The Labour government took a couple of good decisions whilst generally making the railway unaccountable, expensive and  not very friendly to passengers.  They allowed First Hull and Grand Central Railways access to Network Rail’s tracks to act as challengers to the established franchise holder.

          The results have been excellent. First Hull has the highest passenger satisfaction ratings out of all 23 rail operators.  Grand Central has pioneered books of ten tickets, more anytime tickets and cheaper fares.  They have offered direct services to London for cities like Sunderland, Halifax  and Bradford. First Hull provides 14 trains a day between Hull and London ,compared to 1 prior to their challenge. Both companies offer free wifi for all travellers. I have had the chance to read the latest case for open access to train lines and to question  the lobby group that backs it.

        If the challengers  did not provide routes people want to travel and service levels people do not like, these companies would fail. Unlike the franchise holders who have access to  subsidies, the challengers have to provide their own capital and need to sell enough seats to pay the bills.

            More importantly, they provide a check on what the monopoly franchise holder and state  monopoly track owner are telling us about what can be done and what the public want. The successful challenger companies proved that there was spare capacity on the East coast mainline, and they could run services using the slots available to find new passenger demand and service other cities along the route. They showed that the pattern of demand was not just as the franchise holder said, and showed they could innovate on service.

           We need more challenger railway companies and offers. Apparently there is scope for a new fast service to Edinburgh using current track, and more spare capacity on both the east and west coast mainlines. One of the interesting things about our railway is how empty the tracks often are. Of course there needs to be proper safety gaps between trains, but the present gaps are considerably longer in many cases than the prudent safety advice. The task should be to improve what we have got, especially as there is a lot of public money lined up in the non HS2 rail budgets for the years ahead.

 

Last week the Chancellor made an important speech. In it he charted the progress in cutting the deficit so far, and set out why more needs to be done to complete the task .

He proposed that an additional £25 billion a year be taken from  the projected growth in cash public spending in the first two years of the next Parliament, establishing a lower base in 2016-17 for future growth in spending than current plans.

In 2012-13 total spending was £679.3bn. In 2014-15 this will be £730.5bn. Previous plans saw this rising to ££756.3bn in 2016-17. The revised plans will see it effectively frozen for 2 years , at £731.3bn in 2016-17, before going up by £9.3bn the following year.

As tax revenues are forecast to rise from £556bn in 2012-13 to £699.6bn by 2017-18, this will bring the deficit in that year down to £40.9bn.  The Treasury using previous plans scores this as 80% of the work being done by spending measures. The deficit comes down because spending goes up more slowly than revenue.

In his speech on the EU yesterday the Chancellor reminded the rest of the EU that The European economies are falling behind the Asian ones. He drew attention to the high unemployment in many parts of the continent, the lack of competitiveness and the need for more jobs friendly policies. He also made clear that the UK as a non Euro member with no intention  of joining the single currency needs a new relationship so that we do not get dragged into accepting liabilities and instructions appropriate for a single currency zone but not for us.

 

Representatives of British business (Business for Britain) have made an interesting proposal. They have suggested that the complex and expensive single market rules should only apply to business for export from the UK to other EU destinations. They have shown that many UK businesses think the costs of the single market outweigh the benefits to them.

Most businesses are small and operate in a local or  regional market in the UK.  Even some larger businesses confine themselves to the UK market. There is no need to burden them with costly requirements designed for intra European trade.

Nor should businesses seeking to meet the requirements of China, America and the other non EU markets have to meet all the EU’s requirements as well. It could be easier and cheaper for our exporters to non EU destinations if they had the option to  opt out of some of the EU requirements. The Uk Parliament would ensure sufficient standards for UK businesses under a clear framework of domestic law.

It is good to see a business lobby realising that the single market programme imposes  costs and can damage business. They have come up with a flexible proposal.

When the Coalition came into government they swept away the M4 bus lane. They announced a consultation on an 80mph speed limit on motorways. Mr Hammond made the case for it. He pointed out that many motorists already travel above 70mph, and argued that it would be good for the economy if journeys could be faster when the motorway allowed such travel. An 80mph limit would be more in keeping with typical safe practice on a free flowing motorway and would help people get about their business. After all, the believers in trains are always wanting to go faster.

