  car park, tried several times  to pay without success and so left the car park frustrated to find somewhere else that would take her money. She was then fined for being too long in the first car  park without paying! The last station car park  I used required me  to pay before travelling. It refused to accept my credit  card contactless, it refused to accept it with the number typed in, yet the card paid readily for other items before and after these bruising rejections. Fortunately that car park had a cash option which did work.
         Many Councils are pursuing an anti  road  vehicle strategy. If you manage to negotiate the mushrooming sets of traffic lights, the complex junctions, the restricted lanes, the changing hours of regulated uses, the road closures, the neighbourhood limitations, the incessant changes of speed limit,  the cycle and bus lanes and the widened kerbs and pavements you may end up in a  car park out to thwart you at journey’s end.  Visiting a  cathedral city recently I was directed out to a car park which said it catered for longer term stays, only to find a queue of people wrestling with the technology to pay. In the sunshine it was difficult to make out the messages on an unhelpful and often malfunctioning  touch screen. A visitor will stay longer and spend more in a town if the parking arrangements are friendly and sensibly priced. If car parks in town centres are geared to under two hours of parking people will not have the time both to go to the shops and buy a meal.
        Councils just do not want to accept many of us have good reasons to take to the car or van. You cannot do your weekly shop  going to the store by train as you could not carry and stow all the items you bought. The  car boot does the job well. An electrician, plumber, builder or other service provider to your home needs to arrive by van with the tools and materials in the back. Given the deliberate delays and congestion Councils create on our streets they book fewer engagements to allow for the increased journey time. They are worse off, prices go up and more people are frustrated. if you want to take a family in for a meal or the cinema the car may be the only realistic option, particularly at weekends or evenings with reduced public transport.
           The ultras in parties of the left who condemn the road vehicle seem to forget that the food they eat is taken to the shops by large lorry, and delivered to homes by van. They forget that the power they turn on and the water in their tap is maintained by engineers who need vehicle access to installations. When they do get to the local shops they forget that without the trade of people who go there by car the shops would fold for insufficient business. We see too many declining shopping streets and centres in our towns, the  casualties of too few customers. Stopping people going there on impulse and preventing easy and cheap or free parking  is part of the reason for the shuttered properties and the decline of prosperity. So many Councils seem to think they need to charge us a fortune for us to park on Council owned land, land we paid for as taxpayers in the first place! Instead of wanting to serve the public ,plenty of left wing Councils  want to fleece us.
            So what is the answer? Keep it simple. I usually welcome new technology. Mobile phones and internet communication have enhanced our lives . I  see the advantages of the sat nat over a map book. Not all  new technology however is better if it is unduly complex and slows you down. Touch screens are difficult  in sunshine where a button to press would solve the problem. Putting cash or  card  into a simple parking ticket machine  works well. Paying by  cash or  card on exit against a  record stating the time of your arrival works well. Making you download an app, entering your index  number and then relying on vehicle identification technology greatly increases the chances of something going wrong as well as slowing you down. It is clearly dearer and more complex  technology to install.   Councils should change their mentality on  car parks . Instead of  seeing them as big sources of revenue  and opportunities to make our lives worse they should be  a service we need in order to support and encourage flourishing town centres. Paying should be easy and include a  cash option.

The road to net zero is damaging the UK car industry

April 7, 2023 161 Comments

My latest Conservative Home article:

 

The latest figures for UK car sales remain disappointing. The industry has been in denial since lockdown, claiming poor sales resulted from a lack of supply. They say they were unable to buy enough microprocessors as the digital industries hoovered up the output from world chip factories. They now tell us supply shortages are behind them. It is true there was a useful recovery in car sales from low levels so far  this year, but it is also true that they remain way below the levels of the previous decade. It is also notable that whilst fleet or business purchases have advanced well this year, sales to individuals are static at low levels.

           During the long Brexit debates the Remain political parties claimed the UK motor industry would lose out were a 10% tariff to be imposed. Motor industry lobbying was one of the reasons the UK government paid quite a high price to secure a free trade deal with the EU so cars and other items would remain tariff free. No-one suggested a 10% tariff would have done anything like the damage to sales that has in fact occurred for other reasons. We need to ask why are car sales so depressed and why don’t the main political parties and government do something about it?

            We need to look at public attitudes towards battery electric cars. Government, Opposition and industry are united in telling us these are the products we must buy. The latest figures show battery cars stuck at just 14% of the total market. By now if the net zero UK car ambitions are to be hit battery vehicles should be the majority choice. The car buying public remains sceptical. Whilst polling shows general support for decarbonisation and the road to net zero, it also shows a marked reluctance for people to adopt electric cars themselves anytime soon. Many worry about the range of the vehicles. Some worry about battery life. Many are concerned about the lack of reliable charging points around the country. Vehicle reviewers taking EVs for longer drives often report reaching a charger place to find the chargers unavailable, or a long queue of cars to use them, or difficulties with the payment systems. People think  that battery electric vehicles are still too dear compared to petrol versions. There are questions about repairs to damage and the complications if the battery resting in the chassis is also affected.

