John Redwood's Diary – For freedom and prosperity

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Mr Healey’s letter about shuffling the huge bond losses around

September 18, 2026 19 Comments

I am quoting from the Chancellor of the Exchequer’s published letter to the governor of the Bank of England, sent on 17.9.26

This letter gives the Bank of England permission to tackle the losses and sales of bonds.

Quotes are in “ “ .

“The APF has been authorised by my predecessors to hold assets, primarily for monetary policy
purposes. In addition, and as set out below, I am today authorising a segregated portfolio of
APF gilts to be held for non-monetary policy purposes. Under the terms of the existing APF
indemnity, HM Treasury will continue to indemnify the Bank and the Bank of England Asset
Purchase Facility Fund (BEAPFF), so that any gains or losses arising out of, or in connection with,
the APF, including in relation to this segregated portfolio of APF gilts, are borne by HM Treasury.”

JR Chancellor here granting permission

“The MPC’s multi-year path for QT
I acknowledge the decision taken by the MPC to unwind the APF through an annual sales pace
of £20bn in purchase proceeds terms until gilts held for monetary policy purposes are fully
unwound by the end of 2034…….this is equivalent to an
average annual stock reduction of £46bn”

JR: this is a cut from £70 bn year to Sept 2026. Says he acknowledges but as he is paying the bills and as this affects the size of the APF which Chancellors have approved he could have approved.

“The Bank Executive’s strategy for backing banknotes
……
Given that the APF already holds gilts, and that the MPC intends to run its portfolio of APF gilts
held for monetary policy purposes to zero, I agree that it is appropriate for the Bank Executive
to set aside and retain a portion of the APF’s existing holdings to reflect anticipated banknotes
in circulation. This will avoid …….selling gilts as part of QT, which is the best outcome for
the taxpayer. I …..welcome that this avoids crystallising the upfront costs associated with
transferring the gilts across the Bank’s own balance sheet. £120bn of the longest-dated gilts
will therefore no longer be held for monetary policy purposes and so will not be unwound as
part of QT. “

JR important. this means the longest dated gilts sitting on the biggest losses will now be held to maturity to avoid taking large losses.

“I am writing to agree to the proposed changes…..

The implementation of QT
As you note in your letter, officials have been developing a model whereby all APF active gilt
sales are conducted to the government and not to the market. HM Treasury would instruct the
DMO via the Debt Management Account to purchase the APF gilts that the Bank Executive is
selling in its implementation of the MPC’s multi-year plan. Sales would be conducted at market
prices and in a pre-defined manner…… The DMO would subsequently on-sell the
gilts to the National Loans Fund for cancellation. The indemnity arrangements between HM
Treasury and the Bank would continue unchanged. HM Treasury would in due course instruct
the DMO to issue a corresponding amount of debt to finance such APF purchases through the
annual financing remit.
This sales model, whilst leaving the overall supply of gilts to the market from the public sector
unchanged, would see a return to a single public sector supplier of gilts to the market. ……
We will review progress before April 2027 such that, subject to a final decision to proceed,
implementation could begin in a way that allows this to be incorporated into the DMO’s annual
financing remit, as set by HMT.“

JR Interpretation: If they do this it takes the pressure of sales off the market and gets Treasury to buy back the bonds where they already have to pay the losses. Great deal for the Bank which gets out if a very badly bought portfolio and some reduction in losses taken by Treasury.As this will be the Treasury doing the buying it clearly is the chancellor’s decision.

I have left out some detail and various affirmations of Bank’s independence over monetary policy so it is clear this is the Chancellor signing off and approving a sales and QT programme, restating Treasury liability for the whole thing.

The Bank now acknowledges that its sales of bonds at losses has driven up interest rates a bit more.These changes will relieve a little of the pressures on UK debt.

Back to the 1970s is a bad idea

September 17, 2026 38 Comments

What is it about the 1970s that Mr Burnham so likes? His keynote speeches tell us he is fighting Margaret Thatcher and intends to reverse what remains of the 1980s reforms she introduced.

