Let me return like a moth to the flame to the question of UKIP. I get plenty of criticism on this site for fighting the good fight against the use and extension of EU power on the simple ground that I do not join UKIP, who happen to agree with some of my views. I will try again to explain why I and other like minded Conservative MPs will continue to battle for the restoration of UK democracy as Conservatives.
Some UKIP supporters claim to value UK democracy, but they refuse to recognise or accept its results. They have this odd idea that there is a natural UKIP majority of all voters out there just waiting to take us out of the EU, when the reality of election after election is different.
The main reason I do not support UKIP is I do not believe it can deliver its fundamental promise of taking us out of the EU. The second reason is I do think we need to negotiate a new relationship with the EU which preserves our trade and other matters like shipping, aviation and pipelines rights. UKIP never talks about what kind of relationship it would want with the EU on exit and how it would achieve this. The third reason is we have to take the majority – preferably a large majority – of the British people with us as we change this relationship.
Over 20 years of trying UKIP has not won a single Parliamentary seat. Its best chances came at Eastleigh and Newark in this Parliament, when UKIP support was at its highest in polls. It won neither. All the polls show it will not win a single seat in 2015. There would need to be a seismic shift in the polls in its favour, taking it to a higher level of support in a General Election than it managed in a European election. No commentator or independent observer think that likely. The reluctance of UKIP to select high profile candidates for possible target seats for 2015 and get them working also implies UKIP themselves do not expect to win anything.
Democratic politics is about the day to day work of looking after a constituency, listening to your voters, and representing all, including those you disagree with. It is about trying to win the big public debates, to move opinion in the direction you think will do most good for your fellow countrymen and women. I think principles do matter in politics, but those of us who have certain democratic principles have to understand that we only have the right or the opportunity to implement them when enough of the public agree and will vote for them. Compromise and toleration are also important parts of democracy. They do not mean all who practice these democratic traits are traitors or liars as some UKIP supporters constantly assert.
Starting today I am producing a series of pieces which invites bloggers to send in their ideas on what should be on offer in a Manifesto for May 2015 in various areas.
Let us begin with roads. The Labour years saw little roadbuilding, followed by substantial further cuts in capital as their response to the financial crisis at the end of their period in government. The Coalition lived with most of those cuts for the first half of this Parliament, but is now relaxing the controls on capital expenditure.
As more than 85% of our travel needs are met by road vehicles, a growing economy clearly needs more roadspace. Some wish to see their town or village bypassed, as heavy traffic still thunders through some settlements. Some wish to see more capacity on the main motorways and trunk roads, as the core network is under considerable stress at busy times of day. Some wish to see improvement in local roads, as they find blocked junctions and bottlenecks on crucial parts of the local network when taking children to school or trying to get to work or home or to the shops.
As a minimum I suggest we need a continuous south coast highway to dual carriageway standard from Kent to Southampton. We need more capacity to Felixstowe and the east coast, on the M3 and M4 westwards, on the M25, on the M2 and the M1. We need a fully dualled A303 to the west country, more capacity across the Pennines, an improved A1 (M) all the way to the Scottish border, and better links between the major northern cities.
Assuming Scotland votes to stay in our union this September, we will find devolution back on the agenda soon afterwards. All three main parties have promised more powers for Scotland. All three will I am sure wish to honour that pledge.
This time it will not be possible to duck the issue of who governs England? It will be too unfair for Westminster to carry on as if nothing had happened with respect to the government of England, whilst the rest of the UK led by Scotland gets yet more powers for self government in their own Parliament and Assemblies. The SNP agrees with me about this. The SNP does not think their MPs at Westminster should settle matters for England that are settled for Scotland in the Scottish parliament.
I write again about this because recently I was invited onto a 5 Live discussion to tackle the issue of England. My fellow disputants were Jim Murphy for Labour and Menzies Campbell for the Lib Dems. The other two are both Westminster MPs sitting for Scottish seats. Their approach was simply unacceptable to England.
It is true they did preface their remarks by saying this was primarily a matter for England. They could say no less, as they and the whole political establishment have always said Scottish devolution and independence is entirely a matter for Scotland. However, they both went on to accept there will be an English devolution problem, and expressed the view that this could be handled by more devolution of power to regional government or local government in England.
