The Resolution Foundation has come up with a cruel blockbuster this time in its efforts to create an intergenerational war in the UK. They argue that older people have too much of the country’s wealth, and recommend taxing pensions and homes much more to pass the money on to younger people.

They ignore the obvious point that in all past generations older people have more of the wealth than younger people. Most of us  start out with  no assets. You work up to buying a home of your own on a mortgage, and start to put savings away for rainy days, and gradually build up a pension pot. As people now live longer they may spend many years in retirement, so they need a substantial level of savings to see them through their remaining years.

Most bizarre is the Foundation’s idea that many older people have done well out of house price rises. Most people just own the home they live in. As most wish to carry on living in it, they cannot use the gains they have made for some other purpose. The people who ultimately gain are the younger people or the charities who inherit the money on death.

Worse still is the Foundation’s prescription to deal with this misinterpreted problem. They want to charge people more for living in their own home if it has gone up in value – £2.3bn more for the country as a whole. They want to charge people extra tax on their pensions in payment, placing an NI charge on top of their Income tax on the pension receipt! They want to impose more NI on any earnings people add to their pension.

You do not make the young rich by making the older poor. Tackling some poverty in old age has been a success story, so why now go back on it and try to impoverish the prudent?  I agree with them that we can and should do more to help young people with home purchase and with university fees.

Trying to pit one generation against another is unpleasant politics. In many families there is a spirit of mutual help between the generations. Where parents and grandparents have surplus savings they do often help young people to pay their way through education or to acquire their first home.

I am urging the government and aviation industry to use modern technology to save fuel, cut costs, reduce noise and improve the passenger experience.

The central point of the idea is to eliminate the stacks around busy airports, especially Heathrow near my constituency.

Today when the airport gets busy planes are asked to circulate above the London area, flying around in circles, gradually dropping height until a runway is available.  This increases the amount of  noise on the ground  substantially, increases the time when an accident or failure to the plane risks damage and death on the ground below in heavily developed and congested areas, and subjects passengers to variable delays they were not expecting.

The way to eliminate the stack is to use modern GPS, communications to inbound aircraft and computer runway planning to ensure one plane at a time arrives ready to land without joining a stack. Incoming planes can be given single accurate timings to land, and vary their speed at height over the Atlantic or the continent accordingly so they arrive on time.  Sometimes long haul flights will  be told to slowdown. They can give their passengers a precise flight landing time, and can save fuel as they make slower progress to the airport.  For shorter haul this might be done by keeping the plane on the ground at departure until its flight time coincides with runway availability, or might entail letting it take off with a lower average speed to destination.

Where an unforeseen event requires a landing by a plane without an approved slot this should usually be accommodated at a less busy airport. Obviously life threatening disasters would lead to an override of the system if it is thought using a busy runway could offer the chance of saving lives.

Removing the stack means

Greater certainty about arrival times for passengers

Less fuel use for the planes that are asked to fly slower rather than stacking

Less risk to the populations around busy airports

Less noise from the skies

I am told work is underway to give pilots more warning of landing slots and to slow planes that otherwise would have to join a stack. Lets hope they speed this work up.

 

As someone who negotiated at 21 Councils of Ministers in the EU, I learned that a country needs to be firm and clear about its intentions, and must decline to accept an unhappy compromise.

As we have seen from the former senior civil servants in the Lords, they have a  very different approach. Their  view is that  because the EU is larger than the UK we just have to ask them what they intend to do and then claim it as our own. I fully accept that Prime Ministers and Ministers are responsible for the way the UK sought to renegotiate its relationship under David Cameron, and again they are responsible under Mrs May and Mr Davis for the current negotiations. It does however look as if the general thrust of civil service advice now as then has similarities to the attitudes the former senior officials express in the House of Lords. Now they are legislators they  have to accept that their views will  be subject to refutation and rejection by those who disagree.