More recently the government has announced it is not about to raise the motorway speed limit to 80mph. At least no-one can accuse it of being too willing to get into line with the EU on this, as France and Italy have a speed limit of 81mph and Germany has no upper limit on autobahns. Motoring organisations and businesses have been disappointed at the change of heart.

It came as a shock to learn last week that the Department of Transport is now consulting on going the other way, and imposing 60mph limits on certain stretches of motorway, starting with the M1. I was assured by one government source that the original press story was untrue, only to find that the Transport Department is launching a consultation on this very policy. Apparently some officials say that without these speed limit reductions the UK could be in violation of air quality directives from the EU, so there is an EU motivation beneath this change of tack.

I will be writing in response to the consultation. Your comments on it first would be interesting.

UKIP and most of the Conservative party are divided by a common aim. We want to re establish self government in the UK. We do not like the current relationship with the EU, which means the EU makes too many decisions, passes too many laws and controls too much of our lives.

UKIP says the only way to deal with the problem is to announce our intention to leave the EU and to repeal the 1972 European Communities Act. Once that had been done presumably we should then sit down and discuss trade, cross border issues and the like with our neighbours and establish a new basis in the minority of cases where we do need agreement. Anything less than this approach is to some UKIP supporters a cop out, a con, or not likely to work. Of course the repeal of the 1972 Act and the relevant declaration to the EU could get us out quite quickly. The issue is how would this come about in UK politics? So far in UK General Elections few people have voted for this approach.

To bring this about UKIP needs to win 326 seats in the Commons. So far after ten years of trying they have won none. Mr Farage, one of their best campaigners, came a poor third at Buckingham in 2010 when the three main parties were not standing. UKIP came much closer to winning the Eastleigh by election, but even there were unable to beat a very unpopular federalist Lib Dem party. When they did get an MP to cross the floor he did not last long as a UKIP MP.They have won some seats in local government,but nothing like as many as the 3 main parties. Last Thursday they achieved a good result in a Council by election in West Suffolk, but it was on a tiny turnover. Even the most optimistic concede that their strategy is taking a long time, and no pollster or independent commentator is forecasting a UKIP win in the 2015 General Election.Sensible UKIP supporters want their party to work with the Conservatives to help supply a majority for an IN/Out referendum in the next Parliament. This then gives us, the British people, the chance to vote for Out and trigger the repeal of the 1972 Act.

Conservative Eurosceptics have adopted a different strategy. We have sought to develop good Eurosceptic policy in the Conservative party. We have built up Eurosceptic support in the Parliamentary party. As this week-end shows, a majority of the backbenchers now back a big change to our relationship. We now have a leader who has withdrawn the Conservative party from the centre right federalist grouping in the European Parliament. We have a leader who has made it official policy to negotiate a new deal and put that to a vote of the British people. He did veto the Fiscal Treaty, both keeping the UK out of it and preventing the others making it an EU Treaty. Conservatives are prepared to negotiate first and then vote for Out if as UKIP fears the other members of the EU offer us nothing worth having by way of a new and different relationship. We are more likely to win an Out vote if the doubters are proved true and our partners are unco-operative when we state our wish to have a new relationship. We are also more likely to get a better new relationship if the other members states see it is likely otherwise we will simply exit. We want trade, not common government.

This week-end 95 Conservative MPs have added their names to a letter to the Prime Minister saying he needs to go further. We are backing the European Scrutiny Committee’s proposal for the UK Parliament to have a veto on future and past measures from the EU. This would immediately restore the supremacy of Parliament, and allow us to opt out of any measure we did not like. Immediately we could have our own immigration policy, for example. This would lead directly to negotiations about that new relationship, and would show that the UK does wish to be self governing again, with sensible arrangements for trade and political co-operation with the EU.

Our approach of working from within has now got us close to delivering the referendum we need, despite the Conservatives not having a majority in the current Commons. . The Conservative party has got a Bill through the Commons, and intends to honour its promise after the 2015 election, with or without that bill becoming an Act of Parliament, assuming it has a majority to do so. All Eurosceptics should welcome that, as a vote of the people is the best way to determine our future after years when people have not been able to trust federalist MPs on this subject.

