It appears that Mr Clegg and the Lib Dems are as determined as Labour to deny England any justice on our lop sided devolution settlement. Rumour has it that they turned down Mr Hague’s request to join Conservatives in voting through English votes for English issues. If they would add their votes to ours we could pass a simple government motion to amend Standing Orders and from that date we would have English votes for English issues.

I am still awaiting a reply to my letter to Mr Clegg, which I reproduce below

 

The Rt Hon Nick Clegg MP

Leader of the Liberal Democrats

Liberal Democrat Headquarters

8-10 Great George Street

London SW1P 3AE

 

13 October 2014

 

Dear Mr Clegg

You have doubtless seen recent polls which show more than 70% of the public think that we need to offer justice to England as we complete further transfers of power to Scotland. As Scotland moves to having control over her own Income Tax rates, so we will need a way of setting Income Tax for England without the advice and votes of Scottish MPs.

The important first step to achieve more balanced devolution is the policy of English votes for English issues. We could do this by passing a simple motion amending the Standing Orders of the House. I would like to know if you and your party is in agreement, as it would be easiest to table it as a government motion and it would then have a comfortable majority. It would also mean you could share in the credit for doing something that is both just and popular. Our Amendment will give similar voting facilities to Wales and Northern Ireland depending on the degree of devolution to them.

If you do not agree with this proposal, then I and a number of my Conservative colleagues will aim to table it anyway, as we believe there will be a narrow majority for it in the Commons even without Liberal Democrat official support.

Yours ever

 

The Rt Hon John Redwood MP

Member of Parliament for Wokingham

Meanwhile the latest poll from Scotland points to a massive surge in SNP votes. If this is sustained at the General Election Westminster cannot ignore the force of the wish for more Home Rule.The UK government and Parliament will have to sit down and discuss  a new settlement for Scotland. That must also mean a new settlement for England too. If the SNP win most of the Scottish seats in 2015 it will mean the need to discuss a proper federal solution for the UK.

 

At the peak in 2007 130,000 mortgages a month were being issued. House prices were rising, new buyers came into the market. The rise in interest rates and the credit crunch which the authorities organised in 2008-9 changed all that. Banks had to throttle back on new loans. Some individuals struggled to meet their mortgage payments. The number of new mortgages slumped to 30,000 at the worst in 2008.

There has been a reasonable recovery this decade. By January of this year the monthly rate of new mortgage approvals was running at 76,500.  £18.5 bn was lent. By this September the figures have fallen back a bit. 61,000 new mortgages were arranged, with a value of £15 bn. This is still well above the low point, and well down on the high point of the  bubble in 2007.

Home ownership is a good aim of public policy. It is far better to look forward to your old age knowing by then you will own your home and not face a rent bill. Owning a property will be cheaper than renting the same kind of property over a typical adult lifetime. Ownership also gives you greater flexibility about use,adaptation and decoration of your home, subject to planning rules for the bigger changes. It is also 0ften easier to switch homes and move locations if you own, than if you are a tenant in social rented accommodation.

Homes are less affordable today when comparing prices with incomes than forty years ago. Part of this reflects social change. Two earner couples are more common now, and  greater account is taken of both incomes in mortgage calculations. Part of it means young people have to wait longer, save more, and achieve higher earnings levels before they can buy their first home. Some get round this by buying property jointly and sharing.

The Mortgage Market Review has required those advancing money to be properly trained, to take full account of the affordability of the mortgage for the individual, and to stress test the mortgage asking what would happen if interest rates rose. Some say this has held back mortgage lending in recent months as people adjust to the new system. Others say this is a welcome, as it should make it more difficult for people to take out unaffordable levels of new debt.

To have a healthy first time buyer market there also needs to be a sensible balance between new home construction and additional people seeking accommodation.

 

 

The latest polls from Scotland all show the same picture. The Labour vote has fallen substantially, and the SNP vote has risen in its place. One poll on a small sample (YouGov) goes so far as to show the SNP on 42% and Labour as low as 27%.  This accentuates the move more than others and would mean 43 SNP seats at Westminster to Labour’s 12. This would make the  SNP the third placed party comfortably ahead of the Lib Dems in seats given their current poll position. Other polls point to Labour losses on a more modest scale.

In the run up to the 2015 election I will not be making any of my own predictions of the Conservative result. I take this view for two obvious reasons. I believe a Conservative majority is in the best interests of the c0untry, and is the only way to guarantee the renegotiation and referendum on the EU which I think we need. It can be achieved and is my preferred outcome.  I know that if I made an optimistic projection for the Conservatives it would be written off as self serving and arrogant, and if I made a pessimistic forecast for the Conservatives I would be seen as defeatist and would delight my opponents who would use and abuse it.

