John Redwood's Diary
Incisive and topical campaigns and commentary on today's issues and tomorrow's problems. Promoted by John Redwood 152 Grosvenor Road SW1V 3JL

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The Conservatives and Brexit

The leadership contenders for the Conservatives need to own Brexit, be proud of Brexit and say how government should now use the Brexit freedoms to make us more prosperous and successful.

Brexit is only done in a legal sense, and is still encumbered with an EU Agreement that damages Northern Ireland. So far government has failed to change EU taxes, refused to amend their austerity economic controls,  repealed very little of their excessive anti innovation and enterprise regulations, and has stayed wedded to some of their worst net zero, fishing and farming policies. Despite all this our service sector trade has boomed, we have joined the TPP, we are now saving £12 bn a year on contributions and have avoided our share of the huge Euro 800 bn debt the EU is now running up.

If we look at the history Conservatives won a decent majority in 2015 greatly helped by the pledge to hold an EU referendum. Some  Conservatives helped secure a decisive  win on a big turnout in the referendum, whilst the leadership wrongly backed the losing side and then resigned. Mrs May tried to give us Brexit in name only and lost the majority as a result and from wider misjudgements in her manifesto  in the stupid 2017 election. In 2019 Conservatives swept to a big win on the single slogan of Get Brexit done. In 2024 the party playing down Brexit and signing the damaging Windsor framework went down to a huge defeat for that and other related reasons.The failure  to change EU economic style controls, the refusal to exercise our new ability to control our borders  and bad Central banking led to a big loss of support on the back of an avoidable inflation and real income squeeze.

So history tells us the Conservatives back Brexit or they lose. It is curious that the only one of the 6 leadership hopefuls to have voted Leave, voted against the May sell outs and not supported the Windsor framework is removed first by the MPs. In the next rounds they need to make sure chosen candidates are now proud we can govern ourselves again, and keen to show how we can do so much better if we stop modelling our laws and taxes on a failing EU model. They should start by asking why GDP per head in the US is double the EU average.

It was notable in the last eight years how the most talented and dedicated Brexiteers like David Jones, William Cash, Iain Duncan Smith, Mark Francois, Craig Macinkay, Marcus Fysh and others were not used in Ministerial roles to drive through the benefits we all saw from the freedoms.

Budget responsibility

It is a farce that yesterday the government put a Bill through the Commons to “ensure” budget responsibility. It requires the Chancellor to commission an OBR report and forecast when she makes fiscal announcements on spending and or taxes. It is a farce because the Chancellor has announced large additional spending plans on nationalised industries and on public sector wages, over and above the allowed for rises in the last OBR budget assessment. We have not been offered any OBR forecast or comment on the possible inflationary  effects of the pay award or of the enlarged spending plans.

It is a farce because the Bill does not course impose any penalty for non compliance on the responsible Minister or government. There will only be budget responsibility if the Chancellor wants it and imposes it. She will decide. If she wants to be responsible she does not need an Act of Parliament to make her so. If she wants to be highly political and stuff more money into public sector wages and nationalised businesses she will be able to do so without penalty.

From the time of New Labour onwards there have been too many laws and targets purporting to bind the government, and not enough concerted and sustained Ministerial action to tackle the underlying problems. This kind of legislation is at best silly and at worst as with some of targets damaging.

Labour enact nationalisation of a largely nationalised rail industry

The last government lived with a largely nationalised railway. It inherited public ownership of all the tracks, , signals and stations. It continued a regulatory control over most fares and all timetables. It added to the number of train operating companies run by the state as franchises ended or ran out of money.
The new government wants to show its Union bosses it still believes in nationalisation so it put a Bill through the Common yesterday that instructs the Secretary of State who designed the Bill not to use private sector companies in future or to have any competitive challenge to the state incumbents. It continues the bizarre Blair inspired idea of legislation to bind Ministers with no penalties for failure and of course the daily opportunity to simply change the law if it no longer suits. The last government did this too, setting targets that it could not guarantee to hit on net zero for example.