            Urban dwellers with travel patterns within their urban area are less concerned about range. People on good incomes who can afford a second car to provide long distance back up often  like electric cars. More fleet buyers are persuaded as their company seeks to meet its net zero objectives  and helps put in home or workplace charging. We still await the inventor of the Mini or the Beetle of the electric revolution, the must have product that does not need subsidy and special regulations to get people to buy it.

         Meanwhile government policies are very good at stopping people buying new diesels. Once the government’s poster boy of the  CO 2 revolution, praised for their greater fuel economy, the diesel is now briefed against and regulated against. Councils are busy making it more difficult to use any kind of car. The government has announced it will ban new diesel and petrol car sales from 2030. Far from making people keen to buy electric cars it is simply putting people off buying any new car at all. Higher taxes on new vehicles also present another obstacle to new car buying.

           If the government continues with its proposed ban it will act as a  block on new motor industry investment in petrol and diesel vehicles in the UK. That will pass to countries who will not be banning these vehicles so early as motor manufacturers seek to earn returns on ranges of vehicles that remain popular. Many UK customers are likely from 2030 to want to buy nearly new imported cars instead if they cannot buy the cars they want in the UK. If you are planning a transition you need to concentrate on creating success for the thing you wish to replace what you have. The danger of UK policy is it will be better at destroying the existing motor industry than at building the new one they want. The West has anyway let China gain a  big advance in accessing the raw materials needed for vehicle battery production and in rolling out cheaper electric models that do sell in China.

          It is time for a rethink. The net zero revolution needs more popular engagement, which in turn needs more attractive and affordable products. Whilst we await those it is folly to demolish the things that do work and people want, whilst our competitors abroad continue to produce them. The government should lift the proposed ban, review the taxes, and welcome more motor investment here. Councils and government should also allow van and car use as necessary aids to the provision of goods and services productively, ensuring a road system that is safe without so much congestion born of bans and restrictions.

 

The sad history of the Exchange Rate Mechanism

April 6, 2023 89 Comments

In interviews about Nigel Lawson I have discovered a lot of journalist uncertainties about shadowing the DM and seeking to join the Exchange Rate Mechanism. Let me tell you more of what I know, based on the advice I gave Margaret as her Economic Adviser /Head of Policy  Unit in the middle period, and as an informal adviser in the later years.

I argued that ERM membership would be destabilising. When the pound was rising money would be created to sell pounds, swelling sterling money and credit. This would prove inflationary. When the pound wanted to go down the Bank would buy up pounds. This would be contractionary. I wanted the government to stick with the Medium Term Financial strategy Nigel Lawson had helped to create. Margaret agreed and thought her new Chancellor accepted the position.She made her view clear.

It later became apparent  to me that despite the MTFS in place, despite the PM’s wishes, and despite the absence of any formal statement to Parliament of a change of economic policy control the Treasury and Bank were shadowing the DM. Interest rate moves seemed to be related to maintaining the exchange rate. I appreciated this was an inconvenient view for the PM but she came to believe it. One day when I was with her in the study she turned on the news only to hear the BBC claim a policy shift based on DM fluctuations. In later years Treasury pressure to join the ERM worsened the relationship with Number 10 more.

It was a sadness that a good reforming Chancellor who worked well with a reforming PM and her advisers on tax cuts and privatisation got into a fight over using the DM exchange rate as the economic control. In the later Thatcher years following the  DM led to excessive money and credit creation and to inflation. The Treasury who never much liked tax cuts tried to blame them for the inflation. In the 1980 s the Treasury and Bank worked closely together and Ministers were involved in interest rate and money policy.

The ERM led to the economic problems of the early 1990s, undermined the Conservative reputation for economic  competence and was the reason for the defeat in 1997. The irony was this bad economic  policy  was supported by the other main parties, the CBI and TUC.

 

We mourn the loss of a great man, Nigel Lawson

April 5, 2023 74 Comments

I mourn the passing of Nigel Lawson. He gave great service and lifted the  UK economy   after the bruising experiences of the 1970 s. He showed that lower tax rates, more competition and nationalised industry reform boosts living standards and opportunities for the many.

In 1983 I was appointed Head of Margaret Thatcher’s Policy Unit. I pressed successfully to merge the Economic Adviser to the PM job in with being Head of the Policy Unit. Alan Walters had departed leaving a vacancy for Economic Adviser. As I advised that the main policy task was making sweeping changes to the UK’s wider economic policy and performance it would be good to unite these roles. It was also necessary in my view to change the way the Economic Adviser role was performed. Alan had allowed or encouraged himself to be part of the public story. He got himself involved in the crucial relationship of PM to Chancellor in a way which made it difficult for the Chancellor. Stories of public splits were not helpful to either principal.