The 1970s brought us high inflation. The Labour government over spent and overborrowed, driving government borrowing rates up to an astonishing 15.5%. The government ran out of other peoples’ money to spend and had to go to the IMF to borrow money. The IMF imposed spending cuts on the government as part of the conditions for the loan. Is Mr Burnham keen to replay this sorry drama? The bond markets are warning him he is spending and taxing too much.

Labour put top rate income tax up to 83% or to 98% on savings income. This produced a Brain drain as it was called, as talented, entrepreneurial, successful people queued up to leave, including some of our best pop groups. Today we see a similar exodus of entrepreneurs and people with savings seeking to flee the high taxes.

During the miners strike under Mr Heath there was not enough energy to keep the lights on, so the government imposed a three day working week to cut the demand for power by business to avoid domestic power cuts. Will this government with its dangerous net zero policies have to introduce electricity rationing when the sun does not shine and the wind does not blow?

In the 1970s the large number of nationalised industries demonstrated we did not own them but they owned us. They needed large infusions of grant aid and support from taxpayers. They sacked a lot of their staff and delivered poor customer service. Is that to be the fate of Labour’s nationalisations?

Nationalised water regularly rationed supplies with hosepipe bans in the summer, and in 1976 in some regions had to cut off water supply to peoples homes. They needed to go to a standpipe in the street with a bucket. The industry tipped plenty of sewage into rivers and the sea and did not even bother to monitor and report it.

Nationalised BT often made people wait to get a phone line to their home, and for some required them to share a line with the neighbour. You could not then make a call when they were using the phone.

Strikes were common. The Labour government fell after a winter of discontent which had disrupted many pubic services including burying the dead.

In the 1970s we entered the European Community. Tariffs were taken off and there was a major industrial collapse as UK industry was not competitive enough to withstand the shock. The UK’s growth rate halved from the 3.4% we had achieved in the 20 years prior to joining.

The government’s priorities

September 16, 2026 53 Comments

We now can see this government’s priorities. It is revealing to see how they wish to waste their limited supply of political capital.

1. Stop rich people giving money to rival political parties

2. Impose thousands of asylum seekers on small villages, overriding local opinion and Council planning powers.

3. Press on with give away of Chagos

4. Make more concessions to the EU against UK interests without getting anything back we want

5. Continuing the big increase in benefits for life for young people,removing the need for them to look for a job

6.Increasing the tax take from petrol and diesel by insisting on full VAT on the higher oil price, making the cost of living crisis worse

7. Accelerating the closure of our oil and gas industry by banning exploration, delaying production decisions on proven reserves and imposing penal tax levels

8. Failing to follow up the announcement of the end of rough sleeping with plans to impose a national solution in a policy area where Mayors and Councils have powers

9. Failure to explain how they will get to defence spending at 3% of GDP by 2030, the amount the Chancellor said was essential.

10. The failure to smash the gangs or stop the boats.

Replay of the Bank of England losses debate. My 2023 case

September 15, 2026 13 Comments

The Bank of England decided this week to get rid of £100bn of bonds over the next year, £20bn more than last. I agree they should not buy more bonds to replace the ones that mature, like the ECB. I strongly disagree with their aggressive policy of selling bonds at big losses which would lose us less money if they held them to maturity. They have notched up £24 bn of losses, all paid for by the Treasury , this year since April. They have provided no good reason why they do this.

Maybe they want to qualify as one of the worst bond managers in the world. They certainly paid sky high prices for the bonds when rates were near zero. They then hiked rates and sold bonds to force the prices down so they could make colossal losses. They defend the rate rises on the good grounds they needed to do that for monetary policy purposes, as their bond buying and low rates had proved very inflationary. They tell us selling the bonds has little impact on anything, so why do it?

It is difficult to believe what they say. They say buying the bonds at ultra high prices was essential to buttress the economy and help output, but apparently selling them does not do the opposite! Buying stimulates, selling does nothing!

They say their sales, large and low priced as they are, does not depress the market. Of course it does. They point out the prices do not particularly dip on the days of the sales. That is because the sales have been well heralded in advance and are carried out to a stated timetable, so they are in the price. Last autumn when they first announced a big £80 bn bond reduction programme it was followed by bond meltdown, exacerbated by the LDI collapse it helped trigger. The Bank had to reverse policy and buy bonds again to stabilise the market. This showed Bank buying and selling has a big impact as they are the dominant presence in this market.

