Dear Justine

I was pleased to see week-end press coverage that the government is considering allowing the expansion of existing grammar schools and the establishment of new ones where local communities would like this to happen. I strongly support this policy and urge you to develop plans as soon as possible.

In Berkshire children from my constituency and from other neighbouring constituencies can apply for places at the two Reading grammar schools, and frequently do. There are no grammars in Wokingham Borough , nor in the West Berkshire  Council area. My constituency contains parts of both of these Unitary Council areas.  High achieving students at local comprehensives obtain places at top universities, as well as pupils from  the grammars doing so, so it is not right to argue the presence of the grammars undermines the local comprehensives academically.

The grammar schools are massively oversubscribed and are popular schools. The academically gifted child does benefit from the specialist grammar teaching selection allows, just as specialist sporting, dance and music academies can bring out the best in the most enthusiastic and talented youngsters in those disciplines.  Nationally I read that children of better off families have more success at getting grammar places. This in part reflects the location of current grammars, with a concentration in higher income areas like Buckinghamshire, parts of Berkshire and Kent. It would be good to spread their reach more widely.

I do not accept grammars create an insuperable divide at 11. We need a system which allows those late developers who wish to go to a grammar for a more specialist academic education to have opportunity after 11, and we need to ensure high fliers academically can also be  well served by local comprehensives, as many are in my area. As sport, dance , art and music demonstrate, specialist concentrated teaching and learning helps achieve excellence, as it can  academic success. The bigger divide currently is between those whose parents can afford to send them to a top performing feee paying school and the rest. More grammars will help bridge this academic gap.

I was disappointed to read of delay in implementing the Conservative policy of fairer funding for secondary schools in areas like mine, and hope you will revisit this and reach a timely introduction, in line with our Manifesto promises.

Yours ever

 

John

Over the 43 long years of our membership of the EEC which  morphed into the EU government has become progressively enfeebled. More and more of our laws and standards are laid down by Brussels. The UK civil service has ben used to receiving its legislative instructions from a foreign power, and has settled down to accepting a large amount of derived law.

It is one of the reasons why people have become more dismissive of Westminster and Whitehall. We have had two governments for the price of three.

Some of it has added complexity and work we did not need. Some of it has produced rules and requirements that we accept or may have invented for ourselves.  The employment rules where the UK had a good record before membership of progressively raising standards for employees by UK legislative action has produced a body of minimum standards laws at EU level. The labour movement likes  these, which any UK government will keep. The Leave campaign recommended keeping them. Environmental laws are also examples of requirements which previous UK governments often wanted, though here we may wish to adapt them more to our national needs.

I have found an increasing number of areas where constituents have written to complain about the way something works where I have had to explain that Westminster did not have the power to alter it owing to EU demands. In such cases people did not readily gravitate to one of their MEPs, sensing that the European Parliament does not have the same power to initiate, revise  and repeal EU laws that the UK Parliament has over UK laws. It is also obvious that any individual MEP has so much less power to initiate and influence EU law than any UK MP has over UK law.

EU law is another kind of rule by experts, where the consultants and large company lobbyists and executives have the power to influence and draft for Brussels. The combination of too much big company government from the continent and too much independent quango government  from home, has created a new priesthood or tyranny by experts which the public decisively rejected on June 23rd.

One of the worst jobs I was given in government was negotiating numerous Directives and Regulations to complete the so called single market. Seeing the construction of this complex web of law codes from the inside taught me that this was no ordinary market. This was a simple power grab by the EU authorities, using the cover of the markets as means of taking over large areas of legislative authority from the member states.

The job was unsatisfactory, as it entailed endless hours of discussions and debates trying to stop needless rules, or trying to amend badly drafted and over the top proposals to make them something business could live with. I soon concluded it was all based on a false premise, that you can legislate to create a market. Markets require willing buyers and willing sellers. They need some people to be good at defining services and designing products that others will value, and other people willing to shop around with an open mind. You do not need to amalgamate law codes or adopt common laws in order to buy from each other. China’s laws are very different from the UK, yet they manage to sell us a large amount of product.

