Mr Carney’s speech

This week the outgoing Governor of the Bank of England gave a speech which was read as dovish and temporarily drove the pound down. He set out how despite low interest rates the Bank could if necessary ease money policy more. He did not encompass all of the ways in which the Bank could ease but was right about the possibility and the general magnitude of flexibility left in the system.

There were two glaring omissions from the speech. There was no detailed examination of the worldwide Central Bank moves to ease over the last few months, as practically every other Central Bank has joined the necessary move to stop the global slowdown and stimulate growth. China has lowered commercial bank capital requirements and brought forward local authority borrowing. The Fed has cut interest rates three times and pumped money in at the short end. The ECB has resumed Quantitative easing. Brazil, Turkey, Australia, New Zealand, India and many others have cut rates. The UK has done nothing and has ignored the slowdown.

The second is he did not refer to the substantial tightening the Bank has carried out . Contrary to the global trend the Bank has just doubled the countercyclical buffers restricting commercial bank lending. Its words and actions have until Mr Carney spoke this week helped boost the pound, in itself a monetary tightening.

I ask why the Governor did not comment openly on these moves and explain the different path the UK has taken. I think he should seek to justify the tough policy being followed and tell us how this affects growth. He should understand and explain the FPC and MPC interactions and the significance of balance sheet moves by both the Central bank and the commercial banks to money conditions and to economic growth. It looks as if the Bank has yet again misjudged the situation. He talks too much about  alleged Brexit impacts and not enough about the global and domestic policy influences on price and output which are dominant as elsewhere in the world.

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Spreading wealth more widely

There are two ways of reducing equality. There is the socialist way, which is to tax the rich until enough of them leave the country or make less money owing to disincentives, or simply have less money thanks to the tax. That will cut inequality by removing the richest, but may make everyone else poorer as it takes away the demand for services and assets that the rich provided.

There is then the Conservative way, which is to find ways to help people into better paid jobs and to assist them become owners and savers. Taking tax down is one of the  best ways the state can help with this.

I have always regarded the elimination of poverty as a more important aim than the reduction of inequality, given that it does also reduce inequality anyway. Reducing inequality by driving away all the billionaires does not do much to raise overall  happiness whereas getting hundreds of thousands or millions more people into well paid jobs from low paid jobs or into work from unemployment is a big win.

There are those who think the imbalance in wealth between old and young is unacceptable. They should understand that is always likely to be the case that the older people own most of the wealth as they have had a lifetime of working, earning, building businesses, buying homes to accumulate their wealth and increase their income. Most of us starting out with no wealth and little income take time to get to a better  paid job and to owning  a home and repaying the mortgage. What government needs to do is to make sure it eases the way for the young to accumulate, save and invest.

I want to see thus new government back an ownership revolution, finding more ways to promote home ownership, share ownership, small business ownership and the rest.

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EU negotiations

There is one simple rule for UK negotiators seeking a Free Trade Deal with the EU. We do not need to pay to trade. We do not need to accept restrictions and controls on our conduct in order to buy imports from the EU, any more than the USA or Canada or Japan do.

A Free Trade deal is of great benefit to the EU, giving them privileged access to our large and lucrative market for their food and goods. They have promised one in the signed Political Declaration. They know what an FTA looks like, having recently signed ones with Canada and Japan.

I trust the UK negotiators will table a draft FTA based on the best of Japan and Canada with suggested improvements given our tariff free starting point.

We need to take back control of our fish. They should not be offered up as a further sacrifice to secure a Free Trade Agreement.

There is no need for the negotiations to take longer than this year if there is good will on both sides. The UK can show its good will by tabling the proposal soon. If the EU is decent and wants to keep its word all will be well.

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Contributions to this site

I was amused to see a contributor saying that in order to post his response more quickly I should write less often for my own site. That is not my plan. As I handle more than one issue a day I wish rather to put more onto my own site.

I am happy to allow contributors to post interesting views and disagreements. I am still getting too many long and too many repetitious posts, too many posts wishing to use aggressive language against named individuals and institutions or to download quantities of other people’s copyright material.

I will get tougher by simply deleting posts to make my task of moderating easier. Well informed posts and posts with different points of view are always welcome.

