John Redwood's Diary
Incisive and topical campaigns and commentary on today's issues and tomorrow's problems. Promoted by John Redwood 152 Grosvenor Road SW1V 3JL

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Doctors lists

According to a recent press report some doctors’ lists are out of date and inaccurate. This is worrying in itself, as doctors do need to know who they are responsible for and to whom they should provide treatment. It is also worrying for taxpayers, if it means that the NHS is paying doctors for patients who do not exist, or who have died, or who are counted twice by being on more than one list.

I raised the general issue recently about the delays and errors taking on board the death of an individual once it is properly reported to the state’s very own Registrar. This is one more feature of the system. The Tell Us Once addition to Registration, or the act of registering itself, should trigger the automatic updating of the relevant GP’s list. Individuals registering a death are asked to take in the dead person’s NHS card, and the death is registered in full knowledge of their full name, address and National Insurance number. This should make updating the doctors records in an age of fast computers very easy.

When the Coalition looked at the topic of doctors lists in 2010 they estimated 2.8m patients registered in error.

Give free enterprise a chance

The Prime Minister usually includes in her big speeches praise for free enterprise. She appreciates that the Conservatives need to make the case for economic freedoms, for the role of profit and reward in driving investment and beneficial change, for a tax system which allows those who work hard and venture their own effort and money to keep sufficient of it , and for competitive markets which can serve customers well. She also knows that government does need to intervene to prevent monopoly and abuse of commercial power ,and to ensure those who cannot easily compete are looked after or given better chances in life to do well.

In order to see these grand aims through, she needs to look at the balance of what government Ministers and officials are doing and saying. Government is coming across as keener to put taxes up and to find new taxes than to cut them, thanks to the Treasury. The government is ready to ban or regulate things they do not like, often in a good cause, but less forthcoming about how they can encourage or get out of the way of new ideas and better services and goods for the market that do not pose particular problems.

I have often commented on the damage done to the housing and car markets by higher taxes. There has also been the additional business rate burden imposed on some shops from the Business rate revaluation, at a time when traditional shops need all the help they can get to compete with internet suppliers. The Treasury seems to want to tax new technology businesses more when the UK is good at them and is attracting many of the great world names here to grow and expand. Would a unilateral declaration of tax war on this sector be a good idea when many other countries would like those jobs and investments?

The decision to make larger shops charge 5p for a plastic bag has certainly changed behaviour and greatly reduced demand for plastic bags. The new sugar tax is designed to cut the output and sales of certain soft drinks, to be followed by a possible ban on selling energy drinks to young people to reduce sales and output of others. The sale of most old ivory in our successful auction houses has been banned, diverting that business abroad.

Rich Non Doms have been persuaded to leave by new tax rules, taking their money with them. Russia remains sanctioned with the Uk leading the charge to toughen the regime against her more.

Many of these measures individually have a good cause or a good case behind them. The government, however, needs to be aware that if it appears that it bans and taxes parts of free enterprise where it thinks it does harm, and does not do the opposite for the many areas where it does good, it undermines the PM’s support for the system itself. Much of what people like about their modern lives comes from the amazing dynamism of free enterprise, from the digital revolution it is pioneering and from entrepreneurial businesses whose owners and creators become very rich. People like today’s smart phones, computer pads, streamed videos and film, the wide variety of entertainment on offer, modern cars and better appointed homes. Competitive markets give us these. The countries that do best are the ones that are most positive and helpful to the system that delivers so much progress.

Mr Macron’s concentric circles

Mr Macron was misinterpreted by some this week who strain to discern an agreement between the EU and the UK in what he said. When Mr Macron stated he wanted reform of the EU he went back to the old idea of accelerated union and integration for an inner group. He then wants the UK to fit into an outer circle, where doubtless he thinks we should be rule takers. We would be grouped alongside eastern European countries who may want fuller integration but are not welcomed or thought to be ready by the elite countries to join the core of the Euro.

Mr Macron thinks France, Germany, the Netherlands, Belgium and Luxembourg, five of the original six founders of the EU, and maybe Spain, are ready to move to a single budget, a single Finance Minister and a joint foreign and security policy. Italy would probably be told if they want to be part of this inner core they have to forget all their wishes to change the budget strategy and to bin their request to toughen migration and border controls. There would be no room for dissenters in the core. The UK will of course be “offered” a security and defence partnership, because the UK provides more already to European defence than our GDP share would imply. The EU would like access to our two carrier groups and to the squadrons of F 35 fighter bombers, as well as to our Intelligence services. The EU has in mind some kind of Association Agreement with the UK, which is a watered down version of the EU Treaty without the voting rights and place at the table to complain in person about bad laws and bad policies.