The Bill is a shoddy piece of political signalling. Why shouldn’t the railways seek private sector bids to run parts of the railway better with less cost for taxpayers? When did a monopoly producer lower prices and offer better service than competing providers? How can the government control the run away costs of the largely nationalised industry as it moves to complete public sector ownership?

Last year the railways cost taxpayers £33 bn in losses and capital spending, all to be found from a stretched national budget. This Bill will come at further excessive cost to taxpayers.

Where was the Shadow Spokeswoman highlighting the dangers to passengers and taxpayers? Where was the case reminding us of the great success of Hull trains,the  one example where a challenge to the monopoly was allowed? Where the reminder of the colossal waste and cost overrun of HS 2, a truly nationalised wannabe railway which will never get to the north of England despite that being the main point of the plan!

The role of a Shadow Cabinet Minister

I was a Shadow Cabinet Minister after the big election defeat of 1997. A Shadow Cabinet Minister does not draw an additional salary above the MP pay, unlike a Minister, the Leader of the Opposition, select committee chairmen and some other office holders. It is nonetheless an important second job for an MP, and crucial to proper scrutiny and Parliamentary debate of the main government departments. I think we need to hear more from various Shadow Cabinet members, given the actions of the government.

I found it a demanding seven day a week job as is being an MP. I set out to directly  shadow the department I was responsible for. With my team of shadow Ministers and helpers we sought to anticipate the statements, problems and policy announcements of the department. Sometimes we would state in advance what we would do, sometimes we would warn against likely government actions. We aimed to be well briefed by the time the government made a decision or a statement. We also developed our own distinctive alternatives to government actions, identified problems they needed to solve and gave positive advice as well as criticism.

A volunteer  joined the team  and did a great job briefing the press. I generated a daily story or comment or proposal and she talked to   the main newspapers every day  on an individual basis, offering follow up material and direct quotes from me. I did additional weekend briefings on the phone with a ring round every Saturday morning. The press developed confidence in the accuracy and news content of what we were doing, particularly wanting stories about Ministerial mistakes and bad conduct. There was plenty of material. When we shadowed John Prescott’s super Ministry we had all of transport, the Environment, the regions, local government and housing to comment  on which made for an exciting agenda.

The leadership candidates for the Conservatives need to set out this week as Parliament returns what is wrong with this new government’s approach and how they would take control of our borders, avoid tax rises, raise productivity and quality in public services, lift the growth rate, restore law and order and uphold freedom of speech.

The elections in Thuringia and Saxony

The Success of the AFD and a new so called left wing anti migrant party BSW in the two latest German regional Parliament elections confirms a pattern of voters despairing of traditional parties. In the U.K. the two main parties got just 58% of the vote in the General election. In Germany despite a revival of the Conservative CDU the two main parties were way below 50% together with the Chancellor’s SPD slumping to just 7% . Their national poll standing for next year’s federal election is only 15%. The three parties of the governing coalition struggled to get to a combined 10%.

 

Chancellor Scholz announced a reduction of benefits for illegal migrants and more deportations too late to win back lost votes and with many people cynical about whether the government will in practice do anything effective on migrant numbers. Germany of course has to accept free movement from any EU country so it is dependent on border enforcement in other countries.

There has been a growing gap in many countries between the pro immigration policies most governments and public wishes. There are similar schisms over various net zero policies. The traditional German parties refuse to enter coalitions with the AFD though they have not said the same against the other new anti migrant party. Meanwhile the CDU has gained support by shifting to a tougher stance on the issue.

 

What many Conservative and Reform voters want.

This is an amended version of an article commissioned by the Telegraph in 2022. I was asked when speaking at a lunch on Friday to reissue a statement about what Conservatism is.

