No need to increase taxes

(A longer version of this was requested by the Daily Telegraph for this morning after I had prepared this blog)

Levelling up is a good idea. It requires tax cuts, not increases. It requires using the planning system to allow more building and construction based investment in the parts of the country that want the extra jobs and money it brings.

The government has just shown how a tax cut can provide a good boost to activity, jobs and incomes. The cut in Stamp duty has encouraged people to get on with swapping their home to a property that is closer to their current needs. It has helped people downsize and upsize, to move from urban areas to  more rural areas, or to move into cities from the countryside. It has allowed people to buy extra space for  homeworking, or  locate closer to schools or workplaces. It has given them more choice.

As a result housing transactions have just exceeded the pre pandemic levels. When people move it creates work for the estate agents, conveyancers, mortgage businesses, removal firms, painters and decorators, builders doing small works and many others. The Inland Revenue will probably be a winner too from  taxing all that extra activity as well as getting a Stamp duty boost from more transactions as some offset to the lower rates. 

Government works best for people when it respects their wishes, helps them achieve their ambitions and extends their effective choices. We need a series of policies that do just that. Levelling up needs urgent action to bring in  extensive freeports to boost industrial and commercial investment. It needs cheaper energy so we make more things here. It requires new farming and fishing policies so we grow and rear more of our own food.

The government cut the top rate of income tax and collected more revenue from the better off. It cut the rate of corporation tax and collected more revenue from business. It offered a meals discount and kick started restaurants. Let’s have some more policies that promote levelling up  by cutting taxes and costs for people. That way we will get the deficit down more quickly, from all the extra activity.

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Levelling up and planning

The government wishes to see 300,000 house a year built, largely by the private sector. This would amount to an annual investment of say £50 billion in their construction.

We have held the debates before about migration and numbers. Today I wish to discuss the issues the government is consulting on. The consultation is not about migration and just assumes large house numbers.

The issue is where should such a large number of homes be placed? The government has recently issued a couple of Planning policy documents. I wrote about the main one here, eliciting little interest.

The second one is a series of proposals for immediate rather than longer term reform of our planning system. It sets out a new method for calculating housing need which in turn would inform housing targets for each Council in the country.

The base position seems sensible, suggesting a 0.5% increase in existing stock in each Council area each year. This would provide a reasonable number of new homes everywhere allowing some flexibility to home buyers. There is then an added “affordability” formula or algorithm to increase these numbers, as 0.5% leaves the country well short of the government’s own 300,000 target.

The adoption of this proposal produces a strange result.Instead of adding to the housing stock in the places where the government wishes to level up, their numbers are cut. Instead of reducing the flow of more investment and better paid people into the areas that are already well above average in prosperity and employment, they are scored to need many more. The estimates of the impact suggest Sussex would see a 127% increase and Surrey an 83% increase whilst the North East would have a fall of 28%.

I suggest the government thinks again lest this algorithm proves as troublesome as the exams one. We need a levelling up one, where more homes are built in those places which want the investment.

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A new fishing policy

There was no slot for me to speak in the fishing debate yesterday in the Commons ,such was the understandable pressure from MPs for fishing seats to speak.

What I wanted to say included the following

  1. The government must not sacrifice our fish for the sake of some wider deal. The UK feels very strongly that we have been badly treated over fish from the original entry terms onwards. The Common Fishery Policy has been bad for our fish, bad for our fishing industry and bad for the marine environment.
  2. When we take back control we should greatly expand the amount our own fishing fleets can catch, and require most if not all of the fish from our fishing grounds to be landed in the UK. We need to build a bigger fish processing and retailing industry.
  3. The government should ban the ultra large predatory trawlers which damage the sea bed or the wider marine environment when scrambling to catch more fish, and attract too much bi catch as they do so.
  4. We should strengthen our offshore protection vessel fleet to enforce our fishing rules, protecting our marine environment and managing our fish stocks well.
  5. The new fishing policy should encourage a rapid expansion of our fishing fleets, with government help with the financing of suitable vessels and encouragement to the banks to lend for the purpose.
  6. The new fishing policy should be part of a wider policy initiative to encourage far greater food self sufficiency and fewer food miles.
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Time for change at the BBC

I wrote this last week for Free market Conservatives and am now reproducing it here:

The BBC are their own worst opponents. Their recent cancellation of a couple of much loved old songs that are famous worldwide and have not before caused protests led many  of their  former BBC news/Radio 4 audience to anger or despair. They are so dominated by the fashionable global  political correctness and by the briefings from the EU and international bodies that they can no longer relate to the many in the UK who like our country, are at peace with most of its past and just wish to be entertained. They are ready to run any cause which wants more government, higher taxes, more spending by the state, more submission to international treaty rules and more dependence on EU suppliers.  They revel in allegations of inequality and unfairness, whilst seeking to remove their own high payments to some  talent from  the full public gaze. Their constant cry is government should do something. They tend to see  business as a source of stories of overpayment and possible corruption, and show scorn for anyone who does not share their corporate values. 