No, No, No. I had to force my way back into the conversation to remind them I was the only one representing England. I spoke for England, and said my country was fed up with attempts from outside to balkanise and split it up. The last Labour government attempted this, and were strongly rebuffed in their own heartland of the North-east where the public said they did not want regional government. If Scotland is going to have control over some of its own taxes, so will England expect no less. We will not need the help of Mr Murphy or Sir Menzies Campbell to impose taxes on England when Scotland is doing her own.
UK consumers pay dearly for their fuel, mainly thanks to the very high rates of tax on petrol and diesel, and substantial tax on domestic fuels through company tax and VAT as well. In the debate on Scotland’s future the issue of oil and gas tax revenue is more narrowly focused on Petroleum Revenue Tax, a tax on production, and on corporation tax on the producing companies. So what has been happening to this?
The trend of tax revenues on production from the North Sea has bee downwards for sometime. This is another area where the Treasury has been too optimistic in recent years. In June 2010 the Treasury forecast £1.8bn of Petroleum Revenue Tax in 2013-13, and £1.7bn in 2013-14.
Instead they received £1.7bn in 2012-13 and £1.1 bn in 2013-14. Current forecasts are for much lower figures from here than the 2010 estimates.
On June 2010 the Budget forecast £8.7bn of offshore corporation tax revenue in 2012-13 in total, and £8.9bn in 2013-14. Instead the Treasury collected just £4.4 bn in 2013-13, and £3.6bn in 2013-14, or 60% less than the 2010 forecast.
As the oil province declines, so the tax take will reduce substantially. The government is having to offer more tax offsets and lower rates to encourage more marginal production, whilst total volumes decline. Once again past forecasts have been far too rosy about higher tax rates and definitions, forcing not only lower estimates but also a change of policy to a less penal regime.
I am often asked how bad would a Scottish exit be for the UK economy?
I reply by stating that I would like Scotland to stay in the union. It is important it is their choice, and even more important that they then unite behind the democratic decision they are about to make, whichever way it goes. I still expect Scotland to vote to stay in.
The facts are straightforward. Scotland has 8.3% of the UK population. At current rates of economic growth it would take three years to replace the lost Scottish output. At current rates of inward migration it would take a generation to replace the lost numbers of people, but as the aim is to bring the rate down more it would take a couple of generations. I am not recommending that we have to seek to replace the lost people, merely trying to give a sense of relative size.
Scotland receives 9.3% of total UK spending. Whilst the Scottish government and the UK Treasury disagree about some of the detail, they say that Scotland receives somewhere between 122% and 116% of the public spending per head of the rest of the UK.
Scotland contributes 7.3% of the Income Tax revenue of the UK, 2% lower than her share of the public spending. Other taxes are variable, from the 14.1% of total UK spirits duty the Scots pay, down to 5% of Stamp Duty.
The SNP point out that Scotland contributes the lion’s share of production and company taxes on oil and gas output. As we have seen , these tax revenues are now in decline, reducing the Scottish total tax contribution.
One of the big arguments is over how quickly this will decline. If it does so with no obvious replacement, then Scotland in the UK will need to draw more money from the rest of the UK to make up the shortfall.
The English case to keep Scotland in the Union is based on history, politics and sentiment. It is not an economic necessity from England’s point of view.
The sudden deaths of the passengers on the airliner over the Ukraine has come as a dreadful shock. If it was mass murder we need to know who did it and why. The families of those who have lost loved ones have our deepest sympathy.
The first requirement is for the establishment of an authoritative and independent enquiry to see if the airliner was shot down as most assume and if so how it was shot down and by whom. If not we need to know why it crashed.
This is a dangerous situation which will only be made worse if states comment and act on rumour or suspicion before we know the truth of what happened.
Lord Hill has to run the gauntlet of the European Parliament endorsement hearing. They will want him to be loyal to the Treaties Conservatives have opposed, loyal to a federally inclined Commission which we oppose, and keen on the project of ever closer union which the UK cannot accept. He will doubtless use language to get through his test which will upset Eurosceptics.
As Commissioner he will lead a split life. One part of him will have to judge, decide and discuss policy and actions from a federal viewpoint, carrying out the wishes of the majority in the EU. The other part will have to remember that the UK wants none of this remorseless drive to greater union and has different interests and a different viewpoint. It’s becoming an impossible job, as the UK slips away from the EU in mood and rhetoric.
He has to help the UK government secure him a decent job within the Commission. I think there is too much emphasis on this issue. Many of the EU Commission jobs are important because the EU now has so much power. The UK Commissioner is only going to be able to do one of them. Within reason it does not matter that much which it is.