I was positive about Nigel’s appointment as Chancellor. I liked the work he had done as Financial Secretary to the Treasury to establish a new economic policy framework. Control of state borrowing allied to money and credit restraint would provide the best backdrop for low inflation and growth. I thought he would be a tax cutter, as big reductions in personal and business income taxes were essential to end Labour’s brain drain sucking talent and investment out of the country. Privatisation and wider ownership were critical to economic progress. Nigel as Energy Secretary seemed sympathetic to such moves, which would help pay for the programme whilst curbing the deficit.

I explained to a nervous Treasury I would give my views only to the PM. In order to be involved in budget planning I agreed to all those papers being excluded from general Policy Unit consideration. Budget secrecy was taken very seriously then. I was delighted with the big reductions in tax rates, which as I hoped brought in more revenue not less. Margaret and Nigel liked the proposals on privatisation, where I recommended John Moore as a Treasury Minister to drive a government wide programme of reforms, sales and wider ownership. Inflation came down and growth improved.

It then became apparent to me that the Chancellor had changed his mind about his Medium Term Financial strategy and had moved to a personal belief that the UK should join the European Exchange Rate Mechanism instead. I warned the PM in private  why this would be a harmful and destabilising course. She did not want to believe Nigel would do that,  but eventually accepted the evidence. It was such a pity, as their joint enthusiasm for lower taxes, more growth and wider ownership was so successful. The move away from a UK domestic financial discipline to trying to harness to German discipline by proxy spoilt their later partnership in office. Ultimately through John Major’s insistence on joining it led to another boom bust and the large Conservative defeat of 1997. The period of shadowing the DM as the main policy guide had itself given the UK an inflationary boom, as it led directly to creating more money to try to keep the exchange rate down. Meanwhile the German cornerstone of the ERM was based on a low inflationary Germany using domestic money targets to keep their own prices down.

Nigel Lawson went on to make a further important contribution to modern politics through the Global Warming Foundation. He sought to spell out the economic realities and challenges on the road to net zero to remind us that the policy comes with a price tag that needs to be affordable and fitted into a cogent economic policy framework.

Today’s Treasury could learn a lot from Nigel’s success with big tax rate reductions, incentives for more self employment and small business and transformational policies to major industries. He will be long remembered for his big contribution to UK economic and industrial policy.

 

Removing blockages to growth

April 4, 2023 164 Comments

The government says it wants to promote growth. Growth is one of the Prime Minister’s five aims. The latest budget confirming high tax rises on business will not help pursue this aim. I will write a series of pieces over the weeks ahead containing proposals for regulatory and tax  change that could assist growth.

The car industry is under pressure from the wish of the government to ban the sales of new diesel and petrol cars from 2030. This is a bad idea which will  mean premature closure of petrol and diesel car and van making facilities here, with more car companies taking their investment into diesel, petrol and hybrid elsewhere where there is no such time limit on the sales of the products. This ban should be lifted.

The government thinks an early ban will deliver more investment in all electric vehicles. This is proving difficult to land, with the car industry wanting to see established battery making lines here first whilst those considering battery investment want orders from  car companies to make their big investment worthwhile.

They all need more evidence of the wish of many consumers to trade in old diesels and petrol vehicles for all battery models. I continue to meet many people who think the current electric cars have too short a range, are difficult to recharge and too expensive. Our generating and grid capacity is not up to most of us switching to electric vehicles.

The government needs to work with the industry to see what improvements can be made in the electric offerings to make them more attractive to more people. They need a more realistic timetable for expanding the grid and reliable power generation to service more electric cars. A 2030 ban is a  very bad idea.

My supplementary question on the Powering Up Britain statement

April 3, 2023 29 Comments

John Redwood (Wokingham) (Con)
Who will pay for CCS as it does not generate any direct revenue from retail customers?

Graham Stuart (Minister of State for Energy Security and Net Zero)
To decarbonise industry, we will need CCS and hydrogen. We are socialising the funding requirements across the piece to ensure that we deliver what is necessary to meet our carbon targets, at the lowest possible cost to consumers. This year we are also consulting on measures to prevent carbon leakage, ensure that we do not drive UK industry abroad, which I know my right hon. Friend is concerned about, and instead maintain our competitiveness as we move towards net zero.

Written answers – uptake of electric cars by Govt. departments

April 3, 2023 33 Comments

The Department for Transport has provided the following answer to your written parliamentary question (174163):

Question:
To ask the Secretary of State for Transport, what steps he is taking to promote the uptake of electric cars by Government departments.. (174163)

Tabled on: 27 March 2023

Answer:
Jesse Norman:

Decarbonising road transport is critical to delivering the UK’s net zero ambitions and the Government has an important leadership role to play in driving this transition.

As of September 2022, over 25% of the cars and vans in the central government fleet were ultra-low emission vehicles, delivering this target well ahead of the Government’s December 2022 deadline. The Government is now going even further and has committed to its car and van fleet being fully zero emission at the tailpipe by 31 December 2027. Departmental officials are working with colleagues from the Crown Commercial Service and Energy Saving Trust to provide other government departments with advice and guidance to support them to deliver this commitment.

The answer was submitted on 31 Mar 2023 at 10:36.