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

Anyone submitting a comment to this site is giving their permission for it to be published here along with the name and identifiers they have submitted.

The moderator reserves the sole right to decide whether to publish or not.

Fairer funding for schools

I along with MPs with similarly placed constituencies urged the Coalition government to narrow the large gap between the money going to schools in some parts of the country and the much smaller sums going to schools in places like West Berkshire and Wokingham. Conservatives were not able to get agreement in coalition, but did put a commitment to fairer funding in the Conservative 2015 Manifesto.

Ministers have since been working on a scheme. This is currently out to consultation. The request for people to write in on the “National Funding Formula” was first issued on 14 December. The closing date is 22 March. I am writing to remind those interested as they might like to send in their thoughts.

I have put the case to Ministers along with other MPs on several occasions. I will be having another meeting with the Secretary of State shortly about it again. The case is very simple. The main cost of education for each pupil is similar around the country, as it is based on teacher pay and other staff wages paid at  national rates. Of course there should  be extra money for pupils that require more support, and to recognise problems in deprived areas. There also needs to be some recognition of higher property and support costs in expensive parts of the country. The current gap between the highest and lowest funding, at more than 100% of the lowest level,  is too great.

I have asked for the  introduction of a new system as soon as possible, and for further transitional increases in money whilst we are awaiting a fair funding answer. The total support per pupil needs to be sufficient for decent provision. Individual schools may have other budget problems. If a school is unable to recruit sufficient pupils then its total funding will drop, and that may force it to reduce the number of subject options as it adjusts its teaching numbers to the lesser number of pupils.

In 2014-15 the per pupil funding of English schools ranged from £8595 per head in the City of London to just £3950 in the lowest funded authority. The average was  £4550. Wokingham received £4125 and West Berkshire £4367.

 

The contact is SchoolsNationalFundingFormula.CONSULTATION@education.gov.uk

Captcha

Some object to this entry test. I have changed server for a variety of good reasons. I was getting a large  number of computer inspired nonsense contributions and some advert contributions which I need to keep out, and am told this is the best way to do so. I will make enquiries to see if there is any other way to stop this material.

Some also query how I select which items to post. Let me repeat I delete

  1. Any unduly long post unless well written, relevant and easy to approve
  2. Any post with unproven allegations or prejudicial language about people or institutions, whilst allowing more latitude in criticisms of government
  3. Frequent posts from the same person on the same topic, unless they are easy to post
  4. Any post with a cited reference to other websites unless they are to official ones or ones I know. I am always happy to see a citation to the ONS or the Fed etc.

I do not delete posts that disagree with me or the Conservative government, and do delete posts that are personally disobliging about people in all  political parties whatever the merits of the case.

 

Budget 2017 – Not much changes

Lots of money moved around in the Budget arithmetic. Practically all of the changes resulted from new forecasts. At last the Treasury and OBR have thrown off the inaccurate gloom they were enveloped in from the time of Brexit vote, and have brought their figures more into line with reality. As a result revenues leapt £10.5bn for 2016-17 compared to the November forecast!  Borrowing is now scheduled to be £51.7bn instead of the £68bn estimated in November, as spending is down a bit as well. I assume they have at last  got their 2016-17 forecasts  broadly right, as they must know most of the numbers by now.

I raised the issue of wildly inaccurate forecasts and the danger that they drag Ministers into policy responses that are not warranted by the underlying situation.

The Chancellor himself moved very little money around for next year. He took us through a number of detailed spending pledges, itemising   £5m for a commemoration  for women’s voting rights, £25 million for small business rate relief recipients, £25 million for a one off pubs rates relief, and £20 million for free schools capital. The one major item which is also  welcome is the £1200 million more for social care. There is also £250 million for NHS improvements.

The Budget also proposed tax changes for later years, including an increase in Self employed rates of NIC and a reduction in the tax free dividend payable from a company. I would  be interested in opinions on those measures, which come in during the likely run up to the next election.

Budget Spring 2017

In the March 2016 budget the government decided to increase total public spending from £681 bn last year, to £694bn this year and to £706 bn next year.  For 2017-18 we are going to need a higher total, given the pressures on social care, the NHS and schools budgets.

The argument over the budget is less about the need for some more spending on priorities than on how this will be paid for. Some of us say that as the Treasury will be able to report stronger revenues than the Autumn Statement there is no need to hike individual tax rates or find new taxes to impose. Indeed, some selective cuts in rates on enterprise would be welcome, and likely to augment the revenues. Mr Osborne’s  Spring budget last year slashed property transactions with higher Stamp Duties. The revaluation of Business rates will damage some smaller businesses that face high increases with no small premises exemptions.

It is most important that the budget promotes growth, investment and more productive working, rather than taxing it more. Treasury officials are ever minded to look for new sources of income, but the Ministers are there to protect taxpayers and to be a voice of commonsense about how far we can go with increasing tax rates. The UK economy has done relatively well in 2016 and so far this year, but could do better. It will need substantial new investment in broadband, water, electricity, and transport to overcome obstacles to growth and to lift it further. Anything the budget can do to speed these ideas, the better.