Mr Macron’s vision is backward looking and out of time. Mrs Merkel is finding it very difficult to hold her coalition together, and will be in no position to offer a joint budget and common Finance Minister given the antipathy of German electors to the idea of Germany paying more and sponsoring a so called transfer union. As transfer unions are central to most countries with their own currencies this remains a major stumbling block for the Euro. Mrs Merkel’s traditional coalition partners, the CSU, face a difficult election in Bavaria in October, where they could lose control of their Lander Parliament thanks to AFD candidates. This means Mrs Merkel has to pose as tough on matters European and migratory for the next two months.

Mr Macron will also alienate many of the keen members of the EU that are excluded from his inner core. The countries to the south – or their governments – believe in the Euro scheme and were expecting a bit more financial and budget leeway. Instead Mr Macron seems to envisage more budget flex only for the chosen few that have passed the austerity test and joined the core. He will also continue to annoy the Hungarians and Poles who are the new naughty boys of the bloc, wanting the whole institution to adopt anti migrant policies.

It is going to prove a problematic few months for the EU, with Macron and Merkel in disagreement and with Italy pressing hard for changes to both migration and budget policies. Mrs Merkel usually gives in to pressure, so expect German policy to move to a more anti migrant stance.

Chancellor’s policy to hit the car market works

The Chancellor must have expected to see car output down by 11% this July compared to last July. He and his colleagues wanted to put people off buying diesels, and many have heeded his warnings. His higher VED hit the top end of the car market, and the threats of more taxes to come on both diesels and petrol vehicles has put people off buying. Reining in car loans was also part of the successful plan.

Over the year to date UK car output is down by 4.4%, with production for the home market down a massive 16% within that. Looking at new car registrations in the UK we see diesel sales down 30% year to date compared to last year. This of course has nothing to do with Brexit, as all the alleged advantages of the EU trading system are still fully in place. This has been a car market collapse whilst still in the EU, created by domestic policies designed to cut demand for new cars.

The Motor manufacturers trade body says they need the continuation of “beneficial” EU trading arrangements to ensure growth in the future, without properly explaining why they have experienced such a big fall whilst enjoying these self same arrangements over the last year. They should instead be pressing for greater clarity on future car tax policies, and asking for some improvement in the present policy mix so UK people can afford to buy home produced vehicles in larger numbers again.

Encouraging more new cars and allowing more people to afford new cars should be good for the environment and for the economy. Modern cars are more fuel efficient with cleaner exhausts than most older cars. Governments usually want the car industry to do well.
I also see the latest consumer credit figures show a slowing there following authority’s instruction to rein in credit to slow the economy.

Let’s create higher environmental standards

I am grateful to Owen Paterson for pointing out in recent speeches that the EU’s environmental policy which we have to adopt has in several crucial ways let us down badly. It is a myth that the EU has created high environmental standards that we would not have created for ourselves, and a myth that all the EU’s environmental decisions have raised those standards.

Indeed, the UK was a pioneer of higher environmental standards before joining the EU, and an author and enthusiast of some of the better environmental measures the EU did introduce. The UK was early into the crucial business of cleaning up the water courses and containing and processing sewage, with large Victorian schemes to segregate fluids and to eliminate disease carrying water from our tanks and taps.

In more recent years the UK pioneered clean air acts to reduce the burden of dirty smoke, particulates and harmful chemicals coming from factories and commercial premises, and from the domestic fireplace.

The UK pre the EU was good at public open spaces, parks and National Parks to preserve some of the rural landscape in or near to built up areas.

The EU has forced us into environmental damage in several important respects. It has decided that burning biomass – wood to you and me – is good because it lowers CO2 output and recommends it for power stations. That leaves us with a problem with the smoke and particulates.

It pushed diesel cars as another good answer to CO2 issues. Now people are worried about the impact so many older diesel cars have on Nox and Sox and particulates in the air around our busier roads.

It now pushes electric vehicles without exploring the full impact of battery production and disposal on the environment, or considering the ways in which the electricity will be generated to sustain this extra demand. In a country like Germany present policies rely on burning a lot of coal in power stations.

