Everyone agrees the General election is no re run of the Scottish vote on independence. Even the SNP are making it clear they want a mandate to negotiate the best possible settlement for Scotland whilst still being within the UK. On this basis current polls show them attracting some voters who voted against Independence last autumn. It is unlikely Welsh nationalism will make much impact. The majority of Northern Irish MPs are likely to  be elected as unionists.

This does not mean the issue of the future of the UK is off the agenda, or that the next Parliament makes little difference. The next Parliament, it is true, is bound by its predecessor to honour the promises made to Scotland by all three main Westminster parties. These promises are likely to be interpreted in a pro devolution direction by the new SNP MPs who will probably be elected in some strength and may be the third largest party. In contrast the next Parliament is not bound by its predecessor to solve the English problem. Mr Hague as Leader of the House would not  put the matter of EVEN, English votes for English needs, to the vote, as Lib Dems said they would vote with Labour against the scheme.  The new Parliament has a blank sheet to resolve the question of England.

Many in the  SNP accept the justice of England’s case, but their party will doubtless bargain against it in any way they think will help their cause. The Lib Dems have some complex scheme based on votes in the UK Parliament for England calculated by some notional proportional representation, which is unlikely to get support from the  two main parties in the Commons. Labour wants to fob England off with devolution to cities and maybe counties, having no answer to the question why can Scotland chose her own income tax rate but England cannot chose hers? Conservatives have a version of English votes for English issues, which is a start to tackling the problem of England.

The Lib Dems and Labour want to delay justice for England as well as denying it. They favour a long and detailed Constitutional Convention to examine devolution for England, whilst hurrying through more devolution for Scotland with no such consideration. Conservatives wish to press on with proposals for England, after years of examination and thought which has gone into them.

The future of our union will be very affected by what the next Parliament does. As it legislates for Scotland, it is vital it understands the mood in England. Only one party seems to understand the need to do something soon for England. There will be a big difference between a Conservative led government and a Labour led one on the question of England.

One of the most significant differences between the  four main parties (parties likely to win more than 10 seats) is the approach to the European Union. The three left of centre parties all support our current membership, would be happy to see a continuing erosion of power as the EU passes more laws and gains more control over our lives, and are happy to pay a substantial contribution to the rest of the EU. The Conservatives argue that the current relationship is not working in the UK’s interest, that too much power has already passed to the EU, and we need a new relationship with them.

A Conservative government would recognise that the Euro area members of the EU will need to take more and more power to the centre, to add political, fiscal and budgetary union to their currency union. The UK has no wish to do that, and needs a new relationship with the Euro area as it emerges in a more centralised form. A Conservative government will seek to negotiate a new relationship based on trade and political co-operation. As Mr Cameron made clear in his Bloomberg speech, a central task will be to restore UK democratic accountability of government to Parliament. Voters will then have a referendum to decide if they like the new relationship or would rather leave the EU altogether. Those who are sceptical of the UK’s ability to negotiate a new deal without leaving, will be free to vote for Out. The presence of the referendum will provide a good incentive to the rest of the EU to negotiate, as very clearly they do not wish to lose all that money we pay in.

The other three parties would fail to address the real issues which are already upon us over our membership. As non members of the Euro we are finding that regulation and control of our large financial services and banking sector is increasingly under EU law and administration  in ways which can be damaging to business. We are finding it impossible to run a low priced energy policy thanks to EU energy rules, making  our wish to expand UK manufacturing more difficult to deliver. The EU wants the UK to stand behind the debts of the banks and states of the Euro area. We need to resist this. Any likely government  but a Conservative one will not stand up for UK interests, and will not seek to resolve the growing tensions between Euro and non Euro members.

This election will make a huge difference on the matter of our EU membership. There is only one chance now to vote for an In/Out referendum before many more EU shackles are placed upon us if we have a government formed from the 3 pro EU left of centre parties.

 

This week I am going to write a series of articles on what differences there might be depending on who governs after May 7th. The main media concentrates on the spin lines from the major parties, which tend to hype  differences. They follow the daily diet of mistakes, gaffes and set ups which characterise a modern media driven election. Some of these should not matter and are usually trivial and of no lasting significance. My objection to David Miliband was not that he once carried a banana, which many others have done with no harm to their reputations. My objection was his uncritical love of the EU. My objection to Gordon Brown was not his unfortunate facial expressions when waiting for an interview in a studio when tired, but the way his banking and economic policies put us into the most violent boom/bust cycle since the 1930s. These articles will ask what difference will there really be? What matters?

Labour have sought to put the NHS at the centre of this election. They mean by that health in England. This General election will make no difference to the way the NHS is run in Wales or Scotland, where it is a devolved matter under their Assembly or Parliament.

Labour claim the NHS is only safe in their hands. There are no grounds whatsoever to take this view. The management of NHS England say it will need an extra £8billion a year by the end of the next Parliament. The Conservatives and Liberal Democrats have both promised to find this. Labour has promised less, but I assume were they to be in office they would also find the money. The UK bureaucracy is usually good at extracting money for public budgets, and will doubtless make a strong case. It seems unlikely that there will be a lot of difference on total NHS England spending between the parties.

