My Interview with GB News, where I spoke about the Spring Budget, going for economic growth and particularly the need for lower taxes on small businesses and on people’s incomes.

You can find the interview below between: 1:17:14-1:26:57

To ask the Secretary of State for Energy Security and Net Zero, what estimate his Department has made of retirement dates for existing nuclear power stations. (160098)

Tabled on: 07 March 2023
Answer:

Andrew Bowie:
EDF has recently announced that Heysham 1 and Hartlepool Nuclear Power Stations will continue to operate until March 2026, an extension of two years. Heysham 2 and Torness Power Station are currently planned to generate until 2028, and Sizewell B is expected to continue generation past 2028.

The answer was submitted on 15 Mar 2023 at 14:42.

Comment

This is helpful, offering a bit more reliable power for longer as they review closure dates. It is a reminder that we need to build substantial new nuclear capacity urgently simply to replace what is closing.

Question:
To ask the Secretary of State for Energy Security and Net Zero, what assessment he has made of how long it will take to place contracts to build new smaller nuclear power stations. (160097)
Tabled on: 07 March 2023

Answer:
Andrew Bowie:

The Government is committed to ensuring that the UK is one of the best places in the world to invest in new nuclear and intends to take one project to Final Investment Decision (FID) this Parliament and two projects to FID in the next Parliament, including Small Modular Reactors. As with any Government decision, this will be subject to value for money, relevant approvals, and technology readiness/maturity.

The Government also intends to initiate a selection process in 2023, with the intention to enter negotiations with the most credible projects to enable a potential Government award of support as soon as possible.

The answer was submitted on 15 Mar 2023 at 14:42.

Reply This represent a slow rate of progress. The government says it is committed to Small Modular reactors, so it should accelerate the timetable for their development, approval and roll out.

There is a Statutory Instrument on the order paper for the Commons to debate and approve on Wednesday concerning the so called Stormont brake. This is putting the cart before the horse. Parliament first needs to have a full debate on the draft Agreement. I reproduced yesterday some of the questions the European Scrutiny Committee poses over this complex set of changes to our constitution. I have set out before on this site my own concerns about what has been agreed.

The government has still to tell us which EU laws will apply in Northern Ireland, how wide ranging the powers of the European Court of Justice will be, what limits are placed on our ability to impose VAT and Excise taxes, why EU law on many items applies to trade between GB and NI and why it applies to factories and farms in the province not exporting to the EU. They have not yet released the forms traders will need to fill in to send goods from GB to NI or what are the terms of the trusted trader scheme which shippers will need to join and follow.

The brake itself is a burdensome arrangement. If two parties and the requisite number of NI Assembly members want to apply it, the UK government then has to decide if the criteria are met to allow its use and if they wish to use it, bearing in mind the ability of the EU to take retaliatory action. I can imagine UK government lawyers and officials urging caution any time some politicians wished to use the brake. When the EU built up the number of areas that could proceed by majority voting rather than  unanimity in the EU we were always told there was the Luxembourg Compromise. This was a self styled  emergency brake which we could apply to an item we disagreed with which had gained the necessary majority to become law. The UK never used it and in due course it was deemed to no longer exist. When I wanted to use it as the UK’s single market Minister I was blocked from doing so.  If we had enjoyed an effective legislative brake on laws we did not like we would probably still be in the EU today. Instead the railroading of laws onto us was one of the main reasons we voted to leave.

The Protocol should  not be embedded into UK and international law. The Agreement looks as if it leaves too many EU laws applying to NI, still places obstacles in the way of GB to NI internal trade and does not allow us either a veto over laws  nor a unilateral way out of this worrying Agreement.

Readers of this site will know I was critical of the Bank of England, Federal Reserve Board in the USA and the EU’s ECB for continuing money printing in 2021 well into recovery. Coupled with interest rates  at zero it was bound to be very inflationary. So it proved. China and Japan did not do this and kept inflation down to around 2% despite importing a lot of dear energy.

