Taking on a first employee

Since 2000 the UK has had quite a good rate of new business formation, in excess of the death rate for businesses save during the 2009-10 slump. London has led the way, with  1544 businesses per 10,000 residents, with Scotland and Northern Ireland at the bottom end of the table  with 739 and 834 businesses per 10,000 respectively. Over the last 19 years the UK has added 2.4 m new businesses.

The bulk of these businesses are self employed people.  Out of 5.9 million businesses, 4.5 million have no employees. 1.1 million businesses with employees have fewer than 9. Just 8000 businesses employ more than 250 people. The regions that have the highest number of businesses per 10,000 people also tend to be the ones with the highest incomes.

We need to ask what would it take to encourage more self employed people to take on their first employee?  It does mark a large step up, with the employer having to accept a wide range of risks and responsibilities.  We both need to create decent conditions for employment, and sensible conditions for employers so they find it worthwhile to take people on.

I would be interested in your thoughts on whether there are  changes to be made to current rules to provide  incentives to employers to create new jobs without damaging employee rights.

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The continuing bias of the Today programme?

To show how unbiased they wish to  be the Today programme had an item  dealing  with criticisms that they are biased. The item failed to grasp why so many of us think there is bias in much of what they do. They are  so keen to run anti Brexit material that they come across as an institution with a strong view more than independent journalists trying to tease out the different beliefs and views of the audience they serve. They do not seem to know all the positives that led us to vote for Brexit. They also repeat daily the same climate change issue with a series of repetitious stories to the exclusion of other major problems and preoccupations of listeners.

Their one sided approach is reflected in  their use of so called experts. These people usually  share a similar economic, political and scientific world view. The bias of the experts is never explored. They are not usually asked about their past failures in predicting and forecasting and never asked who they vote for or which philosophy or other influences most weigh with them. Most accept, for example, that Brexit will cause economic damage. They are inclined to say leaving without a deal is “falling off a cliff” or is “disastrous”. They may tell us trade will be  disrupted or even  imply it may in many cases be badly damaged if we dare to leave under WTO terms. The economists  if they are old enough would likely have recommended the Exchange Rate Mechanism which gave us a nasty recession, and would have supported the Bank of England’s actions which helped bring the commercial banks down in 2007-9.

They rarely interview people who believe that Brexit is a good economic opportunity which can make us better off. They never wish to remember that some of us correctly predicted the ERM disaster and warned against the chosen Bank and government action in 2007-9. They will not explore the role of the Maastricht criteria in recent austerity economics . Their few interviews with possible Bank of England Governor candidates in the run up to the selection of the new Governor were pathetic, with no attempt to understand the many mistakes the Bank has made in recent years or to ask candidates how they might improve or change it.

When I have been invited on it is usually to fill some special political slot for a Eurosceptic, rather than to have a sensible interview on  the state of the economy and the policy options facing a country soon to be independent. I am treated to the usual barrage of Remain  questions which become as repetitious as most of them are silly to provide “balance”. Yet the many more numerous Remain interviewees are usually spared having to answer all the questions I would wish to ask them about their past false forecasts and their present misunderstandings  of what is happening in our economy whilst still fully in the EU.

I guess the journalists cannot accept  that Brexit is a great idea of the people who just ask that the Establishment does their job. We want government to  show how the freedoms and the extra money can be used to improve lives and our country’s standing and prosperity which is why the Conservatives have just won a majority. The Leave voter listeners who are still tuning in just want to know why the BBC seems to have such a down on the abilities and prospects for our country outside the EU. They should know the case that says we will be better off with Brexit and give it equal prominence to the negative Remain forecasts.

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Encouraging entrepreneurship

The lifeblood of an enterprise economy comes from the ability of the many to set up and run a business for themselves if they wish. A vigorous private sector has  easy ways for new businesses to be born, and sensible ways for failing businesses to be wound down or stopped.

The ability to set up a business rests on self belief, access to property, skills and capital, and a favourable balance of risk and reward for doing so. The UK has a relatively good rate of new business formation compared to the rest of the EU, but falls behind the USA in capacity to set up and grow businesses, especially  beyond a certain small scale.

The first thing the government should do is to advise schools and Colleges that self employment is a serious career option. Indeed, the brightest and most energetic students are above all the people that should be asked if they will set up a business of their own rather than seeking the comfort of a cosy job with a large corporation or state actor. Enterprise should also be for the many, as many people who are not interested in academic subjects or who do not  excel at passing exams may be excellent at understanding customer needs and meeting client requirements.

