In the year to June 2023 1.2 million people came to our country legally. This overwhelms the 30,000 illegals who made their way here. The new arrivals were rightly welcomed. Some came to take educational courses, some came to fill jobs, some came to join  family here or as dependents of those coming to work or study.

In the years ahead we will want to welcome more students to fill courses, some people with skills we need for jobs we find difficult to fill. We want more investors, entrepreneurs,  business builders. We do not want to prevent families reuniting where there is good cause.

We also need to recognise that the huge numbers are no longer fair on either those who come or who  are in  the settled communities that receive them with a welcome. We want people coming to enjoy a good lifestyle. They need decent homes, school places for their children, NHS doctors and hospitals capable of seeing them  promptly when  need arises. They need roads to drive on and utility supplies for their energy and water. All of these things are under stress and much stretched as we are not keeping up with providing the extra capacity in all these areas  that 700,000 extra people a year need.

It is true that last year 500,000 left the country which is why I wrote 700,000 not 1.2 million. Some people just net that off, but in practice for some purposes you need to look at the gross number. People leaving may sell or vacate homes that are are in different parts of the country or in a different price bracket to the new comers’ needs and pockets. People leaving may be older  requiring  fewer school places than younger migrants arriving. There may be concentrations of new arrivals particularly in big cities and in places with plenty of jobs.

We also need to be fair to taxpayers. The low wage model, inviting in people to fill low paid jobs may be cheap for the employer but it is very dear for the taxpayer. A low wage worker will need a subsidised home, benefit top up of wages, a wide range of free public services, and extra capital for the additional utility supplies and  transport they need. I have set out before how it probably costs around £250,000 per low paid migrant in public sector capital set up costs and early years public service and benefit costs. This is in line with the EU estimate of 250,000 euros a migrant in 2016.

In future pieces I will explore the government’s plans to reduce legal migration by 300,000 a year. This could be expanded and speeded to the benefit of  many. We need a higher wage higher skilled economy.

Recent governments have allowed too many so called independent bodies to continue, to increase their fees, charges and budgets and often do a poor  job. When they let us down Ministers get the blame, as the Environment Agency has on sewage discharges, the Rail regulators and public sector bodies have on train services, the North Sea Transition Authority has on energy self sufficiency and cost, The Post Office has on treatment of its sub postmasters, HS2 has over building a railway to time and budget, the Highways Agency has over keeping the main roads open and free flowing and the Border controllers have over illegal migration to name a few.

The public want controlled migration, good roads, affordable railways, well run Post Offices , more of our own oil and gas for our needs and clean water. They do not want Ministers who say it was not us, and responsible bodies who suddenly claim it was nothing to do with them. Ministers tell me with these bodies they are warned off intervening and told they have independent powers. In  practice they are creatures of the state. Ministers need to get them reporting to them  in an agreed and sensible way. Ministers should act as the non executive chairman or the responsible  shareholder, They can delegate their authority but they need to know the up to date position, supervise the annual report and the budgets, and ask good questions if there are complaints. They need to be ready to praise or blame, reward or fire the top management related to their conduct and performance.

In some cases we would be better off without these bodies. Take the work back into the department and supervise it directly.

^The large fall in public sector productivity since 2019, assessed at 7.5% by the ONS to last year, is a major cost to taxpayers and a major drag on economic performance.

The immediate task for the Chief Secretary to the Treasury and the Cabinet Office Minister for the civil service must be to arrest the big increase in management and administration. The more managers and senior staff they recruit or promote, the worse the productivity becomes.  The easiest thing to do it to impose a ban on all new external recruitment into the civil service and the public administration, unless a special case is made out and approved by a Minister.

Natural run off occurs at around 6-7% a year as people retire, find other jobs elsewhere or change their work life balance. As a post is vacated one of the many managers needs to decide if the post can be eliminated, or amalgamated with another. If not then a new appointment is made from within the civil service or public body, and some other post removed.

Ministers and top management would also have to make clear that to raise productivity the work done by these extra people either has to be abolished by better process or carried out more effectively. They must not contract more work out to the private sector. They should review their use of private contracts on a  regular basis, asking each time the contract comes up for review if this is the best way to do the work or if now they know how to do it more of it could be done in house to raise productivity. There is a tendency to  have a bigger overhead of managers who then buy in more work from outside to keep their own headcounts down a bit. There has been a big grade inflation as the civil service has expanded, implying more buy in of the work from  outside .

