John Redwood's Diary
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An agenda for UK US co operation

The UK government says it wants good relations with President Trump, yet many of their words and deeds set out to disagree with the new US Administration. They should next week change their tone and priorities, and seek to create more common cause and joint action with Washington.

They should abandon the costly and dangerous draft deal with Mauritius. They should tell the US their naval base will stay safe in our hands. They at the same time save UK taxpayers billions.

They should agree with President Trump that it is time to negotiate a peace in Ukraine. The Uk and EU do not have the money, military resource or will to replace the US in supporting the Ukraine war. The UK should be as keen on peace  there as President Trump instead of appearing to disagree and to prolong the  war and increase the deaths. Of course the UK and US must be strong for Ukraine to improve the terms.

The UK should back increasing NATO spending on defence and confirm its own increase to 2.5%. The UK should tell the President in private why 5% is not realistic.

Instead of threatening President Trump with the EU over trade, the UK should present the US with a draft Trade Treaty improving  mutual access and lower tariffs. The UK is well placed to avoid general US tariffs and to sidestep a possible EU/US trade war, as long as it shows it is willing to work with the new Administration.

 

Pensions

Conservatives invented the triple lock and made it their policy in the 2015, 2017, 2019 and 2024 elections. I supported the idea, as the starting basic pension was low. As people were paying in for their pension  a percentage of their earnings it seemed fair they could receive  a pension based on growth in earnings,which was likely most of the time to give the higher uprating.

Labour were forced to match the triple lock pledge and did so in 2024.  The triple lock should therefore be safe until the next election. I expect all the main parties to pledge it again then. I did not read Kemi Badenoch’s remarks as meaning she had any wish or plan to remove it. She spoke about means testing pensioner fuel support,implying she would not restore fir very wealthy people whilst probably restoring it for most of the others that have lost it.

The obvious much delayed change government should make to pensions to tackle the rising bills is to remove the option of a very expensive index linked pension for the civil service for all new entrants and to consider reducing or limiting future contributions and accruals for existing members. I tried to get George Osborne to do this  in 2010. instead billions more liability has been heaped up with hundreds of thousands of new recruits and with fast inflation.

Human rights

I am all in favour of human rights. I am also much in favour of democracy. That is why I favour a sovereign Parliament that legislates  for our human rights. We need to be able to change laws when they cease to please or backfire.

The PM believes there is some superior law called international law which embodies some superior morality. It is leading him to make bad judgements based on poor interpretations of this international law. It has led him to assert the ICJ can make us give the Chagos islands away. He seems unaware that the Uk exempted  issues between itself and Commonwealth  countries from the court’s jurisdiction. He also fell for the sloppy arguments as to why Chagos should be given to Mauritius, 1200 miles away and never an owner of Chagos.

Wrongly interpreting a non binding advisory opinion as good law he has negotiated to give the islands away, destabilising a crucial US naval base in the Indian Ocean in a needless way. He is being forced into offering large sums to lease  it back.

In his stated wish to smash the criminal gangs brining in too many illegals there is no stated wish to deport illegals arriving here with criminal records, and no moves to legislate in the UK to assert our right to do so. He seems to accept the creeping jurisdiction of the ECHR extending a right to family defence to people who have entered illegally and committed serious offences.

He is PM, not an international lawyer. The UK needs to use our Parliament to pass laws that meet the needs of UK people. When the ECHR told a past government to give votes to prisoners, Parliament said No. We do did not have to leave the ECHR family as a democratic body made a perfectly reasonable decision. We need to do more of that.

I

Sector strategies

The government is going to launch sector strategies as part of its Industrial plan.

We can write some of them easily. The oil and gas one will say close the whole industry down more quickly. So will the petrol and diesel car one. The net zero mandate requires the closure of many high energy using factories and activities to be replaced by imports. None of these will help growth.