It is true that there is a benefit in the single market legislative programme. If you have a product which is of marketable quality for country A within the single market, that same product will meet the legal and technical specification needed in country B if also within the single market. This of course is an advantage to countries trading with the EU from outside the zone, as  much as it is to members inside the zone. It also brings the disbenefit to members of the zone that if the EU decides on unsatisfactory requirements and specifications you are lumbered with it, whatever world companies may be able to produce which is better outside the EU specification.

Too many still seem to think the single market is some priceless creation. I remember it being a series of compromises over very often badly drafted texts, where the main aim seemed to be to establish EU control or involvement in the particular area covered  by the draft law. Nor is it true to say you cannot trade with member states if you no longer  belong to the single market. The rest of the world trades daily with the EU without being members.

I read their forecast carefully. It is rightly riddled with uncertainty.

The good news is they  no longer expect a recession. They anticipate 2% growth this year, and 1.8% growth in 2018. It is difficult to understand why they think growth will reduce to 0.8% next year . There was sufficient monetary stimulus prior to their latest set of monetary actions to justify a higher forecast.

Their forecasts are  contradictory, and struggle to find any bad news, let alone enough to justify their extraordinary actions. They admit that they do yet see a material slowing in consumer growth, yet consumption is the dominant part of GDP. They have had to give up falls in FTSE 100, and even in FTSE 250 as both indices are at or above where they were prior to vote, which was itself a high level. So now they point out that a couple of sectors within the index are weak, financials and construction. There are usually a few sectors that lag or do badly when an index rises, but it does not normally herald recession.

They cite unspecified property funds that have closed owing to redemptions. They do not point out that some of those funds refuse to accept new subscriptions! Nor do they point out that lots of funds have not closed, and do not take such a pessimistic view of property values. I don’t think we can take seriously mark downs when we are not allowed to buy the units so marked down! They do admit that maybe residential property will not fall very much after all, much to the disappointment of all those who would like to be able to afford a home.

It looks as if the Bank has decided it has to get away from its absurd pessimism that we would plunge into the recession they talked about prior to the vote. To do so they  both change the forecast to a more optimistic one and take action on money to claim the credit for staving off the recession they forecast. Many people did not believe the forecast in the first place. It is interesting that the Bank now thinks this year will be just fine, and thought it could delay monetary action by over a month after the vote. It is a pity they did not delay it longer, as I doubt it was ever needed.

 

 

Just a few weeks ago we were facing recession according to official forecasts if we voted Leave. Now we are told there will be little or no growth instead. These forecasts are very flexible, and doubtless wrong.

The Bank should have waited to see proper data for output and activity for the first quarter or so after the vote before rushing in. It seems as if they are desperate to get the pound down, as the one and only thing that has been performing as they forecast pre the vote.

There is no need to fear, as some now do, that the Bank is running out of options to stimulate. As the Bank itself makes clear, it could have a bigger QE programme, it could widen the range of assets it buys in with created money, and it could expend the bank lending facility. It could also cut interest rates again.

I hope it does none of these things. I do not think they are needed. Triggering more asset inflation is not a good idea, at a time when we would like more UK citizens to be able to afford a home of their own. There is as yet no evidence of a collapse in demand or a serious likelihood of a Brexit induced recession. Real wages are rising strongly. We do not need the Bank to erode them too much by sparking a weak sterling leading to a higher rate of inflation.

The Bank admits it has to control inflation as well as avoid recession. Its latest actions do not seem to take its inflation duty seriously enough.

The Japanese and European Central Banks continue to buy their own government bonds on a grand scale. Their actions in creating money to boost the price of bonds is helping sustain ultra low interest rates throughout the advanced world. Bondholders have been rewarded with large increases in the capital value of their holdings.

It has proved easy for the authorities to create cash and boost bond prices. The US and UK started this process in the West. The ECB now has taken up the running. Japan has been doing it for years, as part of the long aftermath to her large banking and property crash 25 years ago.

The policy is meant to have several desirable affects. It does cut interest rates, helping drive down the costs of borrowing. It does persuade more people and institutions to undertake more risky investments, as those who sell their bonds look for other things to do with the money.