We may need more doctors, nurses, teachers, police and other front line personnel. There are plans underway to do so. Some of this requires extra back up staff so they can do their jobs well. That should be allowed where it  is needed for growth of output. If we need more doctors and nurses to put through more treatments, or more teachers for more pupils then that will not depress productivity to have sensible support staff numbers.

What is strange is the fall in productivity and the big increase in clerical staff has taken place against a background of large expenditures on new computer systems and big breakthroughs  with artificial intelligence, faster and better data processing., more remote working and conference calls to cut down travel time , better software for everything from booking systems to accounts. So why hasn’t this led to a big productivity gains in the public services that have a high administrative content?

John Redwood (Wokingham) (Con):

I, too, thank the Minister and the Government for their fantastic legislation and great track record, of which we can be truly proud. Is it not the case that this Bill would not have been possible when we were EU members, and that we have put right that wrong? I urge the EU to catch up.

Mark Spencer (Minister for Food, Farming and Fisheries):

As ever, my right hon. Friend is absolutely right.

Fifty years ago when a Labour government came into office early  in 1974 they spent more in the public sector, borrowed more, fuelled a subsidy and wage inflation in the nationalised industries and lost control of the nation’s fjnances.  They had to go cap in hand to the IMF to get a bail out to defend the pound. The IMF made them start a programme of spending cuts. After a disastrous economic performance with high inflation, collapse in  growth and many industrial closures they lost the 1979 election.

Labour had got in following the unfortunate short Heath government of 1970-4. The Heath government presided over an inflation followed by a recession along with the US and Europe. They blamed it mainly on the decision of the OPEC Middle Eastern oil producing countries to form an aggressive cartel, cut output and force the oil price up massively . This was certainly very damaging and affected many advanced countries. The UK version was made worse by a miners strike.  It was also the case during these events that the UK government put up its spending and greatly increased its interference in the economy with a prices , wages and nationalised subsidy programme. It  allowed the Bank of England to expand the money supply by adopting a new monetary policy called Competition and credit control. Large amounts of lending were generated which led to a property bubble.

I mention this not because our current position is the same, though we can learn from the impact of an external energy shock and from bad Central banking in both 1970-3 and 2020-3. I mention it because the period of damaging Labour government led to the publication of the work by Eltis and Bacon, two Oxford economists, pointing out the  UK had too few producers. The UK then had a worse productivity problem across the whole economy than we do now. Their analysis  showed how the massive overextension of the public sector to 60% of GDP was unsustainable. It led to tax rates that were far too high, which deterred new investment in the private sector and encouraged the brain drain as successful and talented people went elsewhere to avoid the penal levels of income tax Labour imposed. The marginal rate was 83% on earned income and 98% on savings income, effective confiscation. The poor productivity in the public sector was compounded by low productivity in the private sector. Contrary to common belief at the time a lot of business did have modern machinery like the US and Germany, but did not get the  same output per person from it.

The Eltis and Bacon main perceptions that too much public spending led to a squeeze on the private sector were correct. When looking at today’s problems there are some  similarities. It is however important to recognise  the fact that the public sector does produce valuable output which is captured in modern GDP figures by assessing the number of pupils taught and the number of NHS treatments undertaken. I will be looking again in future articles at the fast productivity decline in the public sector 2019-23, a new feature, as well as the related lack of good control over public spending growth rates.

Please find below the link to my Interview with the Institute for Art and Ideas on inflation.

You can find my contribution which begins at 05:38.

Economic fact and economic fantasy (iai.tv)

“Excellent reasons why we should buy British – Part III”

Now live : https://facts4eu.org/news/2024_jan_food_safety_3

The way the Post Office, a nationalised industry throughout, treated its sub postmasters must have destroyed the myth that nationalising a business makes it ethical, good for its staff and customers and capable of resolving public policy problems. Just as the old nationalised water industry tipped sewage onto beaches, and the nationalised railway  kept cutting services and sacking staff whilst failing to run  the trains on time, so modern nationalised bodies show they are no good at doing what customers need and want. The Environment Agency wrecked the Somerset levels by not using pumps and not keeping the drains and ditches  clear. The North Sea Transition Authority delights in closing down our oil and gas fields so we can import more fossil fuel generating more CO 2. Local Councils pursue vendettas against motorists. DEFRA has been specialising in stopping us growing our own food with large grants to let the land go wild.

