John Redwood (Wokingham) (Con):

I have declared my business interests in the Register of Members’ Financial Interests.

I hope the Government are listening to the right hon. Member for East Antrim (Sammy Wilson) on those important matters for Northern Ireland. It is vital that there are changes to the Windsor framework, so that Northern Ireland is properly a part of our United Kingdom and can accept our commonly agreed laws on everything from taxation through to the arrangements over products and trading.

I welcome very much the emphasis in the King’s Speech on the United Kingdom’s producing more of our own oil and gas in substitution for that which we are currently importing. The logic of substitution is most obvious in the case of gas. We have gas pipelines already installed to bring gas from the fields to the mainland, with capacity in them because gas output has been declining; and, of course, if we deliver it directly through gas pipelines we have none of the extra cost and trouble of transit involved in importing liquefied natural gas, usually from the United States or Qatar. Those who are keenest on the road to net zero should recognise that having our own gas down a pipe greatly reduces the amount of world carbon dioxide because so much more carbon dioxide is generated if it is necessary to liquefy the gas, to transport it for long distances, and then to recreate it as gas when it arrives. All those are very energy-intensive processes which we do not need if we generate more of our own gas from the North sea.

I have good news for Ministers. Let me remind them that although they say they think we need a bit of additional legislation for future licensing rounds, what we really need to do is concentrate on developing the existing fields and the new discoveries that have been well known about, in many cases, for a great many years, and maximising the output of what we already have so that the gas and the oil come more quickly and at lower cost, because we need it now. Most of our constituents still need gas for their domestic heating and will need it for the foreseeable future, most of our industrial plants run on gas as their main source of energy, and most of us have petrol or diesel cars, so we still need the fractions of oil to run our transport. It is important for us to get on with that—and, as the right hon. Member for East Antrim has said, another great bonus for all of us, including the Treasury, is that the sooner we get that oil and gas landed, the sooner we will secure a big increase in tax revenues from which we could benefit, enabling us to get the deficit down and support the public services that we wish to see.

I am very pleased that the King’s Speech began with the mighty topic of the economy. I am sure that the Government and the Prime Minister would agree that what we do over the next year to get inflation down more quickly, to bring about faster growth to create more and better-paid jobs, and to secure the extra investment that we want to see is absolutely vital. Again, I have good news for the Government. I think there are measures that they can take in a future Finance Bill—which, I am sure, will constitute part of our proceedings over the next year—that would help to achieve all those aims. They are not incompatible, and we do not have to wait. Some people seem to think it is necessary to sequence it and to spend a year of misery—with a massive credit squeeze and an austerity Budget—to get inflation down before we can think about doing the other things, but if we cut the right taxes, we can bring forward the reduction in inflation, and that, of course, has a direct knock-on effect on the cost of running public services. One of the reasons we have seen such a big increase in public spending in the last year or so is the massive rise in inflation, because so many things are directly geared to the inflation rate.

So, Government, let us have a year of temporary tax cuts on energy, because British energy is far too expensive. It makes us much less competitive, and it is a burden on household budgets. I would pay for that— because I do not want to increase the overall deficit—by selling all those NatWest shares that we still have. Interest rates have gone up a lot, and banks should be making a lot more money. Let us just sell all the shares and use that for a one-year advantage while the oil and gas prices are still very elevated, and to ease the transition from slow growth to higher growth and to a faster reduction in inflation, which will then help reduce the deficits.

We also need measures to help small business and the self- employed. It is of great concern to me, as it should be to many other Members, that we have 800,000 fewer self-employed people today than were known about, at least, in February 2020. Some of that is due to covid and lockdowns or to natural retirements, but some of it is due to the sharp change in the tax system called IR35, which took place in two tranches, one at the end of the last decade and one at the beginning of this one. It is now very difficult for people to grow businesses, particularly if they want contracts from other businesses. This has put many people off, and we are not seeing the new generation of self-employed people coming through that we have seen in previous generations—and that is mightily important, because they provide much of the flexibility in our economy, and can also provide extra capacity. Such measures would also help to provide worthwhile things for people to do, because some will be currently without a job and will be on benefits generally. So, Government, change the tax system back to the pre-2017 one which allowed a phenomenal growth in the number of self-employed people, and helped the workings of not only products and services markets but the job market itself.

