The UK and Germany both have large economies with certain strong sectors. Germany flourishes with a strong car industry. The UK flourishes with a strong financial sector.

There the similarities end. Germany does everything possible to back and support its car industry. The UK has spent the last seven years exposing the faults and defects of its banks, and hurled many accusations against them.

I fully understand the unpopularity of banks, and have no time for malpractice or bonuses paid to senior executives who have actually made losses for the shareholders. I opposed the bank bail out purchases of shares by the Labour government. If offences have been committed then the perpetrators should be dealt with by the law.

I do think now the hostility to banks has gone too far. There are many decent, hard working people working for banks. Our banks are involved in and facilitate practically every transaction that keeps our economy going. We need successful commercial banks to lend sensible amounts of money to individuals and companies to fuel our recovery. We need a strong globally competitive banking industry based in London to sustain our balance of payments and tax revenues, which have in the past depended on the financial sector for a large contribution.

It is currently fashionable to attack the top end business of banks because they supply expensive services to rich individuals and companies. In this they are in exactly the same place as the German car industry, which specialises in making expensive cars for the rich and for companies. The German government does not go on a moral crusade telling their high end car producers they should make fewer dear vehicles for people who already own cars and who by definition do not”need” the latest high priced product. The German government does not even take very strong action to cut the average CO2 emissions of the vehicles made by the German industry, although it is signed up to global warming worries.

The German car industry should affront all Greens and people with left wing ideas. It consumes large amounts of natural resource, uses big quantities of energy in making the product, and sells machines which are relatively fuel intensive in use. Some people dare to own several cars, though they can only use one at a time. The government subsidises energy for industrial use in Germany, conscious that EU energy policies are damaging to industry without subsidy. The German administration seems to take the sensible view that what is good for the car industry is good for Germany. Selling more cars to the rich creates more jobs for German workers.

The UK recovery has been impeded in past years by the regulatory demands that the banks should hold much more cash and capital. As someone who said the banks should hold more capital and cash prior to the crash, I see the wisdom of demanding good standards to ensure liquidity and solvency. I think the regulators have now done enough, and should allow more lending by banks. There are many good projects and investments that could benefit from more long term loans. The regulators should ask themselves how much more is it wise to take from the banks in fines and compensation demands for past mistakes? If they fine too much the banks will be able to lend less and will be looking for additional ways to put up fees and prices. When the government comes to tax banks it also needs to ask how much more can it afford to take out?

We read that HSBC is considering leaving London to establish its headquarters in Hong Kong. There are a variety of reasons given. If none of the reasons are tackled they might go.There is the bank levy which is charged on non UK activities as well as on UK ones.There are the higher capital demands from the EU and the Bank of England limiting the ability to lend and to earn a good return, when the bank is a strong one with plenty of capital already. There is the move to segregate regular banking from investment banking. There is the EU control on bonus payments. Taken together these are leading some to argue that HSBC should take its headquarters away from London and from the EU. I think it is time to reconsider, and to create a climate where large and successful banks are willing to base themselves here. If we lose too many of our major financial companies, we will lose tax revenue, sales revenue for exported services and spending power in our economy as well paid executives go elsewhere.

Many people who want us to stay in the EU also like higher levels of public spending and more government. That is why they support EU membership, as it brings both in a package UK voters cannot influence much and cannot control or veto. The large gross and net contribution to the EU budget is one of the reasons this country continues to live beyond its means and runs a large deficit.

It is one of the many cruel ironies of the EU that it takes too much of our money and spends it, whilst lecturing us and other EU states to cut our domestic budgets to keep our deficit down. In recent years the UK has simply ignored the requirement to have a deficit below 3% of GDP, but all the time we remain in the EU there is the possibility that the EU will take tougher measures to try to enforce its strict budget rules. Doubtless those who like the current EU agree with their approach to budget discipline.

The honest way to tackle this for those who do want to stay in on current terms would be to impose a tax to pay for our European contributions. The public would then see how much the EU costs each taxpayer and the deficit would get closer to the EU ceiling. As recent judgements on VAT, welfare and borders remind us, the EU regularly taunts the UK by its decisions. I therefore propose calling this new tax JEST – Joint European Solidarity Tax.