Labour say they will stop people making money in the private sector out of the NHS. They do not of course mean this in most cases. It was Labour who set up a lot of the most expensive PFI schemes when in office, encouraging the private sector to profit from providing new NHS facilities. They will not be able to get out of these. Any government will have to buy drugs and medical supplies from with profit companies. All will stick with the system that most GPs are private sector contractors to the NHS. The NHS has always been a mixed economy system, a partnership between leading pharmaceutical and medical supply companies, doctors under contract, and directly owned hospitals with state employed staff. No main party is proposing any change to this pattern.

Labour dictates the terms of the debate on health. This debate prevents discussion of reform or change. This has been a very conservative election on health, with all main parties competing to keep it as it is, with more money.

Conservatives have promised to recruit more GPs to offer longer opening hours and week-end service. This would help relieve pressure on A and E if more people could get an appointment with their GP to deal with the things that do not need hospital treatment. That would be a practical change to offer a better service to patients, and to save money at A and E departments. I conclude there would be little difference to the NHS whoever wins, but Conservatives do have an attractive policy of improving access to GP services which I think could be a beneficial change. It has also taken a Conservative Secretary of State in the coalition government to expose the problems in some hospitals properly that had occurred under Labour, and to get improvements.

 

 

As Labour left office in 2010 there were 2.5 million people out of work . There were 1.5 million claiming Job Seekers Allowance.  Today there are 1.84 million out of work, and 770,000 claiming Job Seekers Allowance. Employment has risen from 28.8 million to more than 31 million.

Most people now know the UK economy has created an additional 2 million jobs over the last five years. Fewer know that many of these jobs are full time, and many  of them have been taken by UK citizens who were out of work or just joining the workforce from school and college. The fact that people on Jobseekers Allowance  has almost halved is good news.

The figures are also a reminder that more needs to be done to help more of the remaining people who are  out of work into employment.

If we compare the UK with other countries in Europe, we can see that the UK has been one of the best performers, alongside Germany. The table beneath shows the problems in most of the larger EU countries, and in Greece, the worst performer:

Unemployment rate

Greece        26%

Spain         23.2%

Portugal    14.1%

Italy          12.2%

France      10.6%

UK             5.6%

 

Employment rate

Greece         49.6%

Italy              56.0%

Spain            56.8%

Portugal       63.0%

France          64.1%

UK                73.3%

Labour’s great banking crash and recession has tested political debate to destruction. Politicians,  parties and most in the media are happiest talking about a few billion of spending. To most people a billion is a lot of money, without having any precise feel as to how much. It is a lot of money, but it is also  just fifteen pounds each for every man, woman and child in the country. It is not a significant sum when discussing the UK economy. It is a small rounding error in the national accounts.

In this election the biggest annual sum argued over has been the £8 billion extra for the NHS. It hasn’t  been much of an argument anyway, as Lib Dems and Conservatives say they will pay it, and Labour in office would end up paying it. The largest individual sum is the misleading £100 billion   for Trident which is some kind of lifetime cost. On a similar time frame the NHS would  be  say £3000 billion. The actual cost of four new submarines would be around one quarter of that, spread over a number of years of building.

Yet as I have set out we are talking in theory of annual public spending of  £737 billion , rising to  £797 billion over the next Parliament on Conservative plans. There is little discussion of whether these are the right totals, and whether we get value for all that.

More importantly, the UK Parliament proved incapable of having good debates about the far more important large numbers which determined our economic crash in the 2005-10 Parliament or the progress to recover from it  in the last Parliament. The £375 billion of QE was worth more debate and examination than it got. The massive £800 billion of assets and liabilities removed from the balance sheet of the state’s own bank,RBS, was crucial to our economic progress.It was only when there was a change in policy towards RBS in 2013 that the economy started to improve more quickly.  It would be good if in the last days of this election campaign there could be some discussion of the big numbers that have a real impact, as well as debate over  the nice to have smaller sums that are important to particular programmes but do not have much impact on the economy as a whole.

Some times predicting is easy. You look at what happened when somewhere else tried something, and reckon the same will happen when your country does. With QE that may not be so easy. Japan has been trying QE for a long time. In their case inflation stays very low, output does not expand as quickly as they would like, so they just do some more. Japan has become the most heavily indebted of the advanced countries, as successive fiscal and monetary stimuli fail to inject inflation or supercharged growth into the economy. The government has racked up record levels of debt.

The high debt levels are less worrying than they seem for two reasons. The first is a lot of the debt the state owes to itself. Once issued, the Bank of Japan buy the debts back for the state with created money.  The second mitigation is the interest rates on the debt remain tiny, thanks to QE purchases of bonds designed to keep rates ultra low.
I suspect the US and UK are different from Japan. Both the US and UK economies are now growing more rapidly. There are signs of monetary growth without QE. Both economies have a past history of being prone to more inflation. The USA keeps talking about getting interest rates back to a more normal level.The UK has deferred any such plan, thanks to the collapse of commodity prices and the greater strength in sterling, limiting inflation for the time being.
The Fed and the Bank of England are rightly wary of moving too fast to raise rates and choking off recovery. They are also conscious that for the time being they are more likely to undershoot their inflation target and have to explain why, than to face an inflationary issue. The US recovery is more advanced and has been proceeding for longer than the UK one. The US commercial banks are now generating extra credit, and US money supply is now growing at 8% per annum. That should be pushing the Fed to earlier action on rates. It begins to feel as if the economy and the banks in the USA are more normal. 0.25% as a base rate is anything but normal. The UK will have the luxury of watching what happens when the USA does start to make her move to normalise. If, however, the UK had a change of government policy to increase spending and borrowing, the UK might find markets intervened and started to drive sterling lower which in turn would start to increase prices.