I have never understood why so many senior officials think we need to give in each time to the EU. At every Council I attended there was remorseless pressure to reach an agreement about some new law – always an extension of EU power – when there was no need for a new law and when many interested parties were against it or wanted it changed or watered down. We can see the dangers of the approach in the failed renegotiation conducted by David Cameron. Let us adopt the convention that the PM himself chose this route. We do not need to claim he simply followed civil service advice. What is clear is no-one senior in the civil service warned him that his negotiating stance would not work, or sought to get him to ask for more or to dig in more. If they had I am sure leaks would have told us about it. What he did he did with civil service agreement.

So what did he do wrong? He asked for too little and settled for even less. The method appeared to  be to tour the main capitals of the EU and ask what they might offer us. The answer was a uniform  not much. He then asked for  not much, and was promptly told that was too much! Legitimate requests to control numbers of migrants and to decide who was entitled to UK benefits were turned down. He thought Germany would help him, but Germany saw little need to and felt the UK with an opt out from the Euro and Schengen already had enough special treatment. As a result he was greeted with universal disapproval by the Brexit majority in the country who decided the deal was simply not good enough.

It is  very important that Ministers and the civil service understand why this went wrong and do not do the same again if they want a sensible deal from the EU. We have been told the EU wants money we do not owe them, wants us to continue to obey laws we might wish to amend, and thinks we should “compromise” over freedom of movement. Many Brexit voters see no need to do any of those things. If the EU stays so unhelpful and offers nothing decent for the future relationship the government will find many voters think No Deal preferable to the deal the EU has in  mind. Are there any voices in the civil service close to the PM telling her that I wonder?

 

 

Recent events have turned the spotlight on Ministerial accountability, leading some to explore what responsibility if any unelected officials have for mistakes in government. The failure over some ten years to  send out the right reminders for breast cancer screening follows hard on the heels of a longer time period of failure to equip Windrush arrivals with proper papers as British citizens. We have seen rail franchises collapse, and other contractors of government get into financial trouble after bidding for government contracts.

Under our system Ministers take responsibility for anything government does wrongly or fails to do. This is based on ultimate policy authority resting with them, and the fact that they are the public voice and face of their departments. Officials are not normally allowed public voice and can usually expect Ministers to take the rap, in return for sharing with Ministers what is happening and seeking Ministerial approval for policies.

This traditional model has been subject to amendments in recent decades. The  idea behind the Next Steps Agencies and their Labour successors was to split policy from implementation. Executive Agencies to implement environmental controls or to build and maintain highways were established, with accountable officials as CEOs. They directly answer to Parliamentary Committees and are responsible for spending money, reporting to the PAC where necessary. The idea was to make the professionals and experts responsible for executing policy, and to distance Ministers from writing and letting contracts and from judging complex technical issues like railway safety features or highways design.

There was always in the traditional model a separate line of accountability and responsibility for proper spending through the Permanent Secretary as Accounting Officer to the PAC, in parallel to the Minister’s responsibility for budget choices and overall adequacy.

These latest debates do require further exploration of how much the Minister is to blame for problems that go back years, and for matters which have rested entirely or largely with officials. Ministers had always said the Windrush arrivals were British, and had said they wanted women up to 70 to have breast screening. The policy was the one Parliament wanted. The issue is why was it not seen through?

More difficult is the situation over Brexit customs policy. I read that some officials think we cannot be ready for 2019 or 2021 for exit with smooth operation of the borders. yet Ministers have asked the civil service to make sure we are ready, and Ministers and senior officials who have been asked by Parliamentary Committees have assured us they will be ready for any eventuality over the talks. This kind of noise off, and selective leaks of official  papers that Ministers do not agree with, is not part of the deal between Ministers and officials. If Ministers are to defend officials, they should expect officials to put their concerns to Ministers and then to stick to the agreed line when decisions are made.

I share the Business Secretary’s concern for the health of the UK car production industry. I do not share his  view that without an enhanced Customs partnership  with the EU complex supply chains will slow down too much. Complex supply chains work just fine today into the UK from outside the EU, demonstrating you do  not need to be in the Customs Union to run them successfully. We will control access to our markets once we leave the EU so why would we want to slow down important components coming in?