With the USA planning major tax cuts and with places like Ireland and Luxembourg also offering an attractive tax package to investors and business, the UK must stay competitive.

Retail sales keep on growing

Today we will hear how non food sales in February fell.  This is to take the British retail Consortium figures of sales for non foods on a like for like basis, adjusting for expansions in shop space. The overall true figure is total sales of all items grew by 0.4% on the month, with food especially strong showing growth of 2%. Non food was affected by a later date for Mothering Sunday delaying purchases compared to last year.

Many shops continue to be pessimistic, as more retail spending takes place on line rather than in shops, and as severe competitive pressures keep down prices.

How could the Chancellor help raise productivity?

The budget is billed as helping drive productivity higher. That would be a good idea. If we work smarter as a country then each person can earn more. The government seems to have in mind labour productivity in its plans, though making productive use of capital, energy and other inputs also matters and can help make a country richer if done well.

The way to encourage smarter working and higher earnings must begin with fair taxation with low rates of tax on enterprise and effort. Politicians of all parties regard work as a good, yet all agree it must be taxed. Given the volume of public service we want as a country, it is true there has to be some tax on work. It is also true that if you tax work too highly you send it abroad, you persuade higher earning people to value leisure time more, you encourage early retirement. I trust the leaks about higher National Insurance for the self employed are just Treasury officials greedy for revenue and not inspired briefing. Starting a productivity drive with a big increase in taxes on some of the most productive people in the economy is not a great idea. Small and new business offers us scope for major adjustments in our economy and improvements in its performance. It is the new fast moving smaller businesses that often pioneer the modern more productive techniques and technologies, offer the new goods and services, and use labour well.  Cutting marginal rates of tax on enterprise, employment and business success will encourage more of what we need.

In both manufacturing and clerical work providing more machine power and computer power at the elbow of each employee raises productivity. UK productivity in factories in recent years has surged as elsewhere in the advanced world. What was done by hand and arm power in a sixties factory is now often done by robot or mechanical power. What was done in an office by people on typewriters, calculators and adding machines is now done by computers and electronic programmes with less human intervention. The full internet revolution has further to run to automate and take more of the routine out of office and factory working. The new jobs will be in machine minding, programming, managing and reviewing the output, and in designing and selling.

The waves of change that are often ascribed to imports and foreign competition also have been driven by automation. A more productive economy has to welcome these waves of technical progress and adopt more machine power to compete. It is then equally important that those who have lost their jobs as a result ar helped and trained to undertake the many new roles a machine driven culture produce. What can a  Chancellor do to bring this about?

He can and should concentrate on helping the public sector to adopt the new ways of doing things that will be smarter, higher quality and more efficient by using computer power. Productivity performance has been disappointing in the public sector this century.  He can and should  with the rest of government to do more to ensure the casualties of such changes are also winners, by backing retraining and recruitment into the new more productive jobs investment can spawn.

“A £60 billion Brexit fund”?

I awoke to an odd headline yesterday in the Sunday Times. The Chancellor we were told is going to set up a £60bn Brexit fighting fund.

Fortunately the Chancellor’s own words in  the same newspaper said no such thing. It was a silly headline. The government is scheduled to continue borrowing a bit more each year up to 2020, beyond our likely date of exit. The additional borrowing each year is now well down on the peak rates of the previous decade, and will continue to fall this Parliament. All the time we are adding a bit to state borrowing we cannot create a fund out of tax revenues.

Nor did the Chancellor write that there can be no net increase in spending in the March budget. He acknowledged that growth has come in faster and the revenues higher than forecast in the Autumn Statement. He has pre announced more money for vocational training and hinted at more spending on social care. He of course states his wish to see continued progress this Parliament in cutting the deficit further but has not said he wishes to stop all new borrowing. He will have some options as the Treasury and OBR correct some of their forecasting mistakes from the Autumn.

The headline about a Brexit fund is doubly misleading. The sum involved just happens to be the sum the rest of the EU would like us to pay as an exit payment. That is why we must rush to explain to them there is no such fund, no such money, as well as telling them there is no liability for us to have to pay. Nor does Brexit require a special fund. The future path of the UK economy is going to be mainly influenced by interest rates, the performance of the US and global economy, world commodity prices and their impact on inflation, and by the balance of domestic fiscal and monetary policy. In other words after Brexit as before the main determinants of our performance will have nothing to do with whether we are in or out of the EU, just as our past performance clearly got  no visible benefit out of being a member  of the EU internal  market. Inflation is rising as many have predicted, but so far UK inflation has risen in line with US and German because it is led by world oil prices, not by the fall in sterling.

