Incisive and topical campaigns and commentary on today's issues and tomorrow's problems

 Yesterday I met the Leader of the new anti Euro German party, Professor Bernd Lucke. We had discussions in a small group, followed by a public lecture which he gave at Westminster.

He told us that as a German economics professor he went along with the consensus in the 1990s and argued that the Euro was a good idea. They thought the discipline of the Euro would force other EU nations in the currency to control their budgets and to become more competitive, so they could live side by side with Germany at a fixed exchange rate settled and enforced by the  Euro. He took comfort from the No Bail Out clause, which he thought offered a guarantee that member states in the Euro would have to accpet the fiscal and trade discipline, as they would be unable to resort to excess borrowing.

In 2010 Greece succeeded in establishing the principle that a struggling Euro member could indeed borrow more money from the EU and the IMF. Greece also went on to demonstrate that a Euro member could  renege on parts of its debts.  This changed Bernd Lucke into an opponent of the current Euro scheme. He apologised for misreading it in the 1990s, when some of us were warning what a disaster it could be for countries that had not brought their economies and budgets into line with Germany as required by convergence programmes.

He now thinks the troubled southern members of the Euro area should leave the currency union and devalue, to try to sort themselves out. Thereafter he thinks it may be necessary for Germany to leave the remaining currency union, as he thinks it is also a strain on France and the other members.

 He said that most people in Germany still support both the Euro and wider EU integration. Support for the EU is stronger than support for the Euro, and more Germans are now starting to worry about the social and economic strains the Euro scheme is imposing on some members. In particular many Germans agreee with Professor Lucke that there should be no more  bail outs.

His party currently has just 3% of the vote. If it is to make it to 5% to get representation in Parliament under their PR system, he is going to need to get acrosss vividly and frequently the points that the Euro scheme is miscarrying, and that Germany will be expected to pay more of the bills. German audiences should understand this, as after all they paid huge bills to try to get their own ostmark-DM currency union to work in the 1990s. In that case the area joining was much smaller, and they shared a common language and culture. The same cannot be said of Greece, Spain and Portugal. Professor Lucke is a fan of the approach adopted with Cyprus, making depositors and  bondholders pay more of the losses. This has in effect created two different currencies, the standard Euro and the Cyprus Euro. The Cyprus Euro is not freeely convertible if you hold too much of it in the wrong banks, and may be devalued by the authorities when you try to draw it out of the bank.

 We learn that Labour is to be told to abstain on the Referendum Bill when it comes before the House. It just shows how little Labour cares about whether we have a UK democracy or not. They do not have the decisiveness  to come and try to vote it down, but nor do they have the wisdom to come and support it. The party that denied us a referendum on Nice, Amsterdam and Lisbon when in office, now does not want to help to give us a referendum on a future attempt to sort out  the totally unacceptable relationship we currently have with the EU as a result of their federalising policies.

       China, the USA, Japan, Russia, Canada, India and Brazil refused to sign up to new Kyoto style targets or to join a new Treaty about global warming. It has left the Europeans rather isolated on this issue. Now China is to publish a Chinese translation of large amounts of peer reviewed research which questions global warming  in “Climate Change reconsidered” on June 15th. The Chinese Academy of Sciences wishes to make clear it does not endorse these views. It is good to see these matters being debated.

  Yesterday we were left none the wiser about what Labour would do concerning our right to opt out of a large number of Criminal Justice measures next year. They told us in their debate on the topic that several measures we could opt out from were important, but left it unclear whether they would opt out from all and then opt back in to some, or whether they would allow a large range of Criminal Justice powers to pass under the control of the European Court by opting out of none.

      I made the point that we want to opt out of these measures, as we wish to have control of our criminal law here in the UK, not find we are powerless thanks to future ECJ decisions. The potential opt out was the one good thing in the Lisbon Treaty. It is important the Uk uses its right. It looks as if the government does plan to opt out of all, and are still considering the issue of whether any of them are the best way of co-operating in justice matters with the rest of the EU. I urged the government not to opt back in, but to make a bilateral agreement with the rest of the EU on matters where we need co-operation across borders.

          Yesterday I heard more about the Green Investment Bank. It will have £3 billion of taxpayers money to invest in green projects.

          It is called a bank, but it does not plan to have any deposits. It will not raise money in the wholesale banking markets. Its initial plans are to invest the taxpayers money it receives in green projects with a view to making a profit on the investments. Many  of the investments will take the form of loans to greeen projects and companies.  It will be in effect a Green Investment Fund, not a bank.

                 Its idea of leverage is to be a co investor alongside private sector investors, who will help finance larger schemes. Without that it will not do a great deal with just £3bn of investment money in a £1500 bn economy. The fund has not ruled out borrowing some money later to augment its £3bn of taxpayer capital. It is clearly not envisaging anything like the leverage of a typical bank.