What I want Mr Clark to do is to stand up for the UK car industry today. Over the last year there has been a sharp decline in sales and output, led by a big fall in diesel cars.  This followed a nine month period of great growth after the Referendum vote, and dates from the March 2017 budget. So will Mr Clark  now intervene, as he likes to do, to stop the output fall and job losses?

Will he challenge the Chancellor about the impact of the higher rates of VED introduced in 2017?

Will he seek some easing of policies which have been restricting car loans on new vehicles?

Will he reduce the attacks on diesel cars? Surely if he wants to see big switch away from  diesel cars  over the next twenty years or so he needs to pace the change so it does not damage existing investments and output.  Modern diesel cars are about as clean as petrol vehicles and meet much higher standards on emissions than previous generations of cars. The UK worked hard to attract inward investment into car diesel engine production, only now to turn round against the products.

Mr Clark says he is running an industrial policy to promote more business. He needs to revisit the government’s policies towards cars where output has been hit. As we are still in the EU this fall has nothing to do with Brexit.

1. Everyone one an owner – widen ownership of property and shares
2. Lower rates of tax to encourage work and reward employees
3. Breaking up state ownership and returning it to families – sale of Council houses and sales of shares in state enterprises
4. Encouraging individual ension savings, backed by a system of National Insurance
5. Abolition of exchange controls and conduct of a supportive money policy, with competing commercial  banks
6. Denationalisation and promotion of competition in industry
7. Introducing  broader freer markets to allow choice and fair exchange. Encourage easy small business formation.
8. Attack high state debt levels through debt reduction and debt swap programmes
9. Define the state’s role in providing for law and order, welfare and defence
10. Free education and health care for all

This was the outline of my Popular Capitalist Manifesto. It was taken up by some of the Eastern European countries when they broke from the Soviet Union, and was translated for re publication.

It appears we need to win these arguments all over again given the relentless drift of the Labour party towards nationalisation, punitive taxation and a dislike of ownership and choice.

Germany accepted the gift of a large statue to Marx from China to commemorate 200 years since Marx’s birth. Their were very mixed  views in Germany we read about accepting this gift, and even more mixed views of the legacy of the political philosopher. It is an important to remind ourselves of Marx’s policies, given the popularity of his work with  some in the Labour party.

There is no doubt of his influence. Some of the  teachers and lecturers I heard  were heavily influenced by what they thought Marx had said, though most of them also thought you could adapt Marxism to a social democrat framework. They were not normally willing to defend Marxism as practised in the USSR at the time. I read some of Marx’s works  to find out how a long dead intellectual could cast such a shadow over societies that we ended up with the tyrannies of Marxist states. They were all much poorer than the west, and so obviously lacked the  personal freedoms we took for granted.

One of my earlier political publications was a rebuttal of the Communist party Manifesto. That slim document was far more influential than Das Capital, as it was so much more accessible, with a strong ten point political programme which informed the ultra socialist agendas of  Marxist revolutionaries and tyrants around the world. The irony of the document was that its central attack on inequality and privilege led directly to a worse kind of privilege, the privilege that accrued to the political leaders of communist states and to communist party members which was then enforced with violence against anyone who questioned their rule.

So I wrote the Popular Capitalist Manifesto. It proposed doing the opposite in nine of the ten policies recommended by Marx. The one I agreed with  was universal free education with no child factory labour..

To remind you what Marx proposed:

The abolition of all private property

A heavy progressive income tax

The abolition of all inheritance rights

Confiscation of all property of rebels and emigrants

A monopoly state bank

Centralisation of all transport and communications in state hands

Wholesale nationalisation of means of production  and state planned farming

Establishment of industrial armies with equal requirement of all to labour

Shift of people into towns with erosion of distinction between town and country

Free education for all with abolition of child factory  labour

In a future  post I will set out my alternative to this Manifesto.

 

 

 

 

 

 

After all the hype Labour failed to break through in the local elections. It continues to suffer outside London from its ambivalent stance towards Brexit. In London it did get a further small swing and is well in the lead in votes, Councillors and Councils. There its trimming away from its pro Brexit stance in the 2017 election probably helped a little, particularly with the EU nationals who vote in local but not in national elections. Much of the UKIP vote went Conservative.