The public finances ex Bank of England are badly damaged by the extent of the losses, which the needless selling makes worse. As the Bank does not think the sales make any difference, why do them when their balance sheet will come down as the bonds mature? More likely these sales have raised longer term interest rates, have weakened bond prices further and very visibly have worsened the public spending and borrowing figures ex Bank of England. Why do other MPs ignore £24 bn of losses so far this year with so many more to come?

My reply to Mr Lawson’s criticism about the triple lock. Telegraph article

September 15, 2026 61 Comments

The campaign to end the triple lock for state pensions is bizarre. The Bank of England loses billions more on bad and needless bond sales yet the establishment that wants to mug the pensioners pretends the losses are not happening. Well off pensioners drawing index linked public sector pensions propose making those relying more on the state pension worse off whilst ignoring the collapse of public sector productivity this decade costing taxpayers more billions. Many of the enthusiastic triple lock abolitionists urge we spend and waste more and more money on net zero subsidies and paying renewable generators to switch off for lack of grid. The triple lock to update pensions to cope with the rising cost of living has been a good policy to cut pensioner poverty. Better off pensioners pay tax on the pension. This would be a small cut for the next few years with a big political price.

The UK’s run away public expenditure owes little to the triple lock and much to the burgeoning welfare bill as hundreds of thousands are given sicknotes for life at a very young age and as the state writes off many people with mild mental ill health conditions that work might alleviate. I have set out tens of billions of relatively easy cuts across government, and the Conservative party have published a plan for £47 bn of reductions without touching the state retirement pension. There are better, bigger and easier ways of cutting state spending.

Mr Lawson embarked on an unwarranted attack on me for supporting the triple lock without giving me any warning or right to reply. His own article began with a vivid and accurate account of how Baroness May’s Manifesto for the 2017 election wiped out a strong Conservative lead in the polls with its attack on pensions and pensioners as if he understood the public mood. He then switched to attacking me for being illogical for consistently understanding the public mood on this issue. I distanced myself from the 2017 Conservative Manifesto in the election and promised my electors to speak out against the worst features of it.

Mr Lawson and the establishment choir against the triple lock never mention that the pension is a Contributory benefit. It is an entitlement based on a person’s contributions. 76% of all National Insurance contributions are paid into the National Insurance Fund. The balance part pays for the NHS. The Fund has a duty to pay the pensions with their annual uprating out of the NI money paid in. If the fund falls short the government has to top it up from general taxes or increase the contribution rate. If the fund is in surplus the surplus stays with the fund. The government would need to amend the law to raid the fund for other purposes.

When they say the triple lock pension is unaffordable they ignore the fact the fund is in healthy surplus. The Government Actuary forecasts a large and growing surplus for the next five years. It means of course the deeply damaging increase in National Insurance contributions destroying jobs introduced by Rachel Reeves was not needed. The surplus in the Fund is heading to £160 bn. To divert this money a government would need to legislate to remove the contributory principle and abolish the fund, making the pension a welfare benefit paid for out of general taxation. The reason retired people do not pay National Insurance contributions is to avoid taking part of their pensions away in an absurd money go round. The critics of the triple lock usually call National Insurance contributions Nics as if they were an ordinary general tax.

Mr Lawson is right to say the triple lock can be changed by changing the law. This however represents bad faith for all those paying contributions over the last two decades with a promise that this would entitle them to a triple lock pension. He objects that the National Insurance fund is not an endowment fund like a company or personal pension. He ignores the fact that it is a pay as you go fund, based on the principle that the working generation pays for the retired on the basis their children will pay for them, with the state requiring all to pay during their working years to qualify and to be fair to all.

The best argument to keep the triple lock is to build some integrity in politics, to get the out of touch often wrong establishment to understand the public mood. The main parties supported the triple lock to get MPs elected in 2024. They need to keep their word for this Parliament. I think it unlikely parties serious about wanting to win next time would think it a good idea to raid the National Insurance fund for other purposes or to legislate to destroy the most important contributory principle. Integrity and understanding the public mood matter more than Mr Lawson’s logic.