Out of the EU we can have a more positive environmental policy. It might include concreting over fewer acres of countryside for houses, once we have in place a new migration policy. It would definitely include a fishing policy that lands all fish caught, instead of returning many of them dead to the ocean.

The UK renews EU trade agreements for post Brexit

One of the many lies of Remain was the claim we would lose all the trade agreements the EU has managed to negotiate. Yesterday the government signed the carry over of the EU Partenership agreements with six African countries. Would all those who wrote in to this site and said this would not happen now like to apologise.

Signing the EU Withdrawal Agreement would be bad news. Leaving without signing it would be good news.

The Prime Minister was scarcely overwhelming in her support for Brexit, which remains her most distinctive core policy, when she said leaving without a deal would not be the end of the world. Let’s have another go at explaining the reality.

There is no agreed deal on the table for the UK’s “future partnership” in the way she wants. Indeed Mr Macron has just poured more cold water on the Chequers proposals, which are not going to emerge as an agreement.What is on offer is an almost completed EU Withdrawal Agreement which is heavily one sided, giving the EU much of what it wants. It delays Brexit for us and burdens the UK with a huge and needless bill which we are under no legal obligation to pay unless we sign to do so.

So here’s my advice. The UK government should be positive and release the new policies on fishing, farming, migration, and trade that could add to our growth rate and prosperity, using the freedoms leaving gives us. Above all the Treasury should cheer up and tell us how they are going to spend the £39bn they have in the budget to give away to the EU. Spend that on tax cuts and public services at home and that’s a great 2% boost to our output and incomes, which we could enjoy over the next two to three years.

Signing a Withdrawal Agreement to give continuing overseas aid to a group of rich countries on the continent will leave us poorer. Let’s hear the Treasury calculations of how much economic damage is done by the large payments abroad, and by the large balance of payments deficit we run with the EU under present rules. It’s high time they did a calculation of the additional costs and losses brought to the UK by EU membership. Let’s also have a new tariff schedule which works for the UK, allowing us to narrow the deficit and do more at home to supply our needs. The single market has not been good for our trade balance or for our big parts of our industry.

Two questions for farmers to take advantage of Brexit

Uk agriculture- and fisheries – has been one of the most heavily managed sectors by the EU and one of the most damaged. We have moved from being a net exporter of fish to be a net importer, despite having the best fishing grounds in the EU. We have lost substantial market share in temperate foodstuffs despite having a good climate and soils to grow our own.

As we move to leaving the EU without a Withdrawal Agreement we need to ask what tariffs we should impose on world exports of food to us, including food from the EU. If we simply impose current EU tariff levels on the EU as well when we leave to meet the obligation for common tariffs on our complete worldwide trade, there would be a substantial tariff barrier against items like Danish bacon, French cheese and Irish beef which would give the UK a huge boost to produce more for ourselves. The tariff revenue we collected as our industry adjusts to its ability to displace imports should of course be given back to consumers as tax cuts so we are not worse off.

Does UK agriculture think we should impose the full EU tariffs against the EU, or should we take advantage of putting new tariffs on EU product to lower the overall tariff on world food generally so some of the benefit is given direct to consumers of non EU food? For example, we could remove all tariffs on food we cannot produce for ourselves. Why not abolish the EU 16% tariff on oranges from outside the EU? Some say we should simply impose the full tariffs. Some say we should impose a lower average tariff on temperate food. Either way there will be a boost to domestic output.I will return to the issue of our tariff schedule in a later post, but would like to know your views.

So my second question to UK farmers is what plans are there to step up your output after March 29 2019? How quickly can we grow extra tomatoes, vegetables and the other items that pour in from Spain and the Netherlands at the moment? How much more cheese and yoghurt can you produce to regain market share from the continent? Are there plans to expand beef and pork production when we get the price advantage any new tariffs will bring?

I will be sending a version of this to the NUFU to hear their comments.

How Theresa May could have a good party conference.

It is that time of year when advisers to the Prime Minister have to consider the first draft of the big speech she has to give to party conference  in Birmingham in the first week of October.

The Chequers proposals have gone down very badly with the party in the country. The negotiations with the EU have not produced a break through for Britain in the way the government wanted.  The Prime Minister should say something along the following lines:

“I have worked hard with my team to try to negotiate a good exit deal for the UK. I have always been friendly and positive towards the EU. I have stressed we would prefer to have a comprehensive future partnership. I have offered to maintain the substantial contribution we provide to  European security through our pledge of armed forces, our intelligence work and our general collaboration. I would be happy to keep tariff free trade between us, even though we import much more than we export. I have offered to pay money we do not owe to show goodwill over the EU’s process of adjustment to the ending of our large financial contributions. I have offered to maintain the rules and standards of the single market for goods even after we have left.