In the EU we experienced two great crashes. One was caused directly by EU policy when we fell out of the mad and dangerous Exchange Rate Mechanism and plunged into recession. The second, the Great Recession and banking crash of 2008-9 was a common crash in the USA, the Euro area and the UK brought on by similar Central Banking and commercial banking mistakes in all three zones. The EU did not cushion or ameliorate the problems, and then added their own twist of the recessionary knife with the Euro crisis that followed.

Let’s hope our authorities have learned from these bitter experiences so we have a good economic performance as we leave the EU. To do so we need interest rates that allow continued expansion without damaging the pound further, as the US hikes her rates. We need some relaxation of credit for good projects, home purchase and other affordable purposes in the private sector, and we need accelerated rates on investment in infrastructure to catch up with our needs.

Let’s have a budget for prosperity

We need to move on from  austerity.  The Treasury needs to write back some of the tax revenue it will collect over the next couple of years, that it took out of the forecasts in the Autumn Statement. It was too gloomy then. It needs to spend enough on social care, schools and the NHS to provide a good service. It can make spending reductions elsewhere, starting with the EU contributions and other items I have highlighted on this website.

It also needs to unleash more infrastructure investment. Much of this in energy, broadband and some in transport can be privately financed. The government may need to assist with loan guarantees, permissions, licences and co investment.  It needs to do more to promote enterprise through tax cuts. It has a programme to raise the 20% and 40% tax thresholds for Income Tax. It would also be wise to cut Stamp Duty rates to help homebuyers. It could offer entrepreneurs and small businesses additional tax relief.

Mr Trump’s plans to increase infrastructure spending, cut personal and company income tax rates, and relax banking controls to allow bit more lending all make sense. The UK is already well ahead of the US in lowering corporation tax rates for large companies, but needs to sharpen its competitiveness for start ups and smaller companies.  We should tax work, effort and enterprise less, as we want more of it.

The UK does not have to pay a single Euro to exit the EU – and is making a very generous and friendly Brexit offer to the EU

I am glad the Lords have confirmed what I have long argued that the UK has no legal obligations under the EU Treaties to pay any one off exit payment or any continuing contributions after departure.

They missed out the even more important point  – UK Ministers have no legal power to make any one off or continuing payments after leaving. The payments would not be authorised. The legal base of the Treaty  supports our regular contributions but not the payments the EU have in mind.

The EU may well think it a good idea to ease the problems they have on our departure by charging us a huge sum for daring to leave. The answer is a simple and polite No to that request.

The EU needs to concentrate on making  sure it still has tariff free access to our market, which they also need. The good news is we are happy to offer them that. The bad news is they do not seem to be able to agree anything amongst themselves about how to respo0nd to Brexit. The EU Commission also seems to think it should try and threaten and bully us, when the sensible approach is to be helpful and courteous, as we are towards them.

 

The UK is offering them tariff free trade and the full rights of EU citizens to stay and work in our country. That’s a great and generous offer.  Why can’t they simply do the same civilised thing? Why don’t they take seriously their legal obligations under their own Treaty to have good relations with a neighbouring state  with a flourishing trade?

Some smart phones are neither smart nor good phones

I have usually been an early and enthusiastic adopter of new technology. I liked the arrival of the mobile phone, thought the internet amazing and welcomed the sat nav. I automated business processes where this could take drudge work out and improve the quality of the product and the quality of work people were asked to do.

I don’t have the same enthusiasm for my so called smart phone. I’m not talking about a particular model or make. The faults of mine are likely to be faults of others.

My main need from a mobile phone is to be able to make and receive phone calls when on the move. I have good internet connections at home and in the office, with  a large screen computer, good keyboard for typing, and landline phones that work. I have no wish to use a small screen mobile with variable reception in these circumstances. I need my phone travelling by  car (hands free using when parked), walking or on public transport. I take an ipad for  computing at my destination or on a train  if travelling to a temporary location away from home and work.

The mobile phone has several disadvantages. Because it operates by means of a small screen if there is bright sunlight you cannot read it at all. Even not so bright daylight makes it difficult to read. Because you need to instruct it by touch it becomes finger printed, and  often your touch is taken as a different instruction from the one you intended.  Trying to type a message is difficult at speed because the letter pad is so small for any given letter. In addition, when the phone rings I need first to scroll the page, and then hit the receive bar on the second frame to appear. All this can take too long so the caller rings off. Quite often my touch does not register in time with the phone.  It means a lot of lost calls when out and about. It does not have a long battery life, so on a busy day you have to remember to take a recharger with you and plug it in somewhere.

It is not that reliable on a train and of course cuts out on the tube. Bluetooth links to the car do not always work, unlike the old mobiles which you plugged into the car system by cable which always worked.

It is true it can receive messages, offer me a moving map, provides a modest quality camera and doubtless other things I have not asked it to do. What I can’t accept is that is a smart phone. The truth is its a dumb phone,  a not very good one. I just lose more calls with it. The old  phones just required you to press one button to receive a call, and plugged into the car which also recharged them.