The National Insurance fund

September 14, 2026 36 Comments

Receipts
National Insurance contributions	5.2	130,901,352	138,649,520
Income from NIF Investment Account	5.3	4,158,579	3,881,306
Compensation for statutory pay	5.4	3,173,000	2,969,000
Redundancy receipts	5.5	29,224	29,634
State Scheme Premiums	5.6	–	1
Personal pension receipts	5.7	–	8
		138,262,155	145,529,469
Less
Payments
Benefit payments	5.8	(143,197,101)	(129,827,870)
Administrative costs	5.9	(856,212)	(491,201)
Transfers to Northern Ireland NIF	5.10	(690,900)	(672,856)
Redundancy payments	5.5	(487,120)	(494,374)
Other payments	5.11	(101,100)	(110,493)
		(145,332,433)	(131,596,794)
Receipts less payments		(7,070,278)	13,932,675

Statement of balances

As at 31 March	2025 (£000)	2024 (£000)
Opening balance	86,418,788	72,486,113
Receipts less payments	(7,070,278)	13,932,675
Balance as at 31 March

These accounts are produced annually for the National Insurance fund. Many of the people commenting on the State Retirement fund seem unaware of this structure. Most the so called benefits paid out by the Fund are the State Retirement Pension entitlements, based on people’s age and past NI contributions.(97%).

The government Actuary makes an annual appraisal of solvency, with five year forecasts. His 2026 Report stated there is likely to be a surplus of tax revenue over spending every year from 2026-7 to 2030-31, a five year run. The fund needs to keep a substantial working cash balance to pay pensions. This is likely to be over £100 bn this year and rising.He thinks the accumulated surplus will reach £160 bn 2030-31.

The Treasury has to make payments to the Fund if the Actuary judges it to need them, last required ten years ago. The Treasury may not take surplus money out to spend elsewhere without a change of law or Parliamentary approval to do so .

A proportion of National Insurance, currently £35 bn, is sent to the NHS every year and not transferred into the Fund. Increasing the proportion of NICs taken in this way would also need a law change. I am setting this out as so many people debating NIC s seem unaware of the special treatment and their special purpose, which is to pay pensions based on contributions.

The needless and damaging increase in NI Contributions by Reeves means the Actuary forecasts a surplus as high as £160 bn by the end of the decade.

Beware the UK debts

September 13, 2026 27 Comments

My Lords, the Conservative Government were swept from power, first because they did not deliver on immigration control in the way that they promised but, secondly, because they presided over a very major surge in inflation in the early 2020s, which had been brought about by excessive spending, excessive borrowing, the deliberate repression of interest rates and the artificial creation of very large sums of money by the Bank of England. Like many, I supported the first very substantial injections into the economy when lockdown was first announced. Lockdown took a lot of activity and income out of the economy and a very major offset was needed. However, I became increasingly critical and impatient in the recovery period because the Government and the Bank of England did not seem to understand that we were into recovery and carried on with excessive borrowing, excessive spending and excessive money creation. I and others told them that it was bound to be inflationary, but much of the great British economic establishment was slow to see that and the result was a nasty cost of living crunch that did damage to the electorate and drove the Conservatives from power in a perfectly understandable way.

By 2024, however, the Conservative Government had got much better control of the economy and, for the first six months of 2024, under Conservative direction, the inflation rate came back down to the 2% target. For those six months, it was the fastest-growing economy of the G7. The Government set out a five-year plan in their 2024 Spring Budget, as always, which had entirely credible figures to show the deficit and therefore the borrowings coming down year by year to reassure bond markets. Under the Conservatives, of course, it was considerably cheaper than it is today for the Government to borrow because there was a bit more credibility in the medium-term prospects for controlling borrowing than there is today.