People training at Colleges to be plumbers, electricians, cooks, house maintenance people and other  skills should be offered supporting courses on how to offer their services through their own business.

The government  needs to revisit IR35. It should be easy to gain self employed tax status for all those who are offering their work to clients and customers other than through someone else’s company as a company employee.

The government should raise the VAT threshold higher so people can increase their turnover more before needing to get help and advice on how to comply with VAT.

The government should derate small business premises altogether so starter units are rates free.

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On the technology frontiers

As the digital revolution sweeps on we will face more and more dilemmas about personal freedom versus personal empowerment.

In its early days the internet was largely unregulated, allowing a profusion of new communications, spawning an army of citizen journalists with their own take on events and permitted advice on any topic including  the assistance of crime.

As the internet grew so governments understandably intervened to stop extreme abuses. The internet should not be a school for terrorists, an on line academy for bomb makers or a means of  money laundering large sums from the proceeds of crime.

Some also asked that the internet be subject to the same laws of libel and slander as the regular media. Many asked for protection from false allegations and from messages of hatred. This has opened up a debate about the duties of internet providers, the extent to which censorship is needed and justified, and the role of the internet in causing harm as well as its manifold ways of doing good.

There are contributors to this site who are deeply suspicious of how the state behaves and how it might come to use new digital controls for its own ends. Would the evolution of a cashless economy mean not merely full visibility of all transactions by the state but state controls and  limitations on those same transactions? At what point does a better convenience for users become an unwarranted intrusion into privacy?  Should we all expect in the emerging world that all our actions, words, purchases are fully available for public scrutiny, or do there remain legitimate reasons for people to be able to keep to themselves what they lawfully do?

Authoritarian societies can deploy digital communications, cashless money, transaction reporting to control their people. They could decline to sell a train ticket to a protest location. They could decline credit to people who join the political opposition. They could intercept on line conversations between friends wishing to share annoyance at government activities.

The challenge for the free West to keep its freedoms is to get the right balance between tackling serious crime conducted in whole or part through digital activities, whilst allowing the usual privacies of people’s spending habits, criticisms of government and the rest that constitute a free society.

There is the additional challenge that as the giant corporations of the current digital era emerge with all their power, the western system should allow strong competition and challenge to them. There is a  danger in codifying how they behave and laying down in law too much of how their business has to be conducted. These  can become barriers to innovation by smaller companies, and can impose  expensive barriers to entry to the business.

As we leave the EU the UK should revisit its laws and regulations governing  the digital world to strike a good balance between keeping us safe and allowing plenty of competition.

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Free enterprise brings us choice and progress

Many of the things we enjoy have come from competition and choice, from free enterprise. Post war living standards rose as tvs, fridges, washing machines and cars became affordable for the many instead of being the luxuries of the few. This century has seen digital technology transform lives. It has placed a mobile phone in most pockets and handbags, equipped the many with an easy to work camera and allowed a whole new world of communication and entertainment to be available instantly any time, any day.

These breakthroughs came from entrepreneurs and private sector companies. Often the challengers had to combat unhelpful regulations and protective old model established companies. In recent years digital business models have dramatically changed  advertising, the media, agency businesses and retail, and are going on to change finance and other services.

The successful countries which do most to promote living standards and welfare of their people are the ones who not only understand this but do most to allow free enterprise to flourish. Lower taxes, sensible regulations, a strong rule of law which protects challengers as well as the established businesses, and a climate which encourages talent and enterprise friendly education all help. In future blogs I am going to explore how the UK can provide more opportunity for enterprise to flourish and living standards to rise.

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Welcome to the exciting 20s

There is no more important task than restoring our right to self government. By the end of the first year of this decade the UK people and Parliament once again will control their laws, money and borders as they wish.

I have every confidence in the people of the UK to make wise choices and to lobby for better government. It has been the people, not their leaders, that have insisted on the UK becoming again an independent country. It will be the people that hold successive governments to account to use the powers well and to spend the tax revenues sensibly.

Once we are fully out we will have more of our own money to spend. Money played an important part in the referendum campaign. Remain forces at home and in the EU have been particularly keen to burden us with as much continuing EU spend as possible to limit the obvious gains controlling our own money brings.

Once we are fully out we can make laws that improve our lives and scrap laws that get in the way. An early candidate for reform and repeal are all the fishing rules that have done so much to damage our fishing grounds. We will be able to raise our standards of animal welfare as we wish. We can have regulations for business which set high standards in ways that allow us good trade with the rest of the world as well as with the EU.