The government claims it will expand housebuilding by 50%. How? They have put mortgage rates up  by losing the confidence of markets. They are driving private landlords out of the market with extra taxes and regulations. They do not have the money for a major expansion of social housing. They think more planning permissions will do the job,  mindless that there are a million plots with permissions sitting there.

The government could set out a bold strategy to boost   industry. It would need major changes of energy and tax policy. We need much more energy from home sources at much lower prices. Getting more of our own gas out of the ground is the easiest way to do this. Adding more renewables needs to be done at lower prices for their power and with a cheap solution to the problem of intermittency which is not obvious.

Corporation tax should be taken down to 15%, where revenues would go up. The Treasury ia likely to stay wedded to the idea that higher rates are necessary. It will continue to look at Ireland, awash with  business tax revenue and digital company investment thanks to a lower tax rate and do the opposite.

I will look at the prospects for some of individual sectors in future blogs.

 

 

How do we get faster growth in the UK?

I will be giving a lecture on How to get faster UK growth on Friday 24 th January at All Souls  College Oxford at 11 a.m. This is free to those interested. The All Souls College website is www.all-soulscollege@ox.uk  and will contain mire details nearer the event.

 

The government needs to strengthen its AI policy

There is no doubting the ambition of the PM’s launch of more growth in and through AI. He urges public and private sectors to greatly expand their computing capacities, and to  use the extra for a wide range of new applications. He sets out a vision of many more datacentres. He expects AI to  improve healthcare diagnosis, tighten up on tax avoidance and boost GDP.

The paper the officials wrote is long on enthusiasm and on how important much more computing is. It is short on practical policies to bring it about. Here are some thoughts on what the government will need to ask itself to make some of this reality.

The paper envisages a bigger role for the public sector, with government putting in more of the investment and adopting more of the benefits. There is no mention of how much extra money will be available for this. They revive the  idea of supercomputers after cancelling the Bristol one the previous government backed. Where will the hew one be and how much will it cost?

When it comes to the private  sector they will find the US giants of AI and the digital world are central to success. Why not take our corporation tax rate down to Ireland’s to tempt more of the US digital investment in future here? Ireland gas attracted so much with a tax rate half ours.

The strategy needs plenty of datacentres  which need plenty of cheap electricity. Will the government adopt some of the ideas around for more and cheaper energy?

Keep the Chagos islands

The Foreign Office establishment tried to persuade Conservative Ministers to give the Chagos islands to Mauritius. David Cameron would not give permission, after James Cleverly had allowed work to be done. Kier Starmer and David Lammy fell for the specious arguments about international law and are desperate to give the islands away.

The International Court gave an advisory opinion that the UK should  cede control to Mauritius. Some government advisers have we are told be warning they could take a case and find against the UK in a binding judgement if we do nothing. Last night on GB News I pointed out that the UK expressly ruled out being under the Court’s jurisdiction for any matter involving another Commonwealth country . The advisory opinion stemmed from a UN resolution of the General Assembly. Such resolutions   are not binding. The UK as a member of the Security Council has a veto on Security Council resolutions which would be binding.

Giving away Chagos would be a double disaster. President Trump wants the UK to remain the freeholder of its crucial Diego  Garcia base, not  pass it to pro China anti nuclear Mauritius. UK taxpayers cannot afford to meet the 100 years of payments Mauritius demands to lease back the base. We hear they want up front early payments of some future annual payments just as the Chancellor needs cuts in spending to reassure markets.

Politics is about choices and priorities. Taxing farmers and cutting benefits for pensioners in order to pay to rent back something we legally own is a very strange and unpopular choice.The Chancellor should say No to any such spending increase in the  middle of a spending crisis.

 

 

Jon Moynihan’s new book on growth

I was delighted when Jon Moynihan became  a peer. He has done much to foster more and better businesses in the UK and has much to offer to the debate on how the UK can grow faster and create greater prosperity and wealth for many. His often unfashionable views and clear analysis deserves the Lords as a platform.