Thereafter, what matters is how strongly and well our Commissioner represents the UK case. Whilst under the theory of the EU he has to swear an oath for the great good of the EU and co-operate with the federal drive of the institutions, in practice he will be judged at home by how well he defends the UK’s interest and prepares for the UK renegotiation. He is unlikely single handedly to turn the rest of the EU round to the UK’s view that it should be a trading arrangement and not much else. Instead he should concentrate on getting a new relationship for the Euro permanent outs as the greater Euro zone presses on to political union.
Of course, were Labour to win the Election rather than the Conservatives, his brief from the UK would change. I think whoever governs the UK after 2015 will be forced to seek a new relationship, but Labour will not offer a referendum so they have taken away the UK’s main negotiating card that any new relationship has to pass a public test of acceptability.
This week Parliament has tried to sort out a serious legislative mess of the EU’s making. This is no way to run a serious country. The European Court of Justice recently struck down a European Directive on Data Retention. This Directive, agreed to by the last Labour government, had been faithfully transposed into UK law. The ECJ left us not knowing what the law now is, as the UK’s enactment of EU law can itself now be challenged.
All three main parties rushed to agree a new Westminster law which they hope will now be compatible with EU law as redefined by the Court. There is, of course, no way of being sure it will do this. All the time the European Court is at war with the EU legislature we will live with an uncertain law. In addition, as the Home Secretary confirmed to me, the EU itself may have a go at new legislation, which would then require the UK to start all over again with its implementing legislation.
Civil liberty campaigners think the new law goes too far in allowing the authorities access to records of people’s phone calls and messages. The government and Opposition point out the UK put more safeguards in our implementation of the EU law than they need do. The latest attempt to implement adds additional safeguards and requires new legislation in two years time, along with a major review.
Whatever the rights and wrongs of the judgements made about how much we need to authorise to keep us safe, surely more people can agree this is not the right way to legislate in a democracy. Parliament should decide these matters, not the EU and the ECJ. Parliamentary law could then be more consistent, and not subject to sudden reversal by a court, which just serves to undermine the law and make enforcement difficult if not impossible.
There was some good news in the reshuffle. Mr Hague’s decision to leave Parliament next May means we now have a Foreign Secretary who has stated he wants out of the EU if we do not get a much better deal. That is a better stance for our negotiation, and encouraging that he agrees with many of us that the UK’s current position in the EU is unacceptable.
The decision to replace Mr Grieve as Attorney General suggests according to some of the accompanying briefing that the government is planning to change its approach to the European Convention on Human Rights. Many Ministers and others are frustrated that the Convention and Court gets in the way of the UK seeking to extradite certain criminals and run the borders policy it wishes to run.
Mr Gove’s arrival as a speaking Chief Whip with wider duties than a traditional Chief Whip makes sense in the run up the General Election. Nikki Morgan as the new Education Secretary needs to push ahead with reforms that Mr Gove has instigated.
I invite your thoughts on the whole package.
In 2008-9, well into the financial crisis, the UK state raised £22.5 billion in Self Assessment Income Tax, with a top rate of 40%. The following year, the last year at 40%, saw another £21.7bn collected.
The 50% rate then introduced was assumed by the Treasury to yield a lot more self assessment income tax, as high payers usually have to complete the self assessment process and are an important part of that total. In the June 2010 forecast the Treasury looked forward to raising £29.2 bn from self assessment in 2012-13, and £32,5bn in 2013-14. These forecasts were reduced steadily in successive years. So what actually happened?
In 2012-13 the Treasury collected just £20.6bn in self assessment Income Tax. In 2013-14 it managed £20.9bn. In other words, the Treasury collected 4 -5% less in those two years than in the last year of 40% tax, despite the inflation in the meantime.
More worrying is the gross inaccuracy of the forecasts. Revenue in 2013-14 was a massive 36% down on the June 2010 Budget forecast in 2013-14. It was 32% down on the Budget 2011 forecast.
Much of the debate about optimum or desirable tax rates in the UK is conducted without reference to any of these outcome numbers. Too many people assume the Treasury model and official statements about the impact of higher rates are correct, where the official word is they do not have a lot of effect either way.
People interested in this topic should instead study the outturn figures. They are markedly different from the forecasts. They show that self assessment Income Tax was hit badly by the 50% tax rate, and has been running a huge one third below forecast.