Category: Uncategorized

The budget set up disaster for this government. It put Ministers in conflict with so many groups and interests

Farmers with family farms see their farms being taxed away from them with NI and Inheritance tax. They are on permanent protest.

Pensioners on modest incomes were mugged by the removal of their fuel grant just in time for a cold winter.

Small businesses face a large tax hike if they employ people. There has been a plunge in job vacancies already. The businesses will cut back more in April when the jobs tax hits.

VAT on school fees has led less well off parents to take their children out of fee paying schools, pressurising the state sector. Some private schools have closed.

The change of tax rules for investing in AIM listed shares has further damaged the London markets trying to provide money for business expansion.

The failure to  link well above inflation pay awards for some public sector workers to improved productivity means too much state borrowing

Allowing large increases in water bills, energy prices, and Council tax is pushing up inflation and hitting family budgets

The budget has stopped growth, increased inflation, increased borrowing and made the public sector less efficient and less affordable.

Now we see care homes and charities  saying they cannot find all the money to pay  the extra jobs taxes. Doesn’t the government care about any of this? Why wont it listen and mend its ways?

As I have pointed out there are easy ways to cut public spending by tens of billions without cutting services.

The last government was only slowly easing the self harm net zero policies the EU made us follow which the Climate Change Committee wanted to gold plate. They agreed to lift bans on new oil and gas drilling and new UK production. They delayed the ban of selling petrol and diesel cars but left in place damaging fines for selling too many. They relaxed the need to get rid of gas boilers and install heat pumps.

Mr Miliband arrived in office, reversed all of those measures and set about enforcing a more severe bout of self harm. He introduced “Clean” electricity only by 2030 requiring a further surge in imports and massive subsidies. He speeded up the closure of our petrol and diesel car plants and with the Business Secretary agreed the closure of our remaining blast furnaces. He probably welcomed the closure of the Grangemouth refinery.

Is he unaware of the massive damage his dear energy and rapid exit from gas is doing? Does he really believe relying on more windfarms and solar panels will secure our supply or lower the prices? Has he asked how much it costs to keep gas power stations on stand by for bad  weather? Has he seen how in cold snaps with little wind we pay sky high prices to import to keep the lights on?

Our electricity bills have 17% extra on for renewable subsidies and helping consumers who cannot afford the high prices. There  is VAT. There are windfall taxes on oil, gas and renewables. Oil and gas companies now have to pay 78%. The old Renewables Obligation certificates and the newer contracts for difference pour billions of pounds of subsidies into renewables.

The US grows faster and is a lot richer thanks to policies that deliver much cheaper energy. Their electricity price on average is half ours.

Dear Prime Minister

President Macron has been to Washington to set out the European position on Ukraine. There is little you can add to that. Europe is divided, with several key military states refusing to join any peacekeeping force. Germany and the UK have led the provision of money  and weapons this side of the Atlantic , with France, Italy and Spain far less generous. This remains a sore point with President Trump who thinks the European members of NATO should have been much more forthcoming. Trying to defend their inactions is not going to help.

President Trump wants some early wins. He wishes to strengthen NATO with bigger non US forces. You should tell him new legal advice has come to light showing that the ICJ cannot decide a case against the UK on the Chagos islands as our Treaty Agreement held Commonwealth matters outside their remit. Given this you will not be giving the islands away and the US base is secure. You will allocate the money Mauritius wanted for the lease to more defence spending on improved capacity.

The President wants to get tariffs on US exports down and is very critical of the EU imposing  tariffs on 73% of all the WTO categories of goods. It is true since Brexit the UK has taken this down to 53% but some high tariffs on food, cars and other items remain. You should offer to cancel all tariffs where the US will match us, giving both sides a big win.

The meeting should be mainly about trade. The UK will not be in the negotiations between Ukraine, US and Russia, which need to be kept tight to have more chance of success. Offering the President free trade, a secure naval base, higher UK defence spending and an early State visit could bring a good result. Lecturing him on Ukraine and giving away Chagos will mean bad transatlantic relations.

 

Yours

Rt Hon Sir John Redwood

 

 

 

 

 

 

 

Rather than arguing about 2.3% or 2.5% the MOD should decide what extra  capabilities we need to defend these islands and help our allies. My suggested list is

1. Improved Iron Dome style surveillance and interception capabilities for the whole UK against incoming  missiles and drones

2. Expanded drone and missile capabilities and stocks including hypersonics

3. An army of 100,000 deployable troops

4. Further destroyers, frigates and submarines to ensure we can deploy two carrier led   groups, with support vessels, all built in UK yards

5. Sufficient strike aircraft for home defence, overseas bases and carriers.

How to pay?

Redirect money from Bank of England excess losses, (£15 bn a year )recovered public sector productivity ( £30 bn a year) and delaying carbon capture and storage (£19 bn)

These savings also can provide for necessary lower taxes and a modest reduction in borrowing.

 

 

 

Here’s a way for Council candidates to improve their chances of election.

Offer lower Council tax. Why do so many candidates compete to spend more and put it up? Why do Councils usually put it up by the maximum allowed?

Offer to cut out all those annoying expenditures that make  our lives worse. End Council “investments” in property and utilities.

Cancel all those anti driver road schemes.

Sell Council trading activities, empty properties and surplus land.