I think the fairest thing to do to try and analyse where we are, because I want the Government to succeed and I think they need to consider very carefully where they are when framing their next Budget. Let us compare the plans of the outgoing Conservative Government in the 2024 Budget for 2027-28 with those of this Government. Let us concentrate on 2027-28 because that is when the new Prime Minister and his new Chancellor can make any changes they like. They have inherited the current year and have chosen not to make many changes, just a few incidental, very small increases in spending. They have basically lived with the Reeves/Starmer construction of this year, but let us hope they think carefully about what they want to do for 2027-28.

What have they inherited from Reeves and Starmer? Well, in two Budgets, Reeves and Starmer increased taxes by £66 billion by policy changes—there is also, of course, a much bigger increase in taxes from fiscal drag and inflation—and for 2027-28 they suggested that they wanted to borrow £97 billion more than the outgoing Conservative Government had planned to do. The Conservatives were planning to borrow £50 billion in 2027-28, and the current Government inherits £147 billion of planned borrowing. There is then the level of spending: the Reeves/Starmer Government added £145 billion extra spending for 2027-28 compared with the £97 billion extra that the Conservatives were planning for that year. So spending will be £242 bn up. The total package is to borrow a lot more, tax a lot more and spend a great deal more.

Looking at the economic performance of the last two years, we see that this has not been a benign policy mixture for the economy. Unemployment has gone up and inflation has gone up, not entirely because of world events in the Middle East, but also driven by public sector costs where there has been a very big increase in public sector wages. I have no problem with paying people in the public sector more, but there should be productivity gains to help pay for it, and those have been sadly lacking. We have seen the Government stumbling to maintain tax revenues at the more elevated levels because they have triggered what in the 1970s was called a brain drain. A lot of talented people and a lot of people with wealth have decided that they want to make their lives or to make their investments elsewhere, which is a considerable concern. I have no problem with wanting to tax the rich more than everybody else, because they have the money to tax, but if you overdo it they do not stay to pay the money you wish to raise from them and then everybody else has to pay rather more. You lose those easier amounts you can get if you tax the rich in a sensible and internationally competitive way.

As has been made very clear by my noble friend Lord Bridges, the Government has to take action on spending. I do not think higher taxation is going to help get the Government out of this, given that they have ruled out the main taxes on most people. They would have to target the wealthy, the energetic, the people who work harder rather more than anybody else. More of that would do damage to growth and would mean less revenue rather than more, so they have to find public expenditure reductions that can start to bring the budget into a proper shape.

I do not share the view of those who think we should pick on the pensioners or the disabled to make particular sacrifices at this juncture. Those who are genuinely disabled need our proper financial support and I think both parties were right to promise the triple lock in the election and should keep to their word. There are many easier targets, which I have often mentioned, but which time does not permit me to handle today. My party has set out a very good set of cuts for the benefits bill to start us off.

My IEA article on budget

September 12, 2026 56 Comments

Here we go again. 47 more days until the budget. 47 more days for stories to run about higher and new taxes. 47 more days for the left inclining think tanks to identify more sources of above average wealth and income that they think should be confiscated by state taxation. 47 more days for the media to generate stories that persuade more people and companies to avoid spending in case they will face a higher tax bill. 47 more days to tempt more well off people to leave the country altogether, to cancel more business investment projects and delay creating more jobs.

This was what happened before the two Reeves budgets. Long run up periods led to much unhelpful speculation about increased taxes leading to the exodus of millionaires, billionaires and talented people. Coupled with substantial tax rises in the final packages this drove down new jobs and vacancies, forced up unemployment, slowed growth and undermined the housing market. When asked about this possibility again the government says they have shortened the time to the budget to limit the damage. Two months, now 47 days, is still a long time.

The trouble is the two Reeves budgets did put up taxes by a stated £40 bn and £26 bn so people are right to have fears of more to come. If the government was seriously worried about growth and jobs they would learn from the experience of the last two years and would rule out any tax rises in Budget 3. They say you cannot rule out tax rises in advance of the budget, yet their Manifesto ruled out all rises in the big three taxes for the whole Parliament. Labour could only win the election by promising not to impose more taxes on working people. They have already distorted the promise by the hike in employer National Insurance Contributions. These do of course hit the self employed and have served to destroy jobs which does affect working people. The failure to calm fears of higher taxes implies higher taxes are still on the agenda.