I know many pro EU people are good sports who sometimes pride themselves on having a better sense of humour than mine, so they will enjoy selling a good Jest to the British people to pay for the EU and to live by its fiscal rules. So bring on the Jesters. Tell us why we should pay this tax. You don’t have to pay a tax in order to be a customer of the rest of the world, so why do you do so with the EU? Why does the rest of the world trade with the EU without paying EU contributions?

The government has announced it is going to sell more Lloyds Bank shares, and start selling RBS shares. That is a good idea. The Labour government was wrong to buy the shares in the first place, as we discussed at the time. They should have found other cheaper ways of supporting what had to be supported in the banking sector, by loans against security with controlled administration for banks that could not meet their obligations. The state should not be an owner of banks, as it has to be their regulator and financier of last resort.

I see in recent press coverage the issue of the Bank levy is being discussed. One of the factors the government should take into account when setting the levy is the impact it has on the value of the taxpayer shareholdings in banks. If you tax yourself too much, you lose out on the capital value of what you own when you come to sell.

Lloyds and RBS each pay around £250 million a year in bank levy, a total of £500 million. Barclays shares currently sell at 14 times adjusted net profits or earnings. Lloyds and RBS are still recovering their earnings, so their multiple of past profits is far higher. If we take say 12 times profits as an approximation of what the market would pay for additional profits of a bank, allowing a discount for the two banks with large government share overhangs, gives us a capital cost of £6 billion in the total value of the two banks from continuing with the Bank levy. The actual loss will be smaller, as the government does not own 100% of either bank,though it still owns most of RBS. That of course is a one off loss, whilst the levy is annual. The bank levy is also paid by banks where the government does not have a shareholding.

Nonetheless, it does pose a question for the government. If you were thinking of reducing the bank levy for other reasons anyway, there would be some compensation in a higher receipt for bank shares being sold.

(PS I do not have any financial interests in banks and last worked for a merchant bank 26 years ago)

Before the Euro crisis the IMF was the model of financial rectitude. It lent sensible sums of money to distressed countries, imposing strict requirements for change on them to ensure it would be repaid and to help the country back onto the path of solvency and growth. It usually combined a fiscal squeeze, recommending lower deficits and lower public spending, with a monetary expansion, allowing the private sector to grow. Devaluing the currency was usually part of the remedy, to divert more work into exports and to cut the volume of imports.

That IMF had its critics. Some thought the medicine too acerbic. Some wanted the IMF to lend more on more generous terms. The IMF mainly lent to poorer countries, and was often part of a pressure by the world community to encourage healthy financial discipline by the borrowers.

All this has been stood on its head. The IMF now seems to be primarily a prop for the Euro and for the wider EU area of influence. It is amazing that three quarters of all the IMF’s current lending is to just four European countries. Three are Euro members, Portugal, Greece and Ireland. The fourth is war torn Ukraine. These countries remain amongst the world’s richer countries despite the damage the Euro and in the case of the Ukraine civil war has inflicted.

What is worse few think Greece can repay all its debts, including the IMF loans. There are question marks over how the Ukraine is going to manage, all the time civil war destroys economic activity, kills people and reduces productive assets to rubble.

The new IMF has allowed itself to be used as a prop and source of finance for the ailing Euro project and for the unsuccessful foreign policy of the EU. The IMF has swung from arguably being too tough on poor countries in need of help, to being too lenient on richer countries locked into a foolish monetary union which is damaging their output and jobs. How can the IMF defend its actions over Greece, as the extra loans have become part of the problem. Some in the Greek government do not even recognise the legality of many of Greece’s borrowings, let alone the wisdom of making the advances and the feasibility of repaying them.

I raised at the time of their first loans to Euro countries the question how could a traditional IMF programme work for a Euro member, when they could not demand looser money within a particular Euro state, and they could not encourage a devaluation of that state’s currency against the German currency because they shared the same money. Perhaps with the encouragement of the IMF the whole Euro zone is now following a looser money policy and devaluing its currency, but the great imbalances between the richer and poorer countries within the zone remains as they cannot sort that out by currency adjustments.