I am both more optimistic today than for many years, and more worried. I am more optimistic because many more people are now alarmed by the extent and scope of EU power and want something done about it. Public opinion is on the Eurosceptics side. I am optimistic because the Conservative party is offering a referendum which will allow us to exit if the relationship is not changed substantially in our favour, restoring self government. I am more worried because I think UKIP and Eurosceptic Conservatives are tackling the issue in two different ways, which could allow the federalists to win. The federalists are enjoying this, because split we run the danger of damaging each other rather than stopping the federalist juggernaut. We need a Conservative government in 2015 both to deliver the referendum and to avoid another five years of Labour government which would make it much more difficult to exit the current EU, as they would work with Brussels to drag us ever more deeply in at a time of further centralisation.

This week-end 100 Conservatives have expressed their support for an important letter to the Prime Minister. We are impatient at the way the Coalition is prevented from renegotiating or giving us a referendum this Parliament on our current membership. Conservative MPs are pressing the government to deal immediately with the worst pinch points of EU policy like immigration and energy prices by legislating in the UK. We are seeking to reassert Parliamentary sovereignty. Once we have used the formula of passing an amendment or repeal of an EU measure “notwithstanding the 1972 European Communities Act” we are in a strong position to gradually correct the damage EU policy is doing. This would be good law in the UK. We would not accept any legal challenge from the European Court, and rule that out in our UK law. Such action could of course trigger the political renegotiation the UK needs with the other member states, and allow us to explain from a position of strength that we wish to trade with them but not to be governed by them.
The argument that such a veto would make a single market impossible is untrue. The so called single market programme has been hijacked by federalists who have used it to produce a massive extension of EU government. Changing that would not prevent a profitable trade between EU nations. As the rest of the EU sells us much more than we sell them they would of course wish to keep sensible tariff and other arrangements to allow the trade to continue.

The letter says:

“Dear Prime Minister,

Each time you have stood up for British interests in Brussels, you have achieved a great deal. We would like you to consider adopting the ideas put forward by the European Scrutiny Committee, which would re-establish a national veto over current and future EU laws and enable Parliament to disapply EU legislation, where it is in our vital national interests to do so. This would transform the UK’s negotiating position in the EU.

This would reinforce the point you made last week in your FT article, in which you suggested that the right of “free movement” in the EU should be a “qualified right”.

It is clear that that is a direct challenge to the existing ‘acquis’, and indeed your article prompted EU Commissioner Reding immediately to claim such a step was “non-negotiable”. However, we believe you are on to something fundamental and which must be pursued.

You have similarly talked about “the return of Britain’s opt-out from social and employment legislation in those areas which have proved most damaging to our economy and public services”; “a complete opt-out from the Charter of Fundamental Rights”; and “limiting the European Court of Justice’s jurisdiction over criminal law to its pre-Lisbon level and ensuring that only British authorities can initiate criminal investigations in Britain.”

Your Bloomburg speech also made clear your challenge to the status quo in the EU when you justifiably asserted: “It is national parliaments, which are, and will remain, the true source of real democratic legitimacy and accountability in the EU.”

In making these statements, you have the fullest support of the Conservative Party – and the majority of voters. Most importantly, you are also speaking in the national interest. However, clarity about how we will achieve these objectives is vital for our credibility. The European Scrutiny Report provides precisely that.

Last week European Scrutiny Committee agreed a unanimous report.
The report cites the existing Article 4(2) of the Treaty on European Union, which requires that the EU “shall respect the essential state functions” of its member states, and that this means respecting the democracy of the member states. Accordingly, the Committee’s report recommends that “there should be a mechanism whereby the House of Commons can decide that a particular legislative proposal should not apply to the UK”. Further, it recommends “parallel provision should be made to enable a decision of the House of commons to disapply parts of the existing acquis.”

This proposal would enable the Government, for example, to recover control over our borders, to lift EU burdens on business, to regain control over energy policy and to disapply the EU Charter of Fundamental Rights (which is set impose enormous costs on British business and taxpayers) in popular and sensible ways.

We would urge you to back the European Scrutiny Committee proposal and make the idea of a national veto over current and future EU laws a reality.