The March 2024 last budget of the Conservative government proposed spending £1226 bn in 2024-5, rising to £1323 bn by 2027-8, an increase of £97 bn or 8%. In last November’s plans the Labour government proposed to spend £1468bn in 2027-8, an increase of 11% over the Conservatives and 20% higher than Conservative plans for 2024-5. £145 bn of extra spending next year has proved to be difficult to finance, with the extra taxes falling well short of the extra spending. As a result the Conservative forecast of borrowing just £50 bn in 2027-8 has risen to £147 bn under Labour.

Labour in its end 2025 budget set out plans to borrow almost £100 bn more, to tax £66bn more and to spend £145 bn more. Lower growth and fewer jobs so far help account for the need to increase borrowing and taxes by more than spending to allow for lower than expected tax revenues to pay for everything. Mr Burnham should study these poor figures and poor results. With John Healey he should try to do something different this time round. Instead it looks as if they think they need to spend yet more money than Starmer/Reeves and offset some of the costs with yet higher taxes owing to the difficulties of borrowing more at realistic interest rates.

The government was given a higher growth rate in the OBR forecasts for saying they would get some extra growth from their attempts to reform planning. So far there is little sign of this having a positive effect, with housebuilding way below required levels. Large projects still take a long time to get approval. Permissions to go ahead with new oil and gas have remain stymied by political hostility. They were also given a higher growth forecast for their increase public sector investment. The more they spend this money on things like the heavily loss making British Steel, the computer remediation costs at the Post Office and the endless delays and overruns of budget at HS2 the less they are likely to create extra growth from more nationalisation and public capital spending.

The markets have decided to charge the government a high premium in extra interest costs to borrow because many bond investors and traders think the government is spending and borrowing too much. The government needs to borrow around twice the £147 bn of new borrowing in 2027-8 in order to replace debt that needs repaying as well. The debt issuance is scheduled to be £275 bn this year and £308 bn next, leaving bond investors plenty of opportunity to acquire UK debt and plenty of bargaining power over how much interest they want in return. This creates the doom loop, with interest charges shooting up. These add to total public spending which in turn requires yet more borrowing. The UK state has to borrow to pay the interest on the debts.

So what should the budget contain? It should contain no new tax rises. It should reduce tax rates where they can collect more revenue by setting a lower rate. The taxes on wealth and transactions are now such that many people either leave the country or take legal routes to avoid the charges, lowering the receipts. It should deliver a package of tax cuts and subsidies that help many more people into jobs and allow businesses to create the extra jobs that are needed. This needs to be paid for by offering far fewer sicknotes for life, with benefit reform to incentivise work and lower the overall bill.

The stark omission from the government’s pre budget planning, and from most of the debate in the establishment media and left facing think tanks is a proper debate about where savings can be made in the bloated public sector budgets. Why send Mauritius large sums with the gift of islands which are British and should stay so? Why put so much public money into carbon capture and storage projects? Why grant so many long term benefit entitlements to people who would be better off working? Why allow the continuing cost overruns at HS2 whilst paying large salaries and even bonuses to the senior managers who have wandered so far off the original budgets and management plan? Where is the business plan to cut the £500 m a year losses at the Post Office before grants, and the £500m losses at British Steel? Where is the plan to slim the civil service and return public sector productivity at least to the higher levels of 2019?

The government cannot succeed with this budget without substantial reductions in current costs. The OBR forecast which determines the fiscal rules is likely to show a worse position than last year. Inflation is up, productivity disappointing and interest charges high. All this means less revenue and more cost. To get closer to the fiscal rules the government needs to narrow the gap between current spending and income. It needs to take more measures to promote growth. The OBR might need to revise down the credits it gave for planning reform and public investment in the light of how they are working out. It will need to reflect the market penalties on borrowing more in its outlook.