Many of us believe people should keep more of their own money to spend on themselves and their families. We want to help people on their individual journeys to success and greater prosperity. We want government to make life easier for all those who can make their own way in the world, with lower tax  rates and sensible rules. We want to live in a successful economy where low tax rates generate more tax revenue from  the extra incomes and business they bring. Then we can be  generous to those who need help and cannot earn their own living and  we can afford  great quality public services. We want everyone to have the opportunity to own their own home. We would like  many to own a share in the business they work for or be able to set up a business of their own. Government should not tell people how to live their lives, but should help people with great education and with public order. Government interfering and investing in business usually wastes money, racks up losses and makes things worse. Ask the postmasters a nationalised company sent to prison, or rail travellers in the north waiting for an HS 2 train.
          We are against those who glue themselves to the roads to stop people getting to work or to prevent ambulances getting to patients, to be on the side of those who leave home early in the dark to ensure the rest of us have milk, bread and emergency services that morning. We oppose the politicians who want to prevent us getting out more of our own gas and think of the needs of the rest of us who have gas boilers and want to keep our families warm  over the winter.
         There is indeed an anti growth coalition. It is a coalition which despises all those who go out to work in the private sector to make and deliver life’s necessities and to keep our utilities running. It sees the businesses that supply  us with clean water, heating fuels and broadband as the enemies that should be taxed  more then nationalised. When they were nationalised they were starved of investment as it all had to compete with the cash demands of the NHS. The anti growth protesters  seek to impede or prevent new homes, new factories and above all new energy supplies , whilst backing ever more illegal economic migrants  who of course will need new homes, and more utility supply to have a decent life here.
           The protesters who try to disrupt the lives of those who work hard to keep our society functioning are backed by an army of left wing party politicians. They include the nationalists that want to bust our country apart. They  use devolved government not to help their electors but to grandstand against the national government. They include the Lib Dems who do  not ever want us to get out more of our own  oil, gas or coal. They  blocked more nuclear power as well when in government . They  would leave us without heating or hot water on days when the wind does not blow. They of course include the Labour party, bound to the Trade Unions who think now is a good time to engineer as many strikes as possible. These strikes on the railways threaten their own members jobs. The railway needs more passengers, not less, to generate the extra fare revenue  to be able to pay their wages. Striking means more people do without the trains  so  more trains run empty yet the Unions expect yet more subsidy for a service people do not want to use or are prevented from using
          We favour freedom and fairness. We need a new balance in policy between those who do and those who complain. We need to let all those who turn up for work, undertake the training and look for promotion to keep more of what they earn. We need to say No, not give in, to all those who want to block every new private sector idea, impede the new investments, the new mines and gas wells, the new fields of food and new factories to make products for the NHS and other customers. The world does not owe the UK a living. We are too dependent on imports and therefore on the goodwill and loans of foreigners. The new UK can be a shining example of enterprise and freedom, where people will want to invest more and create more jobs, because we could have a government that believes in the power of enterprise to help people to more prosperous lives.

F

 

Too much Taxing makes a country poorer

Governments tax tobacco to stop people smoking. They tax alcohol to limit people drinking. They tax petrol and diesel because they want us to use less. They tax plastic waste to get rid of it. They tax flying to reduce it. You get the idea. Government knows better than people what is good for us and imposes taxes to restrict us. It imposes VAT on non food purchases, as it thinks we should make do with fewer purchases. This can lead on to an outright ban as it will soon impose on new petrol and diesel cars . It is government’s puritan tendency. Keir Starmer represents this tendency well, displaying his inner Malvolio all too often.

Government also loves taxing work, saving and investing. This government seems to see work as an unreasonable interruption to people’s lives as it looks at giving rights to people to four day weeks and more flexible and home  working. It may be readying a new tax attack on anyone who works long hours and earns more than the government thinks desirable. They will reinforce the bias in the tax system to penalising success and enterprise.

The bias against so called unearned income is particularly damaging. If you work hard and save some money from taxed income you will then face higher taxes on the income and gains that generates. This is not unearned income. This is twice earned income. You first had to earn the savings, then you have to work at choosing and managing  the savings.

Of course government needs to collect some tax and will rightly get more of that from better off people. All the time we opt for free at the point of use for health and education, and all the time we need to defend ourselves as we do there needs to be sensible taxes. The aim should be to keep the rates of tax down and the number of taxes under control, as that is the best way to grow the economy. It is important to stop undue spending growth on everything from falling productivity to bigger losses by services like trains and the Post Office where customers should pay.It’s not core public services or pensions we cannot afford. It’s Bank of  England losses, the world’s dearest new railway, the bungles of the public sector which lead to big compensation bills, the arrival of so many illegal migrants needing hotels  and the  £30 bn loss of productivity.