The IMF has become the Irresponsible Money Fund. It needs to be aware that many in the developing world will think this deliberate skew of IMF funds to the richer advanced countries is unjustified. Many IMF shareholder states will be even angrier if it turns out that some of the excessive sums advanced will never be paid back. The IMF owes us an explanation of how Ukraine will be stabilised and turned into a fast growing productive economy again. Above all we need to hear from the IMF how they think Greece can repay all her debts and enjoy proper economic growth, to try at least to recapture the 25% of output and incomes they have lost so far since 2007.

IMF Lending June 2015 in SDRs

Portugal 17.8bn
Greece 16.8bn
Ukraine 7.0bn
Ireland 3.8bn

Total 45.4bn
World total 60.8bn

The UK’s quota or IMF share is 4.51%. The UK’s share in the ECB where the losses on Greece could be much larger than the IMF ones is only 0.7% as we are not a Euro member. The main losses will fall to Germany, France and Italy, the largest members and shareholders in the ECB.

If the British people vote to come out of the EU our budget deficit is immediately cut by more than £12 billion a year from that day onwards. There will be no more net contributions to the Union. We also gain the right to decide how to spend the money we pay over and above the net contribution which is sent back to us as EU payments.

Today I invite you to talk about what we should do with all that money if we do decide to leave. Should we be prudent, and simply borrow less, using the end of our contribution to speed getting rid of the deficit? Should we speed up the tax cuts, giving every family an EU exit bonus of around £660 a year? Or should we mix increased public spending and tax cuts, spending say an extra £350 per household on health and education whilst having a £330 tax cut?
Those favouring more spending should remember we will have the chance to spend more on the things that matter to us as we gain control over the EU spending amounts as we repatriate that UK tax revenue as well.

It will be a nice problem to have. I favour the tax cuts myself, as I think the current plans to get the deficit down are sufficient. The boost to incomes, jobs and activity from accelerated tax cuts would show this is indeed the prosperity policy I want. It would also make such a good contrast with the European austerity policies of Greece, Spain, Italy and Portugal, where governments are indeed following genuinely austere policies at the behest of the EU.

Yes, you are right. Controlling the numbers of people coming to the UK to live and work is an important part of restoring balance to our housing market. The Prime Minister has promised to do that.

Now I have got that out of the way, I want to talk about the supply of homes, and effective demand from people already legally settled here. The most recent house price figures show prices going up by 4.6% a year, down from the 11.8% annual rate recorded last June. They show people having much more difficulty in raising a mortgage than prior to the crash, thanks mainly to much tougher regulation today over eligibility and suitability for a loan. The most recent figures show mortgage approvals up by 10% (April compared to March) but still running at little more than half the levels reached just prior to the crash of 2007-8.

The government’s Stamp duty reforms have smoothed the market by removing the unhelpful steps in duty at the points on the scale where higher rates kicked in. The missing areas in the price ranges can now reappear without the slab tax. Homes under £925,000 now attract a bit less Stamp duty than before. Stamp Duty remains, however, a substantial cost which does add to the difficulty of buying your first home, and can deter people from moving to a better home. At present duty rates the buyer of the £250,000 property pays £2,500 in tax, of the £500,000 property £15,000 in tax, and the £750,000 one incurs a £27,500 charge. Lower and smoother Stamp duty is a modest assistance to home buyers.

More new homes are being built than during the crash. The construction of private sector new homes is now 75% above the low point reached in the third quarter of 2009, though still below past peak levels.It is likely the build rate will rise from here, with more land now available for construction and a reasonably healthy housebuilding industry enjoying the profits of recent growth. There are still substantial imbalances between different parts of the country. Success with the Northern Powerhouse could help reduce some of the pressures on London and the South east, and release more money for improvement and extension of the substantial Northern residential estate, just as the London stock has undergone transformation in recent years.