The government will in turn need to break out of its doom loop. With interest rates well above the one day worst Truss level borrowing more is not a sensible option. Borrowing £300 bn a year at these levels for new debt and rolling over old debt is crippling the finances. With the last two sets of tax rises so visibly hitting jobs, investment and growth more tax rises offer no hope. The 1970s Labour government tried to outrun markets with more spending and borrowing and high taxes. It ended in tears, borrowing from the IMF who forced it to cut spending. This government needs to restrain the hands that want to sign the cheques for more public sector costs before some external force comes in to do it to them.

Meanwhile the ticking timebomb under the budget is the Chancellor’s former promise to boost defence spending by more than the government agreed. He still has to find the cuts in the MOD budget promised as part of the package to edge the total up to the 2.7% of GDP he thought too little. It looks as if Mr Burnham expects him to eat his former words on the timetable for more defence spend. It could be a gripping story as the battle for better defence becomes a serial drama.

Railways. Speech on nationalisation Bill

September 11, 2026 22 Comments

My Lords, I welcome these probing amendments and look forward to the Minister’s response to some very important general issues. It is right that the staff in all the operating companies that will be affected by this should have an early idea from the Government about what is planned for their future employment.

I am one of those who welcome the idea that we want a well-paid profession serving on the railways. For the sake of taxpayers, who are putting in substantial grant in aid and capital money, and of fare-paying passengers, who often have to pay very high fares, we need a system for negotiation between staff and Great British Railways which is more likely to achieve the increase in productivity that could justify the higher pay for staff without imposing an ever-higher charge on the taxpayer and fare-paying passengers. This is more than a detail that can be left open; we need to know who the employer will be, what the status of the current contracts is and how they will be put into transition to new contracts for the staff when their employment changes.

Is there anything the Government can tell us about how they might—they hope—have better relations with the unions in future? Can we look forward to a better experience in getting that balance of better pay for better delivery, smarter working, adopting work practices and being willing to operate new capital investment in a way that delivers higher productivity and higher quality of service?

I also welcome my noble friend Lord Moylan’s draft of what the purposes should and could be, which may not entirely match all the Government’s aims. It would be interesting to hear from the Government which of his suggestions are intended or implied in the current legislation, so that we can have some early indication of what the mission statement of the new railway might be.

I think taxpayers and railway users are expecting more services, not fewer. That has not been the early experience of the last two years. They are expecting better punctuality and timeliness, which would also be welcome. What the new railway will definitely require is more feel for where more passenger movements are required or possible. As in the early days of privatisation, surely the early days of full nationalisation they might want to achieve a trend of rising passenger numbers. Privatisation achieved that very well, with the ability of companies to develop timetables and services more suited to modern travel needs and therefore fuel the continuing progress of providing more growth in passengers and revenue.

If a new railway management—the controlling mind of GBR—knows how to do that, it will make everything a lot easier if the background of the completion of these arrangements is rising passenger use, rising revenues, greater flexibility over timetables and thinking about growth rather than cost cutting and the elimination of less profitable routes. That can easily get you into a spiral of downturn, as with the nationalised railway experience for most of its time post war, until privatisation reversed those difficult trends.

I hope that the Minister will not rule out one of the modest successes of recent years, which is the ability to have a competitive challenge to the monopolist. There are times when people outside will see ways of harnessing people, talent and capital to provide additional and better service using the existing track, and for that they will clearly need fair terms for access, and that will provide an innovative stimulus to the nationalised monopoly. However, I fear that the Government will not want to do that, and so I think they will find it that much more difficult to innovate and improve the timetables without that stimulus or spur from others generating such ideas and providing such a challenge and opportunity for the growth of the railway.

The modern pace of change needs continuous learning

September 10, 2026 56 Comments

My Conservative Home article

It is a strange myth that the three years people spend as undergraduates dictates their views, determines their skills and fixes their lives.

In the fast changing world we live in, every day is a day to learn something new, to battle your own ignorance and to embrace improved opinions and skills. I learned a lot more when I took private capital and free enterprise solutions to the governments of the world as a Director of Rothschilds, when I applied my investment experience to qualifying as a fellow of the Chartered Institute of Securities and Investments , and when I led a couple of international industrial businesses than I did as a student.