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Poor retail sales

The disappointing retail sales figures should come as no surprise to readers of this blog. We are living through an entirely predictable economic slowdown brought on by Mr Hammond’s fiscal squeeze and by the Bank of England’s fierce monetary squeeze.

We need a pro growth budget. We need the Bank of England to follow the examples of the Fed, ECB, People’s Bank of China and Bank of Japan and relax money policy to promote growth. Why is the Bank so out of line? Can’t it see the way it has cut our growth rate?

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Walk with kings but do not lose the common touch

MPs need to be confident communicators, willing to talk to anyone and to learn from anyone. As Kipling might have said they need to walk and talk with Prime Ministers and Secretaries of State , with Presidents and Ambassadors, with Chief Executives and executive Mayors just as they need to listen to anyone in a low paid job, the student and the unemployed to understand how it feels for them .

MPs need to be able to speak truth to power. They need to understand fair criticisms of a government they usually support and work away for its correction. They need to warn Ministers of criticisms and threats to what they are seeking to do, and to support them when they are in need of assistance for a course of action which is in the national interest. Opposition MPs need to remember that the government did get elected and is not always wrong, concentrating their fire on the areas where the government is weakest, making a mess or most out of line with public opinion. An intelligent opposition preparing itself for government also needs to present a cogent policy choice and to oppose based on a feasible alternative.

In the UK system every MP must have a good sense of place, being rooted in the community they represent. One of the important roles is to show how local circumstances will be affected by national decisions, and to bring local examples to bear on national debates. Working with people in the local community, the MP can offer access to government and advice on how to develop public services.

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Spreading prosperity around the country

I am all in favour of policies which promote growth and greater prosperity generally, and in support of any measures which can help catch up by the lower income parts of the UK. In many cases the policies required are the same.

The government is going to spend more and do more  on infrastructure. Ensuring good broadband with high speeds in all parts of the country is essential to faster growth. Much of the investment can be private sector, as it should generate its own return. Where public sector pump priming is necessary there should continue to be clawback provisions in the investment agreements to protect taxpayers.

Investment in better transport is needed everywhere in the UK. London has needed substantial extra investment in the tube network because it is being impeded by its own success, with crowded tunnels and trains often leading to temporary station or platform closures to handle the numbers. London does not get much investment in new roads as there is so little space to include them. Outside London more road capacity is needed for buses and cars  and more cycle lane provision. Commuter train services into many cities and towns need improving, with more trains, more comfortable trains and more reliable trains.

The government also needs to look at taxation. Too many taxes in the UK are set at rates that diminish the total revenue by deterring transactions and investments. High Stamp duties cut the volume of property transactions, which means sub optimal use of properties with people feeling taxed out of changing their property for one they can best use. IR35 is deterring self employment and losing the UK contracts. High Vehicle Excise duties have helped hit sales for UK made new  vehicles, though they are greener and cleaner than the old ones they could replace. National Insurance and the training levy are taxes on employment when we want to promote more jobs. The current rate of  Capital Gains Tax puts people off selling assets they hold that could be better developed or used by others.

The Chancellor needs a budget for jobs and growth. That should include reducing tax penalties on work, on investment and on transactions.

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What does an MP do?

There are 650 different ways of being an MP. It requires your presence in Parliament on many specified times including late nights, following the rules of conduct and Parliamentary process. It  also affords each MP considerable scope to decide how to spend the many days and hours when the Parliamentary timetable does not dictate what is being done.

The main task of an MP is to scrutinise government actions, question Ministers, debate proposed new legislation and revisit old legislation that may be failing. This can be done in Parliament by a number of means, and outside through speeches,. blogs, media interviews and the rest. MPs lead a national debate to improve matters, and to expose things that need improving.

Some MPs follow the news and social media, intervening on whatever is topical. Some MPs specialise in particular subjects so their interventions come with more expertise and knowledge behind them. Some MPs allow the agenda to be driven by their party, others try to get changes to their party’s stance on things.  Some MPs campaign to get a change to a law or government policy. Many do this based on professional campaign lobby groups and organisations who supply them with research and back up. Some of us run campaigns for ourselves based on what our constituents are telling us and on our perceptions of what changes would improve public services or the economy.