The productivity collapse in the public sector

The ONS put the loss of productivity at 6.5% 2020 to 2023. The Treasury say we lost £20 bn that way. It looks more like £30 bn.

How did it happen? There was of course a loss of productivity in schools when they were shut for Covid, but that bounced back when lockdowns ended. There was a loss of output in the NHS when many dedicated staff worked hard and at risk fighting Covid but other NHS activities were paused or reduced to avoid cross infection. That too bounced back.

What stayed was the  large recruitment of extra  civil servants and public sector administrators across many departments and public bodies. No resource was spared in fighting the pandemic, but normal business did not resume thereafter. Civil service numbers rose from 445,480 in 2019 to 519,780 by 2023, an increase of 74,300 or 17%. Total public administration numbers rose by a fifth to 1.2 million.

I tried to get the government to slim administration back down to 2019 levels by imposing a recruitment freeze on new employees from outside the public sector. That way no one would be sacked, and employees would gain more promotion opportunities. Every time someone left to retire or take a job elsewhere the management would decide whether they could eliminate that post, or promote someone into it whilst eliminating theirs. they could be guided by the staffing numbers and organisation chart for 2019 in where they were trying to get to, adjusted to any changed priorities. Only a few Ministers insisted on this. The government as a whole was persuaded to try to do one in one out, which of course does not restore lost productivity. I expect the new government will drop any idea of trying to get back up to 2019 levels of achievement.

Many large government functions like welfare benefits and grant allocation can be done with fewer people and more use of the many computers the state owns. Why isn’t this happening?

Is working from home a good idea?

I am not going to condemn all working at home. It would be hypocritical to do so, as I often work from home. That saves time battling bad transport systems and allows me to work without interruptions or distracting noise.
Going to the office regularly is needed to socialise ideas, keep in direct contact with colleagues, be there to mentor and advise new recruits and to have informal meetings to exchange ideas and keep up to date with problems.

Getting this balance right is difficult. Done well by people with a good work ethic  part working from home raises productivity. As much office work is filling in and drafting things on a computer you can do that as well from home as the office without the wasted travel time. Done badly where home distracts the employee with many other things and they miss the trends,ideas and problems going to the office would let them pick up.

Each senior manager needs to work out when and where collaborative working in person is needed and when working from home might boost productivity. In a mixed business where some employees need to be the workplace every working day there is even more need to come to a fair settlement over home working for those who can.

My observation of central government post Covid was that offices were too empty. Meetings with Ministers often saw the MP, Minister and private Secretary in the same room but the senior officials at home. Clearly  taxpayers are paying a lot of money for large swathes of expensive  central London office accommodation which is not used. Use it or lose it.

 

 

The Prime Minister makes 2 big mistakes in his speech

The Prime Minister made a pessimistic uninspiring speech yesterday around the theme of “things will get worse”.

It was a big mistake to tell the nation he now leads we are living in a rotten society. He blamed all of us as well as the last government and told us off for being divided and rotten to the core. As someone given a large majority on just one third of the vote it is a bad idea to attack us and tell us he has to stamp out our divisions and lock up those who are leading the rottenness.

It was an even bigger mistake to tell us he will make changes that will make things worse, as some necessary purgative for our societal breakdown. Governments should not set out to make things worse, as they might succeed. Then they will be to  blame for the bad condition of society and may find it difficult to restore better outcomes.

I have one bit of advice to a PM and  Chancellor who say they are now going to do things they do not want to do. Do not do them. No one is making them cut benefits to pensioners or put taxes. If they want to give big pay rises they need to link this to productivity where even the Treasury says £20 bn has gone missing. If they want to spend more on their nationalised industries and net zero they need to cut the Bank of England losses to pay the bills.

It is never a good idea to do the wrong thing. Lower income pensioners need their fuel money. Higher taxes on investing and business will slow growth, cutting revenues and giving us a bigger black hole.