Once fully out we can set our own taxes. We will no longer be subject to losing corporation tax revenues owing to some legal case at the ECJ overturning Parliament’s wishes. We will no longer have to impose VAT on green products and female hygiene goods. We will not have to keep our tax rates within specified bands or at required levels.

The bigger gain will be in our standing in the world. We can become a leading force for free trade through our independent membership of the World Trade Organisation. They would like a major economy to work with them to promote an agenda of freer trade worldwide at a time when the USA is using tariffs and other barriers to trade as a major instrument of wider policy. We will have our own voice and vote in many other international bodies where before we had to accept the EU line.

The UK is well placed to grow faster, to promote democratic and peace loving values worldwide, and to win new friends and influence.

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Happy New Year

“Pour me another,  lets toast the new year
Here’s to a better, put  fizz in our cheer”

Tonight’s  not for sorrows, no mulling old wounds
Come banish our troubles,  lets sing some new tunes

Caught in the present is a moment to choose
To look forwards or backwards, to win or to lose

If you comfort yourself holding what’s past
This precious moment of hope won’t last

Grasping  the future and its unknown way
Could bring success and many a wonderful day

The past is well trodden where  we know the ending
The future is for moulding, for shaping, for bending

As last year expires, with hopes and promises broken
Change things this time , leaving resolutions unspoken

So pour me another,drink to the new year

here’s to a better, put fizz in our cheer

If your life is a drama  you can change the plot
If your friends are the  actors you can recast the lot

If people around you are holding you back
Tell them you’re changing, cast aside their rack

Lets hold on to new clichés that drive us to more
Lets venture out from  behind that closed door

We can stretch for the stars and strive for the sun
We can soar with  the wind making life more fun

You are only out of the game  when you give up the play
So write some new words so you have a new  say

Aim for something better, embrace the best
You may fall short of target  but gain from the quest

So cast off the old
Live a new dream
Grab the future foretold
Mine a new seam

So pour me another, lets toast the new year
Here’s to a better, put fizz in our cheer

I know tomorrow can be better than today
Let the future  empower us with its  new way

The future is only ours, my friend, if we want to race it
Tonight is the night to embrace it

So pour me another, lets toast the new year

Here’s to a better, put fizz in our cheer

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Good bye to a decade

The 20 teens were hesitant years. There was a cautious economic recovery from the slump of 2008-10, as the deficit was tamed and capacity gently rebuilt.

There was a crisis over the UK’s role in the world. The ruling elites saw the UK as part of the EU project to centralise power, with the UK as a covert participant in the mighty task of European political, monetary and economic integration. A majority of the public wanted the UK to return to being an independent country, capable of self government with a confident outward looking view of herself in a global world. Happy to trade with the EU, keen to travel, to promote many exchanges in education, culture and tourism, the majority saw no need to lock us into a political union to allow these things to continue. They will continue anyway when we leave as they do for many other independent countries having dealings with the EU .

The elite’s refusal to accept the decision of the people led to undue stresses and strains on most of the institutions of the UK state. The Central Bank, already brought low by its failure to stop excesses in credit prior to 2008 and by its clumsy and damaging over correction, entered the fray against the majority decision. The Courts took up cases against government and Parliament, and made decisions designed to slow down or prevent Brexit.

Parliament itself turned against Brexit, despite most MPs being elected in 2017 for Labour or Conservative on promises to see it through. Brexiteers were left with the irony that the very institution they wished to restore to full power did not want that power and spent its time trying to prevent the UK taking control of its own money, laws and borders.

Some large companies turned out endless propaganda against Brexit as if the decision had not been made, repeating the often phoney claims of future economic damage that they had used to try to get people to vote their way in the first place.

The EU itself refused to accept the verdict of the UK people, and worked with the Remain forces in the UK to seek delay or damaging terms for exit that might get the public to change their mind.

Despite all of this the people voted again decisively as the decade ended to get Brexit done. That included many who voted just to leave, and others who voted for the Withdrawal Agreement on offer in anticipation of a Free Trade Agreement to follow. Tomorrow I will look at how and why the next decade can be so much better.

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New Year message

I look forward to 2020 full of hope and optimism.

The new government has a majority and has energy to make things better. I am delighted they have made Prosperity the main aim of policy, as I asked them to do. I am putting in plenty of ideas about the January budget to give our economy the boost it needs and to leave people with more of their own money to spend. I look forward to the arrival of the extra money for schools, surgeries and the police in  our area that I have battled for in recent years.