Yours etc”

The EEC, which has evolved into the EU, was introduced by people who claimed we could “pool” our sovereignty. This they said would make us more powerful. I have often written and spoken about the dangers of confusing power with sovereignty. Today I want to explain why you can only have one sovereign. It is time for the UK to choose whether it wishes to enjoy self government through the UK Parliament or whether it does now wish to be governed by the EU as Commissioner Reding and others have asserted.

The experiment with twin sovereigns or shared or pooled sovereignty is breaking down from both sides. UK democrats are increasingly frustrated at a range of decisions made for us by the EU. A majority in the UK wants self government so we can make our own decisions about benefits, energy, welfare and borders amongst others. At the same time the federalists, mainly in the Brussels government but also among some of the other member states, are frustrated that the UK is still a “difficult” partner, querying too many EU decisions, seeking to slow down the necessary march to more federal power and seeking to prevent more unanimous and majority decisions at the EU level.

So called pooled sovereignty or shared power only works when both so called sovereigns agree on strategy and tactics. In the EU that means the junior members, the national governments, have to accept the view of the senior member, the EU, that on the big calls the EU is in charge. The EU for example settles budget deficit levels, imposes VAT as a general EU tax with control over the level of the imposition, controls borders and now imposes a common Convention of Human rights. The member states have to go along with a continuous process of more and more decisions and power going to Brussels. In other words, EU sovereignty is not pooled or shared. The ultimate sovereign – that means the only sovereign- in the EU model is the EU. This will become increasingly apparent as the EU completes the process of expanding the range of its activities and the extent of its powers through its vast legislative programme.

Mr Justice Mostyn has recently set out how the EU sovereign now overrules the UK Parliament. Parliament under a pro EU Labour government decided that some elements of the EU Convention on Human Rights were unsuitable for the UK and left them out of the UK legislation. The Labour government thought they had secured a Lisbon settlement that avoided the EU Convention becoming UK law. However, the senior Judge now concludes “it would seem that the much wider Charter of Human Rights is now part of our domestic law”. Something we did not want is now directly acting despite Parliament’s wishes.

On 20 November 2013 The European Scrutiny Committee of Parliament under the tenacious chairmanship of Mr William Cash produced a most important unanimous report. They concluded:

“Not only do we recommend a strengthening of the scrutiny reserve, we conclude that now is the time to propose the introduction of a form of national veto over EU legislative proposals, and then to explore the mechanics of disapplication of parts of existing EU obligations, notwithstanding the European Communities Act 1972”

This conclusion is necessary and wise. It is directly in line with the promise made in the July 1971 White Paper on our membership of the EEC. In that again the government wisely said:

“All countries concerned recognise that an attempt to impose a majority view in a case where one or more members considered their vital national interests to be at stake would imperil the very fabric of the community”

They understood then that you cannot have two sovereigns. They also understood that democratic legitimacy and ultimate power had to rest with the member states. Tomorrow I will look at how the UK Parliament could reassert this essential truth.

I would like to thank Commissioner Reding for her honesty is reminding us that the aim of the EU project is a United States of Europe. As I have frequently pointed out before, they have got a long way towards creating one. It is not a superstate I want my country to be part of. We need a new relationship with the emerging USE.

The Commissioner thinks the unelected Commission (she just happens to be a member of it) should be the government. She thinks the European Parliament should be the equivalent of the House of Commons. She thinks there should be some new Senate for national politicians from member states to be the House of Lords. It’s generous of her to leave us that emaciated role in our government.

It is time that the media asked our leading European enthusiasts if they share their Commissioner’s vision. If they do not, how will they stop her and the many in Brussels who think as she does, from doing just that? It is time the Leader of the Opposition, Mr Douglas Alexander (Shadow Foreign Secretary) Mr Clegg and the other main pro Europeans were asked to confront the reality that the EU is evolving quickly into the United States of Europe. Why do they think that a good idea? Why haven’t they been honest about this obvious development? What do they think the UK should now do, given the unpopularity of the emerging USE with a majority of the British people?

The pro Europeans in UK politics have regularly briefed the press and made speeches saying they need to make the case for the EU, claiming it is good for the UK. They have never set out in detail just how many powers have already gone to the EU. They have not explained the growing tensions in our relationship, all the time we rightly stay outside the Euro when most of the rest are plunging headlong into more federal arrangements to preserve the currency. It is time they were asked to explain just how much Europe we already have, how much more they would like, and what they think of Mrs Reding’s refreshingly honest vision of where the logic of EU development takes its members.