They will also know that last year whilst agreeing with rises in rates I warned against Quantitative tightening, selling government bonds at ever larger losses to tighten money yet more. It was this policy announced by the Bank of England just before the Kwarteng  mini  budget that drove bonds down. The Bank of England had to reverse its policy the following week and buy up some bonds to restore stability. They showed they controlled the prices of the bonds, letting them fall too far then rallying them sharply. It was the impact of the falling bonds on pension funds including the Bank’s own that spooked them.

I also thought the Fed was overdoing the bond sales. Last week two US banks collapsed, and a third sought substantial financial help. The share prices of a few  US banks show investors are worrying  about  them. Losses on government bonds were part of the problem at Silicon Valley Bank when it went down.The Fed had to announce a large line  of credit for banks generally and pump liquidity into the markets to avoid further bank runs, reversing some of the excessive tightness of money brought on by bond sales. Just like the Bank of England with its pensions problems.

The ECB has only just started Quantitative tightening and says it has no bank troubles in its area. Credit Suisse was just over the border and said to be a one off. Nonetheless a few EU commercial banks have  suffered sharp  falls in share prices over the last week so the ECB should not be complacent. The main UK banks were much strengthened after 2009 and are not being fingered in the markets.

So why do these Central banks lurch from obviously inflationary policies to clearly over tight ones that threaten pension funds or banks in their areas? They ignore the growth rates of money and credit, failing to see that too much money usually brings on inflation and too little brings company and weak bank collapses.

The Central banks  now share a dilemma. Carry on tightening and they could cause another crash. Relax too much and they could reignite inflation. That is why they should aim for a steady moderate increase in money and credit to avoid inflationary and deflationary shocks. The Bank of England should not carry on selling bonds at big losses. Commercial banks will now be tougher over new loans given the fears that stalk the markets.

The ECB which was  very slow to try to curb the inflation it had encouraged needs to learn from the Bank of England’s bitter experience with the pension funds and from the USA losing a couple of banks.

I reproduce below the worries the European Scrutiny Committee has concerning the Northern Ireland Protocol, which are similar to the issues I have raised with the government:

Areas of concern
22. Our invitation to the Prime Minister remains open and we can flexibly accommodate
his appearance over the course of the coming week. We have identified a number of
significant areas of concern about which the House should be further informed. These
include:
• the amount and extent of EU law that would remain applicable in Northern
Ireland under the Windsor Framework;
• the operation of the ‘Stormont Brake’ and whether it would act effectively as a
full stop on new EU law which amends or replaces EU law applicable in Northern
Ireland, or whether it merely amounts to the insertion of an additional process
into the current schema, as created by the Northern Ireland Protocol;
• the operation of ‘red’ and ‘green’ lanes and the practical implications of the
Windsor Framework for the people and businesses of Northern Ireland and the
extent of CJEU jurisdiction over these;
• how, if at all, the Windsor Framework alters the jurisdiction of the CJEU over
the entirety of the Northern Ireland Protocol, including arrangements for UK/
EU arbitration which engage questions on the application and interpretation of
EU law;
• the placing of goods on the Northern Ireland market made to UK, not EU,
standards;
• VAT arrangements; and
• how the Windsor Framework deals with the granting of UK State aid.
23. We wrote to the Prime Minister on the first point on 2 March requesting a definitive
list of the EU rules that would remain applicable in Northern Ireland under the terms of
the Windsor Framework.14 This letter was sent on the back of a commitment the Prime
Minister made to one of our members, Rt Hon. David Jones MP, on 27 February.15
24. We again urgently request a definitive list of the EU rules that would remain
applicable in Northern Ireland under the terms of the Windsor Framework.
25. We ask that the Government expedite its response to this Report owing to the
legal and political significance of the issues it raises.