There is one persistent mistruth in the debate about the wisdom and complexity of requiring Housing Associations to sell homes to their tenants at a discount. The critics say that this will reduce the number of social homes available. Let me reassure them. No-one demolishes or destroys the home when it is sold. The same family that rented it carry on living in it as homeowners. The housing stock and the living arrangements remain identical pre and post sale.

It is true that when the family who lives there dies, or decides to move, the home is now in the private rather than the public sector. As turnover of social housing is very low, it takes a long time on average before a social home becomes available for someone else to rent. The government’s policy of home sales will increase the available supply of social houses, by insisting on the construction of a new home for every home sold to tenants. This means that following the new build a social home is instantly available. Had the tenant of the social home who purchased still been a tenant, there would have been no empty home to rent.

Ministers do have to work out how to implement this pledge. They will not wish to leave a housing charity worse off as a result. They will need to be compensated for the discount on true value that the tenant enjoys when buying his property. They will need to work closely with the subsidised social housing providers to ensure maximum new construction for the available subsidy, and to ensure fair compensation for charitable assets.

Ever since the Greek voters rejected EU austerity policies the Euro area has been in a state of shock. The rest of the zone, led by Mrs Merkel, tried to pretend nothing had happened. If Greece wanted the rest of the money under the last loan agreement, they said she had to carry on with the cuts and the privatisations to qualify. If she refused to comply with the pre determined EU spending, tax and economic policies then there would be no more money. The Greek government for their part said they had just won an election with a mandate to tear up the agreed policies of the loan. The irresistible force of EU policy had just met the immoveable object of the Syriza political movement.

The tensions became clear through substantial withdrawals of funds from the commercial banks in Greece. The EU blinked first, and advanced large sums under an emergency loans programme from the European Central Bank. Greece did not have to comply with the wider loan agreement in order to qualify for large additional borrowings. The difficulties also showed as the Greek government struggled to find the cash to pay the day to day bills. The EU blinked again, and gave the Greek state permission to issue Treasury bills to raise the money to pay the pensions and wages. The first two messy rounds went to Syriza.

On Friday Greece is meant to repay the IMF some money. We are now told they can delay until the end of the month, when more will be owing. The IMF has now blinked. The IMF, the ECB, the EU, France and Germany met earlier this week to construct a “final” offer to Greece. Presumably this is another attempt to lend Greece more money with conditions attached. Greece was not invited to the meeting. The Greek PM spent his time writing a furious article condemning Euro area economic policy and explaining again he was elected to change it.

My guess is the Euro area leadership and the institutions that have lent so much money to Greece will blink again. They will offer to lend more money with less onerous terms. In due course they will have to accept they have lost a lot of the money they have lent to Greece in recent years, and construct an elegant way of writing some of it off or down. If they dig in and demand full enforcement of their loans and loan conditions and turn off the cash taps they are currently using to fund Greece, the Greek government may decide to walk away from the debts. If the Greek government meekly surrenders then it loses all domestic authority, and it may prove difficult to implement the policy changes the EU demands.

It is a dangerous and fascinating contest. It is a real tragedy for all the Greek unemployed and struggling businesses caught up in it. I do not think Syriza’s economic policy will lead to a strong Greek recovery, nor do I think the EU should carry on with the policies for Greece that have done so much damage to jobs, incomes and output in recent years. The obvious first step in a Greek recovery would be exit from the Euro, the one policy neither side will accept. If they stay inside the Euro then there is a simple choice: yet more unwelcome austerity, or much larger transfers of cash from the richer parts of the zone, which have to be grants, not loans. It has to begin with a major debt write off by the EU states and institutions that have lent money. The Euro scheme for Greece is indeed being part of the European Unemployment and Recession Organisation. It is now testing democracy in an extreme way.

In 1999 I published “The death of Britain?”. In  it I forecast that Labour’s large programme of constitutional change was misjudged, and would undermine the UK from within and from without. The current Parliament has to try to repair the damage. The modern Labour party is rapidly rethinking its stance  on Scottish devolution, the problem of England, high levels of migration and the relationship with the EU. They need to do so as they examine  the results of their handiwork in the electoral success of the SNP and the Conservatives, and UKIP’s  move into second place in some former safe Labour seats, challenging them on migration and identity issues.