He is this week launching the second volume of his important book on growth. This is a great book which all interested in the future of the UK and our prosperity should read. Its  main themes set out how to deliver the  faster growth we need and will be no surprise to readers of this site. He backs the lower taxes I have always campaigned for, and draws on Laffer’s work that higher rates can lead  to less revenue. He believes that smaller government is part of the answer, preferring competitive providers charging buyers and users directly. He  promotes free trade internationally. He chooses Adam Smith , not JM Keynes for economic guidance.

The book is a treasure trove of data and arguments to show how these three principles when applied work well. He shows how the more a state chooses government ownership and direction and the more it goes  for higher taxes the poorer it becomes. He wants more Singapore and less Venezuela  and North Korea in policy.

The disagreements I have relate to priorities and tactics as to how we could get the UK back to greater free enterprise, freedom and growth. Jon for example argued for doing away with pensioner fuel payments before Labour. I think that a bad idea to do in cold snap in winter when government is forcing our energy prices ever higher. We need to address  the  underlying problem of energy markets rigged against UK consumers. I would  start by dismantling the self defeating net zero energy bans, subsidies and adverse price fixing, not by mugging the pensioners.

Jon is also a vigorous free trader. Of course the world would be richer if all allowed tariff and obstacle free trade. We need however to survive in a world where many others play unfairly, so there are areas like food and defence equipment where we need to consider national security as well. It can sometimes  be better to be a multilateral rather than a unilateral dismantler of barriers.

These are tactical arguments born of a wish to see more the recommendations in Jon’s book adopted. The overall case is a strong one, well researched and argued. Back this book.This is the best book on how to remodel our economy for growth available. It should be compulsory reading in government.

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General guidance

This site seeks to provide incisive and original analysis of public policy. I forecast current trends in UK and global economies and examine major themes like net zero, welfare and work, running the public sector, and the digital revolution. Anyone with good ideas or sensible criticisms is welcome.

I highlight big issues that the BBC and traditional media ignore. I have exposed the planned £240 bn losses by the Bank of England, the £20 bn plus productivity back hole in the UK budget, the disastrous impact of extreme net zero policies on UK industry, growth and tax revenue, and the way mass migration creates strains on housing, public services and the national budget.

This is not a political party site. It is not a site to pursue individual UK politicians or influencers for their alleged misdeeds. It is not a site for over the top partisan rhetoric for any political party

I do not usually publish anything which seeks to compare today’s elected governments with Hitler, the Nazis or fascism.Generalised abuse of parties and institutions is discouraged.  I allow  contributors to advance factually incorrect or bizarre or self serving arguments for their causes and parties , but pall of letting them repeat these on too many occasions. I am not their fact checker and often disagree with the points submitted. I do not have the time to correct or counter argue in most cases.

 

The two I never publish

As they break my rules, why not find a site that is more to their liking. They are wasting more of their own time than mine.

The UK decarbonising will not protect us from floods and droughts

The UK like many countries is prone to floods and to water shortages.

When we had a fully nationalised water industry in my youth we faced water rationing in summers with hosepipe bans and in some cases standpipe water. Since then we have had a large increase in population with regulated private monopolies not building additional reservoir capacity. They say they could not charge enough to pay for expansion. The Regulator never told them to expand capacity. Cutting UK CO 2 will have no impact on all the extra  demand a fast growing population creates. The government needs to tell the Regulators to require an expansion of capacity.

Our flooding matters more now than in the past because governments and Councils have allowed and encouraged too much building on flood plains. The Planning regulators have failed to put in sufficient drainage capacity. The Environment Agency has failed  to dredge rivers and expand capacity of ditches and culverts to get water away from buildings. Cutting migration numbers would help. A concerted programme of water diversion is essential Again decarbonising the UK will not stop floods on floodplains.

Sea defences need improving where spending can protect towns and cities. We should be working on a new London barrage further down the estuary.