According to pollsters and commentators  from here a Conservative majority is clearly  possible, but so are a number of other outcomes. The latest polls showing the SNP doing better are a reminder of the significance of third, fourth and fifth placed parties when they reach a certain level in the polls.  It is important to remember just how many MPs were elected in 2010 from parties other than Conservative or Labour:

 

Liberal Democrat       57

Northern Irish parties    18

SNP   6

Plaid     3

Green     1

Total  85    (13% of seats)

 

If we project this forward, there are some  reasons to suppose on current polls that this number could stay high in the next Parliament. Whilst persistent polls point to a substantial reduction in the number of Liberal Democrat seats, the polls also suggest there could be a substantial gain by the SNP in Scotland at the expense of Labour, and there could be  modest gains by Plaid in Wales.

If the two main parties again only share 565 seats out of 650, this means to have an overall majority one party  has to win 58% of the seats going to the 2 main parties to do so, obviously  more than the Conservatives did last time.  This is possible for either party to achieve, but gaining an overall majority is clearly more difficult when there are so many MPs from other parties. There is also the impact of votes for third and fourth parties on the outcome in close races.

Gaining a majority is also made more difficult for either party where people who would in the past have preferred one or other of the main parties and who wished to help choose between them in a General Election now wish to make 0ther points by voting for other parties. Clearly those voting for SNP know their party cannot possibly form the next UK government, but they may have other reasons for voting for them even in a General Election.

Last time there was only one combination of 2 parties that could command a majority in the Commons. That was a  Con/Lib Dem alliance. If the Lib seats say halve, and if the SNP gain more than  20 seats the position would be different next time if one of the main parties still fail to achieve a majority.  There are permutations where it would take three or more parties to form a government.

As the General Election gets closer some think more people will wish to contribute directly to the decision about whether to have a Conservative led or a Labour led government, by voting for their preference between the main two. This could lead to a majority government offering more stable government and the ability to deliver the manifesto promises. Others think this time more voters will want to make a different point, whatever the impact such voting may have on the balance between the two main parties.

Devolution could become an even more important issue if a Parliament is elected with more nationalist and regional party MPs elected and no overall main party winner. The party which had the best offer on devolution might be the best placed to form a coalition government in such circumstances.

 

 

Update 30.10.14   A further poll today now gives the SNP 54 seats with Labour down to just 4 and Lib Dems 1.

 

When I was committed to arguing the case to keep the UK out of the Euro I found the interventions of senior corporate representatives of some large multinationals  far from helpful.

Some car companies  for example were in those days committed to our membership of the Euro. They   told us we should  join otherwise it would adversely affect their investment in the UK.  They  forecast an erosion of the competitive position of their UK operations over time if the UK stayed out. They  told us or implied  that out of the Euro the UK would lose investment and jobs as they7 would need to place new capacity  and new models elsewhere.

Fortunately the main manufacturers   changed their  minds . The leading overseas companies  continued to invest in the UK, and still believe  the UK to be an excellent manufacturing base for some of their  operations. I was very glad to several of  them announce yet more investment for the UK recently . I am pleased they agree that the UK outside the Euro is a good place to make cars, in contrast to what some of them predicted during the Euro debates.

Other senior business people speaking for their large quoted multinationals got the Exchange Rate Mechanism totally wrong. They urged government to join it, which the UK  foolishly did. Predictably it did great damage to our economy, causing first a rapid inflation then a recession. The businesses in the UK which had urged membership were often badly damaged by the results.

Before commenting on our future membership of the EU, it would be good to have an explanation  from these large multinationals who got the past big European issues so wrong. They usually enlist on the EU side of the argument, whatever damage  EU policies do to  our economic progress.
It would be useful to have a critique from big business of the EU;’s dear energy policies, for example, or of the EU’s Euro austerity policies which have hit jobs and prosperity in many continental countries. When I led a large quoted industrial company I did not express political views as its Chairman, even though at the time I personally thought EU monetary and exchange rate polices would be very damaging and said so as an individual. Had I issued bad advice politically with my company hat on , I would have felt I should correct it for the sake of the company at a later date.

 

 

I am all in favour of better transport links to speed faster growth in the northern cities. I look forward to reading an appraisal of the various options for the Leeds/Manchester routes that we hear about this morning. We need a good business appraisal of capacity requirements and the cost of  various options to improve journey times.

We should remember that today the train journey time between Leeds and Manchester is 50 minutes, for a distance of  45 miles ( by road). The train time for the 18 mile journey across London from Ealing to Stratford is also 50 minutes.

The Ealing to Stratford time will be  reduced by Crossrail.  London badly needs both more capacity and faster journey times east to west. The trains are currently very crowded for long periods of the day and evening. The idea behind the exploration of northern options is to offer  improvement to the north similar to  the extra capacity and speedier journeys that Crossrail will bring to London.