I argued in the book that lop sided devolution would fuel Scottish nationalism and pull the country apart. I argued that massive transfers of power to the EU would undermine people’s trust in our democratic system as they found they could change MPs and governments but in many areas we could not change policy and outcome owing to EU laws . So it has proved.

I pointed out that Labour decided to offer most self government to Scotland, where nationalist sentiment was strongest. “Usually the granting of more and more powers for separate development and separate government within a once unified state leads inexorably to stronger nationalist movements and often to eventual separation”. “Over the next few years the new settlement of evolved government….will sorely test the powers of cohesion of the Union”.

I saw this movement as part of the European EU of the regions agenda, where the EU has always wanted to regionalise the UK and always wanted to split up England. The strain  was clearest when the EU is directly involved. “The White Paper (on devolution) offers a rosy prospect. It suggests the role of Scottish Ministers  and officials will be to support and advance the  single UK negotiating line (with the EU)which they played a part in developing…..The problem will arise if the Scottish Parliament has a different political balance from the Westminster one”. Labour legislated for a powerful Scottish Parliament in the belief that only they could win the elections to it!

Today we see that as feared greater devolution gave the SNP a  bigger platform to advance their cause. We find that large areas of life from borders through welfare to energy and business are now substantially controlled or influenced from the EU. Though we do not have the extreme dislocation  between election results  and policy that we see daily in the Eurozone, we now have considerable difficulties  as electing a new government may not fix all that we want fixed as the government is not  able to carry out the people’s wishes in some areas, owing to overriding EU power.

The problem of England, the problem of damaged democracy from excess EU control, and the problem of Scottish nationalism  were predictable results from Labour’s constitutional revolution. The 2015 Parliament has a mighty task to settle the kingdom and restore UK democracy. As Labour must now realise, the EU issue is not just some Conservative preoccupation. A future Labour government could find itself unable to pursue the policies it wanted under EU law. A future Labour government is also much less likely, all the time they lack a solution to Scottish nationalism on the one hand, and to the deep disillusion with the EU’s migration and welfare policies on the other. They lost heavily in Scotland because they were not left wing enough, and in England because they were too left wing and careless of England’s needs.

It should be clear to anyone that you cannot have a democratic UK under the current Treaties. Nice, Amsterdam and Lisbon certainly prevents that, and arguably parts of the Rome Treaty as well.

Restoring the UK’s ability to veto new EU proposals in the major areas that Labour surrendered would help, and would be a minimum requirement. It would still leave substantial jurisdiction transferred to the EU which makes it difficult or impossible for the UK to control its own borders, pursue its own welfare policy, control its own fishing and many others. To remedy this the UK would also need the capability to override Brussels and ECJ decisions where the UK Parliament thought that essential. There would then be a retrospective veto available for the worst cases.

A better and more realistic way of getting agreement to a new relationship that would work for us and them would be to define what the UK wishes to stay in. The business community seems to be surprisingly keen on all the rules and regulations of the single market when it comes to making any decision about the UK’s future. The UK could agree to belong to the single market, with rights to sit around the table and be outvoted on new proposals, whilst withdrawing from anything to do with borders, welfare, criminal justice, fishing and others.

The problem with all of this is  twofold. The EU is well known to expand its jurisdiction. After a new settlement the EU would likely decide more and more things were single market with a view to ensnaring the UK in them. The EU has introduced qualified majority voting for many of these matters, so the UK would be back in the position of having to comply with things it did not agree with.

This shows why it will be very difficult to negotiate a new relationship that does restore UK democratic control, and why many will decide leaving is the easiest option. Leaving also means we will be £15 billion a year better off. Those who wish to stay in at any price have to explain why this is a bill worth paying, and tell us what might stop it going up too much in the future. As much of the rest of the EU in Euroland is going to have to send much larger transfer [payments from rich to poor, how do we avoid the UK being sucked into that system? The impact of a common policy o0f sharing on our fisheries should be a warning to us of what can happen when you let the EU run something for you.