It is curious how this century Labour, Lib Dem and Conservative Ministers have been keen on more so called independent bodies with greater powers. They seemed to think they would do a better job and would take the blame and the strain. Instead many of them did a worse job whilst the blame as far as the public is concerned rested with the Ministers who could have changed the instructions or the management of the body. Some Ministers have become timid or have been house trained to believe they must simply rely on the advice and defend the statements and actions of these independent bodies even when they are obviously wrong and or upsetting many members of the public.

Government needs fewer of these bodies. It needs to supervise them effectively. When I was a Minister with reporting quangos I insisted on an annual review meeting of the previous year’s performance and actions prior to publishing the annual report, and an annual  budget meeting to discuss how much they should spend and how much public money or underwriting they might need in the year ahead.  If big issues cropped up or if their performance was poor there could be additional meetings during the year. I reported any intervention I made to Parliament and was prepared to discuss the published budgets and annual reports which became open documents.

If necessary I asked a CEO or Chairman to leave

The hypocrisy of Council reserved car parks never fails to annoy me. The architects of our current road misery so often have reserved areas in a car park next to the Council offices for their cars when they do make it into the office  to tell the rest of us to leave our cbars at home.

My journeys these days like yours are beset by closed roads, narrowed traffic lanes, more traffic lights, more 20 mph, 30 mph and 40 mph zones, endless changes of speed limit and access rules, ever dearer and more restricted municipal parking. Huge sums are spent on remodelling the roads and junctions, putting up forests of new signs and controls,  and on installing more cameras than in a communist state . These Councils  seek to collect easy revenue from drivers who make a mistake and dare to go 23 mph in what was a 30 mile an hour zone or who get stranded behind a vehicle just across the lines of a box junction.

The Councils love inventing new tortures and increasing their revenues from their anti driver scams. It never occurs to them that they might one day need the ambulance or doctor to get to them quickly by vehicle. They forget that the plumber or decorator or window cleaner they need at home might find it all too much, or put their prices up  because traffic delays means fewer visits in a working day. They delight in letting contracts for temporary traffic lights and barriers so the taxpayer has to pay for weeks of their hire, often for long periods when no works are proceeding on the road.

Why do they hate us so much?

One of the most frustrating features of an MP’s life is when you know something is wrong, you highlight it, and you cannot get the necessary changes. When I first discovered years ago that my knowledge of a local post office damaged by allegations of shortfalls was not alone but other MPs had similar cases I thought that it was very unlikely there had been mass outbreak of fraud around the same time as the introduction of new computer system. My  concerns were strengthened as those affected had often alerted the Post Office to the accounting troubles which no fraudster would have done, and they did not themselves appear to have the money they were said to have embezzled. I supported James Arbuthnot who led the originally small group of MPs who wanted to help  sort this out.

In the end the good work of some of the sub postmasters themselves and important reversals for the Post Office in court led to government instituting a proper review and compensation. Today there may  be faster progress as the tv programme has pricked the conscience of the nation and revealed the big scope of the disaster.

The truth is that whilst this is a very bad and current example of poor work and worse treatment of people by a nationalised industry or branch of government, it is not unique. There are too any cases of wrong decisions, bad outcomes, poor treatment of users, businesses  and taxpayers. One of the reasons there is a feeling of frustration in large sections of the electorate with many saying they do not like what is on  offer from the main parties is this feeling of helplessness exemplified by the sub postmasters against the mighty power of a state determined to get it wrong.

I have been battling against a Bank of England determined to give us high inflation whilst blaming something else.It is now determined to lose taxpayers a fortune by selling bonds at big losses and to drive us into recession. Why?

I have been arguing with an OBR that cannot get its deficit forecasts right and refuses to accept cutting some tax rates can boost growth and revenues. They have this mad idea that we tax cuts are unaffordable but lots of spending increases are unavoidable.

I have been explaining to the vast empire of net zero officials and Ministers that importing LNG gives us more CO 2 than drilling for our own gas, that switching people to electric vehicles before there is sufficient renewable electricity does not help and that heat pumps are far too dear and unsatisfactory to be something most people will want to buy. I have been saying you cannot have a green revolution until consumers think the products that make us greener do genuinely do that, are affordable and are popular.

There are many other examples of  wrong theory doing damage to people’s lives and livelihoods. Too many policies lead to more burdens on the small businesses and self employed on whom we rely for so any services. Many of these people now see the state as the enemy, fearing unreasonable conduct by those in authority as they are made to pay more tax, comply with more regulations and sometimes falsely accused of misconduct.