Category: Uncategorized

I have looked at how the Treasury needs to take inflation- and deflation – more seriously by considering changes in money and credit in my Telegraph article today which I will publish later. The Treasury  also needs to reconsider how to get deficits down. On the revenue side there needs to be much more understanding of the depressing effects of higher and more taxes on activity, and of the growth boosting effects of lowering or removing taxes. In technical language the Treasury and OBR need to include behavioural effects of lower and higher taxes in their models, as many taxes are easily and legally avoidable. They need to create a dynamic picture of deficits, not a static one based on telling us how much a certain tax rate currently raises.

Whenever the UK has cut the higher rates of Income tax better off people have paid more tax and paid a bigger proportion of the whole, as more rich people come and invest here, do more work and set out more businesses here, and undertake more transactions here. When a country as in Ireland cuts corporation tax to low levels it is inundated with companies wishing to set up their headquarters there and book business there. The way to tax the rich and business more is to set rates of tax they will stay to pay. When the U.K. set an 83% Income tax rate and a 98% rate on dividends we had a brain drain from the UK and the country was a lot poorer. We didn’t even keep our pop groups who grew famous with UK fans.

On the spending side there needs to be reappraisal of what the public sector needs to do and what can be left to private sector activity or private capital to provide.  Benefits and pensions to individuals account for a large budget. The incentives and support for more people to be in work at a time of many vacancies offers scope for reduced spending and better lives for those who take these opportunities up.   The pension age should reflect longevity, balancing the number of years you have to contribute with the number of years you are likely to draw down.

Where we want and vote for important public services as with the NHS and education proper financial provision needs to be mirrored by management leadership that puts quality and value for money in central position. The Treasury argues they do that, but the  numbers show there has been no overall public sector productivity gains since 1997, despite the application of large amount of investment in areas like digital processing and on line service. I find it bizarre that the DWP with a large workforce to assess and distribute benefits should have lower productivity today than in 1997, when it must have been a big beneficiary of many switching to digital forms and transfers. I have heard many accounts of the NHS buying badly, wasting stocks, and not controlling spending on external contractors.

I raised the issue of why the NHS paid to take over most private sector hospital capacity during covid but failed to send enough patients to use it, adding to waiting lists. There is the refusal to take back reusable equipment, the waste of stocks through ageing or the overpayment for items and service delivered. There is reported  failure to charge some  foreign users of the service even though it says it is the NHS, not the World Health Service.

The government says it wants a productivity revolution. It needs to start with its own services. Existing management need to negotiate more stretching targets or give way to those who can deliver.

The Covid lock down and interruption to normal working lives has had a big impact on travel patterns. It has made people keener on personal transport and on road deliveries at the expense of buses, trains and tube.

The latest figures compared to the travel pattern just before covid struck in March 2020 is a complete recovery in vehicle traffic overall. Use of vans is up by 14% and of heavy goods vehicles by 5% reflecting greater on line ordering and road deliveries to individual addresses which trains cannot manage. Car use is 5% down, probably reflecting more home working and on line ordering.

Rail use is 14% down, tube use 33% down and buses outside London down 15%. Much of the decline in tube and other public transport use is probably brought about through less commuting to work and more office workers staying at home part of the week. The tube has suffered most, reflecting the reluctance of many office workers to resume five days a week commuting given the difficulties and cost of these public transport journeys.

The greens who want to discourage travel altogether will presumably be pleased that more people stay home to work as there is less overall travel. They will however be disappointed that the motor vehicle has once again proved more useful and popular and is increasing in use for deliveries. Green Councils will continue to make it more difficult for these important commercial  vehicle journeys to run smoothly and to time. This paradoxically will add to congestion, emissions and fuel use as much needed supplies sit in long traffic jams brought on by traffic mismanagement policies.

The Prime Minister announced the headlines of a solution for the energy crisis. She proposes removing green levies and capping domestic energy costs per unit of energy, with a matching scheme for business. Presumably taxpayers pay compensation to the energy companies for selling us energy below their costs.