Last Saturday morning I made the mistake of listening to the Radio 4 Briefing Room programme about the EU/UK talks. For half an hour they paraded so called experts and BBC correspondents who gave us yet another tedious version of Project Fear. There was no attempt at any balance. No-one spoke for the UK and no-one spoke of the many advantages Brexit can  bring. The overarching perspective was that supplied by the EU. There was no attempt to cross examine the EU position and ask about the risks to their big export trade into the UK and our opportunity to substitute UK produced product or cheaper rest of the world product with freedom from EU tariffs. There was no attempt to explore the big upside possible for more food grown and reared in the UK , nor of the way world competition will also affect EU suppliers where we do not have a domestic  industry to protect. The importance and opportunity for our fishing industry was dismissed, though they did think fishing was important totemically for French and Spanish fishermen!  It was as if they had joined the EUBC and had decided not to bother about the  views of a majority of the UK licence payers. 

The BBC’s charter requires the BBC to be neutral and to allow a wide range of views and arguments to be put. Their news coverage does seek to give most political party representatives a hard time, and during elections in particular they are careful to observe the rules over representation. That does not make their overall output  balanced. For years studies showed the BBC gave plenty of easy airtime to those who wished to make the case for the UK’s membership of the EU, but gave far less time to those who wanted to leave. Those who did get on were interrupted, heckled and often presented in an unfavourable way as if their democratic cause was unworthy or absurd. Once the people had voted to leave the BBC would still not accept the verdict, and delighted in giving maximum exposure to the minority representing the global political establishment who wished to undermine or reverse the decision. Many of their storylines come from the Guardian and from Labour and Lib Dem research. They do not offer a similar range of stories for all those seeking to reduce taxes, expand prosperity through enterprise, query the conduct of nationalised monopolies and challenge the global consensus on major issues. To many in the BBC  President Obama’s substantial bombing campaigns were fine, but some of President Trump’s tough or one sided statements designed as a substitute for  military action are  unacceptable.

It means reform of the BBC is in the air. This will be necessary anyway, as we thunder towards a very different media planet where people download much of their entertainment, get news from a range of worldwide instant services, and spend more time on social media than conventional media. The immediate issue is should the licence fee be a normal charge  where payment is enforced by civil and not criminal means? How much longer anyway will the licence fee serve their needs, given the way many people can avoid live tv and so claim they do not need to pay it. A simple first reform would be  to decriminalise the licence fee and unclutter the courts of the licence fee criminal cases. In other guises the BBC would be against a poll tax. They should think again how best to finance their activities going forwards. What is good public service  broadcasting and how much if any should  be taxpayer financed?  Let’s have a modern proposal. Shouldn’t some of the BBC’s current more commercial activities be paid for by   the audience they can command as for other media outlets? We need a new settlement, with the majority of the country that did vote for Brexit feeling we can be included. The BBC should not offer unfair competition to other media outlets financed by their unique access to a dedicated poll tax.

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Tax rises would slow the recovery and increase the deficit

The Treasury should be told that tax rises now would be bad economics and worse politics.

The deficit has soared because government anti virus policies created a huge and fast downturn. In a recession public spending soars and tax revenues fall. Cutting the deficit needs a fast and strong recovery, so Public spending falls and tax revenues rise. In this downturn public spending was massively boosted by taking 9 million people onto the state’s wage bill whilst their jobs were prevented by lock down. We need to get them back into private sector jobs to remove the cost to the government and to get more tax revenue in from their better pay and overtime.

Far from needing tax rises we need rate cuts and tax holidays to promote more activity and jobs. The temporary cut in Stamp Duty is leading to many more housing transactions which will protect or create more jobs and increase tax revenues on the Activity in the housing market.

The Treasury has always been reluctant to accept that often the way to get more tax revenue is to cut rates to stimulate activity. That is what is needed now.

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Sterling rises again

All those who think sterling will fall every time there is no progress on a Brexit deal need to think again.

Over the last month of reports of no progress in talks sterling has risen by 3% against the dollar and 2% against the Euro. Over the last year of talks going nowhere sterling is now 10% higher against the dollar and 2% higher against the Euro.

So why no rush by the pro Remain forces to express pleasure, when they are so ready to rush out misleading releases wrongly blaming Brexit every time sterling dips?