We need a better paid jobs, more investment, good news, growth type of budget. This one promotes more employment with useful measures to encourage more people to get into the workforce which is welcome. It also comes with higher taxes, higher state spending and an increased role for the state in the economy. This is not yet the march of the makers, the liberation of the growers, the freeing of the small businesses, the attraction of the big companies and investors that could boost our output, cut our imports and lift our spirits. This is a budget that rightly says the wholehearted socialism of the Opposition parties would be worse, but thinks a bit of state direction and interference is what is needed. It includes unfunded spending increases.

This budget prolongs energy subsidies, imposing windfall taxes and higher corporation taxes on energy suppliers and VAT on domestic energy consumers and motorists. Why the money go round? Why big taxes on energy when the price of energy is too high and has been so inflationary?  It looks as if adopting the Opposition’s favoured higher energy taxes will cut investment in domestic oil and gas, making us more dependent on imported fossil fuels with their added property of increasing world CO2 in their production and transport. Without more domestic energy the tax revenues will fall from the sector, the balance of payments tilts further into the red and we lose the well paid highly productive jobs. Why are we continuing subsidies for higher income homes to cushion the costs of using luxury levels of energy at home?

Windfall taxes now on wind farms do not help much either, particularly on top of a big lack of grid capacity making it difficult to connect new investment to customers if a business does still want to try.

Just when Spain runs out of water for salads and Dutch food is hit by their Government wanting to stop some farming the UK opts to subsidise wilding, taking land out of food production altogether. The policy adds to the food miles and leaves us less to fall back on when the imports dry up. Instead of more tax revenue from growing and selling more this approach needs extra taxes to pay the subsidies to do nothing.

Much of industry needs large quantities of fossil fuel to produce iron, steel, ceramics, glass, chemicals, aluminium and much else. The UK imposes one of the highest carbon taxes in the world, hikes the corporation tax and then wonders why so much is closing. Subsidies are ploughed in to offset some of the taxes, but too little too late to save some at risk plants. We end up importing more, with more CO2 created by the transport to get the products here. The taxpayer has to pay to stave off more closures.

The motor industry had a great technical and market strength in cleaner more efficient diesel engines. These are now being closed down, with the Government proposing to ban all new diesel and petrol cars by 2030. No other main car producer country plans such an early phase out. The industry is rushing to end investment in the UK and to shut factories ahead of the deadline. The advice to the industry to make electric cars here has not resulted in a surge to do so as the UK struggles to attract enough battery capacity. The industry finds many more people are put off buying new diesels than want to buy new electrics.

We could expand small businesses rapidly if they would lift the VAT threshold. Small business innovates, offer flexible service and can move quickly. We could start more businesses if the tax regime was friendlier for self-employed people trying to build multi-client businesses. We need more small firms in areas ranging from building through maintenance to personal care and support.

We could keep and attract much more investment here if we set a competitive corporation tax rate. Why not match the Irish rate? The EU and the Protocol seems to want to align us in other respects with rules and laws in Ireland so why not do so with their most successful business policy? We know it works. Ireland raises so much more business tax than we do per person thanks to so many more companies setting up business there and expanding there. Investment allowances help a bit, but large companies also look at the longer-term profits and cash flow of an investment which are seriously hit by a 31% increase in the tax charge on yearly profits.

A lot of socialism as recommended by Opposition parties takes you on a walk along a path paved with good intentions through mediocrity to poverty. A windfall tax here, a subsidy there, a price control here, a nationalised or Government led business there and gradually you deter and lose private capital and competitive enterprise. Go the whole way like Venezuela and you end up with lots of permanently empty shelves, rationing and an absence of investment. Talented people rush for the exit. Doing a bit more of the tax and subsidy merry go round will not increase the supply of homes, energy or food to ease our shortages. We need a capacity revolution. Cut the tax rates and grow more. Cut the rates and cut the deficit. Every time Conservative Governments have cut business and income tax rates they have grown the revenues. The photo of Nigel Lawson in Number 11 should remind the Government that even a little bit of Conservatism can work wonders.