Have a plan to slim down bureaucracy with staff freezes and slimmer organisations.

Cut out many of the woke projects.

Use competitive contractors to deliver more of the service

 

The German economy has failed to grow for two years. Its once dominant car industry is reporting falling sales and sharply declining  profits.They have spent huge sums on designing and launching  battery car models, only to find customers do not want them. That was entirely predictable.

Mercedes only sold 12% of its vehicles as all electric. They now say they will make more of the petrol and diesel cars people want to buy. No wonder profits are down. Misallocated capital to battery cars has hit returns.

The whole German economy is suffering from trying to get off dependence on Russian gas, from premature closure of all nuclear power and the search for buyers for the products of the net zero revolution.

The tragedy of these decisions is that they also fail in their own terms. Importing LNG instead of producing piped gas generates far more CO 2. Destroying petrol car factories prematurely and building battery car ones boosts CO 2. Plugging a battery car or heat pump into a grid using gas or coal fired electricity adds to CO 2. Why do Net Zero enthusiasts refuse to look at the total world impact of what they are doing? Why are China and the USA, the largest CO 2 producers, still increasing?

The net zero revolution can only work when they have low carbon products people want to buy, and far more renewable power than current generators and grid systems can deliver.If renewable power is so much cheaper then investors will want to install more.

It is odd that the western governing elites press hard for peace in Gaza rightly pointing to the deaths and destruction in the war, yet do not  press for peace in Ukraine where there are also terrible deaths and destruction of property.

President Trump wants peace in both places. He is accused of letting Russia get too many wins in Ukraine and of being too pro Israel in the Middle East. In both cases the question is where is the better answer which can get us to peace? Secretary Rubio is seeking to get a path in Gaza to peace that the leading Arab states support and will back.

In Ukraine the President says after 3 years of bruising and expensive war Ukraine has lost substantial land and has suffered bad damage to its property and economy. He does not see Ukraine being able to evict Russia by force and has no more intention than Biden of using US and NATO forces to do the job. Nor does he see Russia being able to defeat Ukraine and take the whole country.He therefore says to both sides that a settlement related to the current front lines is a better outcome than fighting on with more loss.

Many European governments disagree strongly. They have not put forward any alternative plan. They have been slow to provide modern and effective weapons to Ukraine.  They have continued to buy plenty of Russian LNG whilst US led sanctions were trying to undermine the Russian economy. They failed to hit the target for the delivery of shells. They say they want to be in the room with Trump and Putin, but if they are serious in thinking Ukraine should  join NATO and should not surrender any land Putin would not stay in the room.

They failed to coordinate a position when Macron convened an informal meeting. No formal EU meeting has agreed a line. They discussed how to police a peace settlement along the lines of the settlement Putin and Trump might  agree which they say they do not want. France, Sweden and non EU UK said they would send troops but Poland and Germany the largest military powers near Ukraine refused.

They want Ukraine to become a Nato member after the peace, but as the US is against  and is the dominant partner in NATO this cannot happen. Russia does not want another NATO state on its doorstep as it does  not  grasp that NATO is a defensive alliance that would not threaten it unless Russia was invading a NATO country.

If Europe is serious about helping Ukraine to fight on and improve its bargaining position then it has to set out how it can replace all the lost money and military might of the US which means doubling its current contribution. It would need to increase that doubled contribution as the combined generosity of US and Europe has been insufficient. I don’t see Europe being able or willing to do that.

 

11 am All Souls High Street Oxford  Friday 21 February

 

Zoom 968 9416 0680

I warned before the last Bank of England rate cut that inflation was going up this yea. The Bank should take its anti inflation duty more seriously. The CPI is up 3%, 50% over target. It will get close to 4% later this year.

The government is causing a lot of the inflation. Bus fares up from cancelling a subsidy. Rail fares to go up to help pay for a big inflation busting pay award by a nationalised industry. Managed energy prices up. Services going up thanks to big increase in employment costs from the jobs tax. Regulated  Water bills up massively. VAT on school fees. Housing costs up 8% thanks to attacks on landlords and restricted supply. Food costs up as family farm businesses threatened with business killing tax rises.

Stagflation is well set in. Around  Zero growth for the last half year and 3% inflation. Last summer we had topped the G 7 growth league for the first half of the year and inflation was 2%

 

In the last century the UK twice was dragged into world wars. The small armies of peacetime were soon retreating and subject to huge loss, with the need to recruit, train and equip much larger armies after the war began.In each war innovation and greatly expanded industrial output transformed our force, with new tanks, planes, and types of munition.

To fight those wars we still had capacity to make steel, explosives and other essentials  and intellectual property to make competitive planes, ships and weapons. By 1943 we were making 26,000 planes a year despite bombing of factories and sinking of imports . Today we have run down our steel, chemicals and other essential raw materials for defence. We buy planes and weapon systems that need components and sometimes permissions from overseas. In the two world wars our enemy sought to blockage us, sinking many of the ships bringing imports. An island nation needs to be able to make and grow things for ourselves to make it easier to survive a war.

The National Security Council needs to do more work on ensuring our defence spending buys domestic capacity and the rights to make the weapon systems here. The MOD needs to overhaul its procurement. There have been too many budget overruns and delays, too many one offs and variations after the programme has started. We need to able to make more standard guns and ammunition, more drones and good value missiles.