I favour doing more by way of tax cuts on energy, adding an end to VAT on fuel and cancellation of the carbon tax to cut energy costs. The problem with price controls is they might put people off investing in more supply, deterred by lower and unpredictable  returns from intervention. They also blunt the role of price in lowering demand when there is scarcity. It is necessary  to help people on low income with bills, or better to help them get jobs with decent incomes.

The EU was looking at plans of its own to tackle their cost of living crisis. They have been seeking a mixture of windfall taxes, price controls and rationing. It appears they have fallen out over controlling gas prices, with some fearing that would lead to an earlier loss of Russian gas and rationing. They expect Putin to find other markets for his gas. The EU seems to think the answer to dear and scarce Russian gas is even more investment in wind turbines and hydrogen.

It is difficult to understand why they believe this.Without storage wind turbine power is erratic and lets you down all too often. Hydrogen made using renewable electricity is not yet a commercial proposition and will need a vast new distribution network. The  truth is this decade many people are relying on the natural gas boiler for heating and the petrol or diesel car and van for transport. All the time that remains true Europe needs to secure supplies of gas and oil.

The U.K. can do something about this reality as it has reserves to exploit.

This week’s news that Ukrainian forces have liberated an area of eastern Ukraine taken by Russia comes as welcome news in the West. The decision to support Ukraine against a murderous  invasion has been backed by a supply of advanced Western weapons which have helped oppose the substantial Russian forces.

Ukrainian sources tell us Russian troops fled with low morale and in poor order, leaving vehicles and munitions behind. Russia claims it was a tactical consolidation that they ordered. All seem to agree Russia now controls less territory which looks like a Ukrainian advance. Ukraine is now reporting bad treatment of citizens under Russian rule.

This presumably means President Biden and the European allies will be encouraged by this and will continue to supply weapons, financial and other support to the Ukrainian state. The US has warned us to expect a long conflict. France and Germany want a negotiated peace. The Ukrainian success makes it unlikely  Ukraine will offer to surrender territory to Russia. It poses the question what will Russia now do?

Putin watchers do not expect him to sue for peace or to give up his violent attempt to take over substantial parts of the country. He is fighting a military war with Ukraine and a sanctions and commercial war with the USA and her allies. Putin is using the gas weapon to try to split the European allies. He wants to dilute or reduce western support for Ukraine. He is using nuclear pressure  against both Ukraine and the West through occupying a nuclear power station. He sometimes speculates about  the use of more extreme weapons which would put an end to the Putin lie that he was liberating Ukrainian people.

His use of the gas tap has so far troubled western economies with massively higher gas prices,  allowing him to collect substantial revenues whilst selling much less gas. This winter is going to be a difficult struggle both over trade including gas and for the forces seeking to win back lost territory.

I would be interested in your thoughts on what the West should now do. .

The two great Queens divided by 350 years and very different circumstances have shown women in the top job to best effect. Both came to the throne in eras when it was assumed men filled the leadership roles. Both inherited the job despite rules giving precedence to the male line. Both handled male dominated institutions with skill. The second Elizabeth was a role model for many more women leaders who in recent years have risen to the most powerful roles in our society, changing our public and business realms substantially so all but the most unreformed welcome good women leaders as well as men.

Their jobs were very different. Elizabeth I was head of government as well as Head of State,wielding ultimate power in her realm. Elizabeth II was the perfect constitutional monarch, embodying the power of the state but leaving it to governments elected by the people and answerable to Parliament to exercise the power.
Elizabeth I was at constant risk of assassination as her religious and political enemies circled. She had to reckon with the possible enmity of Spain, the super power of the day, drawing her into war. She needed to still the conflicts between Catholic and Protestant. She led her country to a remarkable victory against a huge Spanish invasion fleet and presided over a welcome internal peace which powered rising prosperity and a cultural flowering.