The MP needs to get the right balance between listening and leading, between taking the  views of the constituents to government to get explanation or change, and explaining the views of government or Opposition to constituents. The MP also needs to find a good work balance between time spent in the constituency meeting people, attending events and dealing with problems, and time spent in Westminster putting the case of constituents to government and participating in the debates and law making for the UK as a whole.

Some MPs try to become a sort of super Councillor locally. This is  difficult to make work, as the proper Councillors have the powers to settle local  budgets, make planning decisions and guide local services. The MP has no powers in any of these areas and may be resented by those who do have the powers if he or she grandstands too much on what they should be doing. The MP is ,however, often seen by many constituents as the Complaints department about any public service or planning  failing they perceive, so each MP has to work out how to handle that perceived role and whether it is possible in particular cases to be a force for the good or for change in local matters. There is opportunity for joint working  with local Councils as they often need government funding and approvals.

It does help to live in the local area so then your time spent shopping or being out and about  is more time when you are available to constituents if they have something pressing they want to tell you. It also means they can see you are experiencing the same local problems they are if there are road works or flash floods  or whatever nuisance comes to plague us.

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The “job” of an MP

With the arrival of many new MPs at Westminster this week for their first year in office I will write a few pieces about the role of an MP, inviting your comments on what you want us to do.

Being an MP is not just a “job”. It is a way of life. My first advice to new colleagues is you are an MP 24 hours a day, seven days a week.  Your time “working” may be closer to the standard 40 hour week of a “full time” employee, but for all 168 hours of the week you are an MP.

You are on call all the time in case some disaster strikes your constituency or our country. The constituency cases and emails come in at week-ends as well as during the week and sometimes need urgent replies.

You may be sitting at home listening to the news, but that may trigger some need to intervene following a news item. You may be in the local shops, but may then see something which needs following up for the sake of constituents.

I have included the 56 hours you are asleep or relaxing in bed though you would be wise not to take your MP work to bed with you.  I do so because if you spend time in the wrong bed or share a bed  with an inappropriate person you would soon find out that the media and public thought your bedtime a matter of public concern and debate.

Let us suppose you manage to carry out your duties in Parliament and answering emails, and dealing with constituency queries and cases  in say 40-50 hours a week on average, you will have to accept that some weeks your working hours will be much longer. My second piece of advice is do not fight the need to be in Parliament when it is sitting and debating and voting on important matters. Surely that is what you have struggled  to be able to do. Some MPs no sooner get elected than they are nagging the whips to allow them free time when Parliament is  debating and deciding important issues. This leaves them tense and the party feeling a bit let down by them as the whips agonise over which request they can allow. There are days when we sit beyond 10pm and need to be there for a variety of good reasons. You also cannot do constituency correspondence on an ipad whilst taking a serious interest in a debate or Question time. If you are in the chamber it needs your attention.

Parliament meets to hold votes and make decisions about  matters of interest to most people around 100 days a year. I those days coincide with a wedding anniversary, an important family birthday or a social event you just want to do you are likely to be disappointed. Explain in advance to friends and family that there are times when Parliament must come first. It is always possible to make up for that unfortunate truth by having a  bigger and better celebration at the next available Friday or  week-end when Parliament will not  be wanting you in  the evening or at all. Other Parliamentary days totalling around 70 offer debates which you may or may not wish to join, without votes you have to attend, so they offer more flexibility. For around 17 weeks a year  or 85 week days Parliament is in recess, and there are 104 weekend days off. This allows considerable flexibility on how to organise events outside Westminster, meet the need to do things in  the constituency and have time for yourself and your family. It is always a   good idea to book out family time for non Parliamentary days well in advance and  to stick to it in most cases.

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Helping Australia

Many of us are distraught at the scenes nightly on tv from the Australian fires. I have contacted the government to ask if we are offering assistance.

We should not  just assume because Australia is a  relatively high income country she does not need help. Faced with the scale of these events she may  appreciate additional ships and planes equipped for dealing with emergencies. We often help other countries facing natural disasters through our overseas aid department so we have some of the equipment needed.

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  • About John Redwood

    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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