Many of you think I have offered too much. Some of you are concerned that we would not in practice be taking back control of our laws, our money and our borders as promised. I think  we would, but I understand your worries.

I am therefore today withdrawing the very generous Chequers offer, which the EU has told us does not go far enough.The EU has also been critical of important parts of the compromise it embedded. So I say to the EU, in the time remaining time  to do a deal, I propose we  negotiate a comprehensive free trade treaty  instead.

Some say this cannot be done in just a few months. I disagree. If there is a will there is a way. Both the UK and the EU have accepted the Canada Free Trade deal the EU has recently signed. We can take that text as our starting point, and see what more  we can add to it, given that the UK and the EU start on trade and commerce regulation from the same position.

In the meantime I have recently chaired a Cabinet to stress to all Ministers and senior officials in all Brexit facing departments that I want us to be ready to leave without a Withdrawal Agreement in March 2019. I stressed that the government will provide whatever resource is needed to be ready. The problems have been greatly exaggerated. I know of no reason why the planes will not fly or the medicines cease to arrive the day after we have left. Where lower level agreements or understandings are needed between the EU authorities and the UK government we are ready to put them in place. These will be mutually beneficial, and more profitable to the rest of the EY given the large imbalance of trade between us.

 

The Treasury is too gloomy

The UK economy has done well in creating many new jobs, generating considerable additional tax revenues for public services, continuing to grow and attracting large new investments from leading companies around the world since the referendum. This has happened despite a series of tax attacks on it by successive Chancellors out to damage the housing and car markets amongst others and against the background of a substantial monetary tightening engineered by the Bank of England. It has been possible thanks to past reforms and thanks to the growth of a large cadre of entrepreneurs prepared to venture their  time and their money, and to many people willing to work in new areas and jobs. It has happened with the Treasury and Bank forecasting a recession in 2016-17 that did not happen, and constantly telling us of unlikely  negative effects of our chosen policy of Brexit.

This week again the big difference between the Chancellor and the government was visibly on view. This is  not a new problem.. He was elected along with all Conservative MPs on a Manifesto which said we would get on and implement Brexit. The Manifesto saw the benefits of taking control of our laws, our money and our borders. It looked forward to spending plans that spend the EU contributions on our priorities, and to trade and migration policies that make sense for the UK and are fair to all parts of the world. The Chancellor thought otherwise and has spent his time in office trying to delay or derail Brexit by recreating as much of our current arrangements within the EU as possible.

The government line on timing was that we will leave on 29 March 2019. Under pressure from the Treasury and others the PM then allowed the government to say that if they reached an Agreement late with the EU, any individual clause or requirement of the Agreement that could not  be put in place by 29 March 2019 could slip to a later specified date. She proposed a variable implementation period.  This was still not sufficient for the Chancellor who led the charge to demand a 2 year delay in our exit from  the EU. The EU  pushed this back to 21 months and demanded a high price for this concession. It meant that a Chancellor who is famous for seeking to block any good idea to spend a bit more on a domestic public service that needs it, was happily flagging through a huge new set of payments to the EU in order to stay in it for a bit longer. The absence of  effective  Treasury resistance  to the financial demands of the EU is one of the worst features of their behaviour. One of the main reasons I and others voted to leave the EU is we want to spend the money we send them here at home on a mixture of increased spending and tax cuts to promote faster growth and a stronger economy and society.

Six  members of the government and two Conservative Vice Chairmen resigned over Chequers because they rightly saw it granting too many concessions to the EU undermining what people expect from Brexit. Looking at the arguments within government that have spilled over into the press the differences between the Chancellor’s views and where most of the rest of the party is are larger than the disagreements between those who resigned and the compromise position he helped force on the government at Chequers. As this week has made clear the Chancellor is fundamentally against the whole idea of Brexit, wrongly seeing it as damaging to the economy, a  central policy put to the people in the Conservative Manifesto of 2017 and a core policy of the government. He should back it and be sensibly optimistic about the economy he helps guide, or pursue his disagreements from the backbenches. He should also reverse the damage his and his predecessor’s higher taxes have done in the next budget.