Yesterday’s unemployment figures from Euroland made more depressing reading. 19.24 million people are out of work in the Euro area. The unemployment rate of 12.1% is much higher than the US at 7% and the UK at 7.4%. Non EU countries in Europe have lower rates, with Norway at 3.3% and Iceland post crisis at 5.4%.

Within the zone Greek unemployment at 27.4% and Spanish at 21.7% are particularly bad. Germany remains competitive both within the zone and outside and has much lower unemployment. The totals are up 452,000 on a year earlier, and up a little on the previous month.

Worse still is the position of young people under the age of 25. 3.57 million are out of work in the Euro area. The rate of young person unemployment is a shocking 57.4% in Spain, 54.8% in Greece, 41.6% in Italy and 36.5% in Portugal. Even in France one in four young people are out of work.

Unemployment in the rest of the EU is lower than in the Eurozone, which suggests that some of the high level of unemployment is down to the features of the Euro. Unemployment is however, quite high throughout the EU on average indicating that all is not well with the policies pursued by the region. High regulatory costs and dear energy are two of the features that limit economic progress.

The odd thing is the apparent acquiescence of so many voters so far in this dreadful situation, and the complacency of the European establishment faced with this tragedy. It is extraordinary that over half of all young people under the age of 25 can be out of work in some countries, yet no major action is triggered likely to make a bid dent in the totals of the young unemployed.

The European countries that have stayed outside the Euro, and the USA that also experienced a banking crisis, have used monetary and exchange rate policy to get more people back to work and to stimulate more activity. The Euro was saved from break up by the European Central Bank’s decision to lend large sums to the troubled Euro banking system, and more recently has been helped a little by ultra low interest rates. The endless delays in coming to a judgement about who will pay the bills and who will back the overstretched sovereign and banking borrowers is delaying a vigrous recovery, and is ensuring more young people remain out of work for longer.

 

The Uk used to enjoy plenty of wage inflation. It was called the “British disease” and went with too many strikes, frequent devaluations to keep us in  world markets, permanent decline of large nationalised industries like steel, coal and railways, and  large accompanying job losses in those state leviathans. The cash pay rises were soon eroded by price rises.

After the Thatcher Union reforms and the privatisation of much of the old nationalised industry estate the extremes of wage inflation and the accompanying poor performance were eliminated. The UK entered a “NICE” period, when  cash wages rose modestly, productivity improved and former nationalised sectors like telecommunications and energy grew with more jobs being created. Real wages rose each year.

The Great Recession of 2008 changed all that. The UK lost 7 % of ts output in a year. A new era was ushered in with low cash increases in wages, and falling real wages. This was bad for the last two years under Labour and has continued at a lesser pace under the Coalition. Productivity has been weak.

Some commentators have called this the productivity puzzle. I have never thought it much of a puzzle. Part of the reason for the decline was the big losss of output, which makes companies less efficient. Many companies do not cut their workforce in line with the loss of output. Part has been the decline of North Sea oil output, a very high value added sector. Part has been the loss of high end profitable activities from the City as people have diverted high earning areas of their banks and businesses to lower tax jurisdictions in Asia, Switzerland and the low tax islands of the world in response to 50% Income Tax and 28% CGT rates.

There is one additional issue I have not so far raised, which I would like to ask about today. That is the decision of the past government to invite in up to  5 million new people to the UK over  little more than a decade. The UK has a workforce of around 30 million, so the increase in the potential workforce from large scale immigration must have had some impact on the UK labour market. More than 2m jobs have been taken by people born overseas.

Business likes the ability to recruit people from around the world, and likes a plentiful supply of good value labour. Employees of UK companies already settled here need income levels that sustain a reasonable lifestyle in one of the dearer locations in the world.

The issue is one of balance. Allow too little migration, and business might find it difficult to set up or continue here without access to the affordable skills they need. Let in too many new people, and you must depress wages and make it more difficult for unemployed people legally settled here to find a job. Part of the issue of wages is tied up in the potential supply of labour. Over the last decade the UK has had an unprecedented expansion of its labour supply, which is part of  the background to stagnant wages.