It is true if someone reads law or medicine the undergraduate experience is part of their wider and longer professional education, but they opt for a life of continuous study and experience in their chosen fields. For the rest of us a first degree may be a remote memory, with little influence over what we think and do now. Most of us needed to train and learn very different lessons once we got into the world of work. The best things a university can impart to alumni is the need to be able to teach yourself, the skill to know where to go to be better informed about today’s challenges, and the self-criticism needed to acquire higher standards and better understanding.

It is true my three years of undergraduate history at Oxford did have four lasting effects on my views. I oriented my course through the limited choices we could make to pursue special interests in economic history and in the history of science and technology, appreciating their fundamental impact on living standards. The brilliance of the technology in the UK ‘s Industrial revolution and social and economic pioneering of entrepreneurs like Wedgwood and Cadbury were models of greater success.

That helped in my business career and as an MP.

We all had to take a paper on Political thought. I cannot remember much of Plato, Aristotle, Hobbes, Locke or Rousseau though I had to master their principles and main works at the time. They had no influence over my personal political philosophy. The sixth appointed thinker was Marx. He did have a profound impact on me as I sought to expose the lack of history, common-sense and compassion in his evil and divisive creed.

I saw the haunting damage his ideas were doing to the lives of people in the Soviet Union and Mao’s China. I started developing the freedom and free enterprise alternative, publishing my Popular Capitalism Manifesto in the 1980 s and taking it into Eastern Europe as the Berlin Wall came down. I explained how the period 1950 to the 1980s was a giant experiment between communism and a more free enterprise system based on personal liberty in the democracies. The freer societies became much richer, offering more comfortable lives. Anyone could travel from the US or UK to ask to live in the Soviet Union. People wanting to flee the poverty and tyranny of communism were shot trying to cross the border. Freedom won the Cold War.

We had to study general continental European history. I would have preferred to have studied American history. It was more relevant as background to understanding the superpower of the twentieth century, being a country of more importance to the technological success and defence of our own. The Oxford course designers included many European style socialists who thought the US too new and too brash to warrant general study. They wanted the UK inside the European Community and saw English history as a branch of European , probably disliking the later centuries when Great Britain became a global seafaring power. They wanted history in foreign languages to add to its cultural complexity.

This did also have a considerable influence over me.

The more I read of the attempts of the Romans, Vikings, French, Spanish, Dutch, Germans to create a European empire by force of arms with their invasion plans against England the more I wished to disentangle my country from damaging European politics.

The more I read of slavery and serfdom introduced by our Roman and Norman overlords, of the slavery in the German occupied Channels islands from 1940, of the sale of Englishmen into slavery by the Vikings the less I liked the continent’s past values. The bitter fight against new and liberating ideas by Galileo, Newton, Darwin and the others and the endless wars of religion were also a turn off. The course made me a conviction Eurosceptic. I voted to leave the EEC in 1975 in one of my first adult votes . Most attempts at creating a united Europe by arms or by diplomacy had caused endless trouble.

We also had to offer papers in what they called English history. It was of course GB history from 1603 and UK history from 1800. I loved the triumphs of our progress. I marvelled at our early limitation of royal power and establishment of legal rights. I admired the painful evolution of a universal franchise. I was humbled by the sacrifices so many made to see off Spanish, French and German attempts at European domination. I was relieved when Britain and our navy led the campaign to abolish slavery elsewhere.

What I learned of our past constitutional struggles was of great value as I and others led the Parliamentary fight to return our sovereign powers to people and Parliament after their usurpation by the EU. The English civil war they told me about became the war of the three kingdoms in later accounts. It prefigured the Brexit debates. Remain used Northern Ireland to hinder Brexit. Scotland voted a different way to England. I remarked that the Brexit rows were the civil war rows without the muskets.

It was a privilege to attend the university. Its great wealth of libraries and research materials were humbling and its intellectual. standards high. I did develop the history of science and technology I studied through two books I published. I took into politics the need to help defeat the evils of communist tyranny by the power of the pen. I held a determination that the hard won liberties of the British people should not be idly tossed away to a world of international treaties, overmighty quangos and the EU.

In today’s fast changing world graduates need to understand much of their real world education starts the day they graduate.