We all have many small businesses in our constituencies and we know how important they are to the services and output of our local community. We know how flexible they are, how hard so many of them work and how prepared they are to go the last mile to win clients and to look after clients and customers. They need a tax break, and the first thing we should do—now that we no longer have to accept the EU rules on VAT registration —is to have a big increase in the threshold level at which businesses register for VAT, because this is now a major constraint. I am sure we all know small businesses that turn down work or close down for a month extra during the year because they do not want to go over the £85,000 turnover, with all the burdens of the compliance, regulation and paperwork that that would cause, as well as having to put 20% on prices and so forth.

Let us allow small businesses to enjoy their flexibility for longer and to get to a bit bigger size—let them have one or two employees—before they have to go through all the hassle of registration and the legal pressures that that generates. I think that would generate more revenue from other types of taxes, and even on the strange Treasury arithmetic it would be quite a cheap item. For example, we could easily pay for it out of modest improvements in productivity, which we will need to ensure if we are to deal with the collapse in public sector productivity identified by my right hon. Friend the Member for Haltemprice and Howden (Mr Davis). There must be ways to do something about that, and I believe that the Chief Secretary to the Treasury is working on them.

My final point relates to the Bank of England. The Bank is independent in the setting of the base rate and the work of the Monetary Policy Committee, but it is not independent in managing the mighty portfolio of bonds that it currently owns on behalf of the institution and wider taxpayers. The proof of that is the fact that successive Chancellors from Alistair Darling onwards signed a concordat with the Bank of England giving it permission to buy bonds and agreeing to pay any losses, should losses be made, when it came to sell them or when they matured. The Bank of England now wishes to sell £100 billion-worth of bonds over the next few months, now that they have crashed on the markets because of the Bank of England’s changes in interest rate policy and bond policy, meaning that huge bills are being sent to the Treasury. I believe that the bill was £24 billion of losses in the first four months of the current fiscal year, and the theoretical liability is over £170 billion of losses of that kind and of the kind of running losses due to the way in which the Bank holds bonds at the moment.

I would like to advise the Chancellor and the Governor of the Bank of England to look at what the European Central Bank is doing. It too made the colossal mistake of overinflating, over-creating money and buying too many bonds at very expensive prices, just as the Bank of England did, and it too ended up with the predictable excess inflation that we have seen. But the ECB is not panicking out of those bonds; it is holding them until they repay, which will result in fewer losses for it. There will still be losses, because it often paid more for the bonds than their actual repayment value, but it is not incurring big losses by selling them at very depressed prices on the market, now that the central banks have decided to smash the asset values of the bonds that they spent quite a lot of time acquiring just two or three years ago in many cases.

We need to do this because the Treasury should not have to make those huge losses and because money has now lurched from being crazily too expansive and likely to generate inflation to being far too tight and likely to overshoot in slowing the economy too much. So please, Government—listen, watch and on this occasion I say learn from the European Central Bank, which seems to be getting this just a bit more right than we are. Then we might start to make progress in bringing together the perfectly compatible aims of getting some growth, which we will not get if we have too severe a credit squeeze, and getting inflation down, which could be speeded up with the right type of tax cuts.

John Redwood (Wokingham) (Con):

Is my right hon. Friend aware that the Office for National Statistics published figures for the three years from 2020 to 2022, which state that public service productivity in general fell by an unprecedented 7.5%? That means that we needed to put roughly £30 billion extra into public services to achieve the same thing.

Mr David Davis:

My right hon. Friend is right: it is a systemic problem. It does not just affect Britain or the health service. Indeed, I think that numbers for those years for the health service were about 25%—so huge, huge numbers. I bring this back to the reality of the individual. If we delay diagnosis and treatment, we sentence people to death. It is as harsh as that.