In London the 50 minutes from Ealing to Stratford is as good as it gets, as it is a journey on a single tube line. Ealing to Upminster, at 33 miles still less far than  Leeds-Manchester, takes 1 hour 22 minutes by train and at least that time by road.

The growth of London was spurred by the construction of tube lines into the centre. These offered relatively slow trains taking direct routes into the heart of the city and meant people could live further out from the centre but still have a reasonable journey time into the business, shopping  and entertainment districts at the heart of London. Cross London travel prior to Crossrail has never been great. The northern needs are different, as they have  a pattern of segregated cities and the Pennines  in between which has to be taken into account when working out what best transport links can promote their growth. It is good to see some positive thinking on this topic.

 

Yesterday’s elections in Ukraine did not apparently take place at all in at least 27 seats. The Crimea of course did not go to the polls as it was annexed by Russia. Parts of the Russian speaking east did not vote either, where rebels hold sway and where it was thought too difficult to open polling stations.

Where a country is split badly between a majority and minority, it is most important for the majority to proceed in ways which the minority think are fair, even if they do not agree with some of the policies being pursued and want a different political answer. Holding an election when the most unhappy part of the country is  unable to participate in it is far from helpful.

The loss of the Crimea tipped the odds further against the pro Russia part of the country  by removing pro Russian voters. This has now been compounded by the Kiev government’s inability to restore law and order in Donetz and Luhansk and reassure its eastern citizens that it will operate in the interests of the whole country and take their needs into account.

The Ukrainian government needs to build bridges with the pro Russian minority if it wishes to reunite the country. Democracy does allow the majority to have its way, but democracy also entails the majority being reasonable towards the minority.

 

 

Parliament in the UK established its power  by insisting that it should approve taxation before it was imposed by the King or Queen. When the Crown needed more money it had to summons Parliament. Parliament insisted on the redress of its grievances before voting the monarch the money he wanted. The fact that Kings and Queens  had to ask Parliament for new taxes made them wary of asking for too much too o0ften.

The Crown also accepted Parliament’s role as a legislator and used Parliament to pass new laws. A crucial series of Acts in the 1530s established UK supremacy over the clergy and the Church. In England the Reformation was largely a peaceful Parliamentary process, where Parliament asserted the Crown’s sovereignty. The Pope’s power was extinguished by Act of Parliament, and individuals lost their right to appeal to Rome for ultimate judgements of their cases.

In the 1630s the King attempted to rule without Parliament and experimented with new taxes that he wished to impose without Parliamentary authority.  Parliament’s challenge to this presumption by Charles I was an important part of the outbreak of the civil war. During the Protectorate and in  the 1660 Restoration Parliament’s control over taxes was firmly re-established.

Today the threat to Parliament’s power to tax comes not from the monarch but from the EU. The reason so many of us object to the EU’s retrospective recalculation of our tax bill to the EU is that we, the UK electorate and Parliament, have no control or say over this. Defenders of the EU say the UK should just pay up. They claim it is like a change of calculation for an individual’s income tax, or like an increased subscription from a club we belong to. I disagree.

The EU’s £1.7 bn tax is not a simple change to a bill we owe, something the UK government can easily provide for. At a time when the UK government is already borrowing too much and has imposed high taxes, this is an unaffordable new imposition. It is not a tax on the UK government, but a new direct tax on all UK taxpayers who are expected by the EU to consume and spend less so the EU can spend more or give more to other countries.

The EU is not a a set of binding obligations like income tax on an individual, It is a series of opaque and often ambiguous and contradictory international agreements between states within  the EU. There is a legal structure, but there is also a political structure, so that from time to time countries avoid or amend their apparent legal obligations when the politics of them is unacceptable. Just look at the way the obligation to bring balance of payments accounts into balance has been ignored throughout most of the life of the EU, or the way the need to keep budget deficits to 3% or below has been breached for long periods by many states. Is the UK now to comply with the budget deficit reduction requirement, which means not paying the extra impost, or with the tax bill?

The UK Parliament is still sovereign in the UK for one very good reason. Parliament , and Parliament  alone, can decide to repeal or amend the European Communities Act 1972 which remains the origin and fount of all EU power in the UK. If we continue in the EU for a long period without ever using Parliament’s sovereign power, this may change. If we accept a European army and police force we might reach the position where disagreeing with an EU measure becomes law breaking  or an act of rebellion. Today we have  not reached that position. If Parliament does not agree with this new tax, then it should simply amend the 1972 Act to legalise non payment. I doubt they would try to end our membership, as it remains a great deal for the EU.  I also expect they would find all sorts of changes to our budget deal are possible, if we moved to do this, as they would see the dangers to them of the UK visibly reasserting Parliamentary sovereignty.