It also has various less desirable side effects. Low rates make it more difficult for banks to earn good profits to restore their damaged balance sheets. The combination of weak banks and tougher regulation means that the extra money created cannot often find its way into the productive economy through the traditional commercial banking system. Savers can feel they need to save more, as the income on their savings falls short, so to some extent low rates discourage the very spending they are meant to encourage. It generates substantial asset price inflation, pushing up the price of commercial property and residential homes as well as the prices of bonds and shares. This has an impact on the real economy, and prevents some people buying a home of their own.

The biggest problem of all with this bond bubble is how do the authorities deal with it when conditions start to alter?  The US and UK has removed the extra stimulus of additional official purchases of bonds without  undue adverse effects. This has been assisted by the large Japanese and European programmes continuing, encouraging more buyers of US and UK bonds as they seek better income levels than are offered by Japanese or German bonds.

When all the main Central Banks terminate their programmes there could be more of a wobble in markets. If and when these same Central Banks start to raise official interest rates, what will then happen? They will need to think through “normalisation”, and think how owners of bonds will respond if there is no further official purchasing to underwrite high bond values.

The arrival of a new Prime Minister in office has reminded us of how complicated our constitution has become in recent years. Theresa May has had to go to visit the First Minister of Scotland, the First Minister of Northern Ireland, the Prime Minister of the Irish Republic, the President of France and the Chancellor of Germany to discuss vital matters of UK national interest as well as of wider significance.

In “The Death of Britain?” book I wrote I explained how too much devolution at home would be destabilising to the Union it was meant to sustain, and how too much transfer of power to the EU would  damage UK democracy and lead to more popular disillusion with government and politics. The rise and rise of the SNP in Scotland has underlined the first argument, with the arrival of almost a full slate of MPs in Westminster from Scotland wedded to independence. They will look to use any opportunity to make the case for independence, and see in the relationship with the EU one of the routes to adopt.  The outcome of the referendum has underlined my second argument.

In all of the changes England was deliberately left out. England had no matching First Minister or formal political identity as Scotland enjoys. England was left off the maps of the EU, seen as a target for break up into regions that in many cases attracted little loyalty or support. The  public voted down the idea of elected regional government in the North East, the one Labour dominated area at the time where the Labour government thought it would be supported.

As  the new government pilots its way through Brexit and seeks to reassure all those of the current devolution settlement, it also needs to heed the voices of England. Scotland makes a lot of its wish to stay in the EU by a majority. Latest polls however, show no overall change in support for the union of the UK after the Brexit vote, to the disappointment of the SNP.England does not have a First Minister to remind the government that England by a convincing margin voted to leave the EU. Brexit is a Union matter and has to proceed as such. Other matters like the financial settlement within the UK are as much English as Scottish issues. England still needs more recognition in our democratic structure.

The rise and rise of EU powers which has so damaged UK democracy has been accompanied by the doctrine that many things are better run by experts than by politicians taking professional advice. It has been the mood of the last 20 years that independent quangos staffed by experts will do a better and fairer job than elected Ministers.

It was with this in mind that both main parties in office have paid lip service to the idea of Bank of England independence. Gordon Brown claimed to have given independence to the Bank of England in a much spun change of policy in 1997. Instead he gave the Bank limited new powers to control interest rates in return for taking away from the Bank the main regulatory powers over commercial banks and giving them to the FSA. This meant that the Bank lacked crucial powers to deal with the emerging banking crisis and crash in 2008, and spent part of the pre crisis period in a turf war with its rival independent body. The elected official, the Chancellor, left these two warring institutions to get on with it, with disastrous results.

We have now suffered from 20 years of a so called independent Bank. During that time period we have seen two speculative bubbles, in 2000 and again in 2008, a banking crash in 2008-9, the Great recession which resulted from the crash, the adoption of more extreme monetary policies based on printing  extra cash and the  buying up of government bonds. Far from creating stability, the Bank has supervised market extremes, substantial economic volatility and two stock market crashes, including one  with a  banking crash.