Overall Conservatives won control of four Councils and lost control of six, whilst Labour lost control of 2 and gained control of 3. Both main parties got 35% of the vote on the national projections , with Lib Dems rising from their 10% at the General election to 16% in the locals.

The message for the government is clear. People want them to get on with it and see Brexit through quickly and   cleanly. That means taking back control of our borders, our money, our laws, our fish and our trade policy. There is little sympathy for the Remain led cries from the Lords and even from within government to delay, to recreate much of the EU we are leaving, to seek such a comprehensive partnership that we are left paying them money and accepting their laws.  A majority of the public does not believe Project Fear and does not think trade will be damaged  if we do not accept the EU’s terms for a deal.

I found on the doorsteps a refreshing interest in local issues and local concerns, with a good conversation about development, the state of the roads, and housing. Here the incumbents of both parties had to fight to persuade people they are doing a good enough job. Very few Councils changed hands, meaning the benefit of the doubt went to most Councils struggling with these difficult matters.

We now see that most of the main western economies slowed in the first quarter of 2018. Part of this is likely to have been bad weather, possibly with insufficient seasonal adjustments in the figures. The UK economy slowed as  I predicted,  both through the EU slowdown and from the change of  domestic policy designed to slow it. This had nothing to do with Brexit. The Bank’s decisions to raise rates, withdraw substantial special credit lines from the clearing banks, and ask them to rein in consumer and car loan credit have had an effect as expected. The tax rises on Buy to Let, dearer homes and cars have reduced activity and investment. In the months after the referendum vote car sales and consumer sales generally flourished, with good overall growth, before these policy actions were taken to rein it in some nine months later. Shop prices continue to fall, boosting consumers’ effective spending power.

The government should be thinking about what it can do to speed growth up again. Across the Atlantic the Trump tax cuts are having very positive effects on growth and confidence. Consumers have more money to spend. Companies have more money to invest, to grant pay rises and to reward shareholders who in turn can spend more. Many US corporations are busy repatriating cash to the USA, and there have been numerous announcements of pay awards and of increased investment programmes to raise US capacity.

The US has also given itself a big boost by granting more licences to drill for oil and gas, and allowing more pipelines construction to deliver the results. Cheap energy and cheap feedstock for the chemical industry are two important underpinnings of a successful industrial strategy.

It looks as if this year the US is going to grow faster again than the EU, benefitting from a climate that favours enterprise. The US is also capturing more and more of the consumer spending through its highly successful technology based companies. The latest figures from Apple show huge cash generation, whilst Amazon continues to lift turnover from traditional  retailers on both sides of the Atlantic.

 

It was interesting yesterday to hear the media telling us the EU would lose a net 15bn Euros from the UK’s exit from the EU, much in line with the £12bn net UK gain  figure I and others used throughout the referendum campaign. Remain supporters used to tell us it was nothing like as much as this. I hope they were listening.

It was also interesting to see the priorities for increased spending by the EU. They propose increasing defence expenditure 22 fold from a low base. They want to spend 2.6 times as much on  borders, and 2.5 times as much on civil protection as in the present budget period.  We were told there would be no EU army, yet work continues apace to increase the EU’s role in Member states defence.

They also propose three new sources of tax revenue for the EU going forward. There will be a 3% levy on Corporation tax to pay for the single market, as they move to legislate for a “common consolidated corporation tax base”. (Remember all the promises that tax was a red line remaining under national control?) The EU will take 20% of Emissions Trading revenue, and will up its share of customs revenue from 80% to 90%. There will be a new non recycled plastics tax.

The EU will sweep aside all remaining member states rebates over the period 2012-26. They will prevent countries that have “rule of law deficiencies” from getting access to various EU monies to give the EU more leverage over national policies and electoral results they do not like. They are setting up a couple of new funds to help convergence in the Euro area and to assist countries preparing to join the single currency.

It is a sensible budget given the ambitions to create a political union and to project it more on the world stage. The budget reveals what Vote Leave set out – this is not a mere trading arrangement, but a serious attempt at full economic, monetary and political union. This budget and related measures will give it more money per head to spend, and will give the Union more power over the member states.