In the EU everything is renegotiable to those with the political will when they are paying for the organisation. It is not yet a centralised state with the power to tax UK citizens as if it were the UK Parliament imposing Income Tax.

 

The explanations of the purpose of QE and its method working have changed over the years of its use. In the second quarter of 2009, explaining why it had embarked on a large £200 bn programme of QE, the Bank said:

“The introduction of large scale asset purchase using central bank money or QE shifted the focus toward the quantity of money as well as the price of money. Injecting more money into the economy should boost spending….the more that households and companies  use the new money to buy goods and services or other assets, the more it will raise spending. If banks use the additional reserves to expand their lending, the impact could be even stronger. ”

This explanation was altered by July 2012 when the Bank published a further explanation of  QE:

“the objective remained unchanged – to meet the inflation target of 2%…without that extra spending in the economy, the MPC thought that inflation would be more likely in the medium term, to undershoot the target….It does not involved printing more banknotes. Furthermore the asset purchase programme is not about giving money to the banks. Rather the policy is designed to circumvent the banking system”.. to “stimulate spending and keep inflation on track”

Inflation rose above 3% early in 2010 and stayed above 3% until early 2012, rising above 5% at one point. The MPC would presumably say their timing of asset purchase was related to their forecasts of inflation post 2012. Clearly if their use of QE in 2009, and in 2011 and 2012 was about inflation it was not about accurate forecasts of 2010-12 inflation but must have been about something  longer term. Perhaps they “looked through” the higher inflation brought on by the devaluation of sterling.

Today more people say the aim was merely to bring down longer term rates of interest, to make it cheaper to borrow long term. They see QE as an elaborate way of altering the price of long term money compared to short term loans. Perhaps the Bank’s first explanation that it was to try to inject cash into the economy to be spent is nearer the mark.

What is more interesting is the change of stance on unwinding the position. In the early days it seemed likely that first the Bank would stop new purchases, then allow repayments of debt to cancel the outstanding gilts as they matured, and then sell back the remainder before raising interest rates. Now the agreed policy is to raise the official short term rate before taking any steps to reduce the amount of bonds held. This has the perverse consequence of losing money on the bond holdings at market prices, if the Bank raises the official rate and that has the normal impact on the value of gilts.

 

The answer is No.

We do not impose extra tax on people for past years after the year is settled.

Nor do we intend to pay them.

 

We are being reminded that members of the EU have to obey the four freedoms, the freedom of movement of capital, people, goods and service provision.

These should come as no surprise to us, as they were in the original Treaty of Rome. They are not some new addition from more recent federalising treaties. These later treaties  have added a common foreign and defence policy, economic and monetary union, common citizenship and criminal justice integration amongst others. These features have been opposed by Conservatives, voting against Nice, Amsterdam and Lisbon. The UK has an opt out from the Euro and is not committed to  the criminal justice and defence unions. The four freedoms were effectively approved by the British people in the referendum of 1975, when people ignored voices like mine pointing out the full implications of these radical changes to our constitution.

The reasons we need another referendum include the fact that many voters today were not old enough to vote or were not born in 1975, and the fact that most senior politicians in 1975 assured UK voters that they were just voting for a trade agreement or common market. They could point to the fact that in those days the UK still had a veto over any new proposal. Things have changed a lot since then. Many voters in 1975 failed to read the Treaty of Rome so they did not understand the free movement provisions. They understand them  now, thanks to events.

One of the reasons it was possible for the Labour government in 1975 and other leaders to say it was no more than a common market was the inability of the European Community then to enforce many of the things that were in the original Rome Treaty. The Treaty dealt with balance of payments imbalances and said “recognising that the removal of existing obstacles calls for concerted action in order to guarantee steady expansion, balanced trade and fair competition”. Instead large trade imbalances persisted and the EEC took no action to help the UK, a large deficit country.

The Treaty said it would reduce “the differences existing between various regions and backwardness of the less favoured regions”. Instead the gap between the successful and richer parts of the EEC  and the rest in many cases  grew bigger.

The Treaty began with the aim of laying “the foundations of an ever closer union among the peoples of Europe”. It said it would abolish “the obstacles to the free movement of persons, services, and capital” and would  eliminate customs duties and quantitative restrictions on the movement of goods.

Today the free movement of people needs limiting. The UK wishes to control its own benefits system.There should be no automatic right for new arrivals to qualify for the range of out of work or in work benefits that UK citizens enjoy. The UK wishes to control its own criminal justice system, and be able to send back to their own countries criminals who have broken our laws. The UK also wishes to limit numbers seeking lower paid work in our country, all the time there are UK citizens without jobs who might be better off from such work.

It is no good the rest of the EU saying these changes cannot be made because of the underlying principle. There are several underlying principles of the modern EU which the UK does not accept, including the all important monetary union. If they wish us to stay in they need to change the arrangements so we can control our own borders.