Elizabeth II survived the world war which threatened her family just like others from the bombing campaigns and inherited the throne at a young age owing to her father’s untimely death. She needed to keep the idea of monarchy fresh and lively for a new modernising era.With great skill she evolved the style and practice of the monarchy, adapting it to a television age. Her image like her predecessors was on every token of our money , on our postage stamps and in many a Council chamber and boardroom. It was also there in our living rooms on tv showing us her every move and gesture on visits and at state occasions. As the reign advanced so we saw more of her family life.She faced a level of public and media scrutiny that previous monarchs avoided, though they had often been lambasted by cartoonists and scribbling critics.

Parliament rightly has adjourned to pay respects to our late Queen and to allow the use of the Palace of Westminster for the solemn proceedings before the funeral around the lying in state. On current plans the House of Commons will not meet again until October 17th.  We need to get back to Parliamentary work sooner than mid October given the shortened September session and given the urgent tasks that await the new government.

There is a need to produce a detailed scheme of help to businesses facing impossible fuel bills. We need to debate and legislate the full package of energy measures to increase supply and ease the cost of living and cost of doing business crises. We want to hear the Chancellor’s Financial Statement and cut the taxes as promised.

MPs will want to hear from the new Home Secretary how she will defeat the dangerous people trafficking across the Channel, and develop the points based migration system. We wish to learn more of the new Health Secretary’s plans to get waiting times down and cut waiting lists. How will a range of Ministers unite to produce a growth strategy?

It is right we show our respects to the late Queen and right Palace and government are united to organise the State funeral. We must then pick up the pace of changing things for the better.

I have put these points to Ministers

The King spoke well with a moving tribute to his late mother and his clear pledge to undertake his new tasks in the spirit of public service above politics which informed the Queen for seventy years. At the Privy Council he reaffirmed his wish to uphold our democratic traditions and to be guided by the Parliaments of his realms.

In the coming week the UK Parliament will  rest adjourned in mourning. The Palace of Westminster will  be turned into more of a  fortress than normal  in preparation for the funeral of the Queen and the arrival of numerous Presidents, Heads of State and government from around the world to London for this great and sad occasion. The Queen’s body will lie in state in Westminster Hall in preparation. The external business of government will stop, with politics suspended whilst  the relevant Ministers are involved in the preparations and events surrounding the death of the monarch.The nation mourns with its government until the funeral.

Meanwhile the country wrestles with the energy crisis and the cost of living pressures. It is fortunate that the government was able to make a reassuring statement before these sad events that relief is on its way from unaffordable fuel bills. Behind the closed office doors it is important that work goes on to complete the plans for the energy package and for the promised Financial Statement later this month to follow the period of mourning. Parliament should  return earlier from the planned Conference break to scrutinise and approve measures commensurate with the scale of the challenge to business and families posed by the prices of gas and electricity. Business is suffering now with no protection in place against the surges in energy prices.

The Queen’s success rested on her firm understanding of the principles of constitutional monarchy in a democratic state. She took seriously her leading role in the great occasions of each year and of her reign.

Every year saw her distribution on Maundy Thursday in spring, her Remembrance day acts so we do not forget all those who gave their lives in war, Trooping the  colour in summer and her unifying Christmas message. There was the annual  rhythm of the sporting events she liked to attend and time spent in Balmoral and Norfolk outside London.

The reign brought us royal weddings and state funerals, Jubilee celebrations and one off events from the Olympics to World Cup competitions where she  would play her part.She hosted Heads of State visiting from abroad and travelled to many countries as our leading Ambassador.

She opened Parliament and set out the government’s plans in the Queen’s speech from the throne. Written in neutral language it is heard in silence by all parties. MPs then return to the Commons to debate it, support or criticise it, putting living politics into the measured plain prose of the original.

Her success in avoiding political controversy was absolute. She did not find herself in papers based on leaks of partisan or one sided views she was alleged to have let slip in private because she did not allow herself such views. In conversation she was brilliant at being interested in whoever she spoke to without letting slip a viewpoint of her own that some would disagree with and think too political. She did ask the occasional question that made the news, as when she asked why the economic experts had not foreseen the coming economic crash in 2008. She spoke for most of the country when she asked that.