The Bank has demonstrated it is not independent, whilst  governments have continued to interfere behind the scenes. Gordon Brown changed the powers of the Bank, then changed  its inflation remit. Alastair Darling rightly  overrode the Bank to get interest rates down in the middle of the banking crash. Governor Carney’s independent judgement looked very similar to  the Remain campaign in the referendum.

The same thing has happened with the Environment Agency. The Agency developed its own policy of allowing parts of the country to flood. It removed  pumps and failed to keep ditches clean and rivers dredged. It allowed substantial new development to be added without always making necessary provision for handling surface water and household  waste water. The whole system broke down in  the Somerset levels, prompting Ministerial intervention to demand pumps and dredging be resumed.

It is time we moved back to a system where Ministers set policy based on public needs, rather than relying on experts who can offer policies that are not wanted allied to  incompetence in delivery. In the end the public thinks the Chancellor is to blame for the economy and the Environment Secretary for flooding, however much power has in theory been delegated.

I am surprised several contributors here have  complained at Mrs Mays determination  to end modern slavery. I think it is an important priority and one I support wholeheartedly.

We hear that too many people are brought into the UK illegally by people traffickers. Too many are employed for wages below the legal minimum. Too many are made to work in unsafe or demeaning activities. Too  many are locked into high rents for cramped or unsuitable accommodation. Indeed one in such conditions would be one too many.

Surely it is a central task of government to stop illegal entry into the UK? It is also important to stop or prosecute landlords who break rules over numbers of people in a property, fail to connect a property to proper utility services, who break planning laws or otherwise take rent off people without providing decent and legal accommodation.

It is important to stop or prosecute employers who violate health and safety standards deliberately, who employ illegal migrants knowingly, who fail to pay the minimum wage, or who coerce employees with penal service and rent contracts as a mandatory part of their employment.

All these practises are bad for the people trafficked, and bad for our society receiving them. We read that there  are too many people living in sheds or sleeping in shifts in small properties with far too many sharing, working in coercive work forces for very little, without legal papers to be here at all. It is the government’s job to find them if this is true and take action to prevent more  coming here in modern slavery.

This trade in people is a scourge of the modern world. I am glad the government wants to take a leading role in closing down these profiteers from misery. We don’t want them or their activities in the UK.

Today I am reminding readers of the suggested Brexit budget I launched for Conservatives for Britain before the referendum vote. It will remind people that I was very clear the extra money we have to spend is the net figure, not the gross £350 m a week. It also reminds people that NHS and social care was at the heart of the programme, along with some VAT measures:

 

“The UK currently hands over £19 billion to the EU every year. We get £9 billion back in services and the rebate which means when we Vote Leave we will be able to guarantee all the funding to farmers, universities and regional grants that currently come from the EU and still have £10 billion more to spend on our priorities like the NHS.

The Conservatives for Britain spending suggestions for the first post-Brexit budget include:

£1.1 billion for disability benefits to avoid controversial cuts

£800 million to train an extra 60,000 nurses a year to deal with shortages and excess agency staff

£250 million a year to provide an additional 10,000 doctors a year to deal with doctor shortages and to staff the seven day NHS well

£750 million a year on social care to offering better support for people in their own homes, and for more care home and respite care places.

£200 million to cancel hospital car parking charges £400 million for dearer medical treatments not currently licensed by NICE, for example cancer treatments such as Proton Beam therapy and Meningitis vaccines

£1.9 billion to abolish VAT on domestic energy, energy saving materials, on converting existing dwellings and on carry cots, children’s car seats and safety seats

£1.5 billion to keep Council Tax down by offering councils the money to pay for a discount on bills they issue

£900 million to remove Stamp Duty on the £125,000 to £250,000 band of home purchase

£500 million should be allocated to a local road fund to support local schemes to improve junction safety and flows, and to provide additional capacity and bypasses on busy roads in congested areas”

These measures or something like them should be adopted soon. We could issue them before the cancellation of the contributions has been achieved, but it would be best to get on with that in a matter of months. The contributions should not be any part of any negotiation over trade issues.