Shinfield Eastern Relief Road

I had previously taken up the question of delay to completion of the Shinfield by pass. The Council has now provided the following explanation:

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Social care and the prudence paradox

If you buy your own home and save for your old age you end up paying for your own stay in a care home should you need one.  If you rent your home and spend all your earnings the state will pay for your time in the care home at the end of your life.

All parties in government have wrestled with this paradox. The prudent pay more tax, and end up losing their capital if they need long term care. All parties have so far concluded it is too dear to offer free stays in care homes to all who need them. All have rightly concluded if someone without any assets needs looking after in old age the state needs to step in to help.

The resulting structure is complex and cumbersome. All individuals have a right to free health care from the NHS. The amounts and cost of NHS care usually escalate dramatically in the final years of a long life. Any time a person spends in hospital provides them with free board and lodging as well as health care. The aim, however, is to enforce a rigid distinction between health care – drugs, doctors time, operations – which are free, and social care including board and lodging which is  only free if you have no money of your own. The elderly person staying in hospital has an adjustment made to their state benefits and pension to reflect their reduced living costs.

The children are third parties in the struggle between  elderly person and the state over what the state will and will not pay for.  With elderly people living into their 90s, the children are often  pensioners themselves by the time the issue gets intense. Some seem to think they have a right to inherit the “family home” or the home of their parents. This is not normally the actual family home they lived in 60 years earlier, as people usually move on. Others say that if the elderly person has moved into a care home and is not going to move back to his or her home, it is only reasonable the property is sold and the money raised is used to pay the care home bills. No-one argues the children have to pay the care home bills of any elderly person who does not have the money to pay, though some chose to.

With social care back on the agenda, I would be interested in further views on what is the right balance between private payments and state assistance. Should prudence be better rewarded? If so, how?

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UK employment continues to grow to new record levels

The UK has  302,000 more jobs than a year ago, in today’s employment figures. There are 2.7m more jobs than in 2010.  The UK’s employment rate, at 75%, is around the German level, and well above France at 65%  and Italy at 57%.

I doubt we will hear these figures on the main news bulletins. All those who tell me a country has to  be in the single market to prosper, have to explain two inconvenient  facts. Why are Greece, Portugal, Spain and other countries in the single market so cursed with mass unemployment? Why do countries like New Zealand, Australia, Canada, Singapore and the USA flourish with low unemployment by EU standards whilst not being in the single market?

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Cheaper energy

The news of problems with Toshiba’s nuclear power generation investment plans will prompt some new thinking here in the UK. Some in the press are suggesting that in order to carry forward a programme of additional nuclear stations beyond Hinkley, the UK government will now itself have to venture into being a minority investor in these new plants. Private sector companies are finding it a stretch to handle the very high up front investment costs of a new nuclear station. They also have to worry about the long term nature of their commitments, and the eventual costs of decommissioning the facilities when they are worn out.

 

It is true, as the government argues, that nuclear has merits compared to wind power. It is much more reliable, and the plants can be run permanently without the same amount of back up power than interruptible renewable sources require. Whilst a nuclear plant is dear, you do not need an equivalent amount of stand by capacity, as you do for wind. The idea has been to supply unsubsidised power from nuclear plants. That means guaranteeing them a high and constant price for the power they will generate, given the high fixed costs involved. Some see guaranteed prices as just another variant of subsidy.

 

The enthusiasm for UK nuclear is based around the decarbonisation plans of Labour and the Coalition governments, in harmony with the EU requirements. The new government, leaving the EU, can rethink  our energy needs and vary the policy. The overriding objectives should be to provide a sufficient supply of affordable power. We need that both to pursue the new Industrial strategy,and to tackle fuel poverty. Building a new nuclear industry here may make sense, but only if it can be done in a way which delivers sufficient power at affordable prices. The government is pressing ahead with Hinkley and in Cumbria. It may be the case that a new fleet of gas powered stations will also be needed to ensure plentiful good value energy.

What is sure is that you don’t have a meaningful policy to fire up many industries we have lost or where there has been decline unless they have access to cheap power.