 

I was asked when campaigning in Earley on Saturday to set out more of the details of Conservative proposals on migration and welfare.

Mr Cameron has pledged to negotiate a new deal with the EU to reduce and limit their power in the UK, and to base the relationship more centrally around membership  of the single market.

He wishes to regain more UK Parliamentary control over the UK’s borders and welfare policies, to hit his target of a substantial reduction in net migration into the UK.

His particular policy changes include

Asking anyone who has been in the UK from the rest of the EU looking for a job to leave if they have not found one in 6 months.

Removing Child Benefit from EU migrants in the UK or any child not resident in the UK

Remove all in work benefits from any EU person with a job in the UK for the first four years of their stay.

No out of work benefits for EU jobseekers on arrival in UK

He has stated that he will legislate for the In/Out referendum in the first 100 days of a Conservative government.

When Labour first embarked on Quantitative Easing I was uneasy. My preference was for them to mend the commercial banks quickly. Indeed, my prior preference had been not to damage them so much in the first place. If they had mended or not damaged the commercial banks through their wild monetary and regulatory policies, swinging from too hot to too cold too abruptly, we would not have had to consider QE.

If the commercial banks had been buttressed swiftly – preferably in ways which left the original shareholders and senior executives with their losses, and the taxpayer with contingent guarantees or remunerated loans – we would not have needed QE. Instead, buying shares in the banks and then demanding they held much more capital meant painful surgery and a long delay before those banks could help finance a recovery.

Quantitative easing was very much a second best policy. It achieved something, but it also has lots of side effects which are difficult to handle. The main aim of a QE programme is to drive down long term interest rates, in the hope that then more people and businesses will invest and borrow. The programmes surely drove down the rate, but all the time banks are under a regulatory cosh to raise more capital, and all the time markets are hesitant about the future, not a lot of long term borrowing and investment takes place.

The secondary aim of a QE programme is to get people to take more risk. This again did work. By definition the individual investors and the investment funds that sold bonds to the Central banks, usually bought riskier shares with the money. Some of this money found its way into hands that would create new investments, and the stock markets were able to raise some money for companies in need of it.

The main side affect of the QE programmes has been to enrich the holders of bonds and shares by raising prices substantially. This has been most noticeable in US shares and in some continental European government bonds. The late and large ECB programme has already driven bond yields to crazy levels in Germany. Anyone lending to the German government for any time period up to nine years has to pay the German government for the privilege of lending to it!

Successive programmes of QE in Japan have not proved to be inflationary in terms of general prices, though there too they have proved inflationary for the prices of bonds and shares. It is a reminder that if there remain problems in the commercial banks, and if a society is determined to save more and spend less, QE does not solve all the problems.

QE mainly enriches the state. It allows governments to spend and borrow more at surprisingly low cost. It also gives a bonus to savers who own financial assets, but they need the capital gains to offset the loss of savings income, given how low the interest rates go.

There has been a lot of nonsense talked about budgets for the next five years. The Conservatives have set out their plans in the last 2015 Budget book from the Treasury. Few seem to have read it, so here is a reminder.
The aim is to eliminate the budget deficit. Spending will rise from £737 billion (£11,497 per person) to £797 billion (£12,434 per person) , an increase of £60 billion. Taxes will rise from £602 billion (£9391 per person) to £746 billion (£11,638 per person). This will more than remove the deficit after other income is taken into account. The rise in tax revenue comes from growth in the economy, not from higher tax rates.

Spending is effectively frozen for the first couple of years. The rate of cash increase should keep up with pay, prices, and productivity growth, given the current low level of inflation. There is no need for there to be a real terms cut, unless inflation takes off. This allows for the extra £8 billion for NHS spending.
Revenue will grow well assuming as the Treasury does that the economy continues to grow faster than 2% per annum.

So we can sum up the last five years and the Conservative plans for the next five years in two simple rounded figures – in each of the 2 Parliaments, spending goes up by one thousand pounds per per person,and tax revenue goes up by two thousand pounds per person, eliminating the need to borrow any more.

There are cries today from the left in the press and media that by publishing a Manifesto for England the Conservatives are fuelling English nationalism and dividing the UK.

What nonsense.

All main parties publish Manifestos for Scotland – why don’t those same commentators and interviewers complain this fuels Scottish nationalism and splits the country? Maybe because it doesn’t.

It is also bizarre that Labour has spent most of the General Election just talking about the NHS in England, ignoring their old Scottish voting heartlands.