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“A Union dividend”

The UK government has started talking in terms of a Union dividend for Scotland. They tell us there is a “Union dividend of £1941 per person” in Scotland “demonstrating the strength of all parts of the UK working together”.

The “dividend” has two parts. Scottish taxpayers pay on average £308 a year less tax than the UK average. Scotland receives £1633 more public spending per person a year. The dividend of £1941 is up 7.5% on last year.

It is interesting that this increase has happened at a time when polls suggest support for independence is rising. This implies voters in Scotland either do not know this fact, or think there are more important things than taxes and spending levels.

The government is making an economic case for the Union. It points out Scotland would be massively in deficit if it were not part of the UK. The devolved Scottish government which has been given £6.5bn more to spend during the CV 19 crisis would be struggling on its own, with a £15bn or 8.4% budget deficit before the pandemic recession. This means an even bigger running deficit now.

The Union itself should not be in doubt as it was settled for a generation by a referendum a few years ago. I have always only wanted volunteers in our Union and pledged to respect whatever decision the Scottish people took in their big vote. Now is not the time to have another. Wanting to belong to a country is more about feeling and loyalties than about money for the believers on both sides of the argument.

For those with less passion about the issue it is important to remember the inability of the independent Scotland side to settle on what currency an independent Scotland would have or how it would handle a collapse in oil prices which duly happened. What do you think about the current level of the Scottish “dividend”? Why is there no English dividend?

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Returning to work?

To many people working long hours at home to do what they used to do from an office it is strange to be told now is the time for them to go back to work. It is even odder to be urged back by the Head of the CBI who then concedes that she has not herself been working from the expensive HQ of the CBI in central London in recent weeks. She may decide to work just two days a week from the London office from next month to show willing or to get through the obvious interview questions about her advice to others.

Something has changed in the mood of both employers and employees as a result of the CV 19 crisis. Yes, the immediate reason for the mass exodus from city centre offices was a combination of government instruction and fear of the virus. As the virus has receded and as companies and transport systems have tried to reassure about safety other issues have come to the fore that were there long before the pandemic hit.

More people were seeking and gaining flexible contracts which allowed them to work just part of the week in the office and have more time off work for family and domestic reasons, or to work some of the time from home. There was a growing expectation that employers would allow parents to take time out of a working day to attend school events or care for their children. Employers became more flexible about everything from dentist appointments to weddings and funerals, and from sports sessions to shopping. They allowed some of this to fit into the working day. Office computers were used by staff to plan holidays or buy items on line, so staff were not always working for the employer when at the employer’s premises.

The lock down crystalised a couple of things for employees. They found in many cases they could do all their work from home given on line technology and an office in the cloud.It was a huge bonus to save the large amounts of time and money taken up by the daily commute. They could punctuate the working day at home with the drinks, meals and domestic chores of their choice. They could extend their working time into the travel and home time of their old lives to compensate if they took some of the day time for a personal need.

It also surprised employers. They found that many employees worked just as hard or even harder when trusted to work from home. Many of the employers themselves came to value the freedom it gave them in their own personal lives, no longer under under observation from employees of how much time they spent in the office. It could lead on to economies for the company, though most so far are paying the rents on the largely empty offices and delaying big strategic decisions about how much space and what type of space they will in due course need.

Of course there are issues that need managing with a workforce more at home than in the office. Those who gamed the system in the office can game the system more easily when at home. Good managers stay in regular touch with homeworkers and assess their contributions and send sufficient work to them. Meetings and informal discussions can be an important part of resolving problems, innovating and improving service. People have to be encouraged to pick up the phone or the on line link as regularly as they had informal talks in the office. In practice in offices colleagues increasingly talked to each other by email anyway. Teams need to get together in person as well as on video link , which managers can decide and supervise.

Homeworking and the virus should not become an excuse for reducing service levels or building inconvenience and delay in for the customer. Some of the most competitive businesses, like the on line retailers, have shown you can raise service standards and take on more work even against the background of the virus and enforced social distancing.

It is difficult to forecast what might now happen. Some think there will be a gradual return to five day office working and we will restore the rush hour, the five day commute and the busy city centre in due course. Some think employers and employees will over the next few months evolve new ways of getting the work done and dividing up their time, with on line emails, conference calls and video meetings playing a permanently larger role in our lives. If sufficient businesses decide to allow substantially more homeworking in the mix then we will see lost jobs and lost businesses in city centres, along with lower office rents and some office conversions to other uses. There will also need to be big changes to trains, buses and tubes as they adjust to the two or three day week season ticket and the staggering of hours.

Meanwhile the parlous situation in city centres for small businesses is also the result of continuing social distancing rules, the absence of tourists and the cancellation of many events and entertainments.