                I would be interested in your views on whether this is a good way to spend £3bn of taxpayers money?  If much of it is routed into green projects by loan finance the rate of return is not going to be that good. There are risks in concentrating investments in one sector. There could also be benefits if the fund managers build up an expertise and are the choice destination for interestign new schemes. Its early choice of schemes including a hospital project and a Council waste disposal project mean some of  the revenues of the investments are secured on tax revenues, as well as the investment coming from taxpayers.

I think the Speaker was right yesterday to allow a question in Parliament about what had happened at the week-end Bilderberg group. It gave Parliament the chance to explain why MPs do not see the Group as some rival power centre or government in secret. The pity was that Ken Clarke  did not deal comprehensively with what did get discussed at the Group, leaving it to Ed Balls to remind us of the agenda of the meeting which is published.

I do not myself hold the Bilderberg group responsible for the EU controls  placed on the UK. All those have been placed there by the UK Parliament following open debate. The chains of the Treaty of Rome were  originally approved by the electors in a referendum. Doubtless many of the people who go to Bilderberg are pro EU types, as it appears  Bilderberg does not invite and welcome vocal sceptics of the EU project. As a private organisation they do not have to balance their discussions.

Ministers who attend such meetings should have to explain what they said and why they went if MPs want to know. I am glad the Speaker allowed that to happen.

On 6th June I attended the 18th annual conference of the German British forum.  I seemed to be the one Eurosceptic invited to put a different point of view. Most of the participants expressed views which were very positive about the EU in general and the single market in particular. Most wanted to get over the message that they would like the UK to stay in, and regard staying in as crucial for our economic well being and for the trade between the UK and Germany.

There were a few Eurosceptic noises from some of the Germans. They did not necessarily like the idea of a transfer union. Some seemed to side with those in Central banking circles in Germany who do not favour monetary looseness and adventurism. All seemed to think the single market was good for them and necessary for us.

I sought to explain to them why so many people in the UK are no longer happy with our membership of the EU on current terms. I explained the strong feeling that we need a new relationship with the EU without all the rules, regulations and qualified majority votes. I had to accept some of the usual unfriendly comments from a couple of  UK participants.

I stressed that  we do not see the single market as crucial to our trade with Germany. Indeed, I am sure they would want to keep selling us their BMWs and their Mercedes, so a way will be found to facilitate trade between us, even if the UK voters vote to leave the EU. The UK has no wish to impose tariffs or barriers against German cars or other products. Indeed, it would be against international trade rules anyway, even if the UK were outside the EU. We assume Germany would not wish to block our exports to them.

I take an optimistic view about modern democratic Germany and assume they would have no such wish. I asked them at the meeting  to tell me if  they would want to block our trade. None signified they would. There is the added security from the UK point of view that they sell us more than we sell them. Eurosceptics should unite to explain to voters that there is no threat to our trade with Germany if we seek to renegotiate, or if the decision is taken to leave.

I went on to explain why  many of us no longer believe the single market is the guarantor of our trade or prosperity. The idea of free trade around the continent was never fully implemented. Instead the single market brand was used to introduce a very wide range of  new laws and regulations. It means that UK companies have to accept all these requirements, even for good solds in the UK or to non EU countries. Sometimes these EU rules make us less competitive or get in the way of selling elsewhere. The dear energy the EU is imposing is especially worrying, at a time when the US and Asia is benefitting from much cheaper energy supplies.

The single market has also been stretched to give the EU control over our borders, immigration policy and even over parts of our welfare and benefits policy. This is making the single market the problem, not the prize. UK people do not want the EU interfering in these matters, and do not see the benefit from the interference.

I do like the idea of more free votes. I explained yesterday why allowing free votes or encouraging more independence might make it impossible to construct a budget, get through tax increases or spending cuts, and do other unpopular things. There are many other issues where free votes are possible, because the outcome is not central to a government’s task or do not knock on to other policies and concerns.

Traditionally Parliament has most free votes in so called matters of conscience. These are issues where the splits are not on party lines, and where either result can be accommodated without wrecking government policy generally.   Parliament has kept the death penalty off the Statute books by free votes. Criminal justice can continue with or without it. Parliament has free votes on matters like gay marriage and abortion, where religious and  other beliefs are often passionately held and not on party lines.

This Parliament, with a Coalition government, poses the question of whether there should be more free votes on matters like the constitution. Given the level of rebellion on the issue of a referendum on the EU, the decison to whip the vote on the Conservative side did not have a great deal of traction with the Parliamentary party. Now the party is to be whipped to vote in favour of the Referendum Bill. However, you can also argue that big questions like the nature of the voting system and whether Scotland stays or leaves the Union are ones where a serious party of government should have a unifying position which most of its MPs can accept.

I would like  more free votes, but accept there do have to be sufficient things a party of MPs can agree so it can  be a governing or opposing force with some coherence on many issues that matter. The secret of leadership is finding those things, and offering free votes where unity cannot exist in good time. In a Coalition by definition there have to be more free votes for backbenchers.

It is popular here to decry the whips and to claim that no MP should ever vote according to the whips’ wishes. Let me explain why I do not agree.