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Housing numbers

During my last meeting with Wokingham Borough I was reminded that Wokingham has a target to build  856 new homes a year from 2013. (LEP study of housing need Feb 2016) That makes Wokingham’s share of the West Berkshire total 30%, with the other Councils  providing the rest of the 2855. Reading itself has a lower target of 699, despite having substantial brownfield redevelopment potential, the coming of Crossrail and the possibility of more starter home and smaller flats in the centre.  Bracknell has to build just 635 a year. Going forward there needs to be a fair division of the requirement.

The total numbers needed in the future also should take into account any change of migration policy designed to lower the numbers of additional people coming to live and work in the country as a whole. The current high numbers of new home sis partly the result of adding 330,000 extra people each year to our population, as we wish anyone coming to live and work here to have access to decent housing. If the government sticks to its target of a substantial reduction and takes the necessary measures on leaving the EU, could  the targets be lowered.

Were the Council to agree to a new settlement at Grazeley of 15,000 homes that would on its own provide 17.5 years worth of housing against targets. Would the development be spaced out over such a time period? Is it feasible to say no to building on any other large sites throughout such a  long time period? Or  might Grazeley  add to the build rate? If other sites are granted on appeal or run over from past grants of planning, then we need to build even more infrastructure to take care of a faster build rate than present plans.

I am writing to the authorities to ask what thought is going in to future targets in the light of these issues.

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UK inflation falls in January compared to December. Core inflation holds steady.

The CPI index fell 0.5% in January compared to December. Food prices also fell 0.5% over the same time period, despite the bad weather effects on vegetables.

Core inflation  over the last twelve months stayed at the same level as in  December, at 1.6%.

Overall the CPI  rose  by 1.8% over the last twelve months. This was a higher annual rate than December owing to the fall out of a very good month a year ago. The main factor, accounting for half the annual increase came from higher oil prices affecting transport. The UK inflation rate is mirroring the German and US rates, affected by the same world oil price rise. The other most buoyant item was the increase over the last year in restaurant and hotel bills, reflecting higher wages.

January’s figures were helped by falls in clothing and footwear prices, and by the intense supermarket competition which kept food prices down.

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The UK leaving the EU is no divorce and we certainly do not have to pay alimony

One of the more absurd analogies that pass for debate in the EU is that the EU and the UK need a divorce settlement. For a body which loves Treaties and lawyers it is bizarre. The Treaty makes no provision to require a departing state to pay an extra one off payment, nor does it seek or have any power over former states to carry on paying contributions. There is no need for lengthy negotiations on this obvious point. The answer to the request for a large one off financial contribution is No.

To make this a more interesting and longer article, I will however extend the divorce metaphor that so many like. Were this a divorce, it is between two high earning partners. The domineering husband, the EU, earns six times as much as his UK wife. He lives in a large suburban family home in Berlin, with a smart modern flat in Brussels. His wife has a country cottage in Wiltshire where she has retreated to as whenever they meet she just gets shouted at and told what to do. He has a large Mercedes. She drives a modern Mini.

Fortunately there are no children from the marriage. She is generously offering a clean break settlement to the husband to speed things up and to get on with her life, free of his endless demands for cash and obedience. It’s none of her business that he has run up huge bills with his Greek affairs, as she did not agree to any of those and made clear her wish to keep out of it all at the time.

As the husband wishes to undertake the divorce in a foreign court and she intends to live under UK law it is difficult to see how the husband thinks he can carry on with his demands once his foreign jurisdiction no longer applies.

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Heathrow expansion – Draft Airports National Policy Statement

The Government is currently seeking views on the draft the Airports National Policy Statement. Details of the consultation can be found here: https://www.gov.uk/government/consultations/heathrow-expansion-draft-airports-national-policy-statement.

There are a number of consultation events taking place, such as one in Bracknell on Thursday 16 February 2017 at Carnation Hall. Further details are available on the consultation page.

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The established media peddle plenty of alternative facts

It is fascinating to see the traditional media wrestling with other ways of looking at the world. They dont seem to like competitive opinions. It is high time some of their own alternative facts were exposed to criticism.

The media regularly tells us that the Conservatives in government cut public spending. If you look at the figures you find that it climbed in real terms from £249bn to £292 bn under Mr heath, from £326 bn to £437 bn under Mrs Thatcher and Sir John Major, and has risen again under Mr Cameron. (2011-12 constant price basis). The OBR forecasts further real growth this Parliament. The media instead usually takes a figure about the proportion of National Income, so that if the private sector grows faster than the state sector they can call this a cut! They never use the cash figures because these have surged.

The media also regularly tells us Sir John Major’s government fell because the party was split on Europe. If you look at the polls you see the Conservative ratings plunged when the economic damage of the European Exchange Mechanism became clear when we were forced to abandon that crazy policy and never picked up. All the rows over Maastricht and the Euro made no difference to the poll ratings.

The media often present Treasury and Other consensus economic forecasts as if they were reality. They rarely ask why these bodies failed to forecast the Exchange Rate Mechanism recession, the Banking Crash recession or the Euro crisis. Now they should ask why these bodies did forecast a 2016-17 recession for the UK which visibly is not happening.

The media love running Big business threatens to pull out stories about their presence in the UK if we resist features of the EU. They ran these stories when we decided to stay out of the Euro and were wrong then. Now they run them about leaving the EU, and were wrong about the short term impact and will doubtless be wrong about the long term as well.

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The collapse of Labour and Conservative sister parties in the Euro area

It looks as if neither the Republicans (Conservative) nor Socialists (Labour) will have a candidate in the last two to be French President. It looks as if a third force party run by Mr Wilders will be the top performing party in the Netherlands election in March. Syriza came from nowhere to be the largest party and form the government in Greece. Pasok (Labour) have no seats in the present Greek Parliament. In Italy Grilllo’s 5 Star Movement is well ahead of the two old main parties in the polls. In Spain Podemos and Cuidadanos have made huge inroads into the traditional centre right and left main parties, making it impossible for either to form a stable government easily.

I find it extraordinary that these once great governing parties of the post war world in Europe have given up their pre-eminence so easily. It shows just how out of touch they have become. The main driver of their demise and of the popular discontent seems to be the bad impact of EU austerity economics and the Euro on their economies. When a country has half its young people out of work and around a fifth of its entire workforce laid off, it is no wonder voters seek a better way. The traditional parties are either deaf to the entreaties of those who want change, or impotent to change the things that matter because they have locked themselves into the EU and Euro schemes.

Whenever a country gets into a predictable governing crisis owing to its fractured party politics the EU proposes a technocrat led coalition government following the Brussels rules. When a country votes for decisive change, as Greece did when it elected Syriza to government, the EU works to ensure there can be no positive change and redoubles its efforts to enforce the very policies that have led to the political explosion in the first place. Economic failure can lead to a cry for strict controls on the movement of people, and a sharper nationalist rhetoric, as people hit out in search of a solution to a problem which their EU loving rulers scarce admit exists.

It is one thing for the traditional parties to decline, as they are. It is another for a single strong challenger party to emerge and take over government. That so far has only happened in Greece, though it could happen elsewhere this year. It is an even more difficult thing for that challenger party to break free from the shackles of conventional EU politics and improve the outlook. So far Syriza has been unable to do that, owing to voter ambiguity about the Euro project.

Marine Le Pen is made of sterner stuff than Syriza. Were she to win she would take France out of the Euro and run an economic policy she thinks would change France for the better. The AFD in Germany want to take their country out of the single currency, and have recently defeated the two traditional parties in Lande elections. They remain well behind Mrs Merkel’s party in polls for a national election.Sgnr Grillo is playing on the growing unpopularity of the Euro in Italy and may want to exit were he to win.

The ruling elite of the EU, with its single currency and panoply of Brussels controls, is on trial in this years elections in the Netherlands, France, Germany and probably Italy too. The triumph of Brexit and Trump show there could be an upset for the ruling EU group in one or more of these. Meanwhile the Euro elite fasten their seatbelts and proceed with the same approach.

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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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