I would like us dramatically to increase the amount of diagnostic capacity we have. If we look at OECD numbers on CT scans, I think we are third from worst. This is why I say it is not a single Government problem—we do not get to be third from worst in one term; it happened over the course of the whole 30 years. On MRI scans, we are the worst in the OECD. How on earth a country such as ours gets to that position is astonishing.

Let’s try one more time with the Bank of England.

When will they admit that they created too much money and bought too many bonds, causing inflation? Senior people in the Eurozone do now accept their Central bank, the ECB made that mistake.

When will the Bank accept that selling lots of bonds  at huge losses destroys money and causes recessions if you do too much of it? They should learn from the ECB who are not selling bonds, just allowing the bond portfolio to run off as the bonds mature.

The Treasury is wrong to keep sending the Bank enormous cheques to pay for all their unacceptable losses. The Europeans and the US Treasury do not pay the losses of their Central Banks in this automatic way. If a Central Bank wants to make losses it needs to own them. If it needs money to rebuild its balance sheet it should make the case and have it debated before taxpayers pay up.

Please find below my Interview with GB News where we discuss the need for tax cuts in the upcoming Autumn Statement:

You can find it between 49:03- 53:47

All 3 Central Banks , the ECB, Bank of England and Fed, made the same mistake of creating too  much money, buying too many bonds and keeping interest rates too low and ended up with a high inflation. China and Japan didn’t do these things and kept inflation down.

All 3 Central Banks that got it wrong now are making their publics pay by hiking rates and trying to generate a recession or slowdown. Only now they are starting to diverge. The ECB is going easier on their economies, afraid of too deep a recession and worse financial and banking problems if they tighten more. They are not selling bonds at big losses and stopped hiking rates at a lower level. The Fed which is doing the same as the Bank of England had to reverse policy and plump $400 bn b ack into markets to avoid a regional banks collapse.

Now the US Treasury has opened up and is in effect fighting the Fed. Where the UK Treasury goes for a falling deficit, the US has just doubled its deficit when adjusted for the accounting of student loans from fiscal 2022 to fiscal 223 to September year end. The deficit soared to $2 trillion.

No wonder the US has 4.9% growth and we  have practically none. A $400 bn course adjust by the Fed and a huge fiscal boost kept the economy going. Who is right?

This is an article the Mail asked for then decided not to run.

As a strong believer in democracy and free speech I support people’s right to peaceful demonstrations to tell others how deeply they feel about an important issue. I also advise those planning such demonstrations to remember that as they are trying to win over public opinion and the government to their view they need to consider how best to persuade rather than upset.

             On Sunday many in our nation will wish  to remember all those who died in the service of our country in past conflicts. It would be a good idea for anyone planning a demonstration to avoid the same times and places being used for civic and religious ceremonies for Remembrance Sunday.

I was not surprised the rail company is cutting back the number of services to Manchester. When I last returned to London from Manchester by train from conference this year on the all too early 21.15 last train there were plenty of empty seats despite the cancellation of the previous service and transfer of those passengers to the later one. there were even  fewer people on the way to the city.

The latest figures I could find for overall use of the railways are the year to March 2022. Even the up to date  numbers are delayed.  They showed the railways  with passenger journeys down 43% on 2019-20. Rail journeys were just 1% of total journeys undertaken. Government subsidy shot up that year to 2022 to £20.3 bn, 75% up on 2020, as taxpayers were made to pay the losses created by so many empty seats. The railways at great expense moved a lot of heavy fairly empty rail cars around the country, and created a lot of carbon dioxide in the process for their diesel engines and for their electric ones using power mainly generated from fossil fuel.

I found figures for quarter 3 2022 which showed fare revenues down to 71% of 2019-20 levels. Journey numbers had recovered a bit from the previous year, but only by discounting more fares.

The railways have  not found a good business model for the post lockdown era. They need to show more flexibility over tickets for commuters who now travel in on fewer days and maybe at different hours to the old peaks. They need to identify the main places for the growing leisure business. They need to encourage handling large numbers of people all wishing to move to the same popular venue at the same time instead of deterring some of this by station closures and crowd management schemes that deter users. They need to adjust timetables to reflect travel needs and run fewer unpopular trains.