The New Year makes  many people reappraise and ask themselves if we can do things better than in the year just gone. In politics it would be difficult to do things worse than in 2019.A fractured and angry Parliament prevented government governing, accentuated the negative, and let the country down. It undermined our negotiating position with the EU and needlessly delayed our exit.

This year we not only want a positive policy to improve public services and quicken growth in the economy, but we need to try to bring  more people together behind that common purpose. Our public discourse has been more rancorous than robust, often nasty rather than incisive or illuminating.

On the central issue of our membership of the EU we can learn from the past. As a young man casting one of my first votes I voted to leave the European Community in 1975. I was on the losing side. I accepted the verdict of the voters and resolved to do my best to keep the spirit of what the majority voted for, membership of a free trade area or common market. It was only  two decades later that I started to think we needed another referendum, when our country was plunged into a deep recession by our membership of the European Exchange Rate Mechanism, a close commitment to the EU which was not envisaged in the original referendum.  It is one of those unwritten rules of democratic politics that if you lose an election or referendum you accept the will of the majority. It is also an unwritten rule that the majority should  be attentive to the worries and concerns of the minority and seek to allay their fears or deal with their problems.

In  that spirit this government needs to ensure that as we leave the EU there is none of the economic damage some have forecast. I have always held the view that we can be better off out and have set out  the policies we need to follow to achieve that. It will be a central task for me to make that case in the new Parliament. It is also important to show how we will still travel to the continent, have many trade, cultural and educational links with the continent, and enjoy the wider European culture.

I do not regard Remain voters  any less favourably than  Leave voters, and will judge everyone’s case on its merits. All I ask in return is that passionate Remainers understand the we Leavers are motivated by our view of what is best for our country and communities. We wish to work closely with all our fellow citizens to improve lives  and promote happiness and prosperity. I have lived most of my life with the answer on EU membership I did not want, but have not let it embitter me. I have often had to live under a Labour government I did not welcome, but never challenged their right to govern when they had won the election.

So let us enjoy the freedoms of our democracy in the new year.  Let us have robust and strong debate, but let us play down the nastiness and abuse which came to replace such democratic principles too often last year. Far from improving democracy shouting abuse is an attempt to close it down. It damages the very liberties which make this country great.

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Can we discuss the performance of the Bank of England?

Media commentary on the outgoing Governor and the new Governor hit a new low. We were told of the rock star Governor leaving, with silly mildly abusive comments on  the alleged personality of the incoming Governor. There was  no critical commentary of the failings of current Bank policy, nor comment on the huge opportunities  to change things for the better under new direction.

Governor Carney leaves an economy stalled, pursuing a uniquely tight money policy at a time when all the other main  Central Banks are rightly fighting slowdown and recession with a range of monetary tools at their disposal. He has been besotted by Brexit to the point where he has not understood the forces at work on the UK, which are largely  the same as anywhere else in a globalised world economy suffering from sluggish growth and mercifully low inflation in the advanced world. All the time he has been Governor we have been full members of the EU, just as he wanted .

When he first arrived he promised reform. He told us he was going to use forward guidance to give markets a clearer steer of where interest rates and monetary policy were going. The first two occasions when he guided people to expect a rate rise he did not follow through with one, and after the third warning of a rate rise after a gap   he actually cut rates. It was difficult to see  how any of this helped.  

During the referendum he politicised the Bank by producing a series of  very pessimistic short term forecasts  of jobs, unemployment, output and house prices  which only Remain  could accept. They turned out to be very wrong as I and other Leavers forecast.

After the vote he did nothing. A few weeks later he decided to cut interest rates, relaunch Quantitative easing and make money  available to the banks. This stimulated activity and inflation, and pushed the pound down a bit. From 2017 onwards he then changed tack, withdrew necessary facilities from the commercial banks, put through two rate rises and slowed the economy markedly until over the last three months there has been no growth at all. This was needless and predictable.

He could have shifted UK policy in late 2018 to promoting more growth and activity as the Fed did. He could have done so this autumn when the ECB did. Instead he ignored the obvious signs of global weakness and tightened controls over commercial bank lending. On his watch the repair of the commercial banks has been completed so they are  now robust and able to withstand bigger external shocks.  They now need an LTRO or funding for lending scheme to access money to lend on to businesses who wish to invest and to people who want to buy homes and cars.

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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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