People in the UK usually vote for candidates representing the major parties in General Elections. I am not looking for a further debate on which parties are now the main parties!   Most independent candidates receive very few votes, and only rarely in a special circumstance is an independent elected to Parliament.

People understand that Independent MPs may not be able to achieve much. If they wish to propose something, no other MP may be willing to second it, let alone 325 find another MPs to support it to get it through. Many people wish to influence which party governs, and understand that there needs to be some party discipline to conduct a government. An independent candidiate is also unable to say how they will vote on most of the issues coming up before the Parliament, as they will not be making the proposals and will have to respond to what the main parties decide to table as government or Opposition motions. The main Opposition party has 20 days of time in Parliament they can fill each year. The government controls the rest of the time.  An independent has no such luxury.

More importantly, to be able to run a convincing government, Ministers need to be able to take decisions with reasonable certainty that the majority party will support them. Good Ministers consult widely with their MP colleagues before committing themselves, to avoid unpleasant surprises. The whips are two way communicators. Their role is not merely to tell MPs what the government would like them to do, but also to tell government Ministers what backbench MPs are prepared to do. A wise Minister does not rely on the whip to get through anything he wishes to do, but does expect the whips to help and to exert some influence, especially when the Minister has to do something which is right but not necessarily popular.

Any good party based MP will mainly vote for his party’s whip. He or she will do so because quite often the votes will be supporting things that formed their common platform at the election, or reflect their common principles and wishes as a party group. Sometimes an MP will do so on the law of averages. They may not have chosen the policy themselves, but accept all parties are coalitions where there has to be some give and take. An MP may vote for policy A which he is not keen on, to help secure a majority within the party  for Policy B which he does like.

A good MP will also rebel against  the whip where he has good reason to do so. Good reason can include a strong constituency interest that is damaged by the g0vernment or Opposition Policy. It can also include a wish to stick to Manifesto or election pledges if the MP thinks the leadership has wrongly departed from them, or to oppose matters which have come up since the election where the MP thinks the leadership has not been true to the principles of the party. An MP should certainly vote against the party whip where he or she has promised to do so by differentiating his personal manifesto on an important matter at the time of the election. I, for example, promised my electors to vote for an EU referendum in this Parliament, so I have done so  against a 3 line whip.

This Parliament has been a much more rebellious one than usual. The main reason is many Conservatives, elected on a Conservative Manifesto, have often not felt willing or able to vote for Coalition policies that are different from the Conservative policies candidates campaigned for and MPs believe in.There has also been an understanding on matters like the budget that Ministers have to be allowed some leeway, and you do have to vote through a budget for good order, even if it is not always the one you would have liked. A Parliament full of independents who all wanted to increase spending on their pet projects and never wanted to vote through a tax increase would not permit good government. It might be a way to speed us to national bankruptcy.

 I understand the critics of the current government Help to buy scheme, who think more needs to be done to lower home prices. Yesterday I was seeking to explain the thinking behind the government’s policy, which is enabling more younger people to buy their first home.  Sometimes it pays to understand where people are coming from when you disagree with them. The recent buyers  then, of course, have an interest in prices staying up. It is a difficult cycle to break into, and all too easy from an armchair to assert you want home prices to halve without thinking about how many people would be put out of work or into bankruptcy by such a move.

 One of the reasons homes are less affordable today than twenty years ago is the much costs of purchase. Successive governments have seen house buying as an easy means of collecting more tax revenue, by increasing Stamp Duties. It is another case of government taxing something they believe is a  good, with perverse consequences. If government wanted to do more about affordability, a cut in Stamp Duty would help.

At the very least they could consider only charging the higher rates on the amount over each threshold. So the 3% duty would not be charged on the whole transaction of a £300,000 property, but just on the £50,000 above the threshold. The problem with the current system is it creates a series of prices just above a duty rate threshold that cannot function as market prices, because people refuse to pay so much extra tax for a modest change in the price of the property.  If you move from a £250,000 to a £251,000 property you face a bill of an extra £5000  in duty, five times the price rise. If you are nearer the top end and move from a £2m property to a property just over £2m you face a total duty bill of £140,000 instead of £100,000.

Another reason is the fast rate of migration into the country, placing considerable pressure on the available housing stock. Under Labour the build rates were below the rates needed to keep up with the rapid rate of migration. The Coalition has brought net migration down by a third and plans further cuts, which should help ease the housing situation.

The build rate for new homes has been disappointing over the last decade. The government has taken action to allow more housing development. In hard pressed Lodnon, where considerably more space is required, there is a more permissive regime to allow high rise blocks of flats for private rent and purchase. There is also considerable work putting in basement and roof floors into the typical terraced housing in  many a London  Street, which allows more flats and maisonettes in each property. As someone who works some of the time in London and has a bedsit there, I am all in favour of more development in the popular parts of the city. Next to my flat they have just knocked down the old building of the government  offices of London – a good sign in itself – and are replacing it with a taller block containing  flats. That is good news.