Today we remember a dreadful terrorist plot to kill the King and Parliament assembled. A small group of men hired a cellar under the Lords chamber where the King would speak to his Parliament and packed it with barrels of gunpowder. The aim was  the mass murder of the government and Parliament of James 1.

The plot was foiled thanks to excellent intelligence work alerted by a note sent by a conspirator to a relative to avoid going to the opening of Parliament. It was decided after the event to remember the near disaster annually by lighting bonfires, a tradition that has continued.

In 1984 I was asked to leave the Grand Hotel where I was staying for the  Conservative conference at 3 in the morning after a bomb had been set off and a central part of the hotel had collapsed, killing and maiming some guests.  The aim was the same as the Gunpowder plot, to kill leading figures of the government led by Margaret Thatcher.

The Jacobean gunpowder increased tensions with Catholics in England and delayed the necessary passage to religious toleration. The Brighton bomb delayed a peace process in Northern Ireland . Terrorists deliberately foment disputes, striving to get more violent bitterness between peoples with different views and backgrounds. Violence begets violence.

These terrorist events have been put behind us, though they leave deep scars particularly for those who lost loved ones or who were injured in the bombing. The country did move on to reconciliation and to live with differences of faith and outlook. As we witness terrorist attacks and the military responses they evoke elsewhere we should remember that it is possible to find peaceful ways of living with differences.

Mr Musk went well beyond what is likely to happen with the introduction of more  Artificial Intelligence when he said it is the end of work.  The process will create new and additional jobs in AI activities. Many of the current jobs continue, with AI as a computer assistant to the employee. New things will be possible. The automated factory did not make everyone redundant and the arrival of computers did not end the office. It does however, open up an important debate about what is work and how much of it we need to do and what  we want to do.

The debate is usually arranged around the simple division of work and life. I find this odd, as work is part of life and not all the life part of this division is freedom or fun. Some seem to think the route to a happy life is to minimise the hours of formal paid work, with movements to work fewer days and or fewer hours. The issue then is h0w are the hours spent that have been spared if this is successful.

I think it better to divide time up into four blocks each week. There is the one third spent in bed and sleeping. Not much ability or need to change that. There is the time spent in paid employment. There is the time spent in work within the home and family. There is true leisure time when you can watch a movie or play a game. The relative amounts of each of these is flexible and changes over time. More chores time is needed with children in the home. More leisure time comes when retired. It also varies with income and those with money to spare after the basics have more options for leisure and pleasure as well as more flexibility to buy in goods and services they need.

Some people like their paid work. It is what defines them, gives them interests and energy. They seek more work and expand their hours, using the extra money to have more help with the chores and services they need in their lives. Some people dislike their paid work so they look for ways to minimise its impact, and often take up unpaid work at home to supplement as often not liking your work goes with less pay. Be paid less and decorate your own home, be paid more and hire a painter.  Being paid less  certainly goes with less working  hours as you wish to minimise them. Some see that it is not work as a whole they do not like, but the bad job they have got. They look for promotion, training, or major job change so they can find something they do want to do. When people retire some recreate features of their old job and do them for free. Some extend the range of work they do in the home instead. Many hobbies are other people’s work.

All jobs have features that annoy, but so do many leisure activities. I dislike the journey to work now so many Councils have wrecked the roads, created more jams and try to ensnare more motorists into offences against massively multiplied rules. I do work from home more to raise my productivity and cut down the wasted hours fuming about road works and road closures.  I also dislike the travel for  a week end break or holiday because that can be even more vexatious as it is a longer journey. A holiday is to many people the pleasurable aim from working more, but if the hotel is bad , the weather poor and the visitor attractions closed or sub par the holiday ceases to be that delight that makes everything else worthwhile.

Each one of us chooses a different balance of these uses of our time, and each one of us has constrained choices by what we can afford and what others will let us do.  We can all strive to improve or change in ways which expand our choices. There is no simple work/life balance, and no early  move to replace us all by computers and robots.