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Who is trying to divide the UK?

One of the worst features of the hopeless 2017 Parliament was the way the government with no majority seemed to think it needed to reach out for the Union to the SNP in Scotland and to the Republic of Ireland. In both the Brexit talks and on wider issues the government revealed a fear that the Union was in some way in danger, and then thought it could strike a deal with political forces pledged to break up the Union or following a policy of trying to split it for their own advantage.

It was first strange to think the Union was in danger. After all, as good democrats the Union Parliament had recently provided a once in a generation referendum on Scottish independence to the forces in Scotland that did want to break up the Union. After a long and lively debate the Scottish people decided by a healthy majority to stay in the UK. The SNP themselves confirmed this was something you only did once in 20 or 30 years.

The UK always made clear to the Republic of Ireland that they could keep the Common travel area with us when we left the EU, so they would have a special relationship with the UK. The UK always offered tariff free trade to the whole EU, so Ireland could work with her partners to secure that prize she wanted. All the time the government kept the goodwill of most Northern Ireland MPs – and its own backbenchers – it had a majority. Many of us wanted a more robust approach to the EU’s attempt to force us to a bad settlement by unsettling the Union.

The more the Prime Minister genuflected to the Republic of Ireland and to the SNP the more the EU reckoned the UK was nervous and weak, so the more they held out for unreasonable terms in the withdrawal talks. The EU saw Scotland and Ireland as ways to keep the UK under EU laws., making concessions on fish, budgets and much else. They worked well with those who wanted to break up the UK.

The more the agenda was settled by the EU and the anti Brexit forces, the more the government’s natural unionist allies in all parts of the UK felt sidelined.

The EU of course had much form in trying to damage the Union. It always wanted to play up differences between Scotland and the UK. It promoted lop sided devolved government. It tried to deny the existence of England, seeking to split our country into regions and even experimenting with a region which put Kent and parts of Northern France together.

One of the EU’s biggest mistakes which led to the historic vote to leave was its refusal to recognise England in the way it promoted Scotland. One of the previous governments biggest mistakes was to panic in public about the Union and then deny England a proper place at the table over the EU. As I regularly asked when the UK government rushed to consult Scotland about the negotiations, who spoke for England? A successful union depends on the goodwill of all parts of the Union including England. The more that is devolved, the more England needs her own voice in government to keep the balance.

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At peace with our past?

I remember showing a visitor from the recently liberated USSR around Parliament. He remarked that it was a pleasure to see a country “at peace with its past”. For he saw in the statues and paintings, the memorabilia and the stories, all the nation’s past represented – good and bad, insiders and outcasts, establishment and rebels. They are on display for all to see. We cannot change the facts that they lived, held their own views and made their own impact. In his crumbling superstate the government told you what to think about the past, and threw out the statues and paintings of people and events they disliked.

Few of the figures from our past would have shared our preoccupations or held similar views to our present consensus where it exists. Some will look at the statue of Cromwell and see a tyrant and a butcher. Others will see him as the embodiment of a rebellion to tame the arbitrary power of the monarch and to give the generations to come a say in how they are governed. He is still part of our present as well as our past, as we still react today to both the good and the bad of his legacy.

Some will look at the great merchants and business people of the eighteenth century and see there generous donors of civic improvement at home. They will acknowledge their contribution to the betterment of many in the UK who gained employment and advancement from their enterprise. Others will dwell on those that made money out of the slave trade and rightly condemn that source of wealth.

It is true in a way that the past is a foreign country. Many attitudes and assumptions were different then. It is also true there is considerable continuity. Some of the past is an important part of our being a community. Tradition means enjoying what was best about the past and learning from what success our ancestors had in promoting a better life for many. Just as we celebrate our own landmarks of birthdays and anniversaries, so nationally we celebrate or remember important events in the life of our nation. Our nation above all made great breakthroughs for democracy and freedom at home and abroad.

Living in a great democracy means we all need to show some tolerance to each other and cut some slack to our past relatives who had different views from us. It is best to study them in their full range, and accept we will find things we do not like as well as things that showed they cared about us, the ones who came after. The thinkers of the Enlightenment thought they were “dwarves on the shoulders of giants”, who could see further because they could add to the visions of the ancient philosophers and scientists before them. Today too we should accept that we can see further, enjoy greater prosperity and assert superior morality to the past partly thanks to what they achieved and passed on to us.

I have got used in politics to the gross discourtesy and aggressive personal abuse adopted by some on the left. I assume that is because they have such a bad case. I do not like to see the same style adopted by people who I might otherwise wish to